Closing Process and Costs in Ontario

"Closing" is the day the transaction legally completes: title transfers from seller to buyer, the purchase price is paid, and the buyer takes possession. In Ontario the mechanics run through real estate lawyers and the province's electronic land registration system (Teraview).

The Role of the Real Estate Lawyers

In Ontario, a licensed lawyer (not a notary) handles the legal side of a residential purchase or sale; using a lawyer is effectively required to register a transfer and a mortgage on title.

Buyer's lawyer

• Reviews the Agreement of Purchase and Sale and any amendments/conditions.
• Conducts the title search and off-title searches (e.g., tax certificates, work orders, utilities, zoning/compliance), and raises requisitions on any defects.
• Arranges title insurance and reviews it with the buyer.
• Reviews the lender's mortgage instructions, prepares mortgage documents, and ensures lender conditions are met.
• Calculates and reviews the statement of adjustments, confirms the balance due on closing, and receives the buyer's closing funds and the mortgage advance.
• Registers the transfer and the new mortgage electronically, then confirms possession/keys.

Seller's lawyer

• Prepares the transfer/deed and the statement of adjustments.
• Responds to the buyer's requisitions and clears title issues (e.g., obtaining a discharge of the seller's existing mortgage).
• Receives the purchase funds in trust, pays out the seller's mortgage and commissions, and releases the net proceeds to the seller.

Title Search and Requisitions

The buyer's lawyer searches title in the land registry to confirm the seller's ownership and to identify registered interests — mortgages/charges, liens, easements, restrictive covenants, and any registered claims. Off-title searches check for arrears of property tax, utility issues, outstanding work orders, and compliance matters.

If a problem appears, the buyer's lawyer submits requisitions (formal demands) to the seller's lawyer by the requisition date set in the APS, requiring the seller to resolve the issue before closing (for example, discharging a lien). A title search verifies what is registered; it cannot reveal every hidden risk — which is where title insurance comes in.

Title Insurance

Title insurance is a one-time premium policy (usually arranged by the buyer's lawyer) that protects the owner — and, on a separate lender policy, the mortgage lender — against losses from certain title-related problems, such as title fraud, unknown liens or encumbrances, survey/boundary errors, encroachments, and certain zoning/compliance defects not revealed by the searches. Most institutional lenders require a lender title policy. The owner policy typically lasts as long as the buyer owns the property. Premiums vary with property value but are commonly in the low hundreds of dollars for a typical home — confirm the exact premium with the lawyer/title insurer.

Statement of Adjustments

The statement of adjustments is the closing accounting that reconciles prepaid or accrued items between seller and buyer, arriving at the balance due on closing. Common adjustments:

• Property taxes — if the seller has prepaid taxes beyond the closing date, the buyer credits the seller for the post-closing portion; if taxes are unpaid/arrears, the seller credits the buyer.
• Utilities and fuel — e.g., prepaid propane or heating oil in rural properties.
• Condominium common expenses (condo fees) — apportioned to the closing date (see the condominiums reference).
• Deposit credit — the buyer's deposit, already paid (typically held in the listing brokerage's trust account), is credited to the buyer against the purchase price on the statement.
• Other prepaid/postpaid items as applicable (e.g., rents on a tenanted property).

The net result of the purchase price, plus/minus adjustments, minus the deposit and mortgage advance, equals the certified funds the buyer must deliver to their lawyer to close.

Electronic Land Registration (Teraview)

Ontario land registration is electronic. Lawyers register documents through Teraview, the software that accesses the province's Electronic Land Registration System (operated under the Ontario–Teranet arrangement). Transfers, new mortgages/charges, and discharges of the seller's old mortgage are created, signed, and registered electronically between the lawyers' offices. Only authorized account holders (chiefly lawyers) can register documents.

Modern Ontario closings are frequently "virtual": documents are signed in advance (often remotely), funds move by wire/electronic transfer or bank draft into lawyers' trust accounts, and registration happens electronically, so the parties need not attend in person.

Closing / Completion Mechanics

On the closing (completion) date, the sequence is typically:

1. The buyer's lawyer confirms the buyer's closing funds are in trust and the mortgage advance has been received from the lender.
2. The lawyers exchange documents and funds in trust and complete final searches (e.g., a subsearch to confirm nothing new was registered).
3. The buyer's lawyer wires/delivers the balance to the seller's lawyer in trust and registers the Transfer and the new Mortgage on title via Teraview.
4. Once registration is complete and title is confirmed clear, the transaction is "closed." The seller's lawyer then releases keys (usually via the listing brokerage/agent) and, after paying out the seller's mortgage and commissions, releases the net proceeds to the seller.

Because closing depends on funds, documents, and registration all lining up, timing within the day matters; possession is usually confirmed once registration is done.

Typical Buyer Closing Costs

Budget commonly cited at roughly 1.5%–4% of the purchase price (excluding the down payment). Main items:

• Land Transfer Tax (LTT) — usually the largest single closing cost. Ontario LTT is calculated on marginal brackets of the purchase price. In the City of Toronto, a separate Municipal Land Transfer Tax applies on top of the provincial LTT, roughly doubling the tax. First-time homebuyers may qualify for a provincial LTT rebate (and a separate Toronto rebate). Rates, brackets, and rebate amounts are set by the province/city and change — verify current rates and rebates at ontario.ca and toronto.ca.
• Legal fees and disbursements — lawyer's fee plus disbursements (title/execution searches, registration, software, couriers) and HST. Commonly on the order of ~$1,500–$2,500+ plus HST and disbursements for a straightforward purchase; confirm a quote.
• Title insurance — one-time premium (commonly low hundreds of dollars; scales with value).
• Home inspection (optional but recommended) — commonly a few hundred dollars.
• Mortgage appraisal — if required by the lender; sometimes lender-paid.
• Adjustments — reimbursement to the seller for prepaid property taxes/utilities/condo fees via the statement of adjustments.
• Property/home insurance — lenders require it to be in place at closing.
• HST — generally not charged on resale residential homes, but applies to new-construction/substantially-renovated homes (often with a new-housing rebate) — confirm treatment for new builds.

Typical Seller Closing Costs

• Real estate commission — the largest seller cost. Commission is negotiable; total commission (listing + cooperating brokerage) is often in the range of ~4%–5% of the sale price, and HST (13%) applies on the commission. Confirm the exact rate in the listing agreement.
• Legal fees — commonly on the order of ~$1,200–$2,500+ plus HST and disbursements for a sale.
• Mortgage discharge — a lender discharge/administration fee (commonly ~$200–$400) to remove the mortgage from title.
• Mortgage prepayment penalty — if the seller breaks a mortgage before term end, the lender charges a penalty, typically the greater of three months' interest or the Interest Rate Differential (IRD). On a fixed-rate mortgage the IRD can be substantial (potentially thousands of dollars). Get an exact payout statement from the lender.
• Other possible items: outstanding property taxes/utilities settled via adjustments, and — for non-resident sellers — additional tax clearance requirements (get professional advice).

Realtor Quick Reference

• Ontario closings are lawyer-run and registered electronically via Teraview; many are virtual.
• The buyer needs certified/wired funds for the closing balance (price + adjustments − deposit − mortgage advance).
• Buyer's biggest cost = Land Transfer Tax (double in Toronto; first-time-buyer rebates may apply — verify current figures).
• Seller's biggest cost = commission + HST, then legal fees and any mortgage penalty/discharge.

Reference text, not legal, tax, or financial advice. Tax rates, rebates, and typical fees change — verify Land Transfer Tax and rebates at ontario.ca/toronto.ca, and confirm all figures and closing steps with a licensed Ontario real estate lawyer.