Closing Day Nightmares

November 10, 2018

I just wanted to touch base on something today, that every person who is buying or selling a home should be aware of  “The Possible closing day nightmares:

  1. Closing your Existing Home and New Home on the same day
    • Moving from one house to another house on the same day can cause MANY issues and this is one of the greatest avoidable closing day headaches.  You should talk to your Mortgage Specialist or Broker about the possibility of Bridge Financing.
  • Bridge Financing takes the difference of your purchase price less your new mortgage. They calculate the daily interest on that amount.  For example: If the Bridge Amount was $150,000 at 5% for 3 weeks, the payment would be approximately $20.55/day or in total around $287.70
    • Your lawyer and lender may charge an additional fee to handle this as well, calculations are approximate and should be verified with your lawyer and lender. If there are fees charged the cost be around $1000 for three weeks, but there would be NO headaches, and less stress involved. 
  1. Expecting to move in on closing day
    1. As per the standard Agreement of Purchase and Sale Form, a buyer shall be provided vacant possession no later than 6:00 pm on closing date.   Keep in mind though that funds may close transfer earlier in the day, and once the funds have transferred the lawyer will give the keys to the buyer. But the seller legally doesn’t have to be out until 6.  See where this gets confusing! There is nothing worse than a seller who isn’t moved out completely and a buyer who is waiting in the driveway with their movers.
      • As a seller – I recommend that you move out at least ONE  day before closing, and you can do last minute clean and tidy ups on the morning of closing,
      • As a buyer – after you pick up your key on your closing day plan to go to the house that evening, to see if anything needs cleaning, or do any painting or other small jobs that are easier to have completed before you move in. Plan to move the following day.
    • Things do happen, and things do go wrong. Sometimes properties do not close on the completion date. There can be a number of reasons for this, mostly the buyer’s mortgage was delayed and funds were not transferred. This is also the busiest day of the week for Real Estate Lawyers. There could be various other issues as well that can hold up the sale.
      • Keep in mind – The land registry system closes at 5 pm and it will not reopen until the next business day (If you Closed on a Friday this would typically be Monday, sometimes Tuesday in the case of a long weekend.) This means the home is NOT legally yours at this point. The sellers may grant you access to occupy the home (basically rent it back to you until it closes.) However the Sellers do not have to do this, and many lawyerswill advise a seller that there are risks involved if they allow you to take possession before the funds have transferred.  If this happens,  you could end up being homeless over the weekend.  This is an added stress that no home buyer or seller needs.
  • Set up your Utilities
    • Don’t forget to set up your utilities before you move in! I have heard of cases where the buyer closed on a Friday but neglected to set up their utilities. The sellers account terminated on Friday, so the buyers ended up without heat or hydro for the whole weekend! Not as bad in the summer, but in the winter months or on a long weekend this could be very uncomfortable.
  • Test your appliances
    • Most (but not all) Agreement of Purchase and Sale contracts include a provision warrantying the appliances, and HVAC, Plumbing and Electrical systems for the house will be in good working order on completion. If you don’t test the systems until the following week, that is too late.  It has to be the condition on the date of completion.  Of course, if you agreed to purchase the home and appliances “as is” this does not apply.
  • Remain, Civil,
    • You never know –  you may need to reach out to the previous owner of the home at some point to ask questions about how something works. Many homeowners know about certain quirks that are pretty simple that make living in the home easier.  The move may seem stressful, but try to look at the situation from all angles and points of view. Your situation may not be the only situation that is stressful.

Above all else, enjoy the move, relax and have fun! Setting things up and learning all about your new home can be a fun and exciting time, as long as you plan to avoid the worst, and know the possible outcomes and are prepared for what is thrown at you.

If you have any questions about buying or selling a property please do not hesitate to contact me, I’d love to help!