When you purchase a new home or sell your existing home, there are various dates that are important in the process including the closing date (also known as the completion date) and the possession date which are both discussed in this article. We regularly get asked questions about the closing date and the possession date so we wanted to take the opportunity to provide some clarification.
The closing (or completion) date is the date that ownership and title to the home is transferred along with the payment of funds from the buyer’s lawyer/notary to the seller’s lawyer/notary. The possession date is the date the buyer is entitled to take physical possession of the home/property.
The closing date is the date that is of key importance to the transfer of ownership and the assumption of risk with respect to the property. According to the standard real estate contract used most often in British Columbia, the seller is responsible for the property up until 12:00am the night before closing date. The buyer then becomes responsible for the property from 12:01am on the closing date. This is a very important time for the buyer and seller to be aware of especially in the event of a fire or other damage to the property following the time that risk is transferred.
In British Columbia, there is no standard practice on the timing between completion and possession. In some cases, these will be on the same day and be tied to the registration of the transfer of the property. One thing to be aware of (as either buyer or seller) is that this timeline is not necessarily predictable. There is no requirement to complete registration at a specific time and it can sometimes be delayed until later in the day if the buyer’s lender is delayed on getting funds to the lawyer/notary, or if one of the parties is unable to sign documents until later in the day on the closing date. As a result, we often caution excited buyers from expecting to be in their new home first thing in the morning on the closing date as there are often pieces beyond the buyer’s lawyer or notary’s control for getting the transaction registered.
In other cases, possession will be the next day or a few days following completion – most regularly, on the day immediately following the completion date. In some cases, it will be a longer period than one day but that does involve some additional risk to the owner of the property that has a non-owner now occupying their new home. Ideally, the time period between completion and possession will be shorter rather than longer.
There is no wrong way to select dates although in a large majority of cases, funds are transferred before the buyer gets access to the property which also means the buyer is in a difficult position if there is something wrong with the property. Under the contract, the seller is obligated to provide the buyer with the home/property in substantially the condition it was in on the as viewed date, subject of course to any specific contractual terms. This is particularly the case in British Columbia where it is not standard practice to see the buyer do a pre-closing walk through as they often do in other jurisdictions. If the buyer wants that right, it should be written into the contract and the buyer should be clear on what that actually permits if something is wrong (i.e. unless it is a fundamental concern going to the root of the buyer’s contract, they are still required to complete and then would have a potential claim against the seller to recover any loss if the seller has breached the contract). Please review our article titled “What Happens if the Seller Doesn’t Fix the Hot Water Tank” http://touchstonelawgroup.com/kelowna-lawyers/happens-seller-doesnt-fix-hot-water-tank/ for more information on this topic.
Please note that the closing date must be on a business day (ie. not a weekend or holiday) as the offices of the lawyers/notaries and banks must be open. The possession date does not need to be on a business day.
In British Columbia, in most cases, there is no need for the buyer and seller to see their lawyer/notary on the actual closing date. Documents and funds are generally dealt with in advance and simply exchanged between the lawyers/notaries on the closing date. The realtors involved will normally facilitate the exchange of keys between the parties in order to provide the buyer with possession.
If you have any questions regarding the above or the purchase/sale process in general, please do not hesitate to reach out to one of our lawyers practicing in the area of real estate law.
Author: Una Gabie
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of real estate law at the following:Una Gabie: email@example.com Jennette Vopicka: firstname.lastname@example.org Danielle (Dani) Brito: email@example.com Jane Otterstrom: firstname.lastname@example.org