If you are confused by real estate terminology, don’t worry – you’re not alone! Most people will buy or sell a home just a few times during the course of their lives, and it would be impossible for any reasonable person to keep up on all the “jargon” when they are not actively engaged in the market.
One of the most common mix ups is the completion and possession dates. Completion date, sometimes also called the closing date, is the day the title of a home is scheduled to transfer from the seller to the buyer. The possession date is the day the keys for the home are scheduled to transfer from the seller to the buyer.
When an offer to purchase is negotiated between a home buyer and a home seller, some of the most important terms in the contract are the dates for completion, possession, and adjustment. It is very typical for the completion (or closing) to be scheduled for a weekday but most lawyers and notaries advise against Friday completions; just in case there is a delay, you don’t want to hold up the keys over the weekend.
Technically digital title services do allow for Saturday completion of a home sale but very few lawyers or notaries work on the weekend. It is however, very common for possession to be scheduled for a Saturday because realtors do work on the weekend!
The completion date precedes the possession date by a day or two, or sometimes up to a week. Most buyers and sellers will go into their lawyer’s or notary’s office well in advance to pre-sign the transfer paper work, so on the actual official completion day it is simply a matter of the lawyer or notary applying for the registration.
Once registered the lawyer or notary acting for the buyer will be issued a registration number. It is important to remember even if you sign your transfer paperwork in advance, that doesn’t automatically push the possession date forward. It typically stays the same no matter how early your registration takes place.
When you are setting up your home insurance when buying a property, you would want to have the insurance package start on the completion date, not the possession date, officially you are the registered owner as soon as your title registers.
Possession and completion are customarily offset to avoid any mishaps if there is a delay in title registration – although with the digital registration system this rarely happens, it was quite common in the paper and ink days.
An offset will also accommodate a seller who needs the funds from their sale to put toward their purchase.
A purchase and sale for a seller lined up with a purchase and sale for a buyer will often be called a transaction “chain”. If there are many transactions all in a row in a chain to get everyone registered, there will need to be a few days between the completion and possession to account for each “link” in the “chain”.
Adjustment date is the day taxes and utilities are separated and prorated between the buyer and the seller. The adjustment date almost always is the same date as the possession date.
One of the most frequently asked questions by home buyers is “Can we get the keys early?” I know it is hard to wait to get the keys for a home you are already the registered owner of, and in cases where the home is vacant or the sellers have been able to move out early, it’s usually totally fine.
But when it comes to moving day if the sellers had been relying on a chain of transactions, they may be running behind – or, in some very extreme cases, they are not out on time and someone is left in a hotel for the night, or sleeping on my couch!