In most cases, your net sale proceeds (after applicable deductions such as the real estate commission, legal fees, taxes, mortgage discharges, etc.) will be ready for you to pick up on closing day by way of a certified check or bank draft. If you are not here at the time of closing, we can arrange to have the closing funds wire transferred to your account, less the applicable bank charges. In order to do so, we will require from you your bank account information and a void check as well. Also, know that wire transfer payments may take up to 4 business days for the banks to process.
Although uncommon, in some instances we do encounter problems on closing day and the buyer’s funds may not be available. For example, if a buyer only received mortgage approval last minute and doesn’t notify us until the day of closing, the buyer’s may not be in a position to purchase the home on closing day. In this case, we will arrange for a reasonable extension with the buyer’s lawyer on the condition that they provide us with evidence that they will be able to secure the necessary funding together with their undertaking to pay for the seller’s carrying costs (eg. costs associated with extending the mortgage payout date).
If any of the registered owner’s will not be here on closing day, you should advise your lawyer as soon as possible. Your lawyer will arrange to have a power of attorney drafted and properly witnessed so that you or another person (usually a family member or friend) will be able to sign the closing documents on your behalf.
Typically, final adjustments to the sale price will include the deposit made to the seller, property taxes paid by the seller (part of which the buyer will be responsible for paying), and the buyer’s share of the condo fees owing, if applicable. Below is a sample statement of adjustments listing the applicable credits and debits for a typical purchase.
Statement of Adjustments
|Prepaid Property Taxes
2015 taxes paid to date
Seller’s share for 201 days
ADD: Credit Owed to seller
|Balance Due on Closing
Payable to seller:
IF a property is owned only by one spouse, BUT the property is used or designated as a matrimonial home (family residence), the other spouse’s consent must be obtained whenever you want to deal with or transfer an interest in the property. For example, written spousal consent will be required if the registered owner ever decides to mortgage or transfer title of the property to another person. If the spousal consent is not obtained, the transfer or mortgage will be subject to the spousal interest and may be voidable.
Section 18 (1) of the Ontario Family Law Act, 1990, defines matrimonial home as “every 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 his or her spouse as their family residence is their matrimonial home.” Either spouse may elect to designate home owned by one or both of them as a matrimonial home (s. 20 (1)).
Please note that the above ONLY applies to matrimonial homes and does NOT apply to a property used for investment purposes.
If at the time of sale you are not resident in Canada, the Canada Revenue Agency (“CRA”) will require the purchaser to withhold at least 25% of the sale price – usually to be held by the seller’s lawyer. The money cannot be released to the seller until a Certificate of Compliance has been issued by the CRA. The application process for the Certificate will involve the following steps:
- Purchaser is required to withhold at least 25% of the total purchase price.
- Seller must notify the CRA about the sale by filing for a Certificate of Compliance. This must be submitted within 10 days of the actual sale. There is late fee of $25 per day up to a maximum of $2,500.
- Once the application is received, the CRA will request payment or acceptable security to cover the anticipated taxes payable and provide the seller with a Certificate of Compliance. Recent experience with the CRA indicates that the process could take up to 3 months to process the forms and issue Certificate of Compliance.
- Upon receiving the Certificate of Compliance, the purchaser can release the amounts withheld from to the non-resident seller.
- After the end of the calendar year, the non-resident is required to file a Canadian tax return to report the sale.