In response to a new home buyer’s e-mail concerning delayed closings, real estate lawyer Bob Aaron discusses the options available to both home buyers and builders when a new home closing is delayed.

As Aaron outlines, according to Tarion Warranty Corporation regulations, if a builder cannot close by the scheduled date, it “shall” extend the closing date by providing proper written notice to the buyer. The only restriction is that the delay cannot exceed 120 days. After the 120 days, the purchaser has the option for 10 calendar days to terminate the transaction and receive a refund of the deposit money. If the purchaser does nothing, the closing can be extended for up to an additional 120 days.

These are just a few of the closing scenarios that can occur when a new home is being purchased. However as Aaron notes, Tarion regulations on closing extensions strike an effective balance between the two parties: the buyer is not left waiting indefinitely, and the builder has some breathing room to finish the home. And in today’s booming new home market, closing delays are becoming increasingly common due to such events as shortages of labour and materials.

Aaron also outlines the Tarion regulations which state that if a builder provides the buyer with proper notice about a delay, and the delay is within the allowable limits, a purchaser is not entitled to any compensation. However, if a builder does not comply with these rules, the buyer is entitled to claim compensation for living expenses up to $100 a day.

Although closing delays are on the increase, this shouldn’t give anyone the impression that builders are not doing their job. As Aaron notes, delays cost builders money, and they only get their profits when the deals close.