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Closing Process for Sellers: What You Need To Know
First and foremost, congratulations on successfully marketing your property to its full potential and finding the perfect buyer to hand over the keys. You are officially in the phase of what we call the closing period. That being said, the journey is far from over because, for the next couple of weeks or months, you will have a lot to prepare for the closing day.
If you have been searching the internet for answers to pressing questions such as what exactly is closing day, why is it important, and how can you ensure its seamless execution, you have come to the right place. We are here to give you all the essential information you need to navigate this crucial phase.
What is closing day?
In Canadian real estate, closing day is when ownership of the property officially transfers from the seller to the buyer. It is the date specified in the Agreement of Purchase and Sale (APS) on which the transaction is considered complete, and the keys to the property are handed over to the buyer.
On closing day, all funds are transferred between the buyer’s and seller’s lawyers, any outstanding mortgages or liens are paid off, and the ownership of the property is registered in the buyer’s name at the Land Titles Office. It is usually set to be a few weeks after the signing of the APS, giving both parties time to complete any necessary inspections, arrange financing, and prepare for the move.
What is the importance of closing day?
It is an essential milestone in the real estate transaction process as it marks the official transfer of ownership from the seller to the buyer. The buyer becomes the rightful owner of the property, and the seller is no longer responsible for it.
Completion of the purchase: Since it is the final step in buying a property, all the necessary paperwork is signed, and the transaction is completed on this day. Once the sale is closed, the buyer can move into the property.
Payment of funds: On closing day, the buyer pays the remaining balance of the purchase price, and the seller receives the proceeds from the sale. This includes any adjustments to the purchase price for things like property taxes, utilities, and other fees.
Satisfaction of conditions: It is the day when any conditions outlined in the Agreement of Purchase and Sale (APS) must be met. This includes things like the completion of home inspections, the securing of financing, and the resolution of any title issues.
What kind of difficulties might a seller face on closing day?
While the closing day is exciting for sellers, it can also be a source of stress and anxiety. Here are some of the difficulties a seller might face on closing day, along with examples:
Delays in closing: There are many reasons why a closing might be delayed, such as issues with financing or unexpected problems with the property. For example, if the buyer’s lender is yet to approve the mortgage or there are issues with the title or survey of the property, the closing could be delayed.
Disputes over repairs: If the seller has agreed to make repairs to the property as part of the sale agreement, there may be disputes over the quality or completeness of the repairs. For example, if the buyer believes that the repairs are not up to standard, they may only close once the issues are addressed.
Disagreements over closing costs: Closing costs can be a significant source of disagreement between the buyer and seller. For example, if the seller believes they are responsible for paying a certain fee that the buyer assumes should be their responsibility, the closing may be delayed until the issue is resolved.
Problems with the title: If there are issues with the title of the property, such as liens or other encumbrances, the closing may be delayed or cancelled. For example, if the seller has outstanding debts on the property, the sale may be postponed until those debts are paid off.
Seller’s checklist for closing day
Preparing well in advance can help alleviate the anxiety, and rush sellers may experience on the closing day, ensuring that everything goes smoothly without any glitches. So here are some ways you can do just that.
Review the APS to ensure that all conditions have been met and that you comply with the terms of the agreement.
If you have agreed to make repairs to the property as part of the sale agreement, ensure that the repairs have been completed to the buyer’s satisfaction.
Begin to pack up your belongings and prepare for the move. Ensure all personal belongings are removed from the property before closing day.
Contact all utility companies, such as gas, electricity, and water, to arrange for final meter readings and ensure that all accounts are settled.
Cancel any services that are no longer needed, such as cable, internet, and telephone.
Arrange for the final property cleaning, either by hiring a professional cleaning service or by doing it yourself.
Gather all necessary documents, such as property records, warranties, and manuals, and provide them to the buyer on closing day.
Attend the final walk-through with the buyer to ensure that the property is in the condition agreed upon in the APS.
Provide the buyer with all keys, access codes, and garage door openers for the property.
Work closely with your lawyer to ensure that all necessary paperwork is in order and that you understand all the financial implications of the closing.
Some tips for sellers to have a good closing day
01Be organised
Ensure you have all the necessary documents and paperwork in order before closing day. This includes the Agreement of Purchase and Sale, title documents, and any other legal documents.
02Communicate with your real estate agent
Keep in touch with your real estate agent throughout the closing process. They can provide you with updates and help you navigate any issues that may arise.
03Be prepared for delays
The closing day can be unpredictable, so it’s important to be prepared for delays. Make sure that you have alternate plans in case the closing is delayed.
04Stay in touch with the buyer
Communicate with the buyer throughout the closing process to ensure everything goes smoothly. If there are any issues, work with the buyer to resolve them as quickly as possible.
05Stay calm
The closing day can be stressful, but staying calm and focused is essential. Remember that you have a team of professionals working with you to ensure a successful closing.
Closing on a sale of real estate and transferring ownership can be stressful for anyone involved. An already stressful situation may be exacerbated by the need to attend numerous meetings and coordinate many details. You can, however, be more ready for what you need to do and when you need to do it if you follow the guidelines and checklist that have been provided above.
If you need more information, then, The Canadian Home also offers real-time assistance from industry experts via our in-built chat service. So don’t hesitate to reach out. If you found this blog, then make sure to check out our other blogs on everything related to Canadian real estate.
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