From Offer to Ownership: Navigating the Real Estate Closing Process

Navigating the Real Estate Closing Process

The closing process is the final step in a real estate transaction. This is when ownership of the property officially transfers from the seller to the buyer. It involves completing legal, financial, and administrative tasks to finalize the deal. It’s an exciting moment, but there are several important steps to complete before you can celebrate.

Let’s break down what happens during the closing process:

1. Satisfying Conditions of the Sale

Before the sale becomes official, any conditions in the Offer to Purchase (OTP) agreement must be fulfilled. Common conditions include:

• Financing: The buyer’s lender must approve the mortgage and may require an appraisel to assess the property. Most lendors have their own appraisers and the cost to the buyer is approximately $300-$500 depending on the institution and the home. It's required by lenders to confirm the home's market value. Once financing approval is confirmed for the property in the Offer to Purchase, the lender or mortgage broker will provide a commitment letter. This letter is not the same as the mortgage pre-approval letter. 
• Home Inspection: The buyer, their REALTOR®, and a home inspector evaluate the property to ensure it meets expectations. This condition in the OTP requires acceptance of the findings in the home inspection report by the buyer.
• Property Discolsure Statement (PDS): This legal document is completed by the seller that details known issues or defects with a property. It provides buyers with important information about the home’s condition, including structural problems, past repairs, water damage, or environmental hazards. While not always mandatory, it helps ensure transparency and can protect both buyers and sellers from future disputes.When provided by the seller, the buyer will confirm they accept what has been disclosed about the property by signing it. 
• Condo Document Review: For condos, buyers review the Disclosure Statement provided by the condo corporation, or the seller if the condo is not a new build. Once all the documents in relation to the condo and it's condo corporation have been provided to the buyer, the buyer will sign that they confirm receipt of these documents and the seven-day-cooling-off period will begin. The buyer has the right to cancel their offer to purchase for any reason upon reviewing the documents provided,  before the cooling-off period ends. 

Once all conditions are met, the buyer provides a signed removal of conditions, known as the conditions satisfied document, making the sale firm.

2. Securing Home Insurance

• Most lenders require proof of home insurance prior to dispursement of a mortgage. This type of policy provides financial protection for homeowners against damage to their property, belongings, and liability for accidents that occur on the property.

3. Legal Work

Both the buyer and seller’s real estate lawyers take over at this stage to handle the legal details of the transaction. This includes:

• Conducting a title search to confirm the property is free from liens or disputes.
• Preparing transfer documents to legally shift ownership from the seller to the buyer.
• Ensuring all required documents, such as the statement of adjustments, are accurate.
• Government Identification – Required to verify identity during the closing process.

The statement of adjustments outlines financial details, such as:

• Property taxes
• Utility bill payments and adjustments
• Deposit amounts
• Prepaid expenses

3. Signing the Documents

You’ll meet with your real estate lawyer about 1–2 weeks before the possession date. Depending on your lawyer, they may be able to provide a virtual closing. During this meeting, you’ll:

• Sign all documents related to the sale, including the property transfer.
• Provide or receive any keys or access codes for the property.

If you’re the buyer, you’ll also pay closing costs at this stage, such as legal fees and land transfer taxes. Final transfer of ownership includes possession details.

4. Moving Out

As the seller, you’re responsible for leaving the property in a clean and move-in-ready condition. On or before possession day:

• Take final meter readings for utilities (gas, water, and hydro) and notify the providers.
• Remove all personal belongings and garbage from the property.
• Ensure that all promised goods included in the Offer to Purchase are in working order unless it was noted otherwise.

5. Possession Day

On possession day, the buyer’s lawyer confirms that funds have been transferred to the seller’s lawyer. Once the funds are received and all paperwork is complete, the buyer officially takes ownership of the property.

For the seller, this is when your proceeds from the sale are deposited into your account, less any mortgage balances and legal fees.

6. After the Sale

After the sale is closed, remember to:

• Change your address for mail, subscriptions, and government records.
• Cancel or transfer utilities and services.
• Celebrate your successful transaction!

The closing process involves several moving parts, but guiding you as your REALTOR®, it can be smooth and straightforward. Whether you’re buying or selling, I’m here to support you every step of the way to ensure a rewarding experience!