Most Ontario real estate transactions close without incident. The ones that go wrong usually go wrong for a small number of predictable reasons: a term in the Agreement of Purchase and Sale that the buyer did not understand, a title problem discovered too late, a closing cost nobody budgeted for, or financing that fell through after the conditions came off.
Here is what each of those actually looks like in Ontario, and where a lawyer’s involvement changes the outcome.
First: you cannot really skip the lawyer
In Ontario, transfers of land are registered electronically, and access to the electronic registration system is restricted to licensed lawyers. As a practical matter, that means a lawyer has to be involved in the transfer of title, whatever else you do yourself.
That is worth knowing because it changes the question. It is not whether to retain a lawyer, it is when. Retaining one after your offer is accepted means paying someone to explain a contract you are already bound by. Retaining one before you sign means the contract can still be changed.
Your real estate agent and your lawyer do different jobs. Agents market, negotiate and coordinate; they are not permitted to give legal advice. The lawyer reviews the agreement, searches title, resolves problems on title, handles the money, and registers the transfer.
The Agreement of Purchase and Sale: the moment it stops being negotiable
The APS is the contract. Everything after it is administration.
The critical distinction is between a conditional agreement and a firm one. Most residential offers start conditional, commonly on financing, on a satisfactory home inspection, and on review of the status certificate for a condominium. Those conditions exist for the buyer’s protection and have deadlines attached. Once they are waived or expire, the deal is firm.
What happens if a buyer cannot close a firm deal is more serious than most people expect. The deposit is generally forfeited. Beyond that, the seller can usually sue for damages, most commonly the shortfall if the property resells for less, plus carrying costs and expenses incurred in the meantime. In a falling market that gap can be very large, and it is not capped by the deposit. This is the single most expensive mistake available in a residential transaction.
A few APS terms worth a careful read before signing:
- The requisition date. This is the deadline for your lawyer to raise objections to title. It is often set only a couple of weeks out, and if your lawyer is retained late there may not be time to search title before it passes.
- Chattels and fixtures. Which appliances, fixtures and window coverings are included, described specifically enough to be identifiable.
- The completion date, and whether it realistically matches your mortgage funding and, if you are also selling, your other closing.
- Representations and warranties, and how long they survive closing.
- For new builds: the builder’s form is not the OREA standard form. It is drafted for the builder, and typically permits unilateral extensions of the closing date and passes various charges to the buyer on the statement of adjustments. These agreements have a statutory cooling-off period for freehold and condominium new construction, worth confirming the current period and its exact operation with your lawyer.
Have an offer you are about to sign? A short review before signing costs far less than a fix afterward. H&H Law Group can be reached at 416-572-7483.
Title problems
A title search confirms that the seller can actually convey what they have agreed to sell. Most Ontario land is now in the Land Titles system, which is generally more reliable than the older Registry system, but problems still surface:
- Registered liens and charges: mortgages, construction liens, judgments, and unpaid property tax arrears.
- Easements and rights-of-way: a neighbour’s or utility’s registered right to use part of the land.
- Restrictive covenants limiting what can be built or how the property can be used.
- Encroachments: a fence, shed or addition that crosses a boundary line, often revealed by a survey rather than a title search.
- Unregistered work orders or open building permits: searched separately from title, through the municipality.
- Title fraud, where a property is fraudulently transferred or mortgaged by someone impersonating the owner. This has been a real and reported problem in the Ontario market.
Two title issues that catch people out are worth calling out specifically.
Spousal consent. Under Ontario’s Family Law Act, a matrimonial home cannot be sold or mortgaged without the consent of both spouses, even where only one spouse is on title. A separating seller who assumes sole title means sole control is mistaken, and the issue is best identified at the outset rather than a week before closing.
Non-resident sellers. Where a seller is a non-resident of Canada for tax purposes, the Income Tax Act requires the buyer to withhold a portion of the purchase price unless the seller produces a clearance certificate from the Canada Revenue Agency. If the buyer does not withhold, the buyer can be left personally liable for the seller’s tax. This is a genuine risk that falls on the wrong party, and it is one of the more important reasons to establish residency status early.
Title insurance is standard in Ontario and covers many of these risks. It is not, however, a substitute for the searches, it responds after a loss, and it does not tell you before closing that the property you are buying has a problem you would rather avoid.
Closing costs: the numbers people actually miss
Buyers budget for the down payment and the purchase price. The surprises are usually here.
Land transfer tax. Ontario charges land transfer tax on essentially every conveyance, calculated on a marginal scale. First-time buyers can claim a refund of up to $4,000 of the provincial tax, which eliminates it entirely on purchases up to roughly $368,000 and reduces it on anything above that. Eligibility is stricter than people assume: it turns on never having owned a home anywhere in the world, and in some circumstances a spouse’s prior ownership disqualifies both.
One local point worth knowing: Toronto’s municipal land transfer tax applies only inside the City of Toronto boundary. Buyers in Mississauga, Oakville, Milton, Brampton and the rest of the 905 pay the provincial tax only. On a typical GTA purchase that difference is substantial, and it is frequently misunderstood by buyers moving out of the city.
HST. Resale residential homes are generally not subject to HST. New and substantially renovated homes from a builder are. Rebate programs in this area have changed significantly and remain in flux — a first-time home buyers’ GST/HST rebate is now in effect for new homes, and Ontario has introduced additional provincial relief with its own eligibility window. The amounts and deadlines are specific and time-limited, so confirm what applies to your agreement date with your lawyer or accountant rather than relying on a figure you saw online.
Non-Resident Speculation Tax. Buyers who are foreign nationals, foreign corporations or taxable trustees face a substantial additional tax on residential purchases in Ontario, calculated as a percentage of the whole purchase price rather than the buyer’s share. Exemptions and rebates exist and are deadline-driven. If any purchaser on the deal is not a Canadian citizen or permanent resident, raise it before the offer goes in.
Federal restrictions on non-Canadian buyers. A federal prohibition on the purchase of certain residential property by non-Canadians remains in force, with a scheduled end date and a set of exceptions covering some temporary residents. Both the expiry and the exceptions matter, and both should be confirmed against the current rules at the time of your transaction.
The ordinary items: legal fees and disbursements, title insurance, the mortgage lender’s requirements, and adjustments — your share of property taxes, utilities and condominium common expenses the seller has prepaid. Sellers have their own list, including discharging existing mortgages, real estate commission and HST on it, and any outstanding property charges.
Buying a condominium: the status certificate
If you are buying a condominium unit, the status certificate is the most important document you will read. It discloses the unit’s common expenses, whether they are in arrears, the corporation’s reserve fund position, any special assessments levied or contemplated, current or threatened litigation involving the corporation, and the rules the unit is subject to.
The condominium corporation must provide it on request within a statutory timeframe and for a capped fee. Most conditional offers include a period for a lawyer to review it — and that review regularly turns up things a buyer would want to know, from an underfunded reserve fund to a pending assessment to a rule prohibiting the pet or the rental use the buyer had planned.
Hidden defects: what a seller actually has to tell you
This is where Ontario law diverges most sharply from what buyers expect, and it is worth being direct about it.
The general rule in Ontario residential resale is caveat emptor, buyer beware. A seller is generally not required to volunteer information about defects that a reasonable inspection would reveal. If the basement is visibly damp, that is the buyer’s problem to discover.
The exceptions are narrower than the rule:
- A seller must not actively conceal a defect or make a fraudulent misrepresentation about the property.
- A seller may be liable for a known latent defect, one not discoverable on reasonable inspection, where it renders the property dangerous or unfit for habitation.
- If a seller completes a Seller Property Information Statement, it is optional in Ontario, but once completed, inaccurate answers can create liability.
The practical consequence for buyers is that the inspection condition is doing most of the protective work, not any duty of disclosure. Waiving it to strengthen an offer in a competitive market is a real transfer of risk, not a formality.
Financing and closing day
Financing conditions are removed on the strength of a lender’s approval, but approval is not funding. Approvals are conditional on appraisal, on the property itself, and on the borrower’s circumstances remaining unchanged. A job change, a new car loan, or an appraisal that comes in below the purchase price between condition waiver and closing can all interfere with funding on a deal that is already firm, with the consequences described above.
Two practical rules: do not take on new debt or change employment between waiving conditions and closing, and get your documentation to your lender and lawyer early rather than in the final week.
Most closing-day delays trace back to a handful of causes, an undischarged mortgage on the seller’s side, late mortgage instructions or funds from a lender, a title issue raised too late to resolve, or missing signatures and identification. Almost all of them are avoidable with earlier preparation, which is the practical argument for retaining a lawyer at the offer stage rather than the week before closing.
Working with a real estate lawyer
Whether you are buying or selling a home in Ontario, having an experienced real estate lawyer provides valuable protection throughout the transaction. A lawyer does more than complete paperwork they help identify risks, explain your legal obligations, and ensure that your rights are protected.
At H&H Law Group, our real estate lawyers assist clients with residential and commercial property transactions throughout Ontario. We understand that every transaction is unique, and we provide personalized legal guidance to help clients move forward with confidence.
If you are preparing an offer, reviewing a builder’s agreement, or working toward a closing date, it is worth having a lawyer involved before you sign rather than after.