State of Emergency Clauses in Ontario: Drafting for Disruption

Last updated 11 September 2026. Written by Jatin Dua, Broker of Record at RE/MAX Quantum Realty, 799 The Queensway, Etobicoke · For Ontario registrants · 9 min read

This category is a scar, not a forecast

In the spring of 2020, a lot of Ontario agents found out at once that a closing is a chain of other people’s systems. The lawyer needs the registry open. The lender needs somebody answering. The buyer needs to physically get into the house and be handed keys. None of that is in the agreement of purchase and sale, which simply says the transaction completes on a date.

The State of Emergency clauses came out of that. I am not going to write a paragraph about being prepared for whatever comes next, because I do not know what comes next. What I will say is that the drafting problem these clauses expose is permanent and shows up in ordinary weeks. A lender’s systems go down for two days. A registry outage runs into a Friday afternoon. The emergency framing makes agents think this category is for once-in-a-generation events. The mechanics are for Tuesdays.

Half of this category lives somewhere else in the book

Worth knowing before you go looking for six distinct clauses, because you will find three. Pull the current wording from your own OREA member copy — this is the map, not the text.

EMERG-1 is an extension mechanism, not a force majeure clause

This is where agents overestimate what they have. STATE OF EMERG-1 is not a general excuse for non-performance. It does not say that if something extraordinary happens, nobody has to close. It identifies three specific failures and provides a consequence for them.

• The buyer’s bank or mortgage lender temporarily ceasing operations. Not the lender declining the file. Not the lender being slow. Ceasing to operate.
• The seller’s bank or mortgage lender temporarily ceasing operations. The discharge side of the transaction is just as capable of stopping the closing as the funding side, and agents forget that the seller has a lender too.
• The land registry office or the electronic registration system temporarily ceasing operations. The one that is entirely outside everybody’s control and the one that actually happens.

When one of those occurs, the completion date moves to a short, defined number of business days after the relevant service is available again, with weekends, statutory holidays, civic holidays and other days the province has closed for business excluded from the count. The clause also defines what counts as a bank or lender by reference to the categories of federally and provincially regulated financial institutions, which sounds like boilerplate and is not: a private lender or a mortgage investment corporation may well fall outside that definition. If your buyer is closing on private funds, read the definition before you rely on the clause.

What the clause does not touch: a buyer whose income changed, a buyer whose lender re-appraised, a seller who cannot find a place to move to, a market that moved, a party who simply does not want to close any more. None of that is in here. If somebody tells you they are using the emergency clause because their financing fell apart, they have misread it.

The outside date blank is the whole negotiation

The clause carries a blank for the number of days past the originally agreed completion date after which either party may terminate on written notice to the other or their lawyers, with the deposit returned to the buyer. That blank is the only genuinely contested part of the clause and I have watched agents leave it empty.

Think about what each side wants. A buyer with a rate hold expiring, movers booked and a sale of their own closing behind this one wants a short outside date, because an indefinite extension is worse for them than a clean end. A seller who has already bought something else wants the deal to survive. Neither answer is right in the abstract.

Time is of the essence, and what the courts have done with lateness

In 3 Gill Homes Inc. v. 5009796 Ontario Inc., 2024 ONCA 6, as reported, a termination was upheld over a payment that was thirty-five minutes late. In Correa v. Valstar Homes (Oakville Sixth Line) Inc., 2025 ONCA 156, as reported, nine minutes was enough to justify termination. Those are appellate decisions on their own facts and I am not going to extrapolate them into a rule, but the direction is clear enough that you should stop telling clients that a little lateness will be fine.

It does not run entirely one way. In More v. 1362279 Ontario Ltd. (Seiko Homes), 2023 ONCA 527, as reported, a seller who was not ready, willing and able could not rely on time being of the essence, and the court was unimpressed by pouncing on trivial delays. In 2511899 Ontario Inc. v. 2221465 Ontario Inc., 2024 ONSC 4159, as reported, where neither party was ready, neither could rely on the clause. And in VanderMolen Homes Inc. v. Mani, 2025 ONCA 45, a missed technical deadline did not automatically end an agreement kept alive by the parties’ conduct.

Key drop, remote signing, and the mechanics that stuck around

STATE OF EMERG-2 is the small clause with the most ongoing use: the seller leaves the keys in a lockbox or similar secured holder, and the code travels from the seller’s lawyer to the buyer’s lawyer on completion. That is useful drafting for any transaction where the parties will not meet — an out-of-town seller, an estate, a closing where possession happens after hours.

Two cautions. First, the code moves lawyer to lawyer, which means it moves when the transaction completes, not when the buyer arrives at the house at four o’clock hoping. Tell your buyer that. Second, if you or your brokerage are installing the device, install a proper secured one and think about who else has access. A key left in a device that anybody can open is a conversation you do not want to have with a seller whose property was entered before closing.

STATE OF EMERG-3 is the electronic signature consent, which also sits in the guidelines as ELEC-1. It is not an emergency measure any more and has not been for years. Check your own forms and platform documentation first, because depending on what you use the consent may already be captured and a duplicate clause achieves nothing. There is more in the post on electronic signature consent.

Your exposure as the registrant

Do not tell a client an emergency clause means they will not have to close if something goes wrong. It does not say that. Do not tell a client that a two-day delay is nothing — the appellate record on lateness does not support the reassurance and you are not the person who gets to decide. Do not fill in the outside date because it needs a number and you have a habit. And do not describe any of this as covered or protected in writing, because the sentence will outlive the transaction.

Remember too that when an extension right is exercised and the agreement terminates, the deposit does not come back automatically. A brokerage may release trust money only on a written direction signed by all parties, or on a court order. A formal mutual release is not strictly required — that written direction is — and the brokerage’s own signature has nothing to do with it. On a file where a closing has just collapsed, that direction can take a long time to arrive.

If the other side is self-represented, the usual TRESA steps apply and so does the hard limit: confirm they intend to proceed unrepresented, deliver and explain the RECO Information Guide and the Information and Disclosure to Self-Represented Party form, state plainly that you act for your client and not for them, and make reasonable efforts to get written acknowledgement of that form. Explaining to a self-represented seller what outside date they should accept is advice on terms, and it is not available to you.

How I would use this category now

1. Stop thinking of it as the emergency section. Treat EMERG-1 as an extension mechanism for known dependencies and ask, on every file, what this closing depends on that the agreement does not mention.
2. Where a transaction has a private lender, an unusual funding structure, a cross-border party, or a registry dependency your lawyer has flagged, raise the extension mechanism at the offer stage, not at the eleventh hour.
3. Fill in the outside date deliberately, against whatever is chained behind the closing, and tell your client what it means for them.
4. Use the key drop clause on any closing where nobody will be meeting anybody, and make sure your client understands the code moves when the deal completes.
5. Check whether your electronic signature consent is already handled by your documentation before adding a second clause about it.
6. Leave the video conference closing question to the lawyer, but ask it early enough that it is not a surprise on the last day.

One closing thought about the label on this category. Emergency clauses carry an implication that they are for exceptional times, and that implication is exactly why they sit unused in most agents’ practice. The useful reframing is smaller and more boring: transactions have dependencies, dependencies fail sometimes, and an agreement that says what happens when they do is better than one that leaves it to argument. That was true before 2020 and it is true on an ordinary file this week.

Questions agents actually ask

Related reading

• The UFFI Warranty in Ontario: A 1980 Ban That Still Creates Liability in 2026
• Association Fees on Title: The Ontario Clause Agents Forget Until Closing
• No Offer Content Disclosure Clauses Under TRESA: What a Buyer Can and Cannot Restrict
• Land Lease Clauses in Ontario: Landlord Approval, Assumption and the Option to Purchase
• Buying a Tenanted Property in Ontario: Rent Warranties, Notices and the Shortfall Adjustment
• Every clause and condition guide in one place

This is professional commentary from a Broker of Record on drafting practice for disruption and extension clauses, not legal advice. Whether a delay excuses performance, whether an extension right has been validly exercised, and what happens to a deposit are legal questions for the client’s own lawyer. This is general professional commentary from a Broker of Record on drafting practice. It is not legal advice, it is not a substitute for your own brokerage’s policies, and it does not create any professional relationship. Clause codes refer to OREA’s Guidelines for Residential and Commercial Clauses, an OREA member resource — the clause wording itself is OREA’s and is not reproduced here. Always work from your brokerage’s approved forms, and send your client to a lawyer for anything turning on interpretation, enforceability or remedy. Legislation, regulator guidance and case law all change; verify anything you are relying on.