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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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Buying a new home? Here’s how to speak the language
May 17, 2018
Purchase Terms

You may not realize it, but buying a new home requires learning a new language. Ok, maybe not a whole new language, but lots of terms that you may never have come across before --  like ‘freehold’, ‘PDI’ or ‘APS’. So, once you’ve found the home you want to buy, you’ll want to carefully review everything with your real estate lawyer because it’s important that you understand the terminology that’s used in the home-buying process. But even before you consult a lawyer, here are some basic terms and definitions you may encounter in your search for a newly built home that will help you speak the language of home-buying:

The more informed you are, the better equipped you will be to protect your rights, your investment and your peace of mind.

CouchDifferent types of homes

There are different categories of homes based on the type of ownership.

  • Freehold home: “Freehold” means you are buying both a home and the land it’s on. A single family detached home, a semi-detached, a unit in a row house or a unit in a duplex can fit into this category.
  • Contract home: When you already own land and you hire a builder to construct a new home on your property, this is a “contract” home.
  • Condominium: A “condominium” is a type of real estate divided into several units that are each separately owned, surrounded by common areas that are jointly owned, like pools, lobbies or workout rooms. These common areas are referred to as “common elements”. 
  • POTL: A parcel of tied land or “POTL” comprises freehold homes that are built on a parcel of land tied to a common elements condominium. Each owner has a part ownership of the common elements, such as roads, sidewalks or parks.

Who’s who

  • Builder: A “builder” is a person who undertakes all the work and supplies all the materials necessary to construct a home.
  • Vendor: A “vendor” is a person who sells a home not previously occupied. A builder who builds and sells a home is also a vendor.
  • Owner: An “owner” is a person who purchases a home from its vendor for occupancy.

Warranty coverage

  • Almost every new home in Ontario is protected by statutory warranties provided by your vendor and backstopped by Tarion. These new home warranties – called the Ontario New Home Warranty Program – are mandatory under provincial law.

Key documents

  • An Agreement of Purchase and Sale (APS) is a written contract between a vendor and a purchaser for the purchase of a home. The APS contains the particulars of what is included in the price of the new home.
  • An Addendum is a mandatory agreement that forms part of the APS of every new home. The Addendum sets out a number of rights and obligations of vendors and purchasers regarding delays in closing or occupancy, termination of the APS, and critical dates (see below).
  • The Statement of Critical Dates is part of the Addendum and includes: the date by which the vendor plans for your new home to be ready; the vendor's deadline for notifying you if there's going to be a delay in the closing or occupancy date; and the termination period during which you have a right to cancel the purchase agreement because of delay.
  • The pre-delivery inspection (PDI) is an inspection a builder is required to do with purchasers before they take possession of a new home. This is an opportunity to walk through the home with your builder to review all the features and functions of your new home. During the PDI, you and your builder will identify any damaged, missing or incomplete items and put them on a PDI Form. The PDI Form not only serves as a record of the condition of the home at the time but also can provide a ‘to-do’ list for repairs for your builder.
  • The Certificate of Completion and Possession (CCP) is a document provided to you by your builder. It includes your home’s enrolment number with Tarion and the date of possession, which is also the start date of your home warranty.

With these terms in your vocabulary, you’ll be better prepared to talk to your builder, your real estate lawyer or your property manager. For more terminology and advice for home buying, visit Tarion.com or download our MyHome Planner app from Google Play or the AppStore.

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.