What Happens on Possession Day When Buying a House in Alberta?

What Happens on Possession Day When Buying a House in Alberta?

Short answer: possession day is the day the buyer pays the purchase price, the seller’s lawyer releases the transfer documents, and the buyer usually receives the keys.

But possession does not always happen first thing in the morning.

In Alberta, the timing depends on the purchase contract, the lawyers’ closing process, mortgage funding, transfer documents, payout requirements and whether both sides are ready to close.

The important point is simple:

Possession day is not just “moving day.” It is also the legal closing day.

What Does Possession Day Mean?

Possession day is the date set in the purchase contract for the buyer to take possession of the property.

On that day, several things usually need to happen:

• the buyer’s mortgage funds are advanced;

• the buyer provides the remaining closing funds;

• the buyer’s lawyer sends closing funds to the seller’s lawyer;

• the seller’s lawyer confirms the required documents and undertakings;

• the seller gives up possession of the property;

• keys are released to the buyer; and

• the buyer becomes responsible for the property.

In a smooth transaction, all of this happens on the scheduled possession date.

But the exact time can vary.

Do You Get the Keys in the Morning?

Not always.

Many buyers assume that if possession day is Friday, they can pick up the keys at 9:00 a.m. and start moving in immediately.

That is not always how it works.

Keys are usually released only after the seller’s lawyer has received the required closing funds and the closing conditions are satisfied.

Depending on the transaction, keys may be released:

• in the morning;

• around noon;

• in the afternoon; or

• later in the day if there are funding or closing delays.

The practical rule is simple:

Do not book movers based on an assumption that keys will be available first thing in the morning.

What Happens Before Possession Day?

A lot of the work happens before the actual possession date.

Before closing, the buyer’s lawyer usually reviews:

• the purchase contract;

• mortgage instructions from the lender;

• title to the property;

• the Real Property Report and compliance documents, if applicable;

• tax adjustments;

• condo documents, if applicable;

• payout and closing documents from the seller’s lawyer;

• insurance requirements;

• identification and signing documents; and

• the final amount the buyer must bring in to close.

The buyer usually meets with their lawyer before possession day to sign mortgage and closing documents.

The buyer also usually provides the remaining funds needed to close, such as the down payment balance, legal fees, title insurance if applicable, registration costs, tax adjustments and other closing costs.

What Does the Buyer Need to Do?

Before possession day, the buyer should make sure they have completed the practical steps needed for closing.

These may include:

• arranging home insurance effective on possession day;

• signing mortgage and closing documents;

• giving the lawyer certified funds or arranging a bank draft/wire;

• confirming the lender has everything needed to advance mortgage funds;

• setting up utilities;

• arranging movers;

• reviewing the purchase contract for included appliances and items;

• confirming whether a final walkthrough is permitted;

• making sure any condition waivers have been properly signed; and

• staying available in case the lawyer needs last-minute information.

The buyer should not assume the lawyer can close if money, insurance, mortgage instructions or signed documents are missing.

The practical point is this:

Possession day can be delayed if the buyer is not ready to fund and sign on time.

What Does the Seller Need to Do?

The seller also has obligations before and on possession day.

The seller usually needs to:

• sign transfer and closing documents;

• provide required payout information for mortgages or liens;

• provide keys, garage controls and access devices;

• remove personal belongings unless the contract says otherwise;

• leave included appliances and fixtures;

• maintain the property until possession;

• provide vacant possession unless the contract says otherwise;

• address agreed repairs or holdbacks; and

• move out by the agreed possession time.

If the seller is not ready, closing may be delayed or disputes may arise.

Examples include:

• the seller has not moved out;

• the property is damaged before possession;

• agreed repairs were not completed;

• included appliances are missing;

• keys are not available;

• the seller cannot discharge a mortgage or lien;

• title documents are incomplete; or

• the seller has not provided required closing documents.

When Is the Property Actually Yours?

Practically, the buyer takes possession when the transaction closes and keys are released.

Legally, the transfer of title may be registered after closing steps are completed. In Alberta, the lawyers may close using trust conditions and undertakings, meaning the parties rely on professional obligations between lawyers to complete registration and payout steps properly.

This means the buyer may receive keys before the final title registration is fully reflected in the land titles system.

That is normal in many Alberta real estate closings.

The key point is that the buyer’s lawyer and seller’s lawyer coordinate the exchange of funds, documents and undertakings so that possession can be released.

What If the Mortgage Funds Are Late?

Mortgage funding delays are one of the most common reasons possession is delayed.

This can happen if:

• the lender has not sent mortgage instructions;

• the buyer has not signed documents early enough;

• the lender still needs proof of insurance;

• the buyer’s down payment funds have not arrived;

• there is an issue with the mortgage conditions;

• the lender is delayed in advancing funds; or

• the closing falls on a busy day, Friday or before a long weekend.

If funds are late, the seller’s lawyer may not release keys until money is received.

The practical rule is simple:

A mortgage approval is not the same thing as mortgage funds being available on closing day.

What If the Buyer Is Short on Closing Funds?

A buyer may need more money than just the down payment.

Closing funds can include:

• the balance of the purchase price not covered by the mortgage;

• legal fees;

• land title registration costs;

• title insurance, if applicable;

• property tax adjustments;

• condo fee adjustments, if applicable;

• reimbursement for prepaid utilities or other agreed items;

• mortgage lender fees, if applicable; and

• other transaction-specific costs.

If the buyer does not provide enough money to close, possession can be delayed and the buyer may be in default under the purchase agreement.

That can have serious consequences.

The practical point is this:

Before possession day, confirm the exact amount needed to close and deliver it early.

What Are Adjustments?

Adjustments are used to make the transaction fair as of the possession date.

For example, if the seller prepaid property taxes for a period after possession day, the buyer may reimburse the seller for the buyer’s share.

Common adjustments include:

• property taxes;

• condo fees;

• homeowners association fees;

• rent, if the property is tenanted;

• prepaid utilities, if applicable; and

• other prepaid or outstanding property-related amounts.

Adjustments are usually calculated by the lawyers and included in the final statement of adjustments.

The buyer should review these numbers before closing.

What About Utilities and Insurance?

The buyer should arrange property insurance to begin on possession day.

This is usually required by the mortgage lender. It is also important because risk may pass to the buyer at or around closing, depending on the contract.

The buyer should also arrange utilities to start on possession day, including:

• electricity;

• gas;

• water;

• internet;

• waste collection, if applicable; and

• condo move-in arrangements, if applicable.

The seller should arrange final meter readings or final utility accounts where required.

Can the Buyer Do a Final Walkthrough?

Sometimes, yes.

A final walkthrough is not automatic unless the contract provides for it or the parties agree.

A walkthrough can help confirm that:

• the seller has moved out;

• included appliances remain;

• the property has not been materially damaged;

• agreed repairs were completed;

• personal property has been removed;

• the property is generally in the expected condition; and

• access devices and keys are available.

A walkthrough is not usually a chance to renegotiate the deal over minor issues.

But if there is a serious problem, the buyer should raise it immediately with their lawyer before closing funds are released, if possible.

What If the Seller Has Not Moved Out?

If the seller has not moved out by the agreed possession time, that can create a serious problem.

Possible responses may include:

• delaying release of funds;

• negotiating a holdback;

• agreeing to a short extension;

• seeking compensation for moving or storage costs;

• requiring vacant possession before keys are released; or

• treating the issue as a breach, depending on the facts.

The buyer should not try to resolve a possession dispute informally at the door.

The practical rule is simple:

If the seller is not out, contact your lawyer immediately.

What If There Is Damage on Possession Day?

If the property is damaged before possession, the buyer should document the issue right away.

Steps may include:

• taking photographs and video;

• comparing the condition to inspection reports or listing photos;

• identifying whether the damage occurred before or after closing;

• notifying the realtor and lawyer;

• checking the purchase contract;

• reviewing insurance issues; and

• considering whether a holdback or other remedy is available.

Minor wear and tear is different from significant new damage.

The timing, seriousness and cause of the damage all matter.

What If Appliances or Fixtures Are Missing?

The purchase contract usually identifies which unattached goods are included, such as appliances, garage door openers or window coverings.

Fixtures are generally expected to remain unless excluded.

If included items are missing on possession day, the buyer should notify the lawyer and realtor immediately.

Possible solutions may include:

• return of the missing item;

• replacement;

• compensation;

• a holdback; or

• another negotiated resolution.

The practical point is this:

Check the contract before assuming an item was included.

What If the Keys Are Delayed?

Key delays can happen even when everyone is acting properly.

Common reasons include:

• mortgage funds have not arrived;

• the seller’s lawyer is waiting for closing documents;

• there is a title or payout issue;

• the buyer delivered funds late;

• the lender has not completed funding;

• undertakings are still being confirmed;

• the seller has not vacated; or

• there is a last-minute dispute.

If keys are delayed, the first step is to determine why.

Sometimes the issue is solved within hours.

Other times, the parties may need an extension, holdback or formal closing arrangement.

Should You Schedule Movers for Possession Day?

You can, but be careful.

Because possession can be released later in the day, it is risky to schedule movers for early morning unless the timing has been confirmed.

A safer approach may be to:

• confirm the contractual possession time;

• ask when keys are realistically expected;

• avoid scheduling movers before funds are likely to arrive;

• keep movers flexible where possible;

• avoid booking elevator moves too early for condos;

• avoid scheduling deliveries before keys are released; and

• have a backup plan for delays.

The practical rule is simple:

Possession day can involve waiting. Plan for that.

What Happens After You Get the Keys?

After keys are released, the buyer should:

• inspect the property;

• confirm appliances and included items are present;

• check for obvious damage;

• confirm utilities are working;

• change locks or rekey the property;

• locate manuals, garage controls and access devices;

• review mail forwarding and address changes;

• confirm condo access or building procedures, if applicable; and

• keep copies of closing documents.

If a problem is discovered immediately, the buyer should document it and contact their lawyer promptly.

Common Possession Day Problems

Some common issues include:

• mortgage funds are late;

• buyer’s closing funds are short;

• seller has not moved out;

• keys are not available;

• appliances are missing;

• property is damaged;

• utilities are not connected;

• condo move-in rules were not arranged;

• closing documents are incomplete;

• title or discharge issues arise;

• property tax adjustments are disputed; or

• there is disagreement about what was included in the sale.

Most issues are manageable if addressed quickly.

But some can affect closing, possession, or the parties’ rights under the contract.

What This Means Practically

Three rules are worth remembering.

Possession day is not guaranteed to start in the morning. Keys are usually released only after closing funds and documents are properly in place.

Be ready before closing day. Insurance, funds, signed documents, mortgage requirements and utility arrangements should be completed early.

Do not ignore last-minute problems. If the seller has not moved out, the property is damaged, or included items are missing, raise the issue immediately before trying to solve it informally.

Speak With an Alberta Real Estate Lawyer

Possession day should be straightforward, but real estate closings can become stressful when funding, title, documents or property condition issues arise.

A proper closing review should consider:

• the purchase contract;

• the possession date and time;

• financing and mortgage funding;

• title and registration issues;

• tax and condo fee adjustments;

• Real Property Report issues, if applicable;

• seller payout obligations;

• included appliances and fixtures;

• vacant possession; and

• any holdbacks or closing disputes.

 

Berjak Law handles Real Estate law matters in Edmonton and across Alberta.

 

Berjak Law

10080 Jasper Avenue, Suite 301
Edmonton, Alberta

780-879-0200

 

This article provides general information about possession day when buying a house in Alberta and is not legal advice. Real estate closing issues are fact-specific and depend on the purchase contract, lender requirements and the circumstances of the transaction.