Real estate closing dates are very, very important. Every standard contract contains a clause that says “time is of the essence”. This means that change the closing date or another date is not that easy. However, the need to change a date can always arise, even if a specific date appears in your contractual agreement. Unfortunately, sometimes extenuating circumstances can come up that can warrant the closing date to be delayed by a certain amount of time. Although this doesn’t happen often, it’s always within the realm of possibility and it’s important that you work with a trustworthy real estate agent and lawyer who will be completely upfront with you regarding the selling agreement of any property your purchase. Before you sign a contract, be sure to consult a house closing real estate lawyer in Toronto, so that they can review your agreement for you too. If a request for delay comes up on closing this can be quite problematic for all the parties who may have other transactions on the line or moving trucks in front of a home. An experienced lawyer will know how to navigate you through this stressful and difficult type of request.
Without further ado, here are eight common reasons why your real estate closing date could be delayed.
Unrealistic Contract Dates
There are a lot of cogs and moving parts involved in the real estate wheel. That means it takes some time to fully process property purchases and sales. Experienced realtors know that it can take anywhere between 45 to about 60 days for a property sale to close following the acceptance of an offer, often depending on financing time. This also allows parties time to give notices of termination on leases, arrange their funding, finish school, etc. .
Sometimes, it can even take longer depending on the circumstances or conditions of the deal itself. Additionally, the bureaucratic process can be slow or overwhelmed by a sudden spike in real estate activity and sales during peak times of year (e.g., spring and summer). It’s important to give a reasonable amount of time for buyers and sellers to get their affairs in order prior to the closing date. Specific circumstances that are unique to each case must be considered before agreeing upon an airtight closing date.
However, if none of these factors are at play it is quite possible to close the transaction sometimes in as little as five days
Real Estate Appraisal Issues
Bank appraisals typically only apply to real estate transactions wherein the buyer needs to obtain a new mortgage or transfer their existing mortgage to the new property. The bank assesses the value of the mortgage based upon the structural condition of the property in question and whether or not certain repairs or maintenance need to be done to deem the property habitable.
Appraisals can delay real estate closing dates for a number of reasons. For instance, if there are significant repairs that need to be done on the property to make it safe to live in, then the bank may postpone the closing date until all of the required work is complete. This can include electrical repairs or improvements, roof maintenance, and other projects. Part of your realtor’s job is to continuously follow up on all repair and maintenance work that’s being done during this period to ensure it’s completed in a timely manner.
Complete Repairs or Cleaning Required
Each property should ideally meet certain basic cleanliness and structural standards as per the terms of the sales agreement. Unless the seller specifies that the property is going to be sold “as is”, buyers can stipulate that certain cleaning and maintenance conditions must apply as a condition of the final sale. Depending on the amount of work that needs to be done to bring the property up to code as well as your intentions for the property, this could take a lot longer than you initially anticipated.
Issues with the Title
Working with a reputable real estate closing lawyer in Toronto can help you avoid future title-related issues with the property you’re planning on purchasing. While most purchase contracts mandate that the seller must pay off all debts registered on the title of the house such as mortgages or secured line of credits, there are some exemptions to this rule.
Utility right of ways, restrictive covenants, and some caveats can stay on the title and be transferred over to the new owner without them even knowing until they decide to sell the property in the future.
For example, if there’s a lien against the property, then the original owner may be prohibited from selling it to you until the full amount is paid off. Otherwise, the lien will simply be transferred to the new owner. In some cases, you may not even find out about title issues like this until the time comes for you to sell the property somewhere down the line. An experienced real estate lawyer will know how to handle this.
If you suspect any rights-of-way, liens, easements, or on your property that might have to be disclosed to a buyer, it is always best to perform a title search on Land Titles to see if there are any restrictions registered against the property. If there’s anything you don’t understand or need assistance with, then be sure to consult a lawyer for house closing in Toronto.
Outstanding Mortgage Problems
Another common reason that real estate closing delays can occur is if the buyer’s mortgage application is denied by the bank or their financial lender. There are a plethora of reasons that a mortgage application can be denied, but we won’t get into that here. The point is that it can take a while for the buyer to sort it out with their lender. Alternatively, the seller may have to find a new buyer and that can also extend the closing date.
Issues Found during a Last-Minute Inspection
Some buyers might schedule multiple property inspections prior to the closing date. This is common in situations where the initial inspection revealed that the house needs repairs or maintenance work done. Buyers might be inclined to schedule a second or third inspection to ensure that all of the issues identified after the first one have been properly addressed.
Sometimes last-minute inspections can be scheduled at inopportune times for the seller like a few days before the agreed upon closing date.
This depends on the inspector’s schedule. Additional delays could take place if the inspector finds issues with the maintenance or repair work that was done and reports that the property isn’t fully up to code.
Lender Requires Additional Documents
As mentioned, there are a lot of moving parts involved in real estate transactions. All of the professionals involved such as the real estate lawyer, the appraiser, the lender, and the realtor have to do their part in order for the deal to go smoothly. If certain documents aren’t submitted to the lender on time, then this can cause serious processing delays which will inevitably impact the closing date.
A Survey is a blueprint of the land on which the property itself is located. These days, less and less people are getting a survey as the title insurance policy will cover the typical buyer for any issues related to the survey. If a survey is available and provided your lawyer’s job is to perform a review of the survey and ensure that everything is as it should be. If there are any discrepancies such as property line disputes found in the instrument survey, then you need a real estate closing lawyer in Toronto to advise you of the possible risks and solutions. This could range from getting a reduction of the purchase price because of the issued to cover you for any risks or simply to draw up an affidavit that’s signed by all parties involved to resolve the issue. This can delay your closing date if it takes time to reach all of the parties involved and get them to agree to the terms.
Whether you’re buying or selling a home in Toronto, Zinati Kay – Real Estate Lawyers are here to help you. We know that the real estate market is crazy right now, which is why we want to make the closing process as seamless as possible for you. Contact us today if you have any questions or to take advantage of our remote signing process.