From Offer to Keys: A Real Estate Professional's Guide to the Closing Process

For real estate agents and mortgage brokers, the moment an offer is accepted on a property is exhilarating. It's the culmination of hard work, client consultations, and strategic negotiations. However, this is just the beginning of another crucial phase: the closing process.

Demystifying this intricate sequence of steps for your clients is a key part of providing exceptional service. Understanding the journey from a conditional offer to the final exchange of keys allows you to confidently guide them, manage expectations, and proactively address potential issues.

This guide breaks down the essential steps involved in closing a real estate transaction in Ontario. It's designed to be a comprehensive resource for you, our professional partners, to ensure a seamless and stress-free experience for your clients.

Phase 1: Offer Acceptance & Initial Steps

Offer Acceptance: The Agreement of Purchase and Sale (APS) is signed by both buyer and seller. This legally binding document outlines all terms and conditions of the sale.

Deposit Payment: The buyer submits the agreed-upon deposit, typically held in the listing brokerage's real estate trust account. This deposit signifies the buyer's commitment and is eventually credited towards the purchase price.

Hiring Legal Counsel: Both buyer and seller typically engage their respective real estate lawyers immediately after the offer is accepted. The lawyers will guide their clients through the legal complexities of the transaction.

Phase 2: Fulfilling Conditions & Due Diligence (Conditional Period)

This phase is critical for the buyer, allowing them to perform their due diligence. The most common conditions include:

Financing Condition: The buyer works with their mortgage broker and chosen lender to secure firm mortgage approval. This involves property appraisals and final credit checks.

Home Inspection Condition: A qualified home inspector evaluates the property's structural and mechanical integrity, identifying any significant issues that may require further negotiation or attention.

Legal Review of Documents (e.g., Status Certificate):

For Condos: The buyer's lawyer meticulously reviews the Status Certificate, assessing the condo corporation's financial health, governance, and any potential liabilities.

For Freehold Properties: The buyer's lawyer conducts a thorough title search, reviews surveys, and checks for any zoning issues or outstanding work orders.

Condition Waivers/Fulfillment: Once all conditions are satisfied, the buyer's agent and lawyer work to formally waive or fulfill these conditions, making the APS firm and binding.

Phase 3: Pre-Closing Legal & Financial Preparations

Once the deal is firm, the legal and financial machinery moves into high gear:

Mortgage Instruction Delivery: The buyer's lender sends detailed mortgage instructions to the buyer's lawyer, outlining all requirements for advancing the mortgage funds.

Title Insurance Procurement: The buyer's lawyer arranges for title insurance, which protects against certain title defects, survey errors, and other unforeseen issues. Lenders typically require this.

Property Tax & Utility Adjustments: The lawyers for both sides calculate and agree upon the adjustments for property taxes, condo fees, and other utilities, ensuring each party pays their fair share up to the closing date. This is reflected in the Statement of Adjustments.

Document Preparation: Both buyer's and seller's lawyers prepare all necessary legal documents for registration, including the Transfer of Ownership (Deed), new mortgage documents, and other declarations.

Client Signing Appointments: Buyers and sellers meet with their respective lawyers to sign all legal documents. Buyers will also provide the remaining balance of the purchase price (less the deposit and mortgage funds) via certified cheque or bank draft.

Coordination of Funds: The buyer's lawyer requests the mortgage funds from the lender.

Phase 4: Closing Day (The Final Exchange)

Closing day is a coordinated legal and financial dance:

Transfer of Funds: The buyer's lawyer receives the mortgage funds from the lender and combines them with the buyer's balance. These funds are then electronically transferred to the seller's lawyer.

Document Registration: Once funds are received and confirmed, the buyer's lawyer electronically registers the Transfer of Ownership (Deed) and the new mortgage on title at the Land Registry Office. At this point, the buyer officially becomes the legal owner.

Key Release: Upon confirmation of registration and receipt of funds by the seller's lawyer, the keys to the property are released to the buyer, usually through the real estate agents.

Post-Closing: The lawyers ensure all final disbursements are made (e.g., payment of real estate commissions from the seller's lawyer, discharge of the seller's old mortgage).

Your Role: The Essential Orchestrator

From the initial offer to the final key exchange, a real estate transaction involves many moving parts. Your role as an informed real estate agent or mortgage broker is crucial in preparing your clients for each stage, connecting them with trusted legal counsel, and being a reliable point of contact. By understanding this process thoroughly, you reinforce your position as an invaluable guide, ensuring that your clients' journey to homeownership or property sale is as smooth and successful as possible.

Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or real estate advice. Laws and procedures can vary. You should consult with qualified professionals (e.g., a real estate lawyer, mortgage broker, real estate agent) for advice on your specific situation. No professional-client relationship is created by reading this content.