Buying a House Privately in Ontario: A Complete Guide

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What Does “Buying Privately” Mean in Ontario?

Buying a house privately in Ontario means purchasing a property without the use of a real estate agent. Also referred to as “For Sale By Owner” (FSBO), the transaction is negotiated directly between the buyer and the seller. This arrangement can offer savings on real estate commissions, however, it also comes with legal and logistical risks, especially for those unfamiliar with Ontario’s real estate closing process and laws.

Unlike traditional purchases that (typically) involve two real estate agents negotiating on behalf of their respective clients, private sales rely on direct access between the buyer and seller, or their lawyers to communicate.

Private sales can sometimes be posted online, through classified platforms, social media, or signage. Because there is no standardized online database of properties, these listings may not receive the same visibility as properties on the MLS, which can limit buyer options. Still, some sellers choose this route to test market listings and gauge potential sale prices without committing to a full listing agreement and the associated commission.

Without a Realtor, the buyer takes on greater responsibility in verifying the condition of the property, negotiating terms, and ensuring that legal documentation is correctly prepared and submitted. Engaging a real estate lawyer or real estate attorney early in the process becomes essential to protect your interests and facilitate a transparent purchase process.

Is a Real Estate Lawyer Required?

In Ontario, a real estate lawyer is not only strongly recommended—they’re required. Real estate lawyers need to register title with the Land Registry Office. Without a lawyer, parties cannot legally finalize the transaction.

A lawyer also ensures the property is being transferred without encumbrances and that all contractual obligations are met. This includes title searching, verifying ownership, and handling the complex exchange of funds between parties.

What Your Lawyer Does

In a private sale, your lawyer’s role is even more critical. They will:

• Draft or review the Agreement of Purchase and Sale, typically using OREA Forms.
• Ensure the agreement includes all necessary conditions and clauses.
• Perform a conflict-of-interest check and confirm independent legal representation—both buyer and seller must have separate lawyers.
• Manage title searches, coordinate with your lender or mortgage broker, and oversee closing funds and document registration.

Your lawyer also facilitates compliance with the Law Society of Ontario’s rules regarding client identification, trust accounting, and the duty to provide competent legal advice tailored to your specific circumstances.

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Step-by-Step Process for Buying Privately

1. Financial Preparation & Mortgage Pre-Approval

Before you even begin negotiations, buyers should secure a mortgage pre-approval. This not only helps determine your budget but also shows the seller you are a serious buyer. Be prepared to provide income verification, credit reports, and bank statements.

Mortgage pre-approval offers clarity on your borrowing capacity, financial health, and can speed up the process once a private deal is reached. This is particularly important in a private sale, where timelines can be tighter and direct communication may increase pressure to close quickly. A mortgage broker or bank specialist will help you navigate lender requirements, interest rates, and terms.

2. Inspect the Property and Agree on Fixtures

Without an agent, it’s up to the buyer and seller to agree on which fixtures and chattels are included in the sale. Arrange a walkthrough to confirm what stays and what goes. Any verbal agreements should be documented in the offer.

It is critical to clarify what items are considered fixtures (which stay with the property) versus chattels (which the seller may take). Disputes often arise over items such as light fixtures, appliances, or wall-mounted electronics. Listing these explicitly in the purchase agreement can avoid confusion and contribute to a successful transaction.

3. Draft or Review the Agreement of Purchase and Sale

Use the industry standard OREA Form 100 or 101 (Condo) and determine:

• Purchase price
• Closing date
• Conditions (financing, inspection, insurance)
• Included chattels and excluded items
• Deposit amount and deadlines

Have your lawyer draft or review the offer before signing. Errors or omissions here can lead to major disputes later. Your lawyer may also customize clauses to reflect your needs, such as making the agreement conditional on the buyer selling another property.

Buyers should be aware of financing conditions and inspection clauses. These provide important exit points in case unforeseen legal issues, repair needs, or mortgage approval delays arise.

4. Conduct Due Diligence (Inspection, Title Search, Insurance)

• Professional Home Inspector: Hire a qualified inspector to assess the structure, systems, and potential issues. This helps uncover hidden defects and provides leverage for renegotiation if problems arise.
• Title Search: Your lawyer will perform a title search to check for liens, easements, or other encumbrances. This is crucial in private sales where sellers may be unaware of registered issues.
• Tax Certificate: Ensures there are no unpaid property taxes that could transfer to the new owner.
• Title Insurance: It’s often mandated by lenders and offers protection against hidden defects, boundary disputes, and fraud.

Completing due diligence early allows you to either waive conditions confidently or back out of the agreement within the conditional period. This diligence is what separates a risky offer from a secure and transparent purchase process.

5. Secure Mortgage and Mortgage Instructions

Once your financing is approved, your lender will send instructions to your lawyer. The lawyer will:

• Prepare the mortgage documents
• Receive funds from the lender
• Coordinate the funds transfer to the seller’s lawyer

Mortgage instructions often include conditions that must be satisfied prior to funding. Your lawyer ensures compliance with these, from title insurance policies to proof of fire insurance. The mortgage broker can also assist in managing these final-stage conditions.

6. Finalizing the Trade: Signing, Funds, Transfer

Leading up to closing:

• Your lawyer prepares the Statement of Adjustments (includes property taxes, utility fees, etc.)
• You sign closing documents virtually or in-person (Transfer, Charge/Mortgage, Direction re: Title)
• On closing day, your lawyer transfers the funds to the seller, makes land transfer tax payments, and registers the deed and mortgage

The lawyer coordinates the release of keys, confirms all legal obligations have been met, and registers ownership in your name using Ontario’s land registration system. This final step is critical to completing a legally valid real estate transaction.

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Common Mistakes When Buying Privately

• Using non-standard or incomplete contracts that omit essential terms
• Failing to include financing conditions or inspection clauses
• Assuming a single lawyer can represent both parties (not allowed in Ontario)
• Not verifying title or relying on outdated surveys
• Skipping title insurance, leaving buyer vulnerable to title defects or fraud

Buyers also run into trouble when they make offers without understanding fair offer price or the current market. Private sales also carry the potential risks of fraudulent transactions, such as impersonation or forged ownership documents. A diligent lawyer can help prevent these outcomes.

How to Find the Right Real Estate Lawyer in Ontario

When buying privately, your lawyer is your most important advisor. Look for:

• Experience with private sale (FSBO) transactions
• Transparent legal fee structures (flat vs. hourly)
• Prompt, clear communication and updates
• Willingness to draft or review custom agreements
• Positive reviews or referrals from past clients

Interview potential lawyers to understand their approach and confirm their familiarity with private sales. Some real estate lawyers offer bundled packages for private transactions that include document drafting, registration, and due diligence services.

Ensure the lawyer is in good standing with the Law Society of Ontario and not affiliated with the seller’s legal representation. Your real estate attorney should also be comfortable advising on legal issues that could arise, such as property disputes, misrepresentation, or non-disclosure.

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Summary

Buying a house privately in Ontario is entirely legal and can be financially beneficial if done correctly. Without a realtor, the onus is on the buyer to manage negotiations, draft complex paperwork, and handle inspections—which makes partnering with an experienced real estate lawyer non-negotiable. From drafting the Agreement of Purchase and Sale to ensuring clear title and closing day compliance, your lawyer guides you through each step of the process.

In private sales, you’re responsible for identifying homes for sale, comparing house prices, and conducting price negotiations without third-party advice. This places a premium on understanding the local market and working with a knowledgeable team of professionals.

A private purchase doesn’t mean going it alone. With the right professional guidance from a mortgage broker, real estate attorney, and professional home inspector, you can navigate the legal complexities and secure your new home with confidence.

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If you have questions about buying a house privately in Ontario or any other real estate legal matter, we’re here to help. As real estate law specialists, our mission is to provide the clarity and direction you need to protect your property rights.

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