Posted by: Karim Ali
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What to Do if Sellers Haven’t Moved Out on Closing Day
Closing day is supposed to be exciting—the day you finally get the keys to your new home! But what happens if the sellers haven’t moved out yet? This 5-minute read will walk you through exactly what to do if you find yourself in this unfortunate situation. It’s not ideal, but with the right approach and a little luck, it may be resolved without too much hassle.
How To Proceed
1. Contact Your Real Estate Lawyer
The first step is to contact your real estate lawyer immediately. This isn’t the time for guessing games—your lawyer is equipped to give you the legal advice you need. They’ll assess the situation and explain your options based on your Agreement of Purchase and Sale.
2. Review the Agreement of Purchase and Sale
In Ontario, the Agreement of Purchase and Sale outlines all the terms for the transaction, including when the sellers are required to vacate the property. If the sellers haven’t moved out by the agreed-upon time, they may be in breach of contract. Your lawyer will help you review the agreement to understand any legal remedies available.
At the time of writing of this blog post, Agreements of Purchase and Sale in Ontario state that the “Agreement shall be completed by no later than 6:00 p.m. on the [date]. Upon completion, vacant possession of the property shall be given to the Buyer unless otherwise provided for in this Agreement.”
3. Request a Holdback
One of the options your lawyer may suggest is requesting a holdback. A holdback means withholding a portion of the seller’s proceeds until they vacate the property. This incentivizes the sellers to move out quickly and ensures they won’t receive their full payment until they do.
4. Negotiate a Temporary Occupancy Agreement
If the situation isn’t dire and the sellers just need a bit more time, you may be able to negotiate a temporary occupancy agreement (if your situation allows it). This agreement allows the sellers to stay for a short period in exchange for rent or other compensation. This arrangement should be formalized in writing and agreed upon by both parties, under the supervision of your lawyer.
5. Delay Closing (if Possible)
Another option, if both parties agree, is to delay closing until the sellers have vacated. This approach isn’t always ideal because it can cause logistical headaches with your mortgage lender or disrupt your moving plans. However, in some cases, a delayed closing could prevent bigger problems down the road.
6. Seek Legal Remedies
If the sellers refuse to vacate and all other solutions fail, your lawyer may advise pursuing legal action, such as eviction. This can be a lengthy process, but it might be necessary to secure possession of the property. Keep in mind, this is usually a last resort and should only be considered if all other options have been exhausted.
On the same note of legal remedies, you may sue the sellers for breach of contract, and they may be responsible for your moving costs, storage, accommodation and other damages incurred due to the delay in closing.
7. Document Everything
Throughout this process, it’s crucial to document all communication and interactions with the sellers, your lawyer, and any other relevant parties. Keeping a detailed record can be essential if you need to take legal action or claim damages later on
Summary
This can be frustrating, but it’s important to stay calm and rely on your legal team for guidance. Contact your lawyer as soon as possible, as they’ll need to take swift action on your behalf.
Bonus tips
1
Use your final walkthrough
Consider scheduling a final walkthrough very soon before closing day to ensure the sellers are on track with their move-out obligations. It’ll allow you to flag the potential problem to your lawyer, and extra due diligence can be assigned.
2
Budget for Delays
Unexpected delays like this can happen, so it’s wise to build some flexibility into your moving plans, both financially and logistically. A general rule is to never plan a move on the same day as your closing!
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