No, Really. How Much Time Do I Need to Close?
This blog post covers one of those basic real estate issues that come up over and over. It’s that perennial question, “how much time do I need to close my real estate transaction?” The answer is from Barry’s perspective as a veteran Alberta real estate lawyer, but it will be very similar in other jurisdictions.
Time to Close: Real Estate Transactions Aren’t Usually Fast
My teaching on this ultra-important point is:
you should have your closing 30 days after removal of final conditions.
If you are buying from out of province, 35 days is a better bet. 30–35 days gives lots of time for the realtors and lenders to get everything to a lawyer. It allows time for problems, troubles, mistakes, and delays that are way more common than you think.
I can hear some of you saying, “but Barry, do you really need 30 days?” Not always. And, yes, of course, deals can be closed quicker. Rush closes, however, usually cost more in legal fees.
Sometimes that’s a negotiating technique to get you a deal. An investor client of mine once beat out eight other offers to buy a property at $60,000 under market, and one of the deciding factors was that he said he would close quickly. Nothing wrong with that. You have a little stress and a little more in legal fees, but it’s worth it for the $60,000 pop.
But, that’s not the norm. Troubles, problems, and delays are way more common. How do I know that? I see it all the time!
Here are some different scenarios causing heartburn for our clients:
- Mortgage funds didn’t turn up on closing day from the lender.
When we called them, it took half a day till they told us that the mortgage advance had been lost and they would have to re-issue the cheque. 2 day delay.
- Offer to purchase on a rural property had an incomplete legal description.
These are hard to track down. 4 day delay speaking to the realtor, the county, and the lender.
- Brand-new deal with incorrect legal descriptions on the offer and the mortgage.
2 days to reconcile. 8 days after final condition removal, we were still waiting for mortgage instructions from the lender.
- The interest rate and payment amount do not match in the lender’s Statement of Disclosure and Commitment Letter.
Client says they are correct in the Commitment Letter. Lender says it’s the Statement of Disclosure that takes precedence. 4 days to get the lender to acknowledge there is an issue and then they re-issue the Commitment Letter instead of correct Statement of Disclosure. 2 more days to fix. Total 6 days delay.
- Purchase made in a corporate name.
As always the lender wants personal guarantees. Our husband and wife investors should have applied in their married names. Somehow the lender wants the personal guarantee of the wife in her maiden name. 3 days delay while we try to get new instructions from the lender.
- Selling the property of a deceased relative.
Our seller client is executor of his father’s estate. He told us it was a clear title property. Our title search shows an old mortgage from 1996. The buyer’s lawyer quite rightly demands that we get rid of that old mortgage. The seller says it was paid off years ago, nothing owing. Unfortunately, the seller has no proof and the bank says, so far, that they have been unable to locate anything on it. However, they still don’t want to discharge. $500,000 remains in trust.
So, there you have it. What happens to chew up those 30 days? Stuff happens and lots of it. Every month we, and other law firms, come up against and have to solve these kinds of issues. Do yourself a big favour. We know you can’t always, but try your best to get 30–35 days to close after final condition removal. Don’t put yourself in the position of having to ask the seller for an extension. Remember, sellers don’t have to give you an extension. Reduce your (and our) stress and don’t pay extra legal fees.
If you want to close your Alberta real estate transaction, contact Barry now!