Legal Issues When Buying A Home in Ontario

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Freehold vs. Condo Ownership

Buying a home in Ontario means choosing between fundamentally different forms of property ownership. The two most common types are freehold and condominium, and the legal issues surrounding each are shaped by how the property is owned, governed, and maintained.

Freehold ownership—which includes detached homes, semi-detached houses, and most townhomes—means you own both the building and the land it sits on. There’s no condo board, no shared amenities, and no monthly condo fees. You’re responsible for everything: roof repairs, plumbing, landscaping, property taxes—every cost and decision falls to you. That autonomy can be empowering, but it also creates legal obligations that condo buyers may never face.

In contrast, condominium ownership means you own your individual unit but share ownership in common elements like hallways, elevators, and amenities. Those shared components are governed by a condominium corporation under Ontario’s Condominium Act, and monthly condo fees cover their upkeep. Your legal relationship isn’t just with the seller—it extends to the corporation, the board of directors, and fellow unit owners.

For freehold buyers, this lack of corporate oversight means greater freedom—but also fewer built-in safeguards. There’s no condo board to monitor maintenance or enforce standards, so buyers must do more legal diligence up front. You’re buying a property and its problems.

From zoning restrictions and unpermitted renovations to hidden structural defects and title encumbrances, freehold homes carry their own set of legal risks. Understanding how those risks differ from condo purchases is essential to protecting your rights.

The Offer and Agreement of Purchase and Sale

Every residential real estate transaction in Ontario begins with an Agreement of Purchase and Sale (APS)—a legally binding contract that sets out the rights and obligations of both buyer and seller. For most resale homes, this document is based on the OREA Form 100, a standard form widely used across Ontario.

But just because it’s standardized doesn’t mean it’s simple. Small changes in wording can have major legal consequences. That’s why careful review—ideally by a lawyer experienced in real estate law—is essential before any offer is signed.

The APS will cover key terms like:

• Purchase price
• Deposit amount and due date
• Closing date
• Included fixtures and chattels
• Excluded items
• Conditions and timelines

Among the most important elements are the conditions—clauses that make the offer conditional on certain events happening within a specific time frame. These might include:

• Financing: Gives the buyer time to secure a mortgage commitment
• Home inspection: Allows the buyer to assess the property’s condition
• Sale of the buyer’s current home: Often critical in balanced or slower markets
• Lawyer review: Permits review of title, survey, or legal disclosures

One of the biggest legal risks is waiving conditions too early, especially in competitive offer situations. Buyers who waive financing or inspection protections in order to “win the bid” often do so without understanding the legal and financial risks if things go wrong.

Another common source of conflict: ambiguity over inclusions and exclusions. If a chandelier, hot tub, or shed isn’t clearly included, don’t assume it comes with the home. A lawyer can help ensure the offer is properly drafted and enforceable.

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Legal Due Diligence and Title Search

Once your offer is accepted, your real estate lawyer begins the critical process of legal due diligence. At the heart of this is the title search—a detailed investigation into the property’s legal status, financial obligations, and ownership history. For freehold homes, this step is especially important, as there is no condominium corporation managing shared elements or maintaining centralized records.

The title search verifies that the seller has legal authority to sell the property and reveals any issues that might affect your ownership. Common problems uncovered during a title search include:

• Outstanding mortgages or liens
• Easements or rights-of-way (e.g., utility access through your yard)
• Restrictive covenants (limits on how the property can be used)
• Title defects or boundary irregularities
• Unregistered interests or claims

In rural or older urban properties, additional red flags might arise—like encroachments (where fences, driveways, or structures cross property lines) or unpermitted additions. These issues can create long-term disputes with neighbours or lead to municipal enforcement.

Your lawyer will also conduct execution searches to confirm that no one on title has court-ordered judgments or unpaid debts that could attach to the property. This protects you from unknowingly inheriting someone else’s legal problems.

If anything concerning is found, your lawyer will raise requisitions—formal requests for the seller to address the issue before closing. This might involve discharging a mortgage, resolving a title defect, or producing missing documentation.

In some cases, title insurance may offer protection where a problem can’t be fully resolved. But it’s not a substitute for thorough legal review. Title insurance covers risks—not known defects.

Freehold homes require deep due diligence. Unlike condos, there’s no status certificate providing a legal snapshot. Your lawyer builds that picture—piece by piece.

Cooling-Off and Warranty Protections for New-Build Homes

Ontario law treats the purchase of newly built freehold homes differently than resale properties—and recent legislative changes have expanded buyer protections. Understanding these rules is essential if you’re buying from a builder or developer.

As of 2024, buyers of new freehold homes from a builder now benefit from a 10-day cooling-off period, similar to what has long existed for condominiums. During this window, you can walk away from the deal for any reason—no penalties, no explanation required. It’s a crucial time to consult your real estate lawyer for a full legal review of the agreement and builder documents.

In addition to the cooling-off period, new homes are covered under Ontario’s Tarion Warranty Program. This government-backed system provides legal protections and compensation for:

• Major structural defects
• Water penetration through the basement or foundation
• Code violations or safety hazards
• Defects in materials or workmanship
• Delayed closing compensation (in certain cases)

Builders must also register your deposit with Tarion, adding another layer of financial protection. And beginning January 1, 2026, new rules will further restrict how deposits are held and disclosed.

Unlike resale purchases, builder agreements are complex and often one-sided. They typically include:

• Broad builder rights to alter layout, dimensions, or features
• Delayed closing provisions with limited remedies for the buyer
• Restrictions on assignments or resale before closing
• Limited liability clauses for construction issues

These provisions are not standardized and can vary significantly between builders. That’s why a lawyer’s review during the cooling-off period is not just helpful—it’s often the only chance to negotiate or withdraw.

If you’re considering a pre-construction purchase, don’t assume all risks are covered by warranty. Many issues—such as grading problems, encroachments, or disputes over lot boundaries—fall outside of Tarion’s scope and require legal intervention.

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Financing and Mortgage Considerations

Securing a mortgage isn’t just about your income, credit score, or down payment—it’s also about the property itself. In Ontario, lenders conduct their own due diligence to assess whether the home qualifies as acceptable collateral for the loan. This makes legal review of the property even more critical in freehold real estate transactions.

Mortgage lenders typically require:

• A clean title with no undisclosed liens or encumbrances
• A professional appraisal confirming the home’s market value
• Title insurance, naming the lender as a beneficiary
• A copy of the Agreement of Purchase and Sale

What can cause a lender to delay or deny mortgage financing?

• Unpermitted renovations or illegal basement apartments
• Zoning non-compliance (e.g., a duplex used as a single-family dwelling)
• Structural or environmental issues flagged during inspection or appraisal
• Heritage designations, which can restrict future renovations or rebuilds

These are not just technicalities—they can affect whether the lender will finance the property, the interest rate offered, or whether additional legal documents are required.

For homes purchased with private or alternative lenders, legal scrutiny is even more important. These lenders often require additional clauses, custom mortgage terms, and a higher standard of legal protection, especially if the buyer’s financial profile involves added risk.

Your lawyer’s role includes:

• Reviewing mortgage instructions from the lender
• Preparing and registering the mortgage charge
• Confirming the property meets lender conditions
• Advising on any legal risks that might interfere with funding

Missing a lender deadline—even by hours—can derail a closing. That’s why early legal coordination between your lawyer and your real estate agent is key to avoiding delays, penalties, or a failed transaction.

Adjustments, Closing Costs, and Land Transfer Tax

Buying a freehold home in Ontario involves more than just paying the purchase price. There are numerous closing costs and financial adjustments that must be accounted for—many of which catch buyers by surprise if not properly explained up front.

Some of the most common closing costs include:

• Legal fees
• Disbursements
• Title insurance
• Land Transfer Tax (LTT), and Municipal LTT in Toronto
• Execution certificates
• Conveyancing registration fees

If you’re a first-time home buyer, you may qualify for a Land Transfer Tax rebate of up to $4,000 provincially—and an additional $4,475 from the City of Toronto if applicable.

In addition to these costs, your lawyer will prepare a Statement of Adjustments, which prorates certain expenses between buyer and seller. These can include:

• Property taxes
• Heating oil or propane
• Prepaid utilities
• Rental items (e.g., hot water tanks)

While these adjustments are routine, mistakes can lead to disputes at closing. Your lawyer ensures everything is calculated properly and supported by documentation.

Most buyers should expect to pay an additional 1.5% to 4% of the purchase price in closing costs. Understanding these figures in advance is critical to a successful closing process.

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Post-Signing to Closing: Requisitions and Conditions Fulfillment

Between the moment your offer is accepted and the date you receive the keys, your lawyer is working behind the scenes to ensure everything is legally sound. This critical window—often 30 to 60 days—is where legal requisitions and condition fulfillment take centre stage.

Requisitions are formal legal requests made by the buyer’s lawyer to the seller’s lawyer. They may address issues like:

• Discharging mortgages
• Producing permits for additions or renovations
• Clarifying survey or boundary details
• Verifying shared driveways or easements

The Requisition Date is a critical contractual deadline. If your lawyer doesn’t raise objections by that date, you may lose the ability to enforce corrections later.

Outstanding conditions must also be dealt with during this period. These might include:

• Financing approval
• Inspection review
• Sale of the buyer’s existing home
• Legal review of documentation

A good real estate lawyer not only tracks these deadlines but communicates with your real estate agent to ensure all moving parts are aligned. The goal is to resolve issues early—well before funds are transferred or documents are registered.

Closing Day and Key Handover

Closing day is when ownership changes hands. It’s the final act in a complex legal sequence—and real estate lawyers manage every detail.

On closing morning, funds are transferred, documents are registered at the Land Registry Office, and title is officially transferred. Only after this is complete can your lawyer release the keys to you.

Your lawyer also:

• Performs final title and execution searches
• Ensures all undertakings are fulfilled
• Reports to your lender and finalizes legal documentation

Closings typically occur late afternoon. If delays occur—due to wire issues, missing documents, or lender problems—your lawyer works to resolve them while protecting your rights.

When all goes well, your lawyer notifies you once the transaction has closed, and your real estate agent will hand over the keys.

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Special Legal Issues with Freehold Homes

Freehold homes come with unique legal risks that aren’t always obvious at first glance. These include:

• Encroachments: where a structure crosses into a neighbour’s land
• Zoning issues: illegal conversions or uses not permitted by local bylaws
• Heritage restrictions: homes designated under the Ontario Heritage Act
• Shared elements: like mutual driveways without formal agreements

These issues often require legal interpretation or negotiation. Unlike condo buyers, freehold purchasers don’t have a board or governing body to monitor compliance. That responsibility falls entirely on you—and your lawyer.

If identified early, most of these problems can be resolved without litigation. But that requires diligence, legal insight, and a real estate team that understands the complexities of Ontario’s real estate law landscape.

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Summary

Buying a freehold home in Ontario is a major milestone—but it’s also a complex legal transaction that requires more than just a signed offer and a mortgage approval. From drafting a clean Agreement of Purchase and Sale to conducting a thorough title search, reviewing zoning and structural issues, and preparing for closing costs and legal adjustments, every step must be handled with diligence.

Unlike condos, freehold homes offer full autonomy—but they also come with full responsibility. That means no condo board to catch defects or flag disputes. You and your lawyer must build that legal protection yourselves.

Whether you’re buying a detached, semi-detached, or townhome, working with a knowledgeable real estate lawyer ensures that you understand your rights, uncover hidden risks, and close with confidence.

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If you have questions about legal issues when buying a home 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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