When an agreement of purchase and sale is negotiated, both parties will agree to a closing date that seems reasonable. Just as there is said to be a preferable day to book a flight or find an economical hotel room, when negotiating your closing date, the day or week of the month to close may have advantages and disadvantages. Closing on a Friday may have it’s disadvantages.
In Canada, the time span between the offer being signed and the closing date is typically 30-90 days, although some closings may be shorter or longer, depending on circumstances for the buyers and sellers. This period is meant to allow the buyer time to obtain a mortgage, search the title, and plan their move.
Avoid closing on a Friday, if you can
Friday might sound like the ideal day of the week to close on a purchase. Most people are of the mindset that they can take the day off work, and have the weekend to move in. However, Friday closings can be the cause of major challenges and extra costs should something not go according to plan.
That’s because mortgage lenders and the electronic land registry are open until 5pm. During the day of closing a lot goes on behind the scenes. Funds move between the buyer, the buyer’s lender and the seller and their lender (and their respective lawyers). After the funds arrive, the transaction needs to get registered before keys can be released to the buyer.
Needless to say, even the slightest delay or something not going according to plan can mean the difference between meeting the 5pm registration deadline or missing it. If the 5pm deadline for registration is missed for whatever reason, your transaction will likely not close till the next business day. If your closing was originally on a Friday, that means you won’t be able to close until Monday. If it is a long weekend, you’ll be closing on Tuesday.
While there are implications to not closing on time, some of the most common ones are additional per-diem costs for interest incurred on a mortgage or bridge financing, delays in moving (remember, your seller also has plans to move out before closing), or other penalties. Above all, it is a stressful situation for everyone involved, despite best efforts.
Due to the nature of Real Estate transactions, law firms get particularly busy on the last few days of the month, especially during peak Real Estate months such as May through to September.
Closing at month-end isn’t an issue, but keep in mind that closing involves multiple parties that need to come together to complete your transaction. With an increased volume of transactions and all the players in the system working to hit month-end deadlines, the chances of something slipping through the cracks will simply increase.
When negotiating your closing date, picking a day other than Friday or on a month-end may be a good idea, despite the inconvenience. While your transaction may close without a hitch, even if on a Friday or the end of the month, picking the right closing date can decrease the chances of having closing issues.
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