If your mortgage funds are delayed in Ontario, you risk breaching the Agreement of Purchase and Sale. You may have to pay daily penalty fees to the seller or request a formal extension, to avoid losing your home deposit, which is often around 5% of the purchase price.
Closing day is supposed to be the thrilling conclusion to your home buying journey in Mississauga. You have signed the paperwork, packed your moving truck, and are simply waiting for the call to pick up your keys. But if your lender fails to wire the mortgage funds to your lawyer on time, panic can quickly set in.
Ontario real estate contracts rely heavily on the legal principle that “time is of the essence.” ⏱ This means deadlines are strictly enforced. If the money does not arrive at the seller’s lawyer by 5:00 PM on the closing date, the deal is technically in breach. Let us walk through how real estate law firms manage this high-stress situation to protect your investment.
Step-by-Step Process in Mississauga, Ontario
When funds are delayed, swift legal action and open communication are critical. Your real estate lawyer will execute a series of steps to negotiate a solution and keep the transaction alive.
Step 1: Immediate Communication with the Lender
The moment a delay is detected, your lawyer and mortgage broker will urgently contact the bank or lender. 💰 Delays can happen due to internal bank audits, missing final conditions (like a last-minute pay stub), or simply a backlog in the bank’s wire transfer department. Identifying the cause is the first priority.
Step 2: Requesting a Formal Extension
If it becomes clear the funds will not arrive before the Teraview registry system closes at 5:00 PM, your lawyer must contact the seller’s lawyer. They will request a formal extension, proposing an Amendment to the Agreement of Purchase and Sale to push the closing date by one or more days.
Step 3: Negotiating Per Diem Costs
Sellers are rarely happy about delays, as they may need your money to buy their next home. 💵 To grant the extension, the seller will usually demand compensation for their out-of-pocket carrying costs. Your lawyer will negotiate these “per diem” (daily) costs, which cover the seller’s extra mortgage interest, property taxes, and bridge loan fees.
Step 4: Executing a Tender (If Necessary)
If the seller refuses to grant an extension, they may instruct their lawyer to “tender” the transaction. This is a formal legal demonstration that the seller was ready and willing to close, but you (the buyer) failed to deliver the funds. This sets the stage for a potential lawsuit, making it vital for your lawyer to negotiate effectively to avoid this outcome.
How Much Does a Delay Cost in Ontario?
A closing delay is never free. 📊 The financial penalty depends entirely on the seller’s actual damages and what your lawyer can negotiate. Here is a typical breakdown for a Mississauga property.
| Type of Cost | Estimated Cost (CAD) |
|---|---|
| Seller’s Per Diem Charges | $150 – $400 CAD per day |
| Lawyer Extension Fees | $200 – $500 CAD for extra drafting |
| Moving Truck Rescheduling | $200 – $600 CAD depending on the company |
If the deal completely collapses and the seller is forced to relist the property, you could forfeit your entire deposit and be sued for any loss in property value.
How Long Does the Process Take?
Most bank delays are resolved within 24 to 48 hours. 📅 Often, it is simply an administrative error that clears the next business morning. However, if the delay happens on a Friday afternoon, you will be stuck paying per diem costs over the entire weekend until the Land Registry Office opens again on Monday morning.
Frequently Asked Questions (FAQ)
Whose fault is it if the bank delays the mortgage?
Legally, as the buyer, it is your responsibility to provide the funds on time. Even if the bank caused the delay through no fault of your own, you are the one in breach of the purchase contract and responsible for the seller’s late penalties.
Can I move my furniture in if the money is delayed?
Generally, no. A seller will not release the keys until they receive the money. In rare cases, a seller might sign an Escrow Agreement or a Tenancy at Will to let you move belongings into the garage, but they are under no obligation to do so.
Does title insurance cover bank delays?
No. Title insurance policies, such as those from Stewart Title or FCT, protect against fraud, encroachments, and municipal zoning issues. They do not cover financial delays caused by your lender failing to advance the mortgage funds.
Can the seller cancel the deal over a one-day delay?
Because time is of the essence, a seller technically has the legal right to terminate the contract if funds are not received by the deadline. However, most sellers just want to sell their house, so they will agree to a short extension in exchange for financial compensation.
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