Top Reasons for Delays on Closing: Sellers

There are many reasons that a real estate sale can be delayed.  Some reasons can be attributed to actions solely in the control of the sellers; some solely in the control of the purchasers and some reasons are the result of actions by both parties.  Many of the issues that arise can be avoided if the parties are aware of the potential for delays.  In this article we discuss the top 3 sources of delay from the seller’s side.

1. Compliance Issues

Standard real estate purchase contracts require the seller to provide a current real property report (RPR) with evidence of compliance.  This will apply to all properties with structures on it except for certain types of condominiums.  A RPR is a survey showing where all the structures on the land are located, the property lines and other features.  Compliance is issued by the city or town and proves that all the structures located on the property are compliant with the municipal zoning requirements.

If a seller does not have either a current RPR or compliance or both, then they will have to obtain it.  This can take time.  Depending on the surveyor and time of year, a RPR could take 4 weeks to obtain unless done on a rush basis and compliance up to 10 business days.  Rush fees for the RPR or compliance can increase the cost by hundreds of dollars.  If there are unknown compliance issues that arise (such as a lack of permits), those issues must be resolved which can take additional time.  Depending on the issue, the delays can be measured in weeks.

The best way for a seller to avoid delays is to obtain both the RPR and compliance before listing the property for sale.  Your realtor will be able to advise you if a new RPR is required.  

If you are aware before listing that there are compliance issues or that you do not have or are unable to get a current RPR with compliance, we suggest modifying or deleting the clauses in the purchase contract referring to an RPR and compliance and offering title insurance in lieu.  Again your realtor will assist in making the appropriate change to the contract.  Alternatively, if the issue is an unpermitted structure get the permits, fix the structure or remove it prior to listing.  For more information about RPRs, compliance and title insurance, please see our Permits, Real Property Reports and Title Insurance page.

2. Complete Repairs or cleaning prior to closing

We often see sellers agreeing to complete repairs for items discovered due to a property inspection or agreeing to complete cleaning, such as steam cleaning carpets, prior to closing.  These items can cause delays especially if the seller is not motivated to do what they agreed to or the repairs/cleaning do not meet the purchaser’s expectations.  Sellers will try to save money on repairs and do it themselves.  Often the sellers will then not have sufficient proof that the work was done.  The end result: more delays.

One way to avoid these types of complications is to offer compensation for the cost of the repair/cleaning instead of agreeing to complete the repair/cleaning.  We suggest sellers hire qualified people to provide estimates to complete the work.

If you must agree to complete the work, always ensure that the scope of work is clearly stated in writing, the work is completed long before the closing date (at least 2 weeks prior) and all receipts for the work or parts are provided to your lawyer.  Take before and after pictures if necessary.

Avoid accepting contract wording such as “to the buyer’s satisfaction”.  A buyer may have different expectations than the seller.  Delays are likely to occur if the repairs do not meet the buyer’s expectations.

3. Unable to provide a clear title

Most sellers are not aware of what is registered on their title.  A standard purchase contract will require a seller to remove all financial encumbrances on title.  These include mortgages, secured lines of credit, caveats re: purchaser’s interest, purchase agreements and many others.  There are some registrations that remain on title regardless of who the owner is. These are registrations such as utility right of ways, restrictive covenants and some types of caveats.

Caveats in particular can be troublesome.  Before listing your property, do a title search at Land Titles to obtain a copy of your title.  If you see a registration on title that you don’t understand, speak with a lawyer.  Always seek a lawyer’s advice before you agree to discharge a registration that you do not understand.

One of the troublesome caveats we often see is related to landscaping.  If you purchased the property as a brand new build, usually the landscaping and lot grading is not completed when you move in.  Developers will have registrations on title that are designed to protect their requirements for landscaping.  These registrations will typically show up as Caveat re: Agreement for Sale or Caveat re: Vendors Interest.  Developers will not remove these caveats until they have proof that the landscaping has been completed and inspected.  Homeowners of newly built homes should be aware of these requirements and seek to have all landscaping completed and inspected as soon as possible and related caveats removed.  Know who is responsible for completing the landscaping; whether it is the builder or the homeowner.  It is difficult to deal with these issues several years later especially since inspections are seasonal and the original landscaping may not have been maintained as the developer expects.

If you are selling your property and have questions, please contact us for assistance.