Real Estate Possession Dates: Show Me the Money! (Just Not on Friday or Canada Day Please)
Spring Market Frenzy is upon us, which means homebuyers are pounding the pavement and writing offers, for homes they won't move into until June or July. Unfortunately, choosing a sensible possession date tends to be sidelined during hot and heavy negotiations. When closing day finally arrives and key release turns into a nightmare, everyone wishes they could go back in time and renegotiate for any day but a Friday before the long weekend.
Possession dates are a contentious thing. Buyers and sellers want what they want on their personally preferred and convenient schedules. In Alberta, everyone wants to move on a long weekend, especially July long weekend. Perennially, this is the busiest funding window of the year.
Lenders and lawyers are swamped from about June 26th to July 5th. This means possession ('closing') delays inevitably happen, creating a pressure cooker of chaos for homebuyers, sellers, and everyone else trying to facilitate the sale. Therefore, trying to close right before or after the Canada Day holiday is a very silly idea and you shouldn't do it.
A word on mortgage funding: most Canadians leverage mortgage debt to purchase a home. Funding a mortgage on time and to the letter of the mortgage contract is complex. Something as minor as a typo on the bank's mortgage instructions to the lawyer can delay a buyer from taking possession of their new home.
I wish my lecture could end here. However, clearly thousands of Albertans don't take this advice. Because it keeps happening. Year after year after year.
If you're the inquisitive type, keep reading. It's a necessarily long explanation of the closing process, but it will remove all doubt as to the whys and what-fors of choosing your possession date very carefully.
If you're not so patient, just take my word for it: instead of causing yourself to wonder why you ever thought buying or selling a home was a good idea in the first place, make the wise choice now to not close within a country mile of Canada Day holiday (or on a Friday, ever), and you'll be cheers-ing with good friends and fireworks this July 1st--and all your Friday nights before and after.
[Insert short coffee break here. Take a deep breath. Then keep reading if you want to learn something that most people don't know or understand. Great for dinner parties.]
Karri's Possession Date Lecture-to-End-All-Lectures. (And why you should never take possession of your home on a Friday, or anywhere near Canada Day long weekend.)
Every year, a zillion homebuyers and sellers in Alberta decide that moving right before or right after the July 1st holiday is a fabulous idea. This gives lawyers night sweats. You see, paying someone hundreds of thousands of dollars for a home is not as simple as writing a cheque and asking for the key (or door code). It's more complicated than that, and it's the main reason you need a lawyer in Alberta to facilitate a real estate closing.
THE THING to understand: 'Closing' on a home is all about MOVING THE MONEY between buyer and seller. Unless the buyer is paying with cash (rare), there are a lot of steps involved. Here's how it has to go down...
After the buyer removes ('waives') conditions from the purchase contract, the lender issues mortgage instructions to the buyer's lawyer. The lawyer cannot MOVE THE MONEY from buyer to seller without these instructions.
Real estate agents, take note: it can take up to two weeks for mortgage instructions to be issued after condition removal, particularly if the lender is one of the Big Six institutional banks.
Once mortgage instructions are issued, the buyer's lawyer meets with the buyer for document review and real-life 'wet signatures' on the land transfer. Alberta Land Titles will not accept electronic signatures. Full stop. Plan for an in-person, lawyer meeting prior to closing. If you miss it, you're not getting the keys to your new home.
After this meeting, the lawyer can now MOVE THE MONEY from buyer to seller. This generally happens on the morning of possession or 'closing day.'
Friends, trust and believe when I say that heads will roll when the money doesn't move by noon on a Friday, before a long weekend, with a family sitting in front of their new home, packed into a moving van with all their worldly possessions, in 35-degree heat, waiting for THE KEY. But they cannot have THE KEY because the seller hasn't been paid for their home yet. Because the lawyers are trying to MOVE THE MONEY for a zillion buyers and sellers in Alberta that day.
Remember, too, there is an anxious homeowner (seller) on the other side of this equation who is likewise waiting for the lawyers to MOVE THE MONEY into their bank account. If said homeowner doesn't doesn't get paid on time, they might not care (we truly hope for this). But chances are they do care. Sometimes they care because they need THE MONEY to fund their own home purchase, which is now in a snafu.
Very bad.
Closing delays can be resolved, but it's not fun for anyone. It takes time. And phone calls. And faxes (not kidding). And emails. And lawyer sign-offs. And cancelling the moving truck. Plus maybe a night in a motel or 'rent' paid to the seller -- so the buyer can reside in a home they do not own yet. In the background of all this, your Realtor is getting blasted by all parties involved.
Can you see why negotiating a possession date around Canada Day weekend---or really on a Friday, period---is not nearly as convenient as it may seem when planning your summer move?
Bonus points for those buying or selling in Calgary: Do not negotiate possession for the Friday before the opening of Calgary Stampede. Lenders and lawyers close that morning for Stampede Parade and may or may not re-open for the afternoon. If there is a snag in MOVING THE MONEY, your S.O.S. call may go unanswered. Even if you're all sitting in a moving truck in front of your dream home wondering when you can have THE KEY. You can't.
Double bonus points for never closing on any Friday, ever: Trying to solve a funding issue on a Friday afternoon is nearly impossible, long weekend or not. Banks clock out by 4:30pm, 2:30pm Alberta time if your lender is headquartered in Toronto. Lawyers clock out as well. Yes, your real estate agent will hold your hand and talk you off the ledge, but they cannot MOVE THE MONEY and give you THE KEY.
As your mortgage broker, nor can I. I can make calls and pull strings, but like I said, lawyers and lenders aren't in a position to MOVE THE MONEY late in the day on a Friday. Believe me, I know. I was a Realtor for 10+ years. I all but banned Friday closings from my practice. It served my clients well.
Of course, I give this lecture with love in my heart for anyone working on their home ownership goals. My job as your mortgage broker is to solve problems before they happen.
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