When I bought my car, the seller was in the same situation as you. Basically after I sent him my certified cheque for the total amount he had to pay off BMW right away (with another certified cheque, important to get it cleared right away). Once he did that I got BMW to send me a letter proving it was cleared. Once I got this letter I could then register the vehicle with MTO.
I don't necessarily know if this is HOW it must be done, just sharing my experience.