Same-Day Closings Can Go Wrong Fast

Earlier this week I posted a video on closing dates: what to watch for before agreeing to one, and why the date itself matters more than most people think.

One of the things I talked about was the risk of scheduling a purchase and sale on the same day.

I want to go a bit deeper on that here, because the mechanics of what actually happens when things go sideways are worth understanding.

The reason same-day closings create risk isn't complicated.

When your client is buying and selling on the same day, the proceeds from the sale are almost always what funds the purchase.

That means one deal has to complete before the other can. They're not just connected by a calendar date, they're financially dependent on each other.

Most of the time, it works. But when it doesn't, the situation moves fast.

If the sale runs into a delay, for any number of reasons, your client can't close on the purchase on time.

And at that point, they're in breach on the purchase.

Best case scenario: the seller of the purchase agrees to an extension. But they have no legal obligation to do that, and there's often a price. Extension fees on residential deals can be significant and the seller usually has the leverage to set the terms.

Worst case scenario: they say no. Or they had a change of heart about the deal to begin with, and the breach gives them the opening they needed. That puts the deposit at risk and turns a closing delay into something much more serious.

A deal not closing on time has the potential to affect a whole chain of closings, not just the two your client is involved in.

Bob Aaron, another Toronto real estate lawyer, wrote a good article about a 2024 case that shows that domino effect in action:

• The buyers on one deal couldn't close on time because their mortgage funds were delayed.
• The sellers, who were relying on those proceeds to fund their own purchase the same day, were forced to pay $75,000 to get an extension from their seller.
• They then successfully sued their buyers to recover it.
• The court found the outcome was foreseeable: when proceeds from one deal are funding the next, a delay anywhere in the chain creates liability everywhere in it.

Link to the full article here.

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