Canadian:

Depends on value of domain – if you are paying or receiving big bucks for it then you should use an escrow service. The escrow service will collect money from buyer and domain from seller and when transfer is safe / funds cleared then they will forward funds to seller and transfer name to buyer. Sedo offers an escrow service. There is a fee for this service.
If purchase involves a low dollar amount, be very careful who you deal with. Normally funds will be transfered and cleared then name is pushed to, or transfered to new owner.
The actual transfer can be by way of a “push” from sellers account at the domain’s registrar to buyers account at same registrar. Or the buyer can request a transfer to a registrar of their choice and the seller simply approves the transfer. The transfer will cost a years registration and will add a year to the registration period.
A few ccTLD transfers are a bit different – .ca for instance. Let me know if the transaction is for a .ca and I’ll provide details.