Can I charge the buyer for a delayed closing?
Charge the Buyer for a Delayed Closing? Here’s How to Make Them Pay — and When You Can’t
Quick answer up front
Yes — sometimes. But not automatically. Whether you can charge the buyer for a delayed closing depends on the purchase contract, local law, and how you document damages in the closing process. Treat this like business: proof, contract language, and firm follow-up.
Why this matters in the closing process
Delays cost money. Holding costs, insurance, financing gaps, and lost resale timing add up. If your contract allows for damages or liquidated damages, you can enforce fees. If it doesn’t, you can still negotiate an amendment or claim actual damages — but you need paper and a plan.
Practical steps to recover fees after a delayed closing
- Review the contract now — not later. Look for clauses labeled “closing date,” “time of essence,” “liquidated damages,” “possession,” and “extensions.” A “time of essence” clause strengthens your position.
- Document every cost. Mortgage interest, insurance, utilities, property taxes, and any rental or storage expenses. Add invoices and dated records. The closing process lives in the paperwork.
- Send a formal written notice. Use registered mail or email plus proof of delivery. State the delay date, the costs incurred, and demand payment or an agreed extension.
- Seek an amendment. Often buyers will agree to pay a daily holdover fee or lump-sum for a brief delay. Put it in writing and get signatures.
- Use the deposit intelligently. If the buyer is in breach and the contract allows, consider retaining earnest money to offset losses. Consult your lawyer before taking deposit action.
- Hire legal counsel when needed. If the buyer refuses and damages are significant, a real estate lawyer or small-claims action may be required.
Contract language that helps in the closing process (example)
Include a simple clause in future contracts: “If Closing is delayed by Buyer beyond the agreed Closing Date through no fault of Seller, Buyer shall pay Seller $___ per day as liquidated damages until closing occurs, or Seller may retain Buyer’s deposit to cover losses.” Always review with your lawyer.
When you likely can’t charge the buyer
- No breach or delay is due to seller actions or lender delays on the seller’s side.
- The contract lacks a damages clause and you can’t prove actual losses.
- Local law forbids penalizing the buyer in this manner.
Expert tip to prevent disputes
Make “time of essence” explicit. Add a clear holdover fee. Run the closing process like a business: anticipate delays, price them, and include remedies up front.
If you want iron-clad contract language or a fast review of your current purchase agreement, I can help. I handle Toronto and surrounding markets and guide sellers through the closing process every week.
Tony Sousa — Local Realtor
tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
Contact me to protect your sale and recover real costs from a delayed closing.
