Cancellation of a major Greater Toronto Area condominium project could spell good and bad news for your next condo purchase.
Tillsonburg developer Green Urban People Ltd. cancelled a 26-unit condo purchase deal because municipal approval wasn’t received for the freehold, preconstruction townhomes. The developer offered to resell the yet-uncompleted units to the same buyers for 25% more.
That got buyers a date in Ontario court, and a certificate of pending litigation blocking any condo purchase until the dispute was settled. More importantly for you, builders and developers can be fined or suspended for breaching the rules under Ontario’s newly minted Home Construction Regulatory Authority, and be forced to return your deposit with interest.
Here’s what to do if a developer threatens to cancel your condo purchase.
Early Termination of a Condo Purchase (Ontario)
Ontario condo developers can cancel a preconstruction project if:
- They fail to sell enough units, called not meeting the minimum sales threshold.
- They can’t obtain construction financing.
- Construction is incomplete, often because the developer is bankrupt.
- Municipal approvals aren’t obtained. For example, if your condo purchase doesn’t meet the Ontario Building Code.
They’re called early termination conditions. Read about amending your agreement if you’re facing termination of a real estate contract by a seller in Ontario.
Tarion requires developers who cancel a preconstruction condo purchase to return good faith deposits within 10 days. It’s protection resale home buyers don’t automatically. Here’s why: can a seller keep buyers’ deposits?
Safeguards for Your Condo Purchase
Your condo agreement of purchase and sale comes with built-in safeguards. For instance, Tarion requires builders have a provincial licence, and protects your good faith deposit for up to $20,000. See get your deposit back from Tarion. <bookmark>
Condo owner rights in Ontario require that first agreements of purchase and sale signed after Jan. 1, 2020 require an information sheet that details your risk when you buy a condo to live in that is unbuilt or phased in. The sheet also has to explain the developers options for terminating the project early.
New or not, all condos are regulated under the Ontario Condominium Act. Read about recent changes.
Your Options for Cancelling Condo Purchases
But think carefully before deciding on a resale condo purchase over a preconstruction condo.
Any preconstruction condo purchase in Ontario has an automatic 10-day cooling off period. Section 73 of the Ontario Condominium Act starts the clock ticking as soon as you have a copy of a fully signed agreement or disclosure statement (whichever is later). That’s 10 calendar days, and applies when you buy directly from a developer or builder.
Offer cancelled by mistake – what to do.
Receive a disclosure statement that shows a material change to your condo purchase, and you can also cancel within 10 calendar days. The change has to be so significant a reasonable buyer would no longer proceed with the condo purchase.
You can also cancel a preconstruction contract yourself. You may be stuck with financial penalties if your agreement of purchase and sale doesn’t allow for you and the developer to mutually agree to withdraw. So talk to an Axess Law real estate lawyer first. Grounds for cancellation of sale agreement.
If your developer consents, sell a preconstruction condo you don’t want before you take legal possession with an assignment of agreement of purchase and sale. It transfers your obligations, like fixing builder deficiencies, to the new buyer (called the assignee). Axess Law can prepare the assignment document.
Construction going on and on and on? Realistically, how many times can a builder delay closing in Ontario? You could be compensated if your condo purchase takes too long. Here’s how.
Aside for Resale Condo Buyers
Ten-day cooling off periods only apply to new build condos. Resale buyers may be able to cancel a condo purchase if the condo information certificate is unsatisfactory.
Avoid losing your deposit or being liable for the seller’s lost profits and expenses by including that condition in your agreement of purchase and sale. Condo corporations charge around $100 to give potential buyers information about the financial and physical condition of a building. Reserve fund red flags for cancellation of condominium contracts.
Condo owner rights in Ontario are protected under the Condo Management Services Act. It regulates how condo managers and condo management companies operate. See Owning a Condo. For answers to common questions condo owners have:
- Can a condo board evict an owner in Ontario?
- Can a condo owner be forced to sell in Ontario?
- Can condo boards fine resident owners in Ontario?
Why You Need a Real Estate Lawyer
Developer cancellation clauses can take you by surprise. It’s never too late to have an Axess Law real estate lawyer review your agreement of purchase and sale. Even if you’ve already signed or construction has started, email or bring your offer to purchase to any Axess Law office.
What’s in your agreement of purchase and sale.
We review your agreement to see if it contains termination or escape clauses that allow a developer to walk away from your arrangement. You may be able to hold the developer to their commitment, or get your deposit back through your Tarion new home warranty. Get your deposit back from Tarion.
If construction goes on longer than seems reasonable, new home builders can be forced to compensate you. Ask our licensed real estate lawyers about warranty insurance for developer delays. Read compensation for builder delays.
Suspicions aroused by shoddy construction practices? Ontario builders are required to be licenced. Axess Law helps you cancel a condo agreement of purchase and sale if a builder has misrepresented their credentials. Check your condo developer’s licence.
We amend your offer to purchase to include a professional home inspection during the mandatory, final walk-through with your developer. And your Axess Law lawyer tells you how to get a condo insurance certificate that includes valuable information about your new home. What’s in the condo information certificate.
Our legal professionals close condo real estate transactions all the time. We check for your fire insurance binder, and liaise with your mortgage lender to complete legal documents you need to assume, discharge, or obtain a mortgage.
Documents to bring to legal appointments.
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