What Happens on Closing Day? The Residential Real Estate Closing Process
From the moment you waive your conditions to the moment you get the keys, a great deal of legal work happens behind the scenes. Here's exactly what your lawyer is doing and what you should expect on closing day.
The Timeline: From Firm Deal to Closing
Once all conditions have been waived and the Agreement of Purchase and Sale becomes firm and binding, the closing process begins. This period typically 30 to 90 days before the closing date involves several distinct stages of legal work.
Stage 1: Title Search and Requisitions
Your lawyer's first task after receiving the firm APS is to conduct a title search on the property. Using Teraview (Ontario's electronic land registry system), your lawyer reviews:
- The registered owner and chain of title
- All registered mortgages, charges, and liens these must be discharged before you receive clean title
- Easements, rights-of-way, and restrictive covenants
- Any outstanding writs or executions against the current owner
- Tax arrears (confirmed through a tax certificate)
After the title search, your lawyer prepares a requisition letter a formal letter to the seller's lawyer identifying any title issues that must be resolved before closing. The seller's lawyer must respond to each requisition and provide evidence of discharge or resolution.
Stage 2: Mortgage Documentation (If You're Financing)
If you have a mortgage commitment, your lender's lawyer (often the same lawyer as yours in residential transactions, under a limited dual representation) will prepare the mortgage documentation. You will sign the mortgage documents typically a charge/mortgage of land and a standard charge terms document in advance of closing. Your lawyer will explain the key terms before you sign.
Stage 3: Reviewing the Transfer Documents
The seller's lawyer prepares the Transfer/Deed of Land the document that legally transfers title from the seller to you. Your lawyer reviews the transfer to confirm the property description is accurate, the parties are correctly identified, and the consideration (purchase price) is properly stated. Land Transfer Tax (and the Toronto Municipal Land Transfer Tax, if applicable) is calculated and must be paid on closing.
Stage 4: Statement of Adjustments
Your lawyer prepares and reviews the Statement of Adjustments a document that calculates who owes what to whom on closing. Adjustments are made for:
Typical adjustments on a residential closing:
- Property taxes: If the seller has prepaid taxes beyond the closing date, you credit the seller for the overpayment; if taxes are unpaid, the seller is debited
- Prepaid utilities or condo fees: Adjusted pro rata to the closing date
- Rental items: If you are assuming a hot water heater rental or HVAC rental, this is reflected
- Deposit: Your deposit paid on signing is credited toward the purchase price
- HST: On new homes, HST may apply; on resale homes, typically not
Stage 5: The Closing Meeting What You Sign
A few days before closing, you will meet with your lawyer (in person or virtually) to sign the closing documents. These typically include:
- The mortgage documents (if financing)
- A Direction re: Title (instructing how title should be registered)
- A Statutory Declaration confirming your identity and citizenship status (for Land Transfer Tax purposes)
- Various undertakings and directions to your lawyer
At this meeting, your lawyer will also collect the balance of the purchase price (the purchase price minus your deposit and minus your mortgage proceeds), plus your share of closing costs: Land Transfer Tax, your lawyer's legal fees and disbursements, and any outstanding adjustments.
Stage 6: Closing Day
On the actual closing date, the transaction happens primarily between the lawyers. Here's the sequence:
- The lender (if any) advances the mortgage funds to your lawyer's trust account
- Your lawyer confirms funds are in trust and the title is in order
- Your lawyer electronically registers the Transfer/Deed of Land and your new mortgage on title through Teraview
- Your lawyer pays out the seller's existing mortgage(s) and transfers the balance of the purchase price to the seller's lawyer
- The seller's lawyer confirms receipt of funds and authorizes the release of keys
- You receive the keys typically through the real estate agent
Stage 7: Post-Closing
After closing, your lawyer will provide you with a reporting letter summarizing the transaction, including: a copy of the registered Transfer and mortgage documents; confirmation of the Land Transfer Tax paid; the final statement of adjustments; your title insurance policy; and the balance of any funds held or disbursed. Keep this reporting package permanently you will need it when you sell.
Your Closing Costs: What to Budget For
| Cost Item | Approximate Amount | Notes |
|---|---|---|
| Ontario Land Transfer Tax | 0.5%–2.5% of purchase price (graduated) | First-time buyer rebate available (up to $4,000) |
| Toronto Municipal LTT (Toronto only) | Same graduated scale as Ontario LTT | Additional tax for properties within Toronto |
| Legal fees | $1,500–$2,500+ | Varies by lawyer and transaction complexity |
| Title insurance | $200–$400 | One-time premium; highly recommended |
| Home inspection (pre-offer) | $400–$600 | If conducted before waiving conditions |
| Mortgage appraisal | $300–$500 | May be required by your lender |
| Moving costs | Variable | Don't forget to budget for this |