Closing day is the finish line of a real estate transaction. After weeks (or months) of paperwork, inspections, financing, and stress, buyers and sellers expect everything to wrap up smoothly. But closing day is where things most often go wrong. Missed deadlines, last-minute surprises, or small oversights can lead to delays, financial penalties, or even a failed closing. The good news? Most closing-day problems are completely preventable.
In this article we will examine five most common closing day mistakes we see in Ontario real estate transactions, along with practical tips how to avoid them.
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Not Having Certified Closing Funds Ready on Time
The mistake
The usual practice is for buyers to meet with their real estate lawyer a few days before the scheduled closing date and to deliver the required closing funds at that time. These funds must typically be provided by certified cheque or bank draft. In some cases, lawyers may request that funds be sent by wire transfer to avoid the risk of bank holds being placed on deposited funds.
Buyers sometimes assume they can move money on the closing day itself or that a last-minute wire transfer will arrive instantly. Unfortunately, this is rarely the case.
This issue commonly arises when buyers plan to use funds held in investment accounts or RRSPs. While the funds may be available on paper, withdrawals from these accounts are not immediate and often require up to five business days to process.
In practice, banks may place temporary holds on closing funds, even when delivered by certified cheque or bank draft, while they verify the source of the funds. Wire transfers may also be delayed for up to 48 hours, which can be enough to cause a failed or delayed closing.
Why these matters
If funds are not received on time on the closing day, the buyer may be considered in default, even if the delay is unintentional. Ontario courts have consistently held that good intentions do not excuse a failure to close on time. A late closing can expose the buyer to interest penalties, claims for damages, or, in more serious cases, the loss of the deposit and potential termination of the transaction. The court confirmed that failure to close on time is a breach, even where the buyer intended to complete the transaction. The seller was entitled to keep the deposit and pursue damages.
How to avoid this mistake
To avoid this issue, buyers should plan to have their closing funds ready and accessible at least three to five business days before the scheduled closing date, even if the final amount has not yet been confirmed by their lawyer. While it is often not possible to deliver the exact funds at that stage, because the final Statement of Adjustments may still be pending, having the money fully available in a single, readily accessible account significantly reduces the risk of banking delays. This preparation allows certified cheques, bank drafts, or wire transfers to be arranged quickly once the final figures are known.
Transferring funds between financial institutions close to the closing date should also be avoided, as these transfers are often subject to internal verification processes, anti-fraud checks, and holding periods that are outside the buyer’s control particularly for large amounts.
Waiting until the last moment leaves little room to fix issues that may arise and can put the entire transaction at risk. In short, when it comes to closing funds, readiness is just as important as precision.
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Assuming the Seller Has Cleared All Liens and Mortgages
The mistake
Buyers often assume the seller will automatically pay off all mortgages, liens, or tax arrears before closing. Even if your lawyer has conducted a title search within the allocated timeline and submitted their requisitions to the sellers’ lawyer before the title search date, title issues can surface at the last minute or on the day of closing.
The property may be subject to a variety of registered interests, including existing mortgages, construction liens, Canada Revenue Agency tax liens, writs of execution against the seller, and condominium liens. These registrations do not disappear automatically on closing and, if not properly identified and addressed, can prevent clean title from transferring to the buyer. Any outstanding encumbrance can delay registration, expose the buyer to unexpected liability, or even result in a failed closing.
How to avoid this mistake
To avoid title-related closing issues, it is essential that your lawyer obtains clear, written undertakings from the seller’s lawyer confirming that all registered encumbrances will be discharged and removed from title on or after closing.
For example, if a writ of execution is registered against the seller on the day of closing, the transfer of the property cannot proceed until an absolute release of that writ is obtained and confirmed. This process is not immediate and can take time to complete, resulting in delays to registration. To avoid last-minute surprises, your lawyer should conduct all required searches early in the day to identify and address any issues.
While title insurance provides important protection against certain defects or losses that may arise after closing, it should be viewed as a safety net rather than a replacement for proper due diligence.
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Forgetting to Arrange Home Insurance Before Closing
The mistake
Many buyers mistakenly believe they can arrange home insurance after the transaction has closed or assume home insurance is not necessary. Most lenders require proof of insurance to be in place before they will release mortgage funds.
Why this is critical
This is especially common in condominium purchases. Buyers often assume that because the condominium corporation carries building insurance, they do not need to obtain their own insurance policy. While the condo corporation’s insurance does cover the building structure and common elements, it does not replace the need for a separate policy covering the buyer’s unit, contents, and personal liability. Although some lenders may accept a certificate of insurance from the condominium corporation, many lenders require the buyer to obtain a separate condominium unit insurance policy that specifically names the lender as a loss payee. Failing to arrange this in advance can result in last-minute delays or the lender refusing to release mortgage funds on closing.
How to avoid this mistake
To avoid this issue, buyers should arrange home insurance as soon as the agreement becomes firm and ensure that coverage is effective on the closing date.
Once your lawyer receives the mortgage instructions and clear direction from the lender regarding how the bank must be noted on the insurance policy, the lawyer should provide the buyer with specific instructions for obtaining an insurance binder. Clear communication at this stage helps ensure the policy is issued correctly and avoids last-minute delays that could otherwise jeopardize the closing
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Not Reviewing the Statement of Adjustments Carefully
The mistake
Buyers and sellers often sign the Statement of Adjustments without carefully reviewing the figures, assuming the calculations are standard or will be corrected later if something is off. Statement of Adjustments is a critical financial document that determines how property taxes, condominium fees, rent, and other charges are apportioned between the parties as of the closing date. Even small errors may result in overpayments or shortfalls causing delays. Once closing has occurred and funds have been released, correcting these mistakes can be difficult without further legal action.
Why it matters
If incorrect amounts are initially reflected in the Statement of Adjustments and are later corrected, your real estate lawyer may request additional funds to account for the discrepancy. These corrections often occur at the last minute, once updated information is received or an error is discovered late in the process. In some cases, this can result in delayed registration or even an inability to complete the transaction on time. Carefully reviewing the Statement of Adjustments early helps minimize these risks and avoid avoidable closing-day complications.
If errors in the Statement of Adjustments are not identified and corrected before closing, the parties’ only recourse may be to commence legal proceedings to recover the financial shortfall. Ontario courts have consistently been reluctant to intervene where the mistake arose from a party’s own failure to review or question the figures at the time of closing. In many cases, the courts will enforce the transaction as completed, leaving the affected party to absorb the loss rather than being “rescued” from their own oversight.
How to avoid this mistake
To reduce the risk of costly errors, the Statement of Adjustments should be reviewed carefully. Property tax amounts should be confirmed directly with the municipality by way of a Tax Certificate. Buyers and sellers should never assume that figures will “balance out later”, as once funds are released and the transaction has closed, leverage is lost and correcting mistakes becomes significantly more difficult.
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Making Last-Minute Changes to Financing or Employment
The mistake
A common and costly mistake buyers make is assuming that once a mortgage is pre-approved, it is fully locked in. As a result, some buyers change jobs, take on new debt, purchase a vehicle or furniture, or open and close credit accounts before closing. These actions can alter a buyer’s financial profile at a critical time and may trigger a reassessment by the lender, even days before the scheduled closing.
Why this is risky
Most Ontario lenders conduct a final verification of the buyer’s financial circumstances shortly before closing, which typically includes confirming employment status, income, credit history, and overall debt obligations. This re-verification process means that any recent changes, even those that seem minor or reasonable, can raise red flags for the lender and potentially affect the release of mortgage funds. The courts highlighted that buyers who cannot complete a transaction due to financing issues are still in breach, even if the failure was not intentional.
How to avoid this mistake
To avoid this issue, buyers should maintain their financial status quo from the time the agreement becomes firm until the mortgage commitment is signed and funds have transferred to their lawyer’s account. This means not changing jobs, avoiding new loans or major purchases, and following all lender instructions precisely. Buyers should also assume that financing can be reassessed right up until registration is complete and keys are released. In short, nothing is truly final until the transaction has been registered and possession has been confirmed.
Bonus Ontario Mistake: Assuming Keys Are Released Automatically
The misunderstanding
Many buyers mistakenly believe they will receive the keys to their new home first thing in the morning on the closing date. Real estate closing does not operate on a fixed timetable. Mortgage funds must be received by the buyers’ lawyer and subsequently closing funds delivered to the seller’s lawyer, documents exchanged, and confirmations must be exchanged between lawyers before registration can proceed. Until that process is complete, keys cannot be provided, regardless of the time of day.
How to avoid it
To avoid unnecessary stress and extra costs, buyers should plan their move for later in the day or, ideally, the following day, rather than scheduling it for the morning of closing. Morning bookings increase the risk of delays if transaction has not yet been completed. Buyers should always wait for clear confirmation from their lawyer that the transaction has closed and keys are authorized for release before heading to the property.
Why These Mistakes Keep Happening
Most closing-day problems are not the result of bad intentions or carelessness, but rather a misunderstanding of how the process works. In many cases, parties rely on assumptions rather than clear confirmations, which leaves little room to address problems when they arise
Ultimately, preparation is everything. A smooth closing is often an uneventful one, and that is exactly what success looks like. The mistakes discussed above are almost always avoidable with early planning, clear and consistent communication, and experienced legal guidance. If you are buying or selling property in Ontario, the best protection is not luck or last-minute problem solving, but a solid understanding of the process and careful preparation and legal guidance well before closing day.
