Understanding the Legal Aspects of Buying and Selling Property in Ontario

When it comes to buying or selling property in Ontario, understanding the legal ins and outs can be just as crucial as finding the right home or setting the perfect listing price. Real estate transactions are complex and involve legally binding contracts, responsibilities, and deadlines. Failing to grasp the legal components can lead to delays, disputes, or even financial losses.

Whether you’re a first-time homebuyer, an experienced investor, or a seller looking to make your next move, knowing what’s legally required can protect your interests and ensure a smooth, successful transaction.

Key Legal Documents in a Real Estate Transaction

One of the first—and most important—legal documents you’ll encounter is the Agreement of Purchase and Sale (APS). This contract outlines the terms and conditions of the property transaction, including price, deposit, closing date, inclusions (like appliances), and any conditions (such as financing or home inspections). It becomes legally binding once both the buyer and seller sign and agree to the terms.

Other key documents include:

• Seller Property Information Statement (SPIS): Though not mandatory, this form discloses known issues with the property and helps reduce post-sale disputes.

• Title Documents: These verify ownership and ensure the property is free of liens or disputes.

• Mortgage and Financing Papers: Buyers need to secure financing, often requiring signed mortgage documents and credit approval.

• Disclosure Forms: In some cases, sellers must disclose material defects or issues that could affect the property’s value.

Reviewing all documents with a knowledgeable real estate agent and lawyer is essential. Once signed, these documents are enforceable by law, and backing out without proper cause can result in serious consequences.

The Closing Process: What to Expect

The closing process is the final stage in a real estate transaction when ownership is officially transferred from seller to buyer. It involves a series of legal steps and financial transactions that must be completed by a specific date.

Here’s a breakdown of what happens:

1. Title Search: Your lawyer will verify the seller has legal ownership and that there are no outstanding claims, liens, or encumbrances on the property.

2. Review of Title Insurance: This protects the buyer from any title-related issues that may arise after the purchase.

3. Land Transfer Tax: Buyers must pay a provincial land transfer tax, and in some municipalities like Toronto, an additional municipal tax. First-time homebuyers in Ontario may qualify for a rebate.

4. Legal Fees and Disbursements: Your lawyer will prepare the documents, register the home in your name, and disburse the funds. Expect to pay legal fees and costs for registration, courier charges, and more.

5. Final Closing Meeting: This is when the buyer provides the balance of the purchase price, signs final documents, and officially becomes the new owner.

6. Key Exchange: Once all paperwork is processed and funds transferred, the buyer receives the keys—congratulations, the deal is done!

Common Legal Pitfalls and How to Avoid Them

While real estate transactions generally go smoothly with the right team in place, several legal pitfalls can cause headaches if not handled properly:

• Undisclosed Defects: If a seller hides known issues like a leaky basement or mold, it could lead to legal disputes post-sale. Sellers should be honest and disclose all material facts, and buyers should always consider a professional home inspection.

• Zoning and Permits: Want to build a backyard suite or open a home business? You’ll need to check local zoning bylaws. Buyers should confirm the property’s zoning and ensure all renovations or additions were done with proper permits.

• Missing Conditions: Buyers and sellers sometimes overlook or misunderstand conditions in the Agreement of Purchase and Sale, such as financing clauses or the need for a satisfactory home inspection. Never waive these conditions lightly—doing so could leave you financially exposed.

• Boundary Disputes: Fences, sheds, or driveways that encroach on neighbouring properties can create problems. A survey or title search can help identify and resolve these issues before closing.

• Incomplete or Inaccurate Paperwork: Even small errors in legal documents can delay closing or lead to legal trouble. That’s why it’s so important to have experienced professionals—like real estate lawyers and agents—review everything carefully.

Why Working With Professionals Matters

The legal side of real estate can be intimidating, especially for first-timers. Having a knowledgeable real estate agent, lawyer, and mortgage broker on your side can make all the difference. These professionals help you understand what you’re signing, meet deadlines, and avoid costly mistakes.

At Sold by Shearers, we work closely with local legal experts to ensure every step of the buying or selling process is smooth and compliant. We believe in educating our clients and being proactive about potential red flags—so you can feel confident in every decision you make.

Buying or selling a home is one of the biggest financial decisions you’ll ever make—and it’s one wrapped in layers of legal responsibility. From contracts and title searches to tax payments and closing day logistics, understanding the legal aspects of real estate in Ontario is key to protecting yourself and your investment.

Taking the time to learn the process, ask questions, and work with trusted professionals can help you avoid common pitfalls and move through the transaction with peace of mind.

Looking for help navigating your next real estate transaction in Peterborough or the Kawarthas?
Reach out to our team at Sold by Shearers—we’re always happy to guide you through the process, every step of the way.