The Open Door Blog
Whether you own a new home or condo, are considering buying one, or just love to dream about it, the Open Door blog is here to share stories that can help you protect what is likely the biggest investment of your life.
The Open Door blog is published by Tarion, a non-profit corporation that administers Ontario’s New Home Warranty Plan and registers all new home builders in Ontario. Click here to learn more about us.
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When it comes to buying a new home, real estate lawyers can be an essential resource. For example, the signing of the Agreement of Purchase and Sale is a critical first step in the journey of new home ownership. It’s also an opportunity for real estate lawyers to provide their clients with important information on their warranty rights and responsibilities before they sign on the dotted line.
We’ve heard from some new home owners that they did not know until it was too late how they were protected under Ontario’s new home warranty program. With that in mind, here are a few things to keep in mind before you sign. Remember, when in doubt, ask!
I didn’t know my entire deposit wasn’t protected
One of the first steps in buying a newly built home is figuring out how much you can put down as a deposit. Most new home buyers only focus on what they can afford, and not how their deposit money is protected.
Like the warranty generally, there are limits to deposit protection in Ontario. Tarion provides deposit protection for condominium buyers up to a maximum of $20,000. Under the Condominium Act, the whole deposit must be held in trust, but in those extremely rare circumstances where that doesn’t happen, there is additional protection up to $20,000. So overall, your entire deposit is likely protected in the event that the builder cannot complete the project and you do not receive your condo. Keep in mind, however, that unless also placed in trust, this protection may not extend to any additional money spent on upgrades or extras.
Deposit protection for freehold homes in the province is higher – up to a maximum of $40,000. There are no trust provisions for freehold projects, so deposit amounts in excess of $40,000 are vulnerable unless your real estate lawyer has made specific provisions in your Agreement of Purchase and Sale. Bottom line, deposit amounts over $40,000 are not protected by the warranty.
Young woman at home with a tablet and a dog
One way to understand the anticipated timeline for condo completion is to carefully review the Addendum to your Agreement of Purchase and Sale.
I never expected my condo to be delayed this long
New home construction is complicated business. It takes a great deal of skill, material and time. Scale the project up, and you are sure to need more skilled trades, more materials and definitely more time. Condominium projects can take a long time to build. One way to understand the anticipated timeline for condo completion is to carefully review the Addendum to your Agreement of Purchase and Sale. Here’s what to look for:
On page one of the Addendum, you’ll find a few key dates:
- The first date, which is characterized as either “Firm” or “Tentative”, is called the “Occupancy Date” or “Closing Date.” Think of this as the builder’s first and best estimate for when your dream home or condo will be finished. With proper notice, this date can be moved by the builder. It’s not unusual. In fact, it can be moved several times without triggering delayed closing compensation.
- The second date, also listed on this page, is the “Outside Occupancy Date.” This is the builder’s estimate for completion in the event there are unwanted delays. This is a date the builder cannot move and because it is a firm commitment it is also usually set years in the future. Pay close attention to this date – it will provide you with a good sense of how long the builder has given himself/herself to complete the project and avoid delayed compensation claim.
On page two of the Addendum you’ll find more information on the status of the project at the time of signing. For example, the builder must check off if he/she has obtained formal zoning, and if construction has commenced. If neither of these boxes are checked “yes,” the project may be years away from completion. Finally, keep in mind that the builder is motivated to complete the condo project as soon as possible. Remember that money held in trust? It doesn’t get released until the project gets finished.
I wasn’t told that anything outside my contract was not covered
Almost all new homes in Ontario are protected under warranty. But that warranty only covers what is outlined in your Agreement of Purchase and Sale. Extras – such as upgrades that are not included in your contract – are not considered warranted. So, make sure they are included in your Agreement. What’s more, anything agreed to on a handshake or verbal promise will not be protected. So if you request additional items, make sure it is in writing!
So much to take in! And there’s still more. Watch for Part 2 of What to ask your real estate lawyer when buying a new home, coming next week.
Have a question? Contact Tarion.
Always use an experienced real estate lawyer when buying a new home.
Use Tarion as a resource while making the purchase. Visit Tarion.com to read tips for making the deal.
Don’t wait until it’s too late – read up on your warranty rights and responsibilities before you sign on the dotted line! Get more information about your warranty coverage Ontario’s New Home Warranty and your warranty coverage.
The goal of this blog is to provide you with general information about the warranty process by sharing real experiences from new homeowners. The blog should not be relied upon as legal advice. For privacy reasons, we will not address or resolve current cases in a public forum, so any comments or questions that are posted on this site that describe individual cases cannot be discussed. If you have a question about your warranty or Tarion generally, we would be pleased to discuss your issue, in the context of your particular circumstances and in confidence. We exercise reasonable care to avoid offensive, illegal or defamatory content from being posted, as well as comments that are intended solely for self-promotion or considered to be spam.