Firm to close: where Ottawa home sales actually fall apart

Firm is not done

Last week I wrote about how to read the offer on your kitchen table. This is the sequel nobody asks for until it is too late.

The conditions come off, your agent calls with good news, and the whole thing feels finished. It is not. There are usually 30 to 60 days between firm and closing, and in my experience almost every deal that goes sideways in Ottawa goes sideways in that window rather than during the negotiation. The problems are boring, administrative, and almost entirely preventable. They are also the ones nobody warns you about, because they land on your lawyer's desk rather than your agent's.

Here is what actually causes trouble, roughly in the order it shows up.

Rented equipment is the number one offender

Your hot water tank. Possibly your furnace, your air conditioner, your water softener, your alarm system. If any of it is rented rather than owned, that has to be spelled out in the agreement, and the agreement has to say who deals with it: are you buying out the contract before closing, or is the buyer assuming it?

Sellers get this wrong constantly, usually not on purpose. People genuinely forget that the tank in the basement is a rental, because the payment rides along on the Enbridge bill and has for twelve years. Then the buyer's lawyer runs a search, finds a rental agreement nobody disclosed, and now you are three weeks from closing arguing about a $4,000 buyout.

There is one piece of good news here that a lot of sellers have not caught up with. Ontario's Homeowner Protection Act took effect on June 6, 2024, and it banned the registration of Notices of Security Interest for consumer goods on title. NOSIs that were sitting on title immediately before that date were deemed expired. For years, a NOSI registered by a furnace or water treatment company was one of the ugliest surprises in a residential closing, because it showed up as a cloud on title and set off a fight about who paid to clear it. That specific problem is largely gone.

What did not go away is the debt. The rental contract still exists and the company can still pursue you for it, just not by parking a registration on your house. Your lawyer will still run a PPSA search. So the practical instruction is unchanged: pull out every equipment contract in the house before you list, find out what is rented and what the buyout is, and put it in writing in the agreement. Do this during the pre-listing prep window, not the week before closing.

Chattels and fixtures, and the shed you assumed was yours

The rule in Ontario is straightforward and almost nobody applies it correctly. Fixtures, meaning things attached to the property, are included in the sale by default. If you want to keep one, it has to be specifically excluded in the agreement. Chattels, meaning movable things, are not included unless they are specifically listed.

So the mounted TV bracket stays unless you excluded it. The chandelier your mother gave you stays unless you excluded it. The fridge does not come with the house unless somebody wrote "fridge" in the agreement.

This is the single most common closing-day argument in residential real estate, and it is almost always about something worth under $2,000 that has enormous emotional weight. The fix costs you nothing: walk the house before you sign anything and make a list. If there is a fixture you refuse to part with, take it off the wall and replace it before the photos are taken. A buyer cannot fall in love with a light you already removed.

The mortgage discharge nobody budgets for

When you sell, your existing mortgage gets discharged out of the proceeds, and if you are breaking the term early there is a penalty. Two rules cover almost everyone. Variable-rate mortgages generally cost three months' interest. Fixed-rate mortgages cost the greater of three months' interest or the interest rate differential.

Right now the arithmetic is unusually kind to sellers, and I want to be specific about why. The IRD gets large when rates have fallen since you signed, because the lender is losing the spread. Rates have not fallen. The Bank of Canada has held at 2.25% through six consecutive decisions, most recently on July 15, and the next announcement is not until September 2. Anyone still carrying a fixed rate from the 2020 to 2021 window is in the situation where the IRD calculation comes out at or near zero, and the penalty defaults to three months' interest. On a $400,000 balance at 1.8%, three months' interest is about $1,800. That is a rounding error on a $700,000 sale.

The bigger question is whether you should be discharging at all. If you have two or three years left on a term with a rate that starts with a 1 or a 2, porting that mortgage to your next house is very likely the most valuable thing in your entire file, worth far more than any price concession you are agonizing over. Check your maturity date first. If you were part of the 2021 buying wave, your five-year term is maturing about now and there is nothing left to port. If you signed in 2022 or later, call your lender before you commit to a closing date, because most ports require the sale and the purchase to close within a set window and some lenders make that window tight.

Adjustments, and the final walkthrough

On closing, the lawyers adjust for anything you have prepaid past the closing date. Property taxes, if you are ahead. Prepaid utilities. If you are on a City of Ottawa pre-authorized tax plan, tell your lawyer, because those adjustments get missed more than they should.

Then there is the buyer's pre-closing visit, usually a day or two out. Two things go wrong here. The first is condition: you are on the hook for the property arriving in essentially the state the buyer saw it in, so the scratched hardwood your movers created is your problem, not theirs. The second is what you left behind. Paint cans, the broken dryer, the treadmill in the basement that nobody wants. Removing junk is your job, and a buyer who walks into a house with a garage full of your leftovers at 4 p.m. the day before closing has a lawyer they can call.

Leave the manuals, the warranty paperwork, the extra keys, the garage remotes, and the fob for the security system on the counter. It costs you ten minutes and it is the last impression you make.

None of this is dramatic. It is a checklist, and a deal that dies on it dies for no good reason.

If you are firm and closing this summer and you are not sure what is rented, what you agreed to leave, or what your lender will charge you to get out, send me the agreement and I will read it with you before your lawyer does. Reach me at 613-262-6545 or fil@613realtor.ca, and bring the schedule, not just the front page.