Real Estate Closing in Ontario: Everything You Need To Know

Navigating the real estate closing process in Ontario can seem overwhelming, especially for first-time buyers or sellers. This guide will answer essential questions about what to expect during a real estate closing, including costs, required documents, and more.

What is Real Estate Closing?

Real estate closing refers to the final step in a property transaction, where ownership of the property is officially transferred from the seller to the buyer. During this process, various legal documents are signed, and payments are exchanged. In Ontario, closing typically involves a real estate lawyer who ensures all legal requirements are met, including the preparation and registration of documents.

For a comprehensive overview of the closing process, refer to our Real Estate Closing Checklist or the Ontario Bar Association.

Can Real Estate Closing Be Done Remotely?

Yes, real estate closing can be done remotely, especially in light of recent advancements in technology. Many companies like Deeded offer virtual closing services, allowing parties to complete transactions online through secure platforms. This means that buyers and sellers can finalize deals from the comfort of their homes, making the process more convenient and accessible.

Can Real Estate Closing Documents Be Signed Electronically?

Absolutely. In Ontario, electronic signatures are legally recognized, and real estate closing documents can be signed online through platforms like DocuSign or other secure e-signing services. This approach speeds up the process and allows for greater convenience in managing paperwork.

What Are Real Estate Closing Costs?

Closing costs are fees associated with the completion of a real estate transaction. In Ontario, these costs can include:

• Legal fees for your real estate lawyer
• Title insurance
• Land transfer tax
• Home inspection fees
• Adjustments for property taxes and utility bills

The total closing costs can vary based on the property value and specific services required.

How Much Are Real Estate Closing Costs?

In Ontario, real estate closing costs vary based on factors like the property’s location, value, and transaction type (purchase, sale, refinance). Here’s a breakdown of typical costs associated with closing a real estate transaction:

1. Legal Fees for Real Estate Lawyer

• Legal fees cover the services provided by your lawyer, such as title searches, document preparation, and registration. Fees for a standard home purchase generally range from $999 to $1,500. However, for more complex transactions, these fees may increase.
• Deeded’s Fees: Deeded charges $1,099 for a purchase, $999 for a sale or mortgage refinance, and fees starting at $499 for ownership changes.

2. Title Insurance

• Title insurance protects against potential issues with a property’s title, such as fraud or unpaid taxes by previous owners. In Ontario, title insurance typically costs between $200 to $400 based on the property value and lender requirements.

3. Land Transfer Tax

• The Ontario Land Transfer Tax (LTT) is calculated based on the property’s purchase price. The tax rate ranges from 0.5% to 2.5%, depending on the price. In Toronto, buyers must pay an additional municipal land transfer tax of 0.5% to 2.5% as well.
• Example: For a $500,000 home in Toronto, LTT fees may total approximately $10,950.

4. Home Inspection Fees

• A home inspection, though optional, is recommended for buyers to assess property conditions before closing. Inspection fees generally range from $300 to $600 depending on the property’s size and location.

5. Property Tax and Utility Adjustments

• Prorated adjustments may apply for property taxes, utilities, and other pre-paid expenses that the seller has already covered. These adjustments are often settled on closing day, with buyers reimbursing the seller for costs incurred before their ownership begins.

Estimated Total Closing Costs

• For a standard home purchase in Ontario, closing costs (excluding down payment) typically range from 2% to 4% of the property’s purchase price. For instance, on a $500,000 home, expect to budget between $10,000 and $20,000 in closing costs.

While Deeded provides transparent and predictable fees, working with a lawyer or legal provider who itemizes costs helps ensure you’re aware of what you’ll need to cover at closing. For more specific estimates, always consult with your lawyer or lender, as additional costs may arise based on the unique aspects of your transaction.

Who Pays Real Estate Closing Costs?

Typically, the buyer is responsible for the majority of closing costs, but this can vary based on negotiations between the buyer and seller. It’s essential to discuss and agree upon who will cover these costs early in the transaction process.

Are Real Estate Closing Costs Tax Deductible?

In Canada, closing costs are generally not tax-deductible for personal residences. However, if the property is an investment property, certain costs related to the transaction may be deductible as expenses. It's always best to consult with a tax professional for personalized advice.

Sources:

• Canada Revenue Agency: Selling Your Home
• Financial Post: Tax Deductions on Closing Costs

Who Attends a Real Estate Closing?

Typically, the following parties are present at a real estate closing:

• The buyer and seller
• Real estate agents for both parties
• The real estate lawyer representing the buyer and/or seller
• Mortgage representatives, if applicable

It’s crucial for all parties to be present to ensure a smooth transaction and address any last-minute questions.

Are Real Estate Closing Documents Public Record?

Yes, real estate closing documents are generally considered public records in Ontario. This means that anyone can access these documents, which may include property deeds, mortgages, and transfer statements. However, certain personal information may be redacted for privacy reasons.

What Are Real Estate Closing Documents?

Real estate closing documents are legal papers required to finalize a property transaction. Key documents typically include:

• Purchase Agreement
• Title Search Report
• Mortgage Instructions & Documents
• Transfer Deed
• Closing Statement

These documents are essential for ensuring that all legal aspects of the transaction are properly addressed.

Can You Cancel Real Estate Closing?

Yes, a real estate closing can be canceled, but it often depends on the specific terms outlined in the purchase agreement. Reasons for cancellation can include financing issues, legal complications, or mutual agreement between the buyer and seller. However, it's important to understand the potential financial implications of cancellation, including the loss of deposits.

Can a Paralegal Do a Real Estate Closing?

In Ontario, paralegals can assist with certain aspects of real estate transactions, but they are not authorized to conduct complete real estate closings. Only licensed lawyers can handle the entire closing process, including the registration of documents.

How Long Does a Real Estate Closing Last?

The duration of a real estate closing can vary, but it typically lasts between one to two hours. However, the entire process from the initial agreement to closing can take several weeks, depending on factors like financing, inspections, and the availability of required documents. The entire process usually takes around 5-7 days.

What Happens if I Can't Close?

Closing on a home is a major financial commitment, and unexpected challenges can occasionally prevent buyers from completing the transaction. If you find yourself unable to close on a home purchase in Canada, understanding the potential consequences is essential. First, you risk losing your deposit, which can be significant and is often around 5% of the property’s purchase price in competitive markets. Additionally, the seller may pursue legal action for breach of contract, possibly requiring you to pay damages for their financial loss or even forcing you to complete the purchase under specific performance.

To mitigate these risks, taking proactive steps is essential. Communicate promptly with all parties involved, including your lawyer and lender, to discuss your options. If financing is the issue, exploring alternative loan products or lenders, such as credit unions, may help. It’s also worth negotiating an extension with the seller or considering contract assignment if permitted by provincial law. Seeking guidance from a real estate lawyer is vital to understanding your contractual obligations and exploring possible alternatives.

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