There’s actually a small risk on closing that Buyers and their Agents just might not know about.
Possession on closing is allowed at the time the transaction is completed, but not before.
In Ontario at the moment we have electronic transactions. The Seller’s Solicitor sends everything over to the Buyer’s Solicitor, which includes just about everything, including the keys, or at least one key in order to gain access.
The Buyer’s Solicitor sends everything over to the Seller’s Solicitor, which includes signed documents, title documents and the cheque.
Both solicitors sign onto their TERANET accounts and complete the transaction. This process allows the title to be transferred over to the Buyer.
Until that actual “moment of closing”, all the documents held by each side are held “in escrow” by the parties to be returned to the other side if the transaction fails for some reason.
Then, the keys which have been delivered to Buyer’s Solicitor are available to the Buyer in order to gain access to the house.
Is that convenient? What if the lawyers are in Toronto and the house is in Ottawa? That’s not good!
Most of the time, the lawyers will be close, but even at that, on a late Friday afternoon, when the traffic is busy, a 30 minute trip in the GTA can easily be 90 minutes or more. And, that’s just one way. So, who’s making the trip: the Buyer, the real estate agent, a Courier? It requires some strategy.
The Second Set of Keys
In most transactions there will be additional keys, only one went to the lawyer’s office. Can they be accessed?
Actually, this is fine. The Buyer owns the property. There is no problem using the second set.
This is the real problem. Using the keys before the actual registration is closing the deal at common law.
The Buyer actually waives all his rights, completes the transaction unknowingly and loses various rights to good title and so on.
The problem is that all of this happens unknowingly and by accident. In some way, the Buyer gets the key and uses it to enter the property. That access completes the closing.
Originally, seisin was evidence of the transfer of property. This was “delivery”. In some instances, it was just land. The Owner would pick up a piece of soil and hand it over to the purchaser. If there was a building, then the keys would do. That was the process before lawyers and registry offices.
The Buyer’s lawyer was completely unaware, as was the Seller’s lawyer. Let’s assume that there is some reason that the deal does not go through and is to be put over for a few days to resolve matters. It’s now too late, the buyer has entered into possession of the Property and closed the deal himself without his lawyer’s help.
Naturally, this will be the time where fingers will be pointed. Hopefully, this will not include the agents.
Brian Madigan LL.B., Broker