What is the definition of balance due on completion?
- Definition of Balance Due on Completion
The balance due on completion is the amount of money the buyer must pay the seller on the day the sale of a property is finalized (also known as the completion date).
In Canadian real estate contracts, this statement is often used in the agreement of purchase and sale to ensure that the buyer pays the total agreed-upon purchase price prior on the closing day, or the transaction is considered incomplete and the buyer is now in breach of contract.
Why is this term important?
In real estate contracts, there is an elapsed time period between the negotiation period, the final agreed-upon terms of sale and the completion of the sale. During this contingency period, a variety of tasks and costs may be incurred by both the buyer and the seller. These costs can impact the precise dollar amount that must be transferred from the buyer to the seller upon completion date of the contract. The "balance due on completion" statement ensures that the full purchase price is paid by the buyer to the seller, minus any costs or payments already made by the buyer. (This also means that any costs or payments already made by the seller are added back into the final tally.)
If this statement is used in relation to a new-build home, this final payment is due once the home is considered habitable and the build is given an occupancy permit from the city planning department. This does not mean that there won't be defects—also known as deficiencies or a "punch list"—but it does mean that a large portion of the work required to build the home has been satisfactorily completed.
Examples of term
After the completion of a sale on a home, the purchaser will pay any and all money that is owed to the seller, so that the balance equals the final agreed-upon purchase price of the property.