Anonymised, illustrative composite. Three closing conditions were checked off as outstanding items to follow, the buyer closed anyway to meet its own financing deadline, and eleven months later two of them still had not arrived.
At a glance
A buyer purchased the assets of an independent auto parts and service retailer in Ontario for $1,600,000. The purchase agreement listed a standard set of closing deliverables as conditions to the buyer's obligation to close, including a discharge of an old equipment-loan registration under the Personal Property Security Act, the landlord's written consent to assignment of the premises lease, and an updated WSIB clearance certificate. Two weeks before closing, all three items were still outstanding.
The buyer's own financing draw had a hard deadline tied to month-end, and delaying closing to chase three administrative items risked losing the financing window entirely. The parties' lawyers exchanged a short email agreeing the deal would close with those three items marked “to follow,” noted informally on the closing agenda. No written post-closing covenant was drafted, no deadline was attached to any of the three items, and no holdback was tied to their delivery. The closing simply proceeded.
Eleven months later, two of the three items still had not arrived. The PPSA discharge was never filed — the original equipment loan had in fact been paid off years earlier, but the lender's registration against the purchased equipment had never been formally discharged, and the original lender had since dissolved. The landlord's written consent to assignment had also stalled: the landlord had orally agreed but wanted a $15,000 administrative fee that neither the seller nor the buyer had budgeted for, and nobody had pushed it to a conclusion. When the buyer's new lawyer tried to force delivery, the seller's position was that these had been closing conditions, the buyer had closed without insisting on them, and closing without insisting waived them — nothing survived to chase.
The purchase price was $1,600,000. The undischarged PPSA registration created roughly $38,000 of technical lien exposure against the purchased equipment, even though the underlying debt had actually been repaid years before. The landlord's disputed administrative fee for the assignment consent was $15,000. To resolve both, the buyer ultimately paid the landlord's $15,000 fee itself and spent a further $4,200 in legal fees bringing a court application to compel discharge of the dissolved lender's registration — a combined $19,200 the buyer had not planned to spend, on top of eleven months of title uncertainty over its own leased premises and purchased equipment.
No statute governs whether an item marked “to follow” on a closing agenda survives closing as an enforceable obligation. The question is ordinary contract doctrine, and it turns on the difference between a condition and a covenant. Proceeding to close without insisting on a condition generally waives that condition — the right to refuse to close on account of it is gone. But waiving a condition is not the same as extinguishing every underlying obligation connected to it: if the substance of the item (here, discharging a registration, or obtaining a landlord's consent) is also independently covenanted elsewhere in the agreement, in language that survives closing, the covenant can still be enforced even though the condition to closing was waived. The trouble in this deal was that neither item lived anywhere except the closing checklist. There was no separate covenant saying the seller would obtain the discharge or the consent by a stated date; the only place either obligation appeared was as a condition to the buyer's own closing obligation, and once the buyer closed without insisting on it, there was nothing else in the agreement for either side to point to.
Treadstone Law's own closing checklist for buyers flags the fix directly: when something is missing at closing, one of the standard options is “proceeding with a post-closing covenant, where the seller commits in writing to deliver the missing item within a set period, sometimes backed by a holdback,” because “releasing funds should be tied to receiving, or having enforceable assurance of, the documents that protect your ownership and reduce your risk.” That step — converting a waived condition into an express, written, surviving covenant — is exactly what this closing skipped.
The seller was not contractually obligated to do anything further about either outstanding item once closing had happened without a written post-closing covenant. The buyer had no one else to look to and no leverage beyond persuasion and its own money. It paid the landlord's fee and brought its own court application to clear the PPSA registration, absorbing $19,200 in costs that a single paragraph at closing would have made the seller's problem instead.
Had the two-line email instead been a one-paragraph written covenant — “Seller shall, within 60 days of Closing, deliver a registered discharge of [registration number] and the landlord's written consent to assignment, failing which $20,000 of the Purchase Price shall remain held back until delivered” — the buyer would have had both a surviving contractual right and a source of funds to draw on if the seller simply did not perform. Instead, the buyer had to become its own collection agency for a problem it did not create, on a document that no longer clearly said whose problem it was.
The tell is the phrase itself: “to follow,” with no date and no consequence attached, on a closing agenda rather than in the body of the agreement. That phrase alone does the work of a waiver; it takes a deliberate, separately drafted covenant to stop it from doing that work.
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