New home construction delays getting you down? You have options when new home delays make realizing your home ownership dreams seem next to impossible.
How many times can a builder delay closing in Ontario?
What to avoid when building a new home
Can a sale be voided by delays?
When occupancy permits are delayed
How to dispute a new home delays
Ignoring the Tarion warranty – is it legal?
What Can Go Wrong in a New Home
Building a custom home has its problems. Despite new home delays, buyers are bound by their sales contract, called the new home agreement of purchase and sale.
What causes new home delays may be as unpredictable as:
- labour strikes
- floods or fallen trees
- lightning strikes
- acts of God that can’t be foreseen or prevented
- supplier delivery problems
- or pandemics.
It can happen to anyone. But if it does, your agreement’s terms and conditions still apply. You’ll have to carry on or pay the consequences. Can you sue God?
How Many Times Builders Can Delay Closing
Fortunately, Ontario’s New Home Warranty Program (ONHWP, known as Tarion.com) assures buyers their custom home will be ready when agreed to in their sales contract. With proper notice to a buyer, developers can extend the closing date by up to 240 days. It’s called the Tarion addendum. And, if original or extended closing dates go by and new home delays are still occurring, you may be owed compensation.
Compensation for New Home Construction Delays
That means if your home is not ready 240 days after the firm closing date included in your agreement of purchase and sale, 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. Read delayed closing coverage.
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. Buyer’s right to cancel.
Exercising Your Legal Options
Unhappy with the final product, but moved in anyway? You have up to a year to make a ONHWP claim for shoddy workmanship, labour shortages, building permit hold ups or material shortages that ruined your dream home. Like Tony, you can always go to court.
Avoid These Common Custom Home Mistakes
Discovering your home doesn’t fit the lot you bought is an expensive, but common mistake. Three more to avoid:
- Skimping on the basement. Uprooting a basement to add a bath, or window in a guest bedroom, or rental apartment is costly. Factor it in before you build. Basement renovations buyers want.
- Losing out on natural or artificial light. Plan window sizes and placements carefully. Larger windows can improve your mood and make your home feel more spacious. Ask a lighting expert how many watts each room needs, or may before buying floor and table lamps to illuminate your work or hobbies.
- Not adding enough closet space or shelves. Storage nightmares can make your home unpleasant to live in. Be realistic about how and where you will store stuff like winter coats, vacuum cleaners, tools, and books. Are bedroom closets big enough for your ever expanding wardrobe? Where will the pet food and kids’ toys go?
Best month to construct a new house — spring or early fall when the ground is warmer and contractors are available. Build a new home.
Can New Home Delays Void a Sale?
Tony thought he had won the day when Ontario Superior Court of Justice agreed with him that a developer who failed to deliver a new custom home on time couldn’t just keep his deposit and resell the property. But when the case got to the Ontario Court of Appeal, the tables were turned on Tony. Read a quick summary of the judgment.
What Can Happen When Occupancy Permits Are Delayed
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. That ‘firm closing date’ came and went, and still the occupancy permit wasn’t ready. Tarion’s delayed occupancy warranty required that the home builder notify Tony if delivery would be delayed, and extend the firm closing date.
But before Tony could enforce it, the developer accused him of breaching it by not arranging financing on time. In fact, Tom’s lawyer had requested three extensions to the payment date, but his lender declined to advance the mortgage until the home’s exterior was finished. What’s in the agreement of purchase and sale.
Disputing a New Home Payment
Previn Homes told the Ontario Superior Court of Justice the home was ready Jan. 12. Tony’s failure to complete the sale by the extended date (Jan. 17) indicated he couldn’t afford it. Previn refused any further extensions, kept Tony’s good faith deposit, and resold the house. Losing deposit on house purchase.
Developer’s Response to New Home Delays Shaky
The ONSC ruled Previn was standing on shaky ground. The developer was required to provide an occupancy permit by Jan. 11, or written confirmation the home met Ontario Building Code standards so Tony could legally occupy it. By not providing the permit, or notifying Tony of the delay, Previn had breached Tarion’s addendum. Download a checklist for pre-delivery inspection of your new build home.
Can Tarion Warranty Be Ignored?
By law, the ONSC ruled, Tony had 90 days (up to April 11, 2018) to complete the sale. If Tony still didn’t have the money by then, the Tarion addendum gave him six more months, an outside closing date of Oct. 11, 2018, to pay Previn.
The Court of Appeal for Ontario disagreed. Tony voided the agreement of purchase and sale when he took delivery of his new home a day late on Jan. 12. Because Tony didn’t object to late delivery, Tarion’s delayed closing warranty didn’t take effect. When he couldn’t pay for the home by Jan. 17, that allowed Previn Homes to terminate the agreement.
Tony was out his deposit and new home.
Affordable Real Estate Lawyers, Anywhere You Are
Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
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Axess Law’s Ontario real estate lawyers review sales contracts and correspondence from new home developers. Video conference online anywhere in Ontario, 7 days a week, day or evening. https://www.axesslaw.com/services/real-estate-lawyer/virtual-real-estate-closings/ Dial 1-877-522-9377, 647-479-0118 in Toronto, or use our online booking form to make legal appointments. Prefer to meet in person. We have conveniently located law offices in Greater Toronto Area and Ottawa, with onsite parking, and easy transit access.
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