Real estate lawyer Bob Aaron writes that some model homes may be exempt from Ontario’s mandatory builder warranty, even if they are brand new and have never been occupied.

Responding to a client inquiry, Aaron looked into the issue of how previous occupancy of a model home can impact its warranty coverage. As Aaron quickly discovered, determining whether or not a home has been occupied is not a simple task.

According to Harry Herskowitz, a real estate lawyer who represents a number of large developers, the warranty coverage depends on the “nature, extent and duration of use” of the model home. If the use of the home is not extensive, says Herskowitz, the home would qualify for coverage.

Because of the uncertainty surrounding occupancy, there have been numerous court cases dealing with this issue. Aaron tells the story of a townhome builder who had moved some personal items into the home he had built and “lived” there for a few months. This led to a builder-buyer dispute over occupancy and warranty coverage. Eventually, the court ruled that the home not been occupied. In his ruling, the judge stated that “there must be an element of residency or tenancy. Simple possession does not and should not suffice.”

Aaron concludes with some general advice: if you plan to buy a model home or the builder’s own residence, make sure the Agreement of Purchase and Sale states whether or not you will receive the builder’s warranty.