Real estate purchase & sale & closing

Real Estate Law · Purchase, Sale & Closing

Real Estate Purchase, Sale & Closing

Last updated: July 2026

Residential real estate purchases and sales in Ontario involve a lawyer completing title review, tax calculations, lender coordination, escrow of funds, and title registration — through to a completed transfer on closing day. Whether you're in Toronto, Markham, Richmond Hill or elsewhere in Ontario, these legal rules apply province-wide.

Who This Is For

First-time buyers (including new immigrants & international student families) Sellers of principal residences or investment properties Pre-construction buyers closing on their unit Non-resident buyers & sellers Parties with funds sourced from outside Canada Transfers between family members, adding/removing names, or holding in trust A spouse selling or transferring the matrimonial home post-separation Private mortgage lenders & borrowers

Key Legal Points

Ontario residential transactions must be registered by a lawyer

The electronic registration system (Teraview) is accessible only to licensed lawyers — buyers and sellers cannot complete the transfer themselves.

Signing the Agreement of Purchase and Sale (APS) creates binding legal obligations

Aside from new-condo pre-construction purchases, which carry a statutory 10-day cooling-off period from receipt of disclosure documents, an accepted offer on a resale property cannot be walked back. A defaulting party may forfeit their deposit and be liable for any resale shortfall.

Buyers pay land transfer tax — doubled within Toronto

First-time buyers can apply for provincial and municipal rebates. Foreign buyers must also pay Ontario's 25% Non-Resident Speculation Tax (NRST, in effect province-wide since October 25, 2022); Toronto adds a 10% municipal MNRST as of January 1, 2025, bringing the combined rate up to 35%.

📎 Non-Resident Speculation Tax — NRST (Ontario Ministry of Finance)

Non-resident sellers must handle s.116 clearance certificates under the Income Tax Act

If the vendor is a non-resident for tax purposes, the buyer's lawyer must, by law, withhold a portion of the sale price (typically 25%) until a CRA Clearance Certificate is obtained — otherwise the buyer may become liable for the vendor's unpaid tax.

📎 CRA — Disposing of or Acquiring Certain Canadian Property (s.116 Clearance Certificate)

Closing day is fundamentally about "money and title exchanging simultaneously"

Ontario operates under a Document Registration Agreement (DRA) escrow closing mechanism: documents and funds are exchanged into escrow first, and only released once registration is complete. A delay in any one step delays the entire transaction.

Note: Tax rates and policies are subject to the latest publications by the Ontario Ministry of Finance, the CRA, and the City of Toronto. Verify current figures before closing.

25% Ontario Non-Resident Speculation Tax (NRST)

35% Combined maximum within Toronto (NRST + MNRST)

Our Specific Role in the Purchase & Sale Process

Before signing: contract & status check-upReview APS terms, verify the buyer's and seller's identity and tax residency status, and assess whether NRST, the foreign buyer ban, or s.116 withholding applies

During the conditional periodCoordinate lender instructions and monitor satisfaction of conditions — financing approval, inspection, condo Status Certificate

Firm to closingComplete title search and requisitions, calculate the statement of adjustments and taxes, and prepare all signing documents — cross-border buyers should design a funds timeline well in advance

5–7 days before closingAll documents signed, all funds in the lawyer's trust account — building in a buffer so closing day isn't scrambled

Closing dayUnder the DRA escrow mechanism: documents and funds exchanged into escrow → electronic registration → discharge of existing mortgage → funds released once registration completes → keys handed over

After closingReporting letter, title insurance policy, and follow-up on rebates and clearance certificates

How H. Law Firm Approaches These Matters

H. LAW FIRM 恒. 律师事务所

Led by Miao (Mia) He, LSO #83315K · Bilingual English & Mandarin

Full Mandarin communication. Contract clauses, statements of adjustments, and mortgage documents are explained item by item in Chinese — no client signs a document they don't understand.

Cross-border fluency. We understand both Chinese and Canadian legal systems and the practical constraints on moving funds out of China (annual FX quotas, the compliance risks of multiple-person split remittances) — so we design the funds timeline in advance, preventing the closing-day "money hasn't arrived" crisis.

We separate immigration status from tax residency. Early in the retainer, we distinguish "immigration status" from "tax residency status" to determine whether NRST, MNRST, the foreign buyer ban, or s.116 withholding applies — rather than discovering it just before closing.

Real estate and family law under one roof. Our firm also litigates family disputes, so transactions involving the sale of a matrimonial home, post-divorce transfers, CPLs, or resulting trust disputes can all be handled within the same firm.

We plan ahead — no last-minute scrambles. Choosing a lawyer shouldn't just be about reasonable fees — it should be about whether that lawyer plans the closing steps ahead of time on your behalf. On the day we're retained, we issue a written instruction letter listing every step: what to do, who does it, and by when — clients simply follow it item by item.

Transparent fees, no hidden charges. We explain the complete fee structure at the outset and provide itemized disbursement lists with receipts.

Purchase & sale contract review Title search & requisitions Land transfer tax & NRST calculations Non-resident vendor s.116 clearance Lender coordination & fund escrow Cross-border funds timeline design Matrimonial home sale/transfer Private mortgage coordination

Fee Structure & Transparent Billing

In a typical transaction, the total amount clients pay consists of three parts: legal fees + HST + disbursements. We provide a complete disbursement list, itemizing every amount paid on your behalf, with receipts.

Amounts are estimates and vary by property and transaction structure. If your property involves special circumstances (such as additional searches or investigations), extra costs may arise — and we'll tell you before they're incurred, with reasons. For transactions without special circumstances, the quoted fees are what you pay.

Frequently Asked Questions

What happens if something goes wrong on closing day?

The three most common issues are: funds not yet in place, delayed lender funding, and the property's condition on closing not matching the agreement. Ontario's escrow closing mechanism allows a lawyer to withhold funds when documents have been delivered but registration isn't complete — so most issues don't immediately result in a failed transaction. In practice, there are typically four paths: (1) completing registration later the same day; (2) both lawyers signing a written Amendment extending closing to the next day or several days; (3) negotiating a holdback (funds set aside from the sale price in escrow) for unfinished repairs; (4) negotiating a price abatement for deficiencies. One caution: Ontario agreements typically contain a "Time is of the Essence" clause — neither party can unilaterally extend; any extension requires written agreement from both sides. If the other party refuses to cooperate, the matter moves into default and remedy proceedings. Which is why our approach is: complete fund transfers and document signing 5–7 days before closing, building in a buffer against risk.

Can foreign buyers still purchase property in Canada?

The federal Prohibition on the Purchase of Residential Property by Non-Canadians Act took effect January 1, 2023, and has been extended to January 1, 2027. It prohibits non-Canadians from purchasing residential property of three dwelling units or fewer within Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs), with fines up to $10,000 and courts able to order a forced sale (with proceeds capped at the original purchase price); anyone assisting the transaction may also face liability. Several exemptions exist (e.g., qualifying temporary residents, refugees, certain spousal co-purchases). Whether the ban applies, and whether an exemption is available, must be verified case by case — not assumed based on what an agent says.

📎 Prohibition on the Purchase of Residential Property by Non-Canadians Act (Justice Laws, Canada)

Beyond the purchase price, how much extra tax do foreign buyers pay?

Foreign buyers pay a 25% Non-Resident Speculation Tax (NRST) province-wide; for property in Toronto, an additional 10% municipal MNRST applies as of January 1, 2025, bringing the combined total up to 35% — on top of regular land transfer tax. For a $1,000,000 Toronto home, foreign buyer tax alone could exceed $350,000. Some buyers who later obtain permanent residency can apply for an NRST rebate within a statutory deadline, but the deadline is strict and late applications aren't accepted.

I'm currently in China — can I complete closing without returning to Canada?

Yes, but it must be arranged in advance. Common methods include signing a compliant Power of Attorney or executing documents through video witnessing (Ontario lawyers can conduct remote witnessing under LSO rules). Lenders typically have additional requirements for POAs and need written consent in advance. On the funds side, allow time for international wire timelines and bank compliance review (FINTRAC anti-money-laundering requirements) — we recommend starting at least two weeks ahead.

If the deal falls through after I've paid the deposit, can I get it back?

Not necessarily. Deposits are typically held in trust by the listing brokerage within 24 hours of offer acceptance. If the deal collapses due to the buyer's failure to complete (e.g., financing falls through with no financing condition left in the agreement), the seller may claim the deposit as forfeited and separately pursue the resale shortfall and carrying costs. If closing fails due to the seller, the buyer can seek return of the deposit plus damages. Bottom line: careful vetting during the conditional period matters far more than trying to fix problems on closing day.

Real Cases (Anonymized)

Case 1 · Non-resident vendor withholding

The seller was a Chinese citizen who had lived abroad long-term; neither the agent nor the seller realized this made them a non-resident for tax purposes. Acting as the buyer's lawyer, we identified this during title and identity verification, and before closing, withheld 25% of the sale price under s.116 of the Income Tax Act, holding it in our trust account until CRA issued a clearance certificate. Our client was thereby protected from the risk of the CRA pursuing them, as buyer, for the seller's unpaid tax.

Case 2 · Delayed funds on closing day

The buyer's purchase funds were being remitted from China through multiple people in stages, and one payment was held for bank compliance review on closing day. We paused fund release under the escrow mechanism, and the same day, signed a written Amendment with the opposing lawyer extending closing by two business days. The client was not found in default and did not lose the deposit.

Areas We Serve

We provide real estate purchase, sale, and closing legal services to clients throughout Ontario, including:

Toronto Markham Richmond Hill North York Vaughan Mississauga Scarborough All Ontario

Ready to buy or sell? Get a legal check-up before you offer

English & Mandarin · Toronto & Markham & All Ontario

This page provides general legal information only. It does not constitute legal advice and does not create a lawyer–client relationship. Please contact our firm regarding your specific situation. Tax rates and policies are subject to the latest publications by the Ontario Ministry of Finance, the CRA, and the City of Toronto.

Real estate purchase & sale & closing