By Howard Bogach, CEO, Tarion Warranty Corporation
Originally published in the Toronto Sun
How many of us when purchasing something or signing up for a new service, don’t take time to read all the fine print? These agreements often include paragraph upon paragraph of legal language that is tedious to read and difficult to understand. It’s tempting to skip down to the ‘Agree’ button or the signature line so you can just get the deal done.
When it comes to buying a pre-construction home however, it’s important to understand exactly what both parties – buyer and seller – are committing to and under what conditions that agreement can be terminated.
A decade ago, there weren’t a lot of rules on what conditions new home builders could put into purchase agreements and the conditions themselves could be scattered throughout the document making them difficult to find.
In 2008 however, Tarion introduced an addendum to be included with every purchase agreement.
The purpose of the addendum is to not only restrict the conditions under which builders can terminate agreements early, but require them to take ‘all commercially reasonable steps’ to satisfy those conditions. For example, if one of the conditions is zoning approval, the builder would need to have completed all the steps necessary to try to obtain those approvals in a timely manner.
The addendum also requires builders to give home buyers information about zoning and construction as well as closing dates and conditions under which these dates could be changed.
An added benefit to home buyers is that the addendum collects all this information, and the conditions governing the agreement, in one place so they are easier to review.
Although it cannot eliminate all the risks involved in purchasing a pre-construction home, the limitations and level of disclosure that the addendum requires helps protect home buyers and inform them of the risks. But this doesn’t replace the importance of having your purchase agreement reviewed by an experienced real estate lawyer.
A new home is one of life’s biggest investments. The more you know before you enter into the deal, the better equipped you’ll be to protect your rights.