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What Happens on Closing Day in Ontario?

By 360Lending

October 1, 2024

You’ve done it. After an exhaustive search, you found the perfect home. You navigated the stress of a bidding war, your offer was accepted, and your mortgage financing is fully approved. The final hurdle between you and your new life is "closing day."

For most first-time and even experienced homebuyers, closing day is a complete mystery. It’s a date circled on the calendar that is filled with a unique mix of excitement and anxiety. It's a day when large sums of money move between banks, dozens of legal documents are signed and registered, and all you really want to know is: "When do I get my keys?"

This guide will pull back the curtain on the closing day process in Ontario. We will provide a clear, step-by-step timeline of what happens, explain the critical role of your real estate lawyer, and demystify the key financial documents you will be signing, so you can approach the final step of your journey with confidence.

The Key Player: Your Real Estate Lawyer

On closing day, your mortgage broker and real estate agent step back, and your real estate lawyer takes center stage. They are the quarterback of the entire closing process, acting as the central hub of communication and the legal authority to execute the transaction.

What Your Lawyer Has Been Doing

Long before your closing day arrives, your lawyer has been diligently working behind the scenes to prepare for a smooth closing. Their crucial tasks include:

Conducting a Title Search: This is one of their most important jobs. They perform a detailed search of the property's title history to ensure it is "clean"—meaning the seller has the legal right to sell it to you, and there are no outstanding liens, debts, or legal claims against the property.

Coordinating with Your Mortgage Lender: Your lawyer receives the official mortgage instructions and, eventually, the mortgage funds from your lender. They are responsible for preparing all the lender's required legal documents.

Preparing Closing Documents: They draft and assemble the mountain of legal paperwork required to transfer the ownership of the property from the seller to you.

Calculating Your Final Closing Costs: Your lawyer is responsible for calculating every single cost, credit, and adjustment, and providing you with the final, bottom-line number you need to bring to close the deal.

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The Closing Day Timeline: A Step-by-Step Breakdown

While it’s called "closing day," the process often starts a day or two before and can stretch late into the afternoon. Here is a timeline of what to expect.

The Morning: Your Final Signing Appointment

Typically, you will meet with your lawyer a day or two before the official closing date for your final signing appointment. This is your last major task as a buyer.

Signing Documents: You will sign a thick stack of legal documents. These will include the final mortgage documents from your lender, the land transfer documents that will register you as the new owner, and various statutory declarations. Your lawyer will walk you through the key points of each document.

Providing the Funds: At this meeting, you will provide your lawyer with a certified cheque or bank draft for the full remaining balance of your down payment and all your closing costs. Your lawyer will tell you this exact amount, down to the cent, a few days before this meeting.

Mid-Day: The "Money Moves" Phase

This is where the magic happens behind the scenes. On the morning of the official closing day, a complex electronic transfer of funds takes place.

Your lawyer receives the mortgage funds from your lender into their legal trust account.

They combine these funds with the down payment and closing cost funds you provided.

They then wire the full purchase price of the home to the seller's lawyer's trust account.

This entire process is handled securely between the two law offices.

The Afternoon: Registration and "Closing"

The deal is not officially "closed" until the property is legally in your name. Once the seller's lawyer confirms they have received the full funds, your lawyer will electronically register the new deed (transfer of ownership) and the new mortgage on the property's title in the provincial land registry system. The moment this electronic registration is complete, you are the official, legal owner of the home.

The Final, Anxious Wait: The Key Release

This is the final step you'll be waiting for. Once the seller's lawyer sees that the property has been successfully registered in your name, they will give the "release" for the keys. They will typically call the seller's real estate agent to inform them they can now hand over the keys to your real estate agent, who will then finally give them to you. It's important to be patient, as this final step can often happen late in the afternoon, sometimes as late as 4:00 or 5:00 PM.

Decoding the Statement of Adjustments

A few days before your closing, your lawyer will provide you with the most important financial document of the day: the Statement of Adjustments. This is the final balance sheet that reconciles every single dollar in the transaction.

The Final Balance Sheet

This statement clearly shows the total purchase price of the home and then details all the credits that reduce the amount you owe, and all the debits that increase it.

Common Credits (Money You've Already Paid)

The biggest credit on your statement will be the deposit you made when your offer was accepted. You will also be credited for any portion of the property taxes or condo fees that the seller has pre-paid for the period after you take ownership.

Common Debits (The Costs You Must Pay)

This section details all of your closing costs. You can expect to see:

The remaining balance of your down payment.

The Land Transfer Tax (both Provincial and, if you're in Toronto, Municipal).

Your Legal Fees and Disbursements for your lawyer's services.

Title Insurance: A mandatory insurance policy that protects you and the lender from issues with the property's title.

Pro-rated adjustments for any utilities or other costs that the seller has already paid for.

The Bottom Line

The final number at the bottom of the Statement of Adjustments is the exact amount you will need to bring to your lawyer's office in the form of a certified cheque. It represents the purchase price, minus your mortgage funds and your initial deposit, plus all your closing costs and adjustments.

Stress-Free Closing Day

Closing day is a complex legal and financial process, but it is a well-orchestrated one that is managed every single day by your professional team. While it can be a long and sometimes anxious day, it is the final, exciting step in your homeownership journey.

The key to a stress-free experience is to be prepared. This means having your funds and all your required documents ready for your lawyer well in advance and understanding the timeline of events. A smooth closing day is the final result of a solid financing plan that was put in place months before.

A great mortgage plan accounts for all these final steps from the very beginning. Contact our brokerage today to get pre-approved and to ensure you have a clear and comprehensive budget for all your closing costs, setting you up for a successful and stress-free closing day.

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