Buying or selling property in Ontario is one of the biggest financial decisions you’ll ever make. Whether you’re a first-time buyer in Newmarket, an investor in Barrie, or selling your Mississauga home, understanding real estate law helps protect your investment and prevents costly mistakes.
This comprehensive guide covers everything you need to know about Ontario real estate law – from closing costs and ownership structures to navigating complications when deals fall through.
Why You Need a Real Estate Lawyer in Ontario
In Ontario, involving a lawyer in property transactions isn’t just recommended – it’s required. Ontario law requires lawyers to be involved in property purchases and sales to protect both buyers and sellers. Under the Land Registration Reform Act, lawyers must make certain statements in the land title deed. Lawyers have exclusive access to the Provincial Electronic Land Registration Systems, which allows them to register land transfers properly and ensure all documentation is accurate.
What Real Estate Lawyers Actually Do
Your real estate lawyer handles critical tasks throughout your transaction:
For buyers, your lawyer will:
- Conduct thorough title searches to ensure clear ownership
- Review and explain purchase agreements in detail
- Prepare and review mortgage documents
- Advise on ownership structures (joint tenancy vs. tenancy in common)
- Arrange title insurance
- Obtain confirmations from the seller ensuring property taxes are up to date
- Handle the actual transfer of title, registration of mortgage and payment of funds on closing date
- Provide you with the keys to your new home
For sellers, your lawyer will:
- Confirm mortgage and line of credit details
- Calculate discharge fees or penalties owing on sale
- Respond to requisitions from the buyer’s lawyer
- Prepare transfer documents and statements of adjustments
- Facilitate signing of closing documentation
- Discharge mortgages and liens
- Forward sale proceeds
Protecting Against Common Problems
Experienced real estate lawyers in Newmarket, Barrie, Mississauga, Richmond Hill, and Oshawa routinely identify and resolve issues including:
- Illegal property additions or improvements
- Title defects and encumbrances
- Zoning and planning regulation issues
- Issues with uncooperative buyers or sellers
- Complications with bank-owned or foreclosed properties
- Out-of-town purchase complexities, including farm and commercial properties
Choosing the Right Real Estate Lawyer
You’ll see now why having a lawyer is essential, but choosing the right lawyer is your next step. When choosing, consider three key factors:
- Experience and Expertise: Look for lawyers with dedicated real estate law practices who understand Ontario’s specific regulations and local market conditions.
- Team Support: A lawyer within a team ensures you can reach someone when issues arise, regardless of vacations or scheduling conflicts.
- Transparent Costs: Work with a lawyer able to offer you clear, written fee estimates detailing both legal fees and expected disbursements.
Understanding Real Estate Transaction Costs
One of the biggest surprises for buyers and sellers is the range of costs beyond the purchase price.
Legal Fees vs. Disbursements
Legal Fees cover your lawyer’s professional services – reviewing agreements, conducting searches, preparing documents, handling closing procedures, etc.
Disbursements, on the other hand, are third-party costs your lawyer pays on your behalf: Land Transfer Tax, title insurance, search fees, and registration fees.
Many people expect their legal fees to include everything, but disbursements are pass-through costs that will vary by transaction. Additionally, real estate lawyers sit in a unique position – they work for you while also coordinating with your lender to meet their requirements.
As Ontario real estate lawyer Mark A. Epstein explains: “We’re acting for the purchaser but we also act for the bank. If the bank wants wet ink signatures on documents we need to get wet ink signatures on documents. It’s not necessarily our choice.”
This dual representation means some costs come from your lender’s requirements, not your lawyer’s preferences.
Why Some Costs Change Last-Minute
Even with the best planning and sharpest lawyer, some disbursements and requirements only present when banks provide final instructions – often just days before closing. The reason? Communication gaps within the banking systems themselves.
“There’s often a disconnect between the bank lending department and the mortgage brokers. The lending department doesn’t always talk to the mortgage broker. So we talk to the mortgage broker, and the lending department talks to us, but they don’t talk to each other.”
This breakdown means document requirements can change at the last minute, signing procedures may be dictated by the bank, and timing is often out of everyone’s control.
Land Transfer Tax: The Hidden Cost
Land Transfer Tax (LTT) is one that often catches new buyers off guard. This tax can add thousands to your closing costs – and being unprepared for this kind of cost can impact your budget significantly.
LTT is a tax paid by the buyer on the total purchase price of the property, payable on the date of closing when your Transfer/Deed gets registered with the Land Registry Office. Ontario uses a sliding scale system, meaning the more expensive your property, the higher percentage you pay on different portions of the purchase price.
Ontario’s LTT rates:
- Up to $55,000: 0.5%
- $55,001 to $250,000: 1.0%
- $250,001 to $400,000: 1.5%
- $400,001 to $2,000,000: 2.0%
- Over $2,000,000: 2.5%
If you’re buying property within Toronto city limits, however, you’ll pay both the provincial Ontario Land Transfer Tax and an additional Toronto Municipal Land Transfer Tax – essentially paying the tax twice. This double taxation significantly impacts affordability in Toronto compared to other Ontario municipalities.
Real-World Example: A $600,000 home in Newmarket costs $8,475 in LTT. The same home in Toronto costs $16,200 because you pay both provincial and municipal LTT.
First-Time Buyer Rebates:
To qualify, you must have never owned a home anywhere in the world, be a Canadian citizen or permanent resident, and occupy as your principal residence within 9 months.
- Ontario: Up to $4,000 (covers full LTT on homes up to ~$368,000)
- Toronto: Up to $4,475 (covers full Toronto LTT on homes up to $400,000)
- Federal GST (New Construction): Up to $50,000 on new homes after May 27, 2025 (Newly proposed and not yet enacted)
Title Insurance: Worth the Investment
One of the most common questions is whether title insurance is necessary.
Mark A. Epstein is clear: “I get title insurance when I buy a place because it’s peace of mind… If somebody defrauds you, if you’re that one in a million, and you go on vacation and come home and they sold your house, you’re protected.”
Title insurance covers:
- Property tax discrepancies (the #1 claim type)
- Construction liens from previous owners
- Title fraud and forgery
- Boundary disputes and survey issues
- Unknown title defects
“[With title insurance] we don’t have to go through 40 years worth of searches online and look at every document – which could be 50 bucks – but in a lot of cases, it’s an excess of a hundred. In some cases, it could be a few hundred.”
Getting title insurance often costs less than comprehensive manual searches while providing ongoing protection and the extra layer of peace of mind. Title insurance is also in most cases, a lender’s requirement for your mortgage.
“The beauty of title insurance is they step in immediately within the week, pay you off, and they pursue the vendor. You do nothing. You just collect your cheque and move on with your life.”
Total Closing Costs
With all of that said, here’s an idea of what total closing costs could look like:
For a $600,000 Ontario home, budget 1.5-3% of purchase price:
- Land Transfer Tax: $8,475
- Legal fees: $2,000-$3,000
- Title insurance: $300-$500
- Home inspection: $400-$600
- Moving costs: $500-$2,000
Total: $12,000-$18,000+
Property Ownership Structures: Joint Tenancy vs. Tenancy in Common
When buying with someone else, choosing how to hold title affects your estate planning and property rights. There are two ways to approach a joint purchase: joint tenancy and tenancy in common.
Joint Tenancy
Here, each owner has equal interest in the purchase. When one dies, their share automatically goes to the surviving owners (right of survivorship), regardless of their will.
Requirements: Four “unities” must exist:
- Unity of Time – all acquire interest simultaneously
- Unity of Title – all through the same document
- Unity of Interest – all have identical interests
- Unity of Possession – all can use the entire property
Example: Sarah and Scott buy a Newmarket home as joint tenants. If Scott dies, Sarah automatically owns 100%, even if Scott’s will says otherwise. No probate required for the property.
Joint tenancy is best for:
- Married couples wanting automatic inheritance
- Avoiding probate delays and costs
- Simple equal ownership structures
Benefits:
- Immediate transfer upon death
- No probate required
- Straightforward for couples
Drawbacks:
- Limited estate planning – you can’t leave your share to others
- Problems if relationships change
- Can’t access equity independently
Tenancy in Common
In this approach, each owner has a distinct share of the property which they control independently. When one dies, their share goes to their estate per their will – not the other owner(s).
Key Features:
- Unequal shares are allowed (70/30, 60/40, etc.)
- Independent control – you can sell, mortgage, or gift your share without permission
- Estate planning flexibility
- Each owner’s creditors can potentially force sale of their share
Example: Three friends buy a Barrie rental property as tenants in common with contributions of $100,000, $75,000, and $50,000. Their ownership reflects these amounts (44%, 33%, 23%). When one dies, the deceased owner’s share goes to their beneficiaries – not automatically to the other owners.
Tenancy in common is best for:
- Business partners or investors
- Owners making unequal contributions
- Second marriages with children from previous relationships
- Complex family situations
Benefits:
- Maintain estate control through your will
- Ownership(s) reflects contributions
- Independent transfer rights
- Maximum flexibility
Challenges:
- Probate required for deceased’s share
- Co-owners can force partition sales
- More complex to manage
Common Mistakes
Mistake # 1: Assuming joint tenancy is always better: This assumption creates problems if you want to leave your share to children from a previous marriage or if relationships change.
Mistake # 2: Not understanding severance: Innocent actions like adding someone to a mortgage can accidentally convert joint tenancy to tenancy in common.
Ignoring estate planning impact: When making any purchasing decisions, ensure property ownership aligns with your will and overall estate strategy. This can also be a prime time to develop an estate strategy, if you have yet to create one.
The Buying Process: What to Expect
The Agreement of Purchase and Sale
The Agreement of Purchase and Sale is your most important document, outlining purchase price, deposit, closing date, conditions, and all terms binding both parties.
Protective Conditions
Smart buyers include:
- Home inspection condition: Can back out if major problems are found
- Financing condition: Protection if mortgage approval fails
- Sale of current property: Makes the purchase conditional on selling your existing home
- Status certificate review (condos): Time to review condo finances and bylaws
The Mortgage Commitment Reality
Getting mortgage approval isn’t as final as it seems – unfortunately, your mortgage can be pulled even as late as on closing day.
“People get a commitment from a bank, which sounds like – by the strict definition of the word – they’re committing to your deal. No, it’s just a document called a commitment. They can change their mind the day of closing. It’s like, ‘now we re-evaluated the deal and we’re not funding.’ Well, okay, but we have six hours until closing, and they can just say, ‘We have no legal obligation to you to close this deal.’ That’s nuts.”
“It happens more than people would think,” explains Mark A. Epstein. “We don’t go a week without one of these types of issues happening.”
There are a variety of reasons your bank can withdraw:
- A re-evaluation of your financial risk
- Property appraisal coming in lower than expected
- Employment changes (even promotions)
- Market volatility
- Internal bank communication failures
What Happens When Funding is Pulled:
With hours until closing, you might face:
- Emergency lender searches
- Calling family for emergency loans
- Alternative lenders at much higher rates (one recent case saw rates jump from 4.9% to 8.5% with $35,000 in additional fees)
- Negotiating closing extensions (with fees owing to sellers)
- Storage and moving complications
Take steps to protect yourself and lessen the risk of this happening:
- Don’t change jobs or take on debt between approval and closing
- Stay in constant communication with your mortgage broker
- Have backup plans identified
- Work with experienced lawyers who can move quickly in crises
When Things Go Wrong: Deals That Fall Through
Even with everyone’s best efforts, deals sometimes fail. Some common reasons a deal might fall through are:
- If financing falls through
- An inspection reveals major issues
- Title problems are discovered
- Cold feet or life changes (job loss, divorce, illness)
Legal Implications of Backing Out
After an Agreement of Purchase and Sale is completed, it becomes a binding contract for both buyer and seller. Walking away from a real estate deal sets off a chain reaction: failing to complete the deal by the closing date can force other parties to default on their own commitments.
There are two legal ways to exit, if needed:
- The other party has unfulfilled conditions in the agreement
- The seller has materially misrepresented the property (didn’t disclose flooding, fire, mould, etc.)
Consequences for Buyers
Keep in mind, you can’t simply change your mind without consequences (for example, new condos have 10-day rescission, but resale properties don’t).
Backing out without valid reason means:
- Losing your deposit (typically 5-10% of purchase price)
- Additional damages for:
- Difference between your price and eventual sale price
- Carrying costs (mortgage, taxes, utilities) during delays
- Storage and moving expenses
- Legal costs
Rights for Sellers
When buyers default, you can:
- Keep the deposit
- Relist the property
- Pursue additional damages beyond the deposit
To better protect yourself, ensure deposits are at least 10% of purchase price. Larger deposits demonstrate serious commitment and provide better protection.
Special Situations
Power of Attorney Transactions
When Power of Attorney is involved, extra verification from your legal team protects everyone.
“Law firms get involved to verify and make sure the POA is valid,” explains Roscoe Wu, Associate Lawyer at Epstein & Associates PC. “It’s more on the seller’s lawyer to make sure that person has a valid and continuing POA that hasn’t been revoked yet.”
Critical checks lawyers will make in instances of a POA:
- The POA is properly executed with required signatures
- It specifically grants real estate authority
- The POA is currently effective and not revoked
- It is not being used improperly
“Some POAs are only effective upon incapacitation, meaning it requires some conditions such as a capacity assessor to say ‘Yes, John Doe does not have capacity,’ and that’s when the document becomes valid.”
Red flags to look out for in these scenarios:
- An attorney acting against the principal’s known wishes
- The transaction primarily benefits the attorney
- An unusual urgency without clear reason
- Reluctance to provide documentation
- Family concerns about the transaction
Tenant and Landlord Rights
Ontario’s Residential Tenancies Act governs rental relationships.
Tenant protections include:
- No discrimination
- Access to vital services landlords can’t shut off
- Minimum heat (20°C September-June)
- Controlled rent increases (once per 12 months max)
- Proper eviction procedures through Landlord and Tenant Board
Read more about tenant rights in our previous article, Know Your Rights: Renters Edition.
Landlord rights include:
- Ability to evict for legitimate reasons with proper procedures
- Must provide 60+ days notice
- Must compensate one month’s rent for personal use evictions
- Must act in good faith
Read more about landlord rights in our previous article, Know Your Rights: Landlord Edition.
Bad faith eviction consequences: Landlords may owe former tenants up to 12 months rent plus moving expenses and rent differentials for up to one year.
Your Key Takeaways
Real estate law is in place to protect you and ensure your transaction proceeds smoothly from offer to closing. Having knowledgeable legal representation means you’ll navigate any challenges with confidence, from dealing with title issues to financing complications or unexpected changes to your deal. The right lawyer doesn’t just handle paperwork – they anticipate problems before they become costly mistakes and advocate for your best interests throughout the entire process.
Keep the following in mind when you’re looking to buy or sell property in Ontario:
Lawyers are required and essential: Choose experienced counsel who understand local markets and can handle complications.
Budget comprehensively: Beyond down payment, expect 1.5-3% of purchase price for LTT, legal fees, title insurance, and other costs.
Ownership structure matters: Joint tenancy vs. tenancy in common has major estate implications – choose carefully.
Mortgage commitments aren’t guarantees: Banks can withdraw funding on closing day. Have backup plans and experienced lawyers.
Title insurance provides peace of mind: Even lawyers buy it – straightforward claims process protects against costly problems.
Know your rights: Understanding Ontario real estate law prevents expensive mistakes whether buying, selling, or renting.
Act quickly when problems arise: Time-sensitive issues require immediate legal advice to protect your interests.
Working with Epstein & Associates PC
Real estate transactions involve specific legal requirements and significant financial commitments, but you don’t have to navigate them alone. Whether you’re buying your first Newmarket home, selling a Barrie investment property or handling a Mississauga transaction, the experienced team at Epstein & Associates PC is here to guide you through every step.
Contact us today to schedule your consultation and ensure your real estate transaction closes smoothly. With offices across the GTA, we’re here to serve you wherever your Ontario real estate journey takes you.
