Closing Delays and How to avoid them
Whether you are buying or selling a property, it’s important to understand that there can be delays in a real estate closing. A closing delay is something you want to avoid. There are several reasons possession may not be possible on the date you have on your purchase agreement. Sometimes upexpected or negleted items occur and nobody wants to be left homeless on their possession date.
REALTORS® are aware of these delays (because we don't get paid until after possession day), we help our clients avoid closing delays for a smooth transaction and a happy buying and selling experience. Below is a list of possible closing delays.
You choose the wrong lawyer
Not all lawyers are familiar with real estate transactions and this can cause delays in the transfer of title. At EdmontonHousesAndHomes, we encourage our clients using real estate lawyers.
Unreal closing dates
Unlike other provinces in Canada, Alberta's land title transfer process begins prior to you meeting with your lawyer. In the province of Alberta, it takes time to process a the title of a property to another person. This time frame will vary according to the market and land titles processing time. As a rule of thumb - a good closing date is 1-2 months after you write your offer to purchase.
Your bank revokes your mortgage
Yes. This does happen. The bank has the right to secure their mortgage and in the event that something changed, such as a job loss or the buyer also purchased a vechicle, changing their debt-ratio, the bank can pull your mortgage. REALTORS® will remind their clients not to make any big purchases until they recieve their house keys.
Real Estate Appraisal Issues
Sometimes (usually in a busy market), the bank did not send out the appraiser prior to telling you your mortgage has been approved. If the property does not appraise out at your offer price or higher, the bank can refuse to forward funds, the seller will need to reduce the price of the property or the buyer must come up with the diffence between the offer price and the appraised value.
Terms or contingiencies of the contract
If you have a walk through term written into your agreement and you find out the terms after the contract have not been fullfilled, this can be considered a breach of contract. These items could be as simple as the seller removing the dog feces in the back yard to more substantial issues such as a builder not finishing the completion or repairs. It is always best to have a walk through clause written into the offer prior to the buyer removing their conditions.
Problems with the title
Edmonton REALTORS® are obligated to pull title when they are writing an offer to ensure the persons selling the property is correct as well as ensuring there is enough equity in the property to be sold. Sometimes, prior to closing, after conditions have been removed, the seller has taken out a second or third mortgage and there is not enough equity to close. If this happens, there is major liablity issues that your lawyer will discuss.
The RPR does not have compliance
In the REALTORS® purchase agreements, there is a cluse reguarding the real property report and compliance which the seller has signed and agreed to. In the event the seller does not have compliance, there is an issue. A common one is when the seller has change the deck or a non-movable shed had been added to the property.
Homeowner insurance is not secure
The buyers lawyer will ask the buyer to bring in the insurance binder. This is basically a peice of paper saying the buyer has insurance on the property. If there is no insurance, the bank can not forward the mortgage funds.
If either the buyer or the seller does not have enough cash to close, there's a problem. Read more on closing costs.
When writing an offer to purchase, the terms, conditiond, amendments and addendums must be crystal clear to avoid misunderstandings. The interpatation of the buyers lawyer may not be the same as the sellers lawyer. If the written phrase is not cytal clear, have your REALTORS® re-write it in lamens terms.
The buyer changes their mind
During the last Edmonton real estate crash, we seen this happen often due to the crashing real estate prices and buyers did not want to pay the agreed amount when the value of the property had substantially decreased. In our REALTORS® contracts, there are items put in place with the consequnces of such action. To avoid this in a soft market, be reasonable with your negotitaions. - The buyer can walk away.
The seller is unable to vacate on time
Alberta REALTOR® purchase contracts state that the property must be vacant by noon on the day of possession. However, sometimes the seller is still in the property due to circumstance beyond their controll. If this happens, it is a breach of contract. The best thing do is take your lawyers advice, there is some conpensation.
Not working with a qualified REALTOR®
The majority of Edmonton Remax REALTORS® have closed hundreds and hundreds (some have closed thousands) of real estate transactions. Using an experienced REALTOR® can be the differnce between being homeless and a seemless closing.
We pride ourselves on helping our clients with a smooth real estate transaction and a great buying and selling experience. If you or thinking about buying or selling and need experienced Edmonton Remax REALTORS®, email us. We are here to help.