Behind the scenes: What happens on closing day

One of the biggest questions during a Real Estate transaction is “when do we get our keys?”

Before getting your keys, there are several steps that need to be completed first and this all (believe it or not) happens behind the scenes on closing day.

What is Closing Day?

Closing day is the day when you take legal possession and finally get to call your new house your home. Prior to closing day, the buyer will be signing and reviewing documents prepared by the lawyer with regards to their mortgage loan, down payment, closing costs & purchase price. They will also review a statement of adjustments, which outlines the final closing numbers. Lastly, the buyers must arrange for funds to be deposited in the lawyer's trust account, while the lawyer requests the remaining funds from the mortgage lender. The funds are then transferred to the seller's lawyer who releases the property to be registered in the buyer's name, along with a mortgage (also called charge) which will be registered in the favour of the lender.

When Should You Schedule Your Closing Day?

Picking a closing day may seem like a simple decision, however there are many factors to keep in mind to avoid major issues from arising. Picking a closing on a Friday may cause issues if you cannot get everything before 5:00pm, businesses and systems will close for the weekend leaving you unable to close which may cause you to pay extra costs. The same principal is recommended for avoiding closing days before long weekends.

In addition, you should also keep in mind, Real Estate transactions peak in month-end especially during the Spring. Be aware this means everything, and everyone will be busier, such as movers, lawyers, realtors, and lenders. Therefore, it may be more difficult to ensure all parties are available and able to attend your closing. Overall, it is recommended to avoid picking a closing day before Fridays, long weekends, and month-ends wherever possible.

What Happens on or near Closing Day?

On the actual day of closing there are a number of tasks that must be completed by each party before the keys can change hands.

• The buyer will sign a variety of documents prepared by their lawyer relating to the mortgage loan, and the purchase of the home.
• Your lender will send the mortgage funds to your lawyer.
• You must provide the rest of the purchase price to your lawyer as well as the additional closing costs.
• Your lawyer transfers the funds to the seller's lawyer.
• Your lawyer will register the property in your name with the Land Title / Land Registry Office. If applicable, they will also register a mortgage (also commonly referred to as "charge") in favour of your lender.
• You will receive a closing report, which includes a copy of the deed/transfer of title.
• Your Lawyer will provide instructions on how and where you can get your keys.
• Additionally, please make sure you contact all appropriate utilities to inform them you are the new owner (i.e., hydro, electricity, water, condo fees, taxes etc.) so they can update their billing information.

As you can see, there's a whole lot that happens on or near your closing day, with most steps happening behind the scenes. The goal is to have all these tasks completed by 4pm to 5pm which is when many agencies and lenders close for the day. If the deadline isn't met, the closing is typically extended to the next business day. Hence closing on a Friday or before a holiday weekend is not recommended.

Additional Closing Costs

• Your Deposit- The deposit is a portion of the total home purchase price that will be paid out-of-pocket by the buyer. Typically, the down payment is between 5-20% of the total purchase price.
• Land Transfer Taxes (LTT) – The LTT is calculated as a percentage of the purchase price of your home. The exact percentage varies from province to province and sometimes individual municipalities like Toronto have additional costs. Alberta does not have LTT.
• CMHC Insurance – Should you use less than 20% for your down payment, you will be required to obtain CMHC insurance. This is an insurance policy that protects your lender should your borrower default on your loan repayment.

This is not an exhaustive list, visit this blog for additional information on closing costs, however we always recommended speaking to your realtor and lawyer to ensure you know exactly what your circumstances will be at closing.

Can Deeded Help with My Closing?

Of Course! When it comes to purchasing a home, our team at Deeded strives to make the process as easy as possible so you can “close” and get your keys as quick as possible. As a first step, Deeded connects you with a friendly and experienced, independent real estate lawyer.

Final Thoughts

The closing process is a complicated and high-stress event, not just for the buyers and sellers but the realtors, lawyers, and lenders as well. Although it is understandable that you want the closing process to be done as quickly as possible, being patient will help things go much more smoothly.

If you have any further questions our experienced team is ready and able to make your closing a simple, quick, and painless process. Feel free to contact our team if you have any questions on our closing procedure.