Closing day is a major day for any buyer or seller.

Understanding what happens on that day is even more important. There are many things that need to happen for the real estate deal to be successful.

Learn everything you need to know about what happens on closing day and what you need to do as either the buyer or seller, as well as what finally happens after closing day.

Table of Contents

What is Closing Day in Real Estate?

The closing date is the date on which ownership of a home passes from the seller to the buyer, and it is specified in the sale contract by all parties. Closing day is also known as completion day in British Columbia.

After this day, the change of title and ownership have officially taken place.

The buyer will work with a lawyer and/or a real estate professional who will obtain the relevant papers, register the mortgage and title change with the land titles, and meet with the seller to examine and sign the purchase and mortgage financing documentation prior to the closing date.

The go ahead will be given to the seller or the seller’s lawyer and real estate agent to release the keys to the buyer. But only after the funds have been disbursed and are in the proper bank account. This transaction must normally be completed by noon on the agreed-upon closing date.

A closing date is often chosen based on the convenience of both the seller and the buyer.

Overview: What Happens on Closing Day?

In Metro Vancouver, the closing day usually involves four to five steps to complete, depending on the buyer and the seller’s deal.

Step 1

The first step is for the buyer to prepare for a smooth closing day. Ideally, as a buyer, make sure you have all your documentation ready for your lawyer or real estate teams to review.

Step 2

The second step is for the buyer to sign documentation from the mortgage lender to facilitate the purchase of the home.

These documents are generally prepared for by a lawyer or notary to ensure accuracy for such a large purchase. If the offer is all in cash, there is no documentation required for the mortgage lender.

Step 3

Next, the buyer’s mortgage lender will provide the funds to make available to the seller, including any associated closing costs owed to the seller. And possibly distributing the remaining to the buyer to pay for other associated costs to close the transaction. The lawyers or notary will finalise the purchase of the property once a bank draft is received.

Step 4

The fourth step is for the sellers lawyers or real estate team to confirm receipt of funds for the real estate transaction.

Once confirmed, the land title will then be transferred and registered for the new buyers with the local Land Title Office.

Step 5

Finally, as a seller, you’ll receive funds for the sale of the property and the buyer will be officially listed as the owner on the title of the property.

However, the buyer cannot move in on this day, as the possession day is when the new owner has actual possession of the property and can enter at may.

How long does closing a house take?

Depending on the deal size and the type of real estate being sold, closing periods can take anywhere from a couple weeks to several months.

During a sellers market, homes can be listed on the market for a matter of days before final offers are accepted and closing tasks begin to take place.

During a buyers market, closing a real estate deal does take longer. There are usually many more contingencies like inspections, appraisals, updates to the home, etc., before the final closing papers are completed.

Actually closing day will take about 1-2 days, depending on the time it takes for lawyers to be involved and documents to reach each party.

Common Problems + Situations That Come Up on Closing Day

During closing day on a real estate transaction, there can be some common problems or situations that appear, that can ultimately throw a wrench in the deal and possibly prevent it from going further.

These are things to keep in mind for both the buyer and the seller so there are no problems on closing day.

What the Seller is Taking From The Property

Oftentimes, the seller may take certain appliances, utilities, or additional items that they may have an attachment to.

If these items have not been previously discussed but disclosed in contracts, this can sometimes come as a surprise for buyers when they don’t see certain items in the home during the closing date.

There could have been that awesome hot tub the buyer spotted on the initial property viewing that the seller decided to move to their new property.

In the contract of purchase and sale, there are usually clauses around what times are expected to stay in the home or go with the seller. This prevents buyers from being caught off guard in the process.

Mortgage Approval Issues

In an almost worst case scenario, the buyers do not get their mortgage approval, or there are issues with the process, delaying the closing date. This happens from time to time if a buyer’s credit is changing for the worse from recent changes in their financial scenario.

There can also be changes to the interest rates in Canada, which can benefit or adversely affect a buyer and how their lender approves of the mortgage and amount.

For buyers, it’s best to communicate with your lender several days in advance of the closing date to ensure funds are available, or other arrangements can be made.

Title Issues

As a buyer, it’s important to make sure that the title doesn’t have any issues, like liens or other real estate covenants that could affect the closing of the real estate sale.

It’s typical to use a title company to see the details of the title. This ensures the sellers aren’t hiding anything or have not disclosed something during the process.

Get started by using this title lookup tool & instructions.

Cost Considerations for Closing Day

On closing day, there are closing cost considerations for both the buyer and seller that need to be taken into account.

Buyer Cost Considerations

On closing day, there are several cost considerations, also called “closing costs” that the buyer needs to have ready.

This can include items like:

  • Property Appraisals,
  • Title Insurance,
  • Legal fees,
  • Home Insurance,
  • Mortgage Insurance,
  • Property taxes,
  • Etc.

All these costs can add up to approximately 2% to 4% of the home purchase price. As a buyer, plan accordingly with savings or incorporate these items into the mortgage payment.

Seller Cost Considerations

For the seller, there are different cost considerations to save for or allocate a portion of the home sale funds towards, so everything goes smoothly.

Some seller costs on closing day include:

  • Mortgage loan costs,
  • Property transfer taxes,
  • Real estate agent commissions,
  • Property taxes (In some instances, prorated),
  • Title transfer fees,
  • Legal fees,
  • Etc.

These costs for sellers can be approximately 4% to 10% of the home purchase price

Next step: Prepare for Possession Day

A common misconception for new or first time home buyers is that you get possession of the property on closing day.

The closing date is when the important details such as the money transfers and legal title changes happen, but that doesn’t mean the buyer can move in yet.

After the closing date comes the possession date.

The possession date is when you actually gain possession of the property, can move in and start enjoying your newly purchased home and property.

To best prepare for possession day, you’ll need to decide on the following:

  • Moving arrangements,
  • Potential storage arrangements,
  • Forwarding addresses,
  • Setup utility accounts and billing,
  • Arrange to meet your real estate agent right near after possession date,
  • Avoid large credit or cash based purchases.

Ready to Close?

Closing day can sound like a lot due to all the little details you have to be ready for. That is where a trusted real estate agent can add value and be a part of your team.

They can help you have a smooth closing day by ensuring that you have made all the right decisions leading up to the big day.

If you’re buying a home in the lower mainland, Daniel John and his team is here to help you.