5 Common Pitfalls in Residential Real Estate Transactions

Buying or selling a home is one of the most significant financial transactions most people will ever make. While exciting, the process can also be complicated, and even small oversights may result in costly consequences. At Emam Law, we help clients avoid common mistakes by providing careful legal guidance throughout the transaction. Here are five pitfalls to watch for:

1. Not Reviewing the Agreement of Purchase and Sale Carefully

The Agreement of Purchase and Sale (APS) is the central contract in any real estate transaction in Ontario and it is legally binding. It is usually prepared by the buyer’s real estate agent and sets out all of the essential terms of the deal. This includes the purchase price, deposit, conditions, closing date, fixtures and chattels included, and representations made by the seller.

The APS is typically signed once the buyer and seller have agreed on the price and key terms, often through negotiation between their real estate agents. Importantly, this means the APS is usually signed before a lawyer has reviewed it, which can be risky. While some conditions (such as financing or inspection) can provide a short window to back out, once those conditions are waived or fulfilled, the APS becomes firm and legally binding.

Failing to review the APS carefully can have serious consequences. For example:

• Buyers may miss unfavourable clauses that shift repair or maintenance obligations onto them.

• Sellers may inadvertently agree to include items (like appliances or fixtures) they intended to keep.

• Ambiguous or missing terms can lead to disputes, delays, or even litigation.

Having a lawyer review the APS before you sign, or immediately after with conditions in place, is one of the most effective ways to avoid future problems.

2. Failing to Account for Hidden Costs

Many buyers and sellers focus on the purchase price and deposit, but overlook the additional expenses that come with closing a real estate transaction. These hidden costs can add up quickly and leave clients scrambling if they are not prepared in advance.

Some of the most common additional costs include:

• Land Transfer Tax (a provincial tax payable on purchases, plus an additional municipal tax in Toronto).

• Title Insurance (protects against defects in title, fraud, or survey errors).

• Legal Fees and Disbursements (your lawyer’s professional fees, plus court searches, registration fees, and courier costs).

• ·Mortgage-Related Costs (appraisal fees, lender’s title insurance, and discharge fees if an old mortgage must be paid out).

• Adjustments on Closing (reimbursements between buyer and seller for prepaid expenses such as property taxes, utilities, and condo fees).

• Home Inspections and Survey Costs (often needed for financing or peace of mind before closing).

For buyers, failing to anticipate these costs can create serious financial stress right before closing, and in some cases, may even prevent the deal from completing if funds are short. For sellers, not understanding adjustments or payout obligations can result in less net proceeds than expected.

At Emam Law, we make sure our clients understand the true cost of closing well in advance. We review the Agreement of Purchase and Sale, calculate expected adjustments, and provide clear estimates of closing costs early in the process. Our goal is to ensure there are no surprises on closing day, so you can focus on moving into your new home or finalizing your sale with peace of mind.

3. Ignoring Title Issues

Every property comes with a title, which is the official record of who owns it and what rights or restrictions are attached to it. A property may look perfect on the surface, but problems hidden in the title can lead to expensive disputes or even prevent you from taking proper ownership.

Some common title issues include:

• Liens or unpaid debts registered against the property (e.g., unpaid mortgages, construction liens, or tax arrears).

• Easements or rights of way that give others access to part of your land (for example, a shared driveway or utility access).

• Boundary or survey discrepancies, where fences, structures, or land use don’t align with the legal property lines.

• Undischarged mortgages from previous owners that were never properly removed from the record.

• Fraudulent or improper transfers, where someone in the past may not have had proper authority to sell or transfer the property.

If these issues are not discovered and resolved before closing, the buyer may inherit the problem, leaving them with financial liability or restrictions on how they can use the property. Sellers can also face delays and disputes if their property has title defects they were unaware of.

At Emam Law, we conduct a thorough title search on every transaction. This means carefully reviewing the property’s history in the Land Registry system, identifying any liens, easements, or encumbrances, and working to resolve them before closing. We also arrange title insurance, which offers added protection against hidden risks that might not be discovered even with a diligent search.

By addressing title issues early, we ensure that ownership of your new home is secure, and your investment is fully protected.

4. Missing or Misunderstanding Closing Deadlines

In real estate transactions, timing is everything. The Agreement of Purchase and Sale (APS) contains several key dates and deadlines that must be met precisely. Missing even one of these can have serious legal and financial consequences.

Some of the most critical deadlines include:

• Condition Dates – Many agreements contain conditions for financing approval, home inspections, or the sale of the buyer’s current home. These conditions must be waived or fulfilled by the stated deadline, otherwise the entire deal may collapse.

• Deposit Deadlines – Buyers are usually required to deliver a deposit within 24 hours of acceptance. Late or missing deposits can put the buyer in breach of contract.

• Closing Date – On closing day, funds must be transferred, documents exchanged, and title registered. Even a small delay can expose a party to penalties, interest charges, or lawsuits for failing to close.

• Requisition Date – This is the buyer’s deadline to raise title-related concerns with the seller. Missing this date could mean the buyer is forced to accept the property with defects they otherwise could have challenged.

Misunderstanding or overlooking these deadlines can result in lost deposits, breach of contract claims, or costly litigation. For sellers, it may also mean wasted time on the market or exposure to damages if the buyer walks away.

At Emam Law, we carefully track all contractual dates and statutory deadlines for our clients. We send reminders, prepare documents in advance, and coordinate with all parties to ensure nothing is missed. By managing the timeline, we reduce stress for our clients and protect them from avoidable disputes.

5. Overlooking Zoning and Use Restrictions

It’s easy to assume that once you own a property, you can use it however you like. Many buyers picture renovations, adding a rental suite, or even running a small business from home, only to find out after the deal closes that local zoning bylaws or municipal regulations stand firmly in their way.

Zoning laws dictate how land and buildings can be used. A property that seems ideal for a duplex may only be zoned for single-family use. A basement you hoped to convert into a rental unit may require permits that are difficult or impossible to obtain. Even seemingly small changes, like adding a deck or enlarging a driveway, can trigger restrictions or require approvals.

Discovering these limitations after you have purchased a property can be disheartening and costly. Plans may have to be abandoned, renovations halted, or, in some cases, municipal orders issued to undo unapproved work. For sellers, failing to disclose zoning or permit issues can also result in disputes with buyers who feel misled.

At Emam Law, we help clients avoid these pitfalls by reviewing the legal use of a property before closing. We investigate zoning classifications, building permit histories, and any outstanding work orders that could affect your intended use. By identifying restrictions early, we give you a clear understanding of what is - and is not - possible with the property, so you can move forward with confidence.

Conclusion

A residential real estate transaction involves more than signing paperwork, it requires careful planning and attention to detail. By working with a licensed real estate lawyer, you can avoid these pitfalls and protect your investment.

At Emam Law, we guide clients through every stage of the process, from reviewing agreements to closing day, ensuring that your interests are protected.

Contact us today to learn how we can help with your next real estate transaction.