Selling a home fAQ

WHEN CAN I COLLECT MY PROCEEDS FROM THE SALE?

Typically, your net proceeds from the sale, taking into account various deductions such as real estate commission, legal fees, taxes, mortgage discharges, etc., will be prepared for you by the closing day or the subsequent business day. This will be in the form of a certified check or bank draft, or directly deposited into your personal account, as per the conditions of the OREA Form 100 agreement of purchase and sale. If you are unable to be present at the closing, we can arrange for the funds to be wire transferred to your account, though this will incur bank charges. Wire transfer payments may take up to 4 business days to process. For this, we will need your bank account information and a void check.

‍

However, there may be rare occurrences when issues arise on the closing day, delaying the availability of the buyer’s funds. This could happen if, for instance, the buyer receives last-minute mortgage approval and doesn’t inform us until the closing day. In such a scenario, we will negotiate a reasonable extension with the buyer’s lawyer, provided they can demonstrate their ability to secure the necessary funds and agree to cover the seller’s carrying costs (e.g., costs associated with extending the mortgage payout date).

‍

WHAT IF MY SPOUSE OR PARTNER IS UNAVAILABLE AT THE TIME OF CLOSING?

In the case that any of the registered owners cannot be present on the closing day, inform your lawyer as soon as possible. They will arrange a power of attorney that is properly drafted and witnessed, which will allow you or another person (typically a trusted family member or friend) to sign the OREA Form 100 agreement of purchase and sale documents on your behalf.

‍

HOW ARE ADJUSTMENTS MADE TO THE SALE PRICE AT CLOSING?

Adjustments to the final sale price typically include the deposit made to the seller, the property taxes paid by the seller (a portion of which the buyer will be responsible for), and the buyer’s share of any owing condo fees, if applicable. Here's an example of a statement of adjustments showing the credits and debits for a typical purchase.

‍

Statement of Adjustments

‍

Purchase Price: $475,000.00

LESS: Deposit: $20,000.00

Prepaid Property Taxes:

2015 taxes paid to date: $3,821.31

Seller’s share for 201 days: -$2,104.34

ADD: Credit Owed to seller: $1,716.97

‍

Balance Due on Closing Payable to seller: $456,716.97

‍

WHEN IS SPOUSAL CONSENT REQUIRED TO SELL MY PROPERTY?

If the property, though owned solely by one spouse, is designated as a matrimonial home (family residence), the other spouse's consent is necessary for any dealings or transfers of interest in the property, as stipulated in the OREA Form 100 agreement of purchase and sale. For instance, if the registered owner wishes to mortgage or transfer the title of the property, written spousal consent is required. If consent is not obtained, any transfer or mortgage could be subject to the spouse's interest and may be nullified.

‍

Ontario Family Law Act, 1990, Section 18 (1) defines the matrimonial home as any property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and their spouse as their family residence. Either spouse can choose to designate a home owned by one or both of them as a matrimonial home (s. 20 (1)).

‍

Please note that this only applies to matrimonial homes and not to properties used for investment purposes.

‍

WHAT ARE THE TAX CONSEQUENCES IF I AM A NON-RESIDENT AT THE TIME OF SALE?

If you are not a resident of Canada at the time of the sale, the Canada Revenue Agency (“CRA”) mandates the buyer to withhold at least 25% of the sale price, typically held by the seller's lawyer as per the OREA Form 100 agreement of purchase and sale. These funds cannot be released to you until a Certificate of Compliance is issued by the CRA. The steps involved in this process include:

‍

1. The buyer is required to withhold at least 25% of the total purchase price.
2. You must notify the CRA about the sale by filing for a Certificate of Compliance within 10 days of the sale. A late fee of $25 per day up to a maximum of $2,500 applies if this is not done promptly.
3. Upon receiving your application, the CRA will ask for payment or acceptable security to cover the anticipated taxes payable and then provide you with a Certificate of Compliance. Recent dealings with the CRA suggest that the process might take up to 3 months to process the forms and issue the Certificate of Compliance.
4. Once you receive the Certificate of Compliance, the buyer can release the amounts withheld to you as the non-resident seller.
5. After the end of the calendar year, as a non-resident, you will be required to file a Canadian tax return to report the sale.