Closing day is the same as possession day. It’s the day that the buyer’s lawyer sends the funds to the seller’s lawyer. The seller’s lawyer will pay out any mortgages, liens, lines of credit, etc which are registered against the property. They will then make an application to Land Titles to have the title transferred to the buyer’s name(s). Once the lawyers complete their tasks, the sellers receive the proceeds of the sale and their REALTOR® will release the keys. The buyer’s REALTOR® picks up the keys and meets the buyers for a walk-through of the home. The keys can be released in the morning, or this process could take most of the day. Typically speaking, key release occurs after lunch. That is – if there are no complications.
The majority of glitches that may occur on closing day are within the control of the buyer or seller. Below is what to expect on closing day and how to prepare for it.
Quick take: What happens at closing in Edmonton?
- Buyer’s lawyer transfers funds to Seller’s lawyer
- Seller receives proceeds of the sale and keys are released
- The buyer may conduct a final walkthrough before instructing their lawyer to transfer the funds
- The lawyer may holdback funds if the Real Property Report and Compliance are not provided
- The lawyer may require proof the terms/repairs in the contract have been completed
- The lawyer may holdback funds if the property is not vacant of all personal belongings
- Lawyers apply to have the title transferred to the buyer(s)
- You may negotiate or postpone closing day if you need more time to fulfil contractual obligations.
Note: You can choose your own closing day with Sweetly’s Swift Sale.
What is a real estate closing in Edmonton?
“Real estate closing day” refers to when a homebuyer and home seller in Alberta fulfill their contractual obligations. That entails exchanging funds for the property’s paperwork and the transfer of ownership.
To improve the odds of a successful closing, the seller and buyer may require the services of the following professionals.
- Buyer/seller REALTORS®.
- Attorneys to create contracts and oversee the transfer.
- Home appraisers and inspectors.
- A loan officer.
- Title company representative.
What is in a purchase agreement in Edmonton real estate?
A purchase agreement is a contract that must be signed voluntarily by both parties during the sale of a property in Alberta. The agreement contains:
- A closing date. Both parties must honour their contractual obligations before the closing date.
- An agreed-upon price. Discuss all the expenses and set a price that covers the needs of both parties. Hidden fees and expenses may cause delays or disputes on closing day.
- Contingencies. Both parties need a way out should specific criteria not be met. For instance, if the buyer fails to pay the down payment on time, you may back out if a contingency allows it.
- Financing terms.
- Inspection and appraisal report.
- Property taxes and zoning issues if necessary.
- Deposit amount. We recommend including a contingency on what happens to the deposit should either party choose to back out.
Does the buyer need a lawyer during closing in Edmonton?
Considering that purchasing a home is one of the most significant investments you will make in your lifetime, it is advisable to ensure that everything is above board. You do not want a lawsuit post-closing.
Hiring a real estate lawyer when purchasing a home in Alberta is beneficial in that:
- The lawyer will prepare all necessary legal documents in adherence to local laws. On closing day, a lawyer will prepare a formal letter informing the buyer that the transaction is complete and you now own the property.
- Your lender may also require a report from a lawyer and copies of all relevant documents.
Does the seller need a lawyer during closing?
Yes. On closing day, the work of the seller’s lawyer is three-fold.
(1) The lawyer will pay both the buyer’s and seller’s REALTORS®, typically 5-6% as commission, depending on the agreement.
(2) Your lawyer will forward funds to payout and discharge your mortgage.
(3) Prepare a reporting letter telling you that the transaction is complete.
Liability protection for the buyer and seller
Another reason you need a lawyer is liability protection. For first-time buyers, mistakes in the paperwork or a fraudulent contract can be hard to spot. Consequently, it is best to have the paperwork checked by a professional before signing.
What to remember
- Lawyers conduct title searches to prove ownership. Depending on provincial laws/Alberta’s Registration Reform Act, only lawyers and law firms have access to electronic databases containing that information.
- You may include a clause in the contract that requires a lawyer to review the documents before signing.
- The buyer and the seller may choose not to involve lawyers.
Can the buyer and seller use the same lawyer?
You may use the same lawyer, but it is not advisable and provincial laws may prevent it in some situations. We suggest getting recommendations from friends and family or hiring a lawyer who specializes in real estate.
Can a seller back out after accepting an offer on closing day in Edmonton?
It depends on the terms of the contract and the seller’s reason for backing out. What is vital to remember is backing out of an accepted and signed offer may be grounds for a lawsuit. Before you back out of an accepted offer, you should look for any contract clause preventing you from doing so.
It is also advisable to include contingencies in the contract before you sign.
What sellers must remember:
- You may back out of a verbal agreement if you choose to. However, once you sign a contract, you are legally bound to its terms.
- Including conditions in a real estate contract gives you a “way out” should you choose to back out for reasons included.
- Working with a real estate agent gives you access to experience. In addition, REALTORS® can help you identify bad deals and conditions.
- The best time to back out is before signing a contract.
- You may back out if there is evidence of fraud on the buyer’s end.
- If the appraisal is too low, you may back out if a condition in the contract allows it. Most lenders are unwilling to pay an amount higher than the appraisal amount. The buyer may pay the difference out of pocket or renegotiate. The same applies to home inspections.
- You signed the contract under duress or pressure. The decision to sell your home should be your own; that means a contract is invalid if either party was tricked or pressured into it.
We recommend only signing conditional contracts unless the real estate market is in a ‘mania’ phase which might prevent you from purchasing a home if it is conditional.
Tip: You can become a power buyer and don’t need to base the purchase of your next home on the condition that your previous home sells by utilizing Sweetly’s Swift Sale program.
What is a kick-out clause in Edmonton?
When selling a home in Alberta, you may find yourself in a situation where you have an accepted offer and get a better one. If included in a contract, a “kick-out clause” as the name suggests, allows the seller to kick out a buyer should they get a better offer.
Can a buyer back out of an accepted offer on a house in Edmonton
Unlike the seller, homebuyers in Alberta have multiple avenues to back out of a home purchase. But just like the seller, you may negotiate contingencies into the contract that allow you to back out should specific events occur.
For instance, what if you cannot afford the projected monthly mortgage payments or if financing falls through?
These factors may be beyond your control, so we recommend only signing conditional contracts as long as the deal doesn’t hinge on being non-conditional. That way, you can avoid litigation and losing your deposit. For the buyer, we recommend contingency clauses, including:
- Appraisal/home inspection clause.
- Financing terms.
- Review of condominium documents
What happens if either party fails to fulfill their contractual obligations before closing in Edmonton?
Failure to fulfill contractual obligations in Alberta may prompt the other party to file a “notice to perform.” A notice to perform tells the other party that you are willing to “walk” or take legal action if the obligation is not fulfilled. For example, you may file a notice to perform if:
(1) The other party has not submitted the necessary paperwork on time.
(2) The buyer fails to pay the down payment on time.
(3) You have not received proof of funds.
For the seller, you may back out if the buyer fails to fulfill the set-out obligations on time.
Download a general notice form here.
Tip: It is in your best legal interest to consult with a lawyer before you back out of a real estate deal. Go over the contract with your lawyer and find a safe way out.
What happens on closing day for the buyer in Alberta?
For the buyer, this is what will happen on closing day:
- You will pay all agreed-upon closing costs (check your closing disclosure for specifics).
- The seller will sign over the property title to you.
- The lawyer will update the title with Alberta’s registry.
- If the contract requires it, you may have a final walkthrough. This helps you determine if repairs have been made or if other problems must be settled before closing.
What happens on closing day for the seller in Alberta?
- You will sign over the title to the buyer.
- You will receive proceeds from the sale as agreed in the contract.
Sellers: What to do before ‘closing day’ in Edmonton
- Complete all repairs and clean the home.
- Move out of the home if the contract requires it.
- Gather all necessary documents, including home association documents.
- Cancel your insurance and utilities.
- Have a home inspection and zoning certificate if necessary.
- Have the home safety features, including smoke and carbon monoxide detectors inspected.
- Repair or fix all issues that may cause injuries. If you do not have the resources, make sure that the buyer is aware, or you may get sued for negligence.
- Gather your closing documents. Your REALTOR® will tell you what documents you need on closing day.
- Change your address and notify interested parties that you are moving.
You may also:
- Hand over appliance receipts, warranties, and manuals to the buyer.
Sellers: What not to do before closing in Edmonton
- Do not back out of a contract without a contractually valid reason.
- You must get written consent from all parties that have a legal interest in the property before the sale. (See Dower Rights)
- Do not sign sale documents if you have not fulfilled your contractual obligations.
Buyers: What to do before ‘closing day’ in Edmonton
- Create a checklist of all documents you need.
- Fulfill your contractual obligations.
- Have your lawyer conduct a title search.
- Get your mortgage approved.
- Review the closing disclosure and prepare for any related expenses.
- Do a final walkthrough to verify if the seller has fulfilled his end of the agreement.
- Gather all necessary documents.
- Go over the documents with your lawyer if necessary or if you do not understand the wording.
Buyers: What not to do before ‘closing day’ in Edmonton
- Avoid making other big purchases which may affect your mortgage being funded
- Do not spend your down payment
- Avoid utilizing your available credit capacity by carrying heavy credit card debt as it may impact your mortgage.
- Avoid paying your bills late.
- Do not change employment if your approval was based on your current position/employer
