Over the past year, we’ve encountered several challenging situations during real estate transactions—particularly close to closing.
In some cases, buyers requested a last-minute extension.
In more difficult scenarios, a few buyers even attempted to delay closing strategically, using it as leverage to pressure sellers into accepting new terms.
Understandably, this creates immediate concern for sellers:
- “Do I have to agree to the extension?”
- “What happens if the buyer refuses to close?”
The key is this:
If handled incorrectly, a seller can quickly lose control of the situation—and potentially face significant financial loss.
This article outlines how sellers should respond when a buyer requests a closing delay, based on real cases we’ve successfully managed.
The Fundamental Principle: A Contract Is a Contract
In Ontario real estate transactions, the Agreement of Purchase and Sale is legally binding.
If a buyer fails to close on the agreed date—regardless of the reason—it constitutes a breach of contract.
That said, delays do happen in practice.
The question is not whether they occur—but how you respond when they do.
Step 1: Maintain a Firm and Unified Position
At the first sign of a delay request, it is critical that the seller, agent, and lawyer present a consistent and firm stance:
- The seller is fully prepared to close on time
- Any delay will result in measurable financial loss
- Extensions are not accepted by default
This early positioning is essential.
If the seller appears uncertain or flexible at the outset, negotiations often shift in favor of the buyer—making it much harder to enforce the original terms later.
Step 2: If You Agree to an Extension, It Must Come at a Cost
If the buyer insists on delaying closing, the situation moves into negotiation.
At this stage, the principle is simple:
An extension is not free—it must include compensation and added protection.
Additional Deposit Requirement
In most cases, sellers should require an additional deposit, typically in the range of 2.5% to 5% of the purchase price.
Equally important is how this deposit is structured:
- It must include a clause stating that
if the buyer fails to close again, the deposit is released directly to the seller
This is critical. Without this clause, the deposit may remain tied up in trust, reducing its effectiveness as protection.
Compensation for Financial Losses
Any extension should also account for the seller’s actual carrying costs, including:
- Lost interest on sale proceeds
- Bridge financing costs (if purchasing another property)
- Daily carrying expenses (utilities, insurance, equipment rentals, etc.)
- Property tax adjustments (pro-rated by day)
- Moving or temporary storage expenses
These costs can—and should—be calculated on a daily basis and used as part of the negotiation.
Step 3: All Terms Must Be Documented by a Lawyer
No matter how straightforward the agreement may seem, all changes must be formalized legally.
This includes:
- Executing a written Amendment to the Agreement of Purchase and Sale
- Clearly outlining all revised terms, deposits, and conditions
Verbal agreements or informal confirmations carry significant risk and should never be relied upon in a closing scenario.
A Critical Insight: The Deposit Reveals the Buyer’s True Position
One of the most reliable indicators of a buyer’s ability—and intention—to close is their willingness to provide the additional deposit.
If a buyer is unwilling to commit further funds:
It is often a strong signal that the risk of default is high.
This is not just a negotiation tool—it is a risk assessment mechanism.
Final Thoughts
Closing delays can be stressful, but they do not have to put sellers at a disadvantage.
With the right strategy:
- You maintain control of the transaction
- You protect your financial position
- You minimize the risk of further complications
However, these situations require careful handling. Poor decisions at this stage can easily translate into tens of thousands of dollars in impact.
