If you have entered into a new-build home agreement, it is strongly advisable that you have your agreement reviewed by a legal professional for the following reasons.

TARION Registration

Legal counsel will verify that the new home builder is registered with TARION, the corporation that administers the Ontario New Home Warranties Plan Act (the Act), and that the home itself is enrolled under the Act. If they are not so registered or enrolled and there is no applicable exception under the Act disqualifying the home from enrolment, this will deprive the purchaser of the benefits provided under the Act. Accordingly, the purchase agreement would need to be adjusted for homes that do not qualify for enrollment under the Act, because in that case, the purchaser cannot rely on statutory warranties under the Act, but on contractual warranties only.

TARION Warranty Coverage

A review of the new-build agreement with counsel will ensure that the purchaser is knowledgeable about the filing requirements of and the deadlines up to which a warranty service request or claim can be made.

TARION assists with the enforcement of vendor warranties. For example, in the new-build agreement, the vendor will warrant that the home is constructed in accordance with Ontario’s Building Code, is fit for habitation, and is free from defects in workmanship and materials and major structural defects. If a dispute arises concerning such warranties, TARION conducts an assessment of the warranty claim by inspecting the building or by other investigation. Furthermore, if the vendor refuses compensation for violating a warranty, TARION itself will compensate the purchaser out of a guarantee fund it maintains. For these protections to take effect, the purchaser must adhere to strict deadlines that vary with the nature of the discovered deficiency.

Deposit

TARION insures the purchaser’s deposit up to a limit depending on the purchase price in the event of default of the vendor. Hence, counsel will advise that there should not be a deposit paid by the purchaser in excess of the TARION insurance. Furthermore, if the deposit exceeds 30% of the purchase price, the purchaser will be regarded as a homeowner upon making the payment, and no longer a home purchaser. Consequently, the purchaser may be responsible for any construction lien claims registered after closing against the new home and may be subject to statutory holdback liabilities concerning such claims.

HST Rebate

Counsel will also advise the purchaser on the requirements to obtain the first-time purchaser HST rebate. New-build home buyers are eligible for this rebate, which can amount to up to $24,000.00, if the home will be utilized as their primary residence, or the primary residence of certain blood-relatives.

Modifications Post-Closing

Counsel will also draw the purchaser’s attention to the fact that vendors and builders are permitted to substitute certain materials from the plans and specifications for materials of equal quality. It may also be the case that the purchaser is permitted to select certain colors or materials from the vendor’s samples. Upon the purchaser’s failure to make such a selection within a specified timeframe, the vendor may make the selection on the purchaser’s behalf.

Substantial Completion

Another surprise that may await a purchaser who does not have legal counsel reviewing the purchase agreement can be the obligation to begin occupation of the dwelling upon its “substantial completion”. Substantial completion is reached when the dwelling complies with legislative standards. This can require significantly lower degrees of completion than the purchaser may expect. The building must merely be fit for habitation, have completed structural, mechanical, plumbing, and electrical systems, and comply with safety and health standards. This does not necessarily require that certain luxurious items are installed, or that the exterior of the building is finished.

The purchaser may not hold back any part of the purchase price notwithstanding that there may be exterior work to be completed such as painting, driveway, grading, seeding, etc. The vendor shall complete any outstanding details within a reasonable time thereafter. Failure to fully complete these items will not allow the purchaser to refuse to close, nor does it entitle him or her to a reduction of the purchase price.

If you are seeking legal advice in relation to your new-build home or other real estate matter contact Jonathan Dippolito at 905-668-4486 ext 229 or jdippolito@durhamlawyer.ca.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”