Understanding Real Estate Closing Dates: Q&A
What’s the difference between the Completion, Possession, and Adjustment Dates?
- The Completion Date is the day when the money and property title officially transfer from the seller to the buyer. It must be on a business day and cannot fall on a holiday.
- The Possession Date is when the buyer actually gains access to the property. This is the date and time specified in the contract when the seller must vacate and hand over the keys.
- The Adjustment Date is when financial adjustments are made for costs like property taxes, utilities, and maintenance fees. These amounts are prorated based on each party’s responsibility and appear as debits or credits on the Statement of Adjustments prepared by the lawyer or notary.
Why is the Completion Date different from the Possession/Adjustment Date?
The Completion Date is when the sale is legally finalized, but the exact timing of the title transfer and fund release can vary. Contracts require submission before 4 PM, but processing by notaries, lawyers, and the land title office means the exact time of registration will vary. Typically, a lawyer or notary will advise against granting possession until they have received the sale proceeds. If the funds aren’t available to the seller’s lawyer or notary by the end of the day, possession may be postponed. Because of this, to avoid any risk of breach of contract, it’s common to set the Possession Date at least one day after Completion.
Why would a seller prefer a staggered Completion and Possession Date?
A staggered schedule provides flexibility, particularly if the seller is using the sale proceeds to purchase another property. It ensures they receive the funds, complete their next transaction, and move before giving up possession of their current home. In some cases, if the seller is purchasing a home that also requires a staggered closing, they may want up to a week between Completion and Possession.
Should the Possession and Adjustment Date be the same?
Yes, it’s customary to align these dates so that buyers only become responsible for property taxes, maintenance fees, and other costs when they actually take possession.
How do I choose the best Completion, Possession, and Adjustment Dates as a buyer?
The ideal dates depend on various factors, including whether you're moving from a rental, purchasing for investment, or also selling another home. The seller’s preferences may also come into play. These details should be carefully considered when drafting your initial offer.
What happens if the sale doesn’t close on the Completion Date?
If the sale doesn’t close on the Completion Date, it doesn’t necessarily mean the deal is off. While contracts set a 4 PM deadline for document submission, courts have ruled that as long as the funds are available on the Completion Date, a delay past 4 PM may not invalidate the sale. However, missing deadlines can create complications, including potential disputes between the buyer and seller. To minimize risks, it's crucial to ensure all conditions are met on time and to follow the guidance of your notary or lawyer if any delays arise.
What happens if the seller doesn’t vacate on the Possession Date?
If a seller fails to vacate by the agreed-upon Possession Date, they will be in breach of contract. Although rare, in such cases, buyers should consult their lawyer or notary to determine the best course of action, which may include financial compensation or legal enforcement of the contract terms.
Can I move in on the Completion Date?
Typically, no. The seller is not obligated to provide possession until the Possession Date stated in the contract. Since fund transfers can be delayed, possession is usually granted only after the seller’s lawyer or notary has received the funds. In some cases, if the seller has already moved out, the home is clean, and the funds have been received, they may be willing to provide the keys on the Completion Date.
What if my Completion Date falls on a Friday or before a long weekend?
If your Completion Date is on a Friday or before a holiday, any delays in fund transfers may push the seller’s receipt of funds to the next business day. This could delay possession, so it’s important to be mindful when scheduling closing dates. However, in some cases, closing before a weekend is unavoidable.
Have more questions or need more help?
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