New home construction delays getting you down? You have options.
Delay Doesn’t Void Sale
A developer who failed to deliver on his promise the buyer would be in their home on time was prevented from voiding an agreement for purchase and sale by Ontario Superior Court of Justice. The court called the action invalid.
Occupancy Permit Not Ready
When Tony contracted with Previn Homes Limited to build his new home March 26, 2016, the parties agreed he could move in by Jan. 11, 2018. The firm closing date came and went and the occupancy permit wasn’t ready. Nor had the developer notified the buyer and extended the closing date, as required by the delayed occupancy warranty Previn gave Tony when they signed.
A Warranty for Construction Delays
The Tarion addendum, required under Ontario’s New Home Warranty Program (ONHWP), assures buyers their home will be ready when agreed in their sales contract. With proper notice, developers can extend the closing date by up to 240 days. You may be owed compensation if the developer fails to meet the original or extended closing dates.
90-Day Extension Mandatory
When Previn didn’t notify Tony in advance of their delay, he fell back on the ONHWP’s mandatory 90-day delayed closing date clause. But before he could enforce it, the developer declared Tony had violated the agreement of purchase and sale and, six days later, voided his contract.
Tony objected. The developer had provided the occupancy permit Jan. 12 and he considered the sale complete. But he would need time to get the money together for the final payment. Previn had known this when they signed the new home contract, Tony argued. Six days wasn’t enough notice. Besides, since the occupancy permit wasn’t ready on time, the ONHWP guaranteed him 90 days to close.
Disputing a New Home Payment
The developer countered that the home had been substantially ready on time and the sales contract provided that was sufficient for occupancy. Although exterior work was still being done Jan. 11, the contract allowed for a one-day delay to Jan. 12. Previn had given the buyer almost a week to make payment. Agreeing to extend the closing to Jan. 17 to complete financing had made the delayed closing warranty invalid.
Investor Not a Serious Buyer
Besides, Previn said, Tony’s failure to complete the sale on time signalled he couldn’t afford the home. He had already advertised it for sale. Tony, Previn told the court, was an investor, with no serious intent to move in. So when his lawyer asked to extend the payment date to Jan. 18, they refused. The sales contract was ended and Tony had forfeited his deposit. Previn resold the house while Tony pursued them in court.
Developer’s Argument Shaky
The judge found Previn was standing on shaky ground. The developer was required to provide an occupancy permit on or before Jan. 11 or written confirmation the home met Ontario Building Code standards so Tony could legally occupy it. Previn couldn’t confirm that — the home’s exterior hadn’t been completed by the firm closing date. Not having the occupancy permit ready on time was a serious matter, the court said.
Warranty Can’t Be Invalidated
The issue was bigger than that. The delayed occupancy warranty didn’t permit Previn to void the sales contract within a week. Failing to ask for an extension to the firm closing date meant the company had to give Tony up to April 11, 2018 (the so-called delayed closing date or mandatory 90 days in the Tarion addendum) to finalize the sale. If Tony still didn’t have the money by then, the addendum gave him six more months, an outside closing date of Oct. 11, 2018, to pay up. Previn couldn’t just opt out of the addendum.
No Recourse for the Unavoidable
New home construction can be problematic. Despite delays, buyers are bound by their sales contract, even if the unpredictable happens, like:
- labour strikes
- floods, fallen trees, lightning or other acts of God that can’t be foreseen or prevented
- civil insurrection, aka riots or protests
- war or terrorist acts
- or pandemics like COVID-19.
When Compensation is Due
Fortunately, if your home is still not ready 240 days after the firm closing date, the builder must pay delayed closing compensation and provide a delayed closing date. You can claim up to $7,500 plus GST/HST ($150 a day) for living expenses, moving costs or storage.
Cancelling a Sales Contract
You can cancel the agreement of purchase and sale altogether if the builder hasn’t completed the home within a year of the 240-day extension. Since agreeing to yet more extensions may affect the timing for cancelling your contract, get legal advice if delays continue.
Exercising Your Legal Options
Still unhappy, but moved in anyway? You have up to a year to make a ONHWP claim for shoddy workmanship, labour shortages, building permit holdups or material shortages that ruined your dream home. Like Tony, you can always go to court.
Legal Advice for Home Renovations
Axess Law’s Ontario real estate lawyers review sales contracts and correspondence from developers to protect your legal rights. Online video conference calls are available anywhere in Ontario, 7 days a week, day or evening. Dial 1-877-522-9377 or in Greater Toronto 647-479-0118 or use our online booking form. Make an in-person appointment at our Ottawa, Toronto, Scarborough, Vaughan, Etobicoke, Mississauga Winston Churchill or Mississauga Heartland law offices.
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Photo by Mahesh Patel | Pixabay.