Buying and Selling Property on the same day in Ontario

  • By:Gibson & Reitboeck LLP

It is possible and completely common to buy and sell a home on the same day.  Here is why we don’t recommend it…..

When buying and selling property on the same day, there are multiple issues that arise.  When you buy and sell on the same day, your transactions become a part of a chain of deals that will be closing.  You cannot buy before you sell, unless you are purchasing in cash sourced outside of the sale proceeds.  Most people need their sale proceeds to purchase a new home.

If the person you are selling to is obtaining a mortgage, their lender plays a big role in when funds will be advanced to their solicitor in order to complete their purchase from you.  We also reply upon how quickly the other lawyer is to get to the bank and send us documents.  When your mortgage comes from a Tier One lender (RBC, CIBC, TD etc.) funds are usually advanced to the solicitor early in the day.  However, if you are using a Tier Two lender (First National, MCAP Service Corporation etc.) or a Tier Three lender (private financing), funds tend to arrive much later in the day – sometimes as late as 4:45 p.m.  When buying and selling on the same day, neither you, nor your lawyer are in control of timing!  Your lawyer cannot “get the sale closed” until they are in receipt of funds.

If the person/people purchasing your property do not get their funds until late afternoon, your sale may not close until well after 4 p.m..  If your sale does not close until after 4 p.m., there is a very real possibility that your purchase will not close prior to 5 p.m..  If your solicitor is unable to close your purchase by 5 p.m., you will be responsible for any fees incurred for storing your household contents, hotel stays (especially if your deals are closing on a Friday as you will have a multiple night stay at a hotel).  Please do not close on Fridays, especially Friday’s on holiday weekends!

Further issues arise if the person you are buying from is also purchasing on the same day.    Now you are part of an extended chain.  If your purchase doesn’t close, then someone else’s sale has not closed, and in turn their purchase cannot close.  The person you are purchasing from may agree to extend the closing date of your purchase, but beware, you will have to pay for this privilege.  You will pay the per diem interest on their mortgage, their hotel stay(s), storage fees, moving company fees etc.

If you are selling your property in Ontario and buying a property in another province, you should never close these transactions on the same day.

This likely sounds like more stress than you need, but stay tuned because we have a solution!  Watch for our blog on Bridge Financing!

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