The Buyer says at 3:00 pm to the Seller: “you have to be out, this deal closed at 2:00 pm”. The Seller replies: “I know that, but I still have until 6:00 pm”.
There are two arguments here which involve the interpretation of the words “completion” and “closing”. Depending upon your view, in a deal where the Transfer was registered and released from escrow at 2:00 pm, the Seller has to deliver vacant possession either by 2:00 pm, or 6:00 pm. The majority appear to favour the 2:00 pm interpretation.
In transactions where the precise time really matters, as in the sale of a business as a going concern without any stoppage since the business operates 24/7, the time is set out accurately in the Agreement of Purchase and Sale.
In jurisdictions other than Ontario, closings and completion of the transaction are handled in a much better fashion. The Seller vacates the day before closing, the premises are then cleaned, the Buyer and Seller attend with the Title Insurer and complete an inspection, if everything is in order, the cheque is exchanged for the keys and the Buyer can move in within moments. The Title Insurer is a neutral third party attending to the closing and completion of the deal. Lawyers are not involved.
In Ontario, both parties have lawyers who attend to matters remotely. Is the final closing step the actual delivery of vacant possession? If that’s the case, then the registration of the Transfer was only one of the early steps in the process. Certainly, another step to follow is the release from escrow. The deal hasn’t closed upon registration of the Transfer and the delivery of the keys in exchange for the cheque. That is a step in the process, but not the final step.
If the release from escrow is the final step, then 2:00 pm would be the correct answer. If vacant possession is the final step, then 6:00 pm would be correct.
At this point, we don’t have an interpretation by the Courts, let alone the Ontario Court of Appeal which would be determinative.
The problem is the OREA wording could go either way. Why not simply say “vacant possession shall be transferred at 3:00 pm unless the parties agree otherwise”.
Brian Madigan LL.B., Broker