Wondering when you’ll get your money? After all, that’s the whole point of this process, isn’t it? Getting the money into your hands. So when will you get paid?
When you sell your home, we’ll give you a cheque for the net sales proceeds – this is the money left over after the realtors’ commissions have been paid, along with any mortgages or lines of credit, the legal fees, land title fees, taxes, etc…..
It’s really important that you don’t plan on getting your cheque on the closing day itself. Most of the time, In certain situations, your money (or at least part of it) might not even be available to you for weeks or even months after your closing date.
So why can’t you have your money on closing day? In short, timing, and the amount of work we have to do to pay out the property’s bills.
We generally don’t get money from the “other side” – the buyer’s notary or lawyer – until either very late on the closing day, or even the next day. Surprisingly, most contracts don’t actually specify when the funds are to be delivered.
Funds are only delivered to us when all of the registration work is done. On a good day, the registration process might be done at noon, but most days it’s done around 3:00 or 4:00 pm. Only then does money actually start to move. Cheques have to be written and signed by the buyer’s notary or lawyer, and then someone has to go to the bank, stand in line and deposit the funds. All of that takes time.
Once those funds have been delivered to our trust account, we then have to write a bunch of cheques to pay various things out (mortgages, taxes, utilities, legal/land title costs, etc.).
If you have a line of credit, or a mortgage with a line of credit component to it, we have to call your lender for a payout update. This is because sellers often continue to use their line of credit right up to the closing date. This update call always happens the next business day after receiving the money.
If you (or any other owner on title) are a non-resident of Canada, then we have to sort out non-residency taxes and holdbacks. This holdback can be as much as 50% of the sale price of your home.
If there are court orders, liens or other unusual charges registered on title to your property, those may take some time to pay out as well.
Your cheque for net sales proceeds is one of the last cheques we write.
There are some things that delay this funding process even further. Busy month ends, different trust accounting practices at other firms, buyers who can’t get their ducks in a row, lenders refusing to fund, long closing chains….
So there is simply no guaranteeing when we will receive the money from the buyer’s notary or lawyer, even when they are trying their hardest. We’ve had situations where everyone has done everything right, and the courier has lost the money on its way to us. It took 5 days in that case to get the courier company to find the money, get it back from Ontario (where it had ended up) and into our hands.
Sound scary? It’s not, really. It can be complicated, but that’s what your notary or lawyer is for. We make sure that the title to your home is transferred according to the terms of your contract. We make sure that your title is cleared according to the terms of your contract. We will go through all of the financials when you come to see us for your signing meeting, and we will make sure you understand what we will be paying out of the funds we receive from the buyer’s notary or lawyer. We will talk to you then about whether we have to hold back any funds, and the timing of when you will receive your funds.
Most sellers receive their funds the next business day.
Tempted to say “no money, no keys”? Don’t. That’s not a thing. At least, it’s not a legally enforceable thing in the way you might think.
A contract, like the contracts used to buy and sell homes, is (among other things) a series of mutual promises. You have to hold up your end of the bargain. For example, a seller promises to give a buyer clear title, and to allow possession of the property on the date set out in the contract. A buyer promises to pay a seller for this clear title.
The buyer’s notary or lawyer won’t have started the registration process until they have met all of their obligations under the contract. So the buyer has met their obligations even though you don’t necessarily have money in your hands yet. You have to make sure you carry out your part of the bargain.
Part of the seller’s obligations including giving the buyer possession at the date and time you set out in your contract, NOT when you receive your money. Don’t breach your contract just because you haven’t yet gotten the sales money in your hands. Be patient. It will come.
So please be careful – don’t plan on having your net sales proceeds on closing day. If you need the money right away for another purchase, or some other reason, make sure you tell us that, so we can work out a timeline, and talk you about your options. We’re here to help.Tags: buying a home, net sales proceeds, selling a home, timing of net sales proceeds
Categorised in: conveyancing
This post was written by Linda Caisley