June 3, 2025
Selling a home is one of the most significant financial transactions you will make in your life. In Ontario, as in other provinces, there are several legal requirements and considerations to keep in mind when selling a property. Whether you’re a first-time seller or have sold homes before, understanding the legalities can help ensure the sale process goes smoothly and avoids potential pitfalls. This article provides an overview of the essential legal aspects of selling a home in Ontario.
1. Listing Your Property: Legal Agreement with a Realtor
When you decide to sell your home, the first step is often to work with a real estate agent. If you choose to list your property through a realtor, you will sign a listing agreement. This is a legally binding contract between you (the seller) and the agent or brokerage, and it outlines the terms and conditions of their services, including the commission rate, listing price, and duration of the agreement.
There are typically two types of listing agreements in Ontario:
- Exclusive Listing: This gives one realtor or brokerage the exclusive right to sell the property.
- Multiple Listing Service (MLS) Listing: This allows multiple agents or brokerages to list and sell your property, increasing exposure.
Ensure that you read the listing agreement carefully and understand all the terms. If you’re unsure about anything, it’s advisable to consult a real estate lawyer to review the agreement.
2. Disclosure Obligations: Honest Representation
In Ontario, sellers are legally required to disclose certain information about the property to potential buyers. Under the Real Estate and Business Brokers Act, 2002 (REBBA), you must ensure that any material facts about the property are disclosed in writing. Failure to disclose issues that could affect the buyer’s decision, such as water damage, mold, or structural problems, could expose you to legal liability for misrepresentation or fraud.
A common tool used in the process is the Seller Property Information Statement (SPIS). This document, while not mandatory, is often requested by buyers. It includes questions about the condition of the property and any past issues (e.g., renovations, insurance claims, or past flooding). By providing accurate information, you reduce the risk of disputes after the sale. Because this may increase your liability, extra care should be taken in completing this form. There is the option to sell “as is” but this may affect your sale price.
Key areas to disclose include:
- Known defects or damage
- The age of major systems like the furnace and roof
- Past repairs or renovations that may affect the property’s value
- Environmental hazards, such as asbestos or lead paint
3. Offer and Acceptance: The Agreement of Purchase and Sale
Once you have a buyer interested in purchasing your home, the next step is negotiating the terms of the sale. The buyer typically submits an Offer to Purchase, which includes the price they are willing to pay, their desired closing date, and any conditions (such as financing, inspections, or the sale of their own property).
As the seller, you can accept, reject, or counter the offer. Once both parties agree to the terms, a formal Agreement of Purchase and Sale (APS) results. This document is legally binding and outlines the terms and conditions of the sale. It is crucial to ensure that all aspects of the agreement are clear, including:
- The purchase price
- The deposit amount (typically 1-5% of the sale price)
- The closing date
- Any contingencies or conditions, such as repairs or inspections
It’s highly recommended that you work with a real estate lawyer to ensure the Agreement of Purchase and Sale is in your best interest.
4. Legal Closing Process and Title Transfer
The closing process involves the transfer of the property’s title from you (the seller) to the buyer. This is when you hand over possession of the property. There are several legal steps involved in the closing process, including:
- Payment of outstanding debts: Any remaining mortgage balance, property taxes, or utility bills must be paid off before the sale is completed.
- Transfer of title: Your lawyer will prepare the necessary documentation to transfer the title of the property to the buyer. This includes ensuring that there are no encumbrances or liens against the property.
- Final inspection: The buyer may conduct a final walkthrough to ensure that the property is in the condition agreed upon in the contract.
- Closing statement: This document outlines the financial aspects of the transaction, including adjustments for property taxes, utilities, and other fees. Your lawyer will help ensure all calculations are accurate.
On the closing day, the buyer’s lawyer will transfer the purchase funds to your lawyer, and in return, you will hand over the keys to the property. The title transfer will then be registered with the Land Registry Office.
5. Capital Gains Tax and Other Tax Considerations
In Ontario, capital gains tax may apply when selling a property. If the home is your primary residence, you are generally exempt from paying capital gains tax on any profit made from the sale. However, if the property was used for investment purposes or as a second home, you may be subject to capital gains tax on the profit.
It is also important to consider other taxes, such as the HST (Harmonized Sales Tax), although it generally does not apply to the resale of residential properties. However, it could apply if the property was used for business purposes or if the property is newly constructed.
Consulting a tax advisor is recommended to ensure you understand your tax obligations fully.
6. Potential Legal Risks and Disputes
While most property transactions in Ontario proceed without legal issues, disputes can arise during the process. Some common legal risks include:
- Breach of contract: If either party fails to meet the terms of the Agreement of Purchase and Sale, the other party may have legal grounds to pursue damages.
- Misrepresentation: If you fail to disclose known issues with the property, the buyer may be entitled to cancel the contract or claim damages.
- Title issues: If there are unresolved title defects (e.g., an undisclosed lien or ownership dispute), this can delay the closing or derail the transaction entirely.
To protect yourself, it’s crucial to work with professionals, such as a real estate agent and a lawyer, who can guide you through the legal aspects of the sale and help mitigate these risks.
7. Hiring a Real Estate Lawyer
While a real estate agent can assist with much of the sale process, hiring a real estate lawyer in Ontario is essential to protect your legal interests. A lawyer can:
- Review and negotiate the Agreement of Purchase and Sale
- Ensure compliance with disclosure requirements
- Handle the transfer of title and registration
- Advise you on any tax implications
- Resolve any legal disputes or issues that arise during the sale
A lawyer’s expertise can help prevent costly mistakes and ensure the process runs smoothly from start to finish.
What Weilers LLP Can Do to Help You
Selling your home in Ontario involves several legal steps, from listing the property and disclosing relevant information to completing the sale and transferring the title. By understanding your legal obligations and working with professionals such as the real estate team at Weilers LLP, you can navigate the process with confidence. Whether you’re a seasoned seller or new to the market, ensuring that you meet all legal requirements will help make the sale as smooth and successful as possible. Give us a call and see if we are the right lawyers for you.