Purchasing Property from a New Builder in Ontario: A Buyer’s Guide

Purchasing a newly built home from a builder in Ontario is an exciting yet complex process. Unlike resale homes, new builds come with unique considerations that buyers must be aware of. This blog explores what buyers should do before and after purchasing a new build, the importance of legal advice, rights under the Tarion Warranty program, and the legal consequences of failing to close the transaction.

Steps Buyers Should Take Before and After Purchasing a New Built

Before Signing the Agreement

Research the Builder – Check the builder’s reputation, past projects, and customer reviews. Ensure they are registered with Tarion.

Understand the Agreement of Purchase and Sale (APS) – New build agreements are often lengthy and complex. Buyers should thoroughly review all terms and conditions.

Get Legal Advice – A real estate lawyer in Ontario can help identify hidden clauses, additional costs (e.g., development charges), and any potential risks.

Check for Cooling-Off Period – In Ontario, buyers of new condominium units have a 10-day cooling-off period to reconsider their purchase. However, this does not apply to freehold properties.

Know Your Rights Under Tarion – Ensure the builder provides Tarion warranty coverage and review the protection it offers.

After Signing the Agreement

Monitor Construction Progress – Keep track of completion timelines and communicate with the builder.

Review Adjustments and Closing Costs – Be prepared for extra costs such as utility hook-ups, development levies, and HST adjustments.

Conduct a Pre-Delivery Inspection (PDI) – Document any deficiencies before taking possession.

Secure Financing – Ensure mortgage financing is in place before the closing date to avoid delays.

Importance of Legal Advice Before and After the Purchase

Obtaining legal advice is crucial to avoid unexpected costs, understand your rights, and ensure a smooth transaction. Before signing the agreement, a lawyer can help you negotiate terms, clarify additional costs, and explain your obligations. After the purchase, legal counsel can assist with closing procedures, reviewing title issues, and ensuring the builder fulfills their obligations under the contract.

What to Do If There is an Issue with Closing

Issues can arise at the time of closing, such as:

The builder delays occupancy or fails to complete construction on time.

Unforeseen closing costs that the buyer was unaware of.

Financing issues preventing the buyer from obtaining the required mortgage.

If there is a problem with closing, buyers should:

Consult The Builder’s Lawyer Immediately – A real estate lawyer can negotiate extensions, dispute additional fees, or explore legal remedies.

Check for Tarion Coverage – Tarion may provide compensation or assistance if the builder fails to meet their contractual obligations.

Negotiate with the Builder – Some builders may offer alternative solutions, such as delayed closing compensation.

Buyers’ Rights Under Tarion Warranty in Ontario

Tarion provides warranty protection to new home buyers, covering:

Deposit Protection – Refund of deposits if the builder fails to complete the home.Delayed Closing Compensation – Buyers may be entitled to compensation if the closing is delayed beyond permitted limits.Defects and Workmanship Issues – Coverage for construction defects, major structural defects, and Ontario Building Code violations.Warranty Periods:

o   1-year warranty for workmanship and materials.

o   2-year warranty for major plumbing, electrical, and heating issues.

o   7-year warranty for major structural defects.

Legal Consequences of Not Closing the Deal

If a buyer fails to close the transaction, they may face serious legal and financial consequences, including:

Loss of Deposit – The builder may retain the deposit if the buyer defaults.Lawsuits for Damages – The builder may sue for losses resulting from the failed transaction.Impact on Credit Score – A lawsuit or mortgage default could negatively affect credit ratings.Resale Restrictions – Some builders impose conditions on assignments or resale before closing.

Conclusion

Purchasing a newly built home in Ontario is a significant investment that requires careful planning and legal guidance. Buyers should take proactive steps before and after purchasing, be aware of their rights under Tarion, and seek legal assistance if issues arise. Failing to close the deal can have severe consequences, making it essential to be financially and legally prepared. If you are considering buying a new home, consulting an experienced real estate lawyer can help you navigate the complexities and protect your investment.

Resource : https://nhashmilaw.com/blog/purchasing-property-from-a-new-builder-in-ontario-a-buyers-guide/