Remember This When Buying a Preconstruction Home

When an Ontario couple innocently lent a nearly complete preconstruction home to a friend, they wound up in legal hot water. Forfeiting a $73,980 deposit has to hurt, especially if you think you are doing the right thing, as they did.

Alexandre and Kelly Lucas bought their preconstruction home in 2015. They made all the mandatory deposits for three years while their preconstruction home, a condo in a Toronto luxury, mixed use residential and commercial development, unfolded. 

Interim occupancy fees, a form of rent until the developer obtains the legal occupancy certificate, were due in April 2018. That’s when loaning out their preconstruction home sparked an expensive lawsuit (Lucas v 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52).

When does the seller get the deposit for a preconstruction home? 

Perils of Buying a Preconstruction Home

The buyers had indeed failed to inform the developer their unit was occupied, as their preconstruction home contract required. And while it was true the contract stated a contractual breach could result in the sale being terminated, keeping the deposit, and trying to resell their preconstruction home to relatives, were grounds for legal action.

Can a seller keep buyers’ deposits

Preconstruction Home Scuffle Favours Buyers

The developer argued the Lucas had leased their unit, violating their preconstruction home agreement of purchase and sale. The court disagreed. Ontario’s Condominum Act defines a lease as a written contract. The couple had merely loaned the unit, not rented it, and had no contract with their friend. Nor did the preconstruction home contract prevent the Lucas from letting family or friends use their unit.   

The developer lost on another crucial point. Time is of the essence in contracts, but five months went by between when the developer was advised the condo was occupied and the friend was denied access. Five more months elapsed before their preconstruction home contract was terminated. 

By delaying ending the contract, the developer lost their right to terminate it. The Lucas’ forfeited deposit was returned by the court, and the resale overturned. 

Making Amendments to Agreements of Purchase and Sale

Lost deposits aren’t the only preconstruction home peril. Aggravating as they are, new build delays are common. How many times can a builder delay closing in Ontario on a preconstruction home? More than you might expect. 

While you’re covered for some delayed closings (delayed occupancy for condos), you could definitely be out of pocket if critical dates in your new build agreement are missed. Review requests to amend the agreement of purchase and sale with a real estate lawyer before signing. You have the right to terminate if delays become unreasonable. 

Buying a new home from a builder in Ontario. 

Getting Builder Delay Compensation in Ontario

Further, developers who delay completion of your new home must commit to legally binding deadlines. Check the outside closing/occupancy date condition in your Tarion new home warranty. A developer may owe you delayed occupancy compensation of $150 a day, up to a maximum of $7,500, for problems they cause, but not for unavoidable delays, like a pandemic, fire, or flood.

What happens if the builder delays closing

Why You Need a Real Estate Lawyer

New construction attracts early buyers whose plans often change before their unit is ready to occupy. Axess Law finalizes the transaction when you buy a newly completed home or condo on assignment from the original purchaser. 

Is buying an assignment sale cheaper? 

We check your agreement of purchase and sale for essential clauses that protect your buyer’s right to cancel. Our licensed real estate lawyers answer your questions, like can a buyer back out of a purchase agreement in Ontario? We confirm what happens to the deposit on a house if the deal falls through. We review your contract for mutual release clauses that minimize the financial consequences of backing out of a real estate deal.

What to look for in a new build agreement of purchase and sale

Your Axess Law virtual real estate lawyer can check your agreement of purchase and sale for clauses that commit you to specific deadlines. We hold your buyer’s deposit in trust until your real estate purchase is concluded, and witness and e-sign closing documents by remote video conference. When it’s more convenient, or you’re just not comfortable signing important legal documents online, we can arrange for you to drop into our open law offices in Ottawa and Greater Toronto Area to sign the final papers.

Find a Real Estate Lawyer Near Me

Axess Law has flat rate lawyers in Ottawa and Greater Toronto Area for document searches and property title transfer in Ontario. We check for construction liens or financial charges against property title, and advise you if you need to take action to protect your property purchase. Our real estate lawyers register your new home with the local land titles office. 

Transferring ownership of property from parent to child in Ontario. 

Axess Law discharges existing mortgages, and liaises with your bank, credit union, or private lender to sign new mortgage documents. We answer all your questions about what is title insurance and more. 

Common questions to ask a real estate lawyer

Getting a high ratio mortgage from CMHC, Canada Guaranty, or Sagen™? Your final statement of adjustments includes an itemized breakdown of credits and expenses, including mortgage payouts, property insurance, and legal fees.

Save With a Flat Fee Real Estate Lawyer

Flat rate lawyers make home buying easier. We understand purchasing a new home is a major investment. Hiring a flat fee real estate attorney gives you more money for other expenses, like buying new appliances or replacing those outdated carpets. You pay for only the legal services you need, with the same great services you’ve come to expect from Axess Law. 

Our flat fee lawyer rates start at $999.99 and up plus HST to buy a new construction home or condo, or $799.99 and up plus HST for sellers. Your bill is all-inclusive, with  no hidden extras or surprises.

Book Virtual or In-Person Legal Appointments

Access lawyers anywhere you are in Ontario. Our virtual real estate lawyers video conference with you remotely using secure, confidential online software. You can use your home computer, laptop, tablet, or any compatible mobile device.

In-person appointments are available at Axess Law offices in Ottawa or Greater Toronto Ontario, day or evening, 7 days a week. Book online, or call our 647-479-0118 lawyer line (toll free to 1-877-402-4207) to find a convenient date and time. 

Axess Law has onsite parking, and easy transit access.

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