Area of Law: Real Estate Law
Answer # 403
Compensation for new home closing delaysRegion: Ontario Answer # 403
In Ontario, under the Delayed Closing Warranty section of the New Home Warranties Plan, a builder guarantees that a home will be ready by the closing date specified in the purchase agreement or by a date that has been properly extended. If the closing date is delayed beyond the original closing date or properly extended date then compensation may be payable for such delay.
When buying a new home which is being built for you, you should be prepared for possible delays and complications. Although many new homes are completed and ready to move into by the scheduled closing date, it is not unusual for the closing date to be delayed or extended. This can happen as a result of strikes, shortages of labour or materials, or simply the builder’s inability to meet the original delivery date.
To provide a set of rules for both buyers and builders, the Ontario New Home Warranties Plan has established a delayed closing warranty. According to the rules, a delay does not automatically void or cancel an agreement between a buyer and a builder. By law, a builder is permitted two extensions of 120 days each, without having to pay delayed closing compensation, provided that the homeowner was given proper written notice.
After the 240 days have elapsed, the builder must set a Delayed Closing Date and the homeowner is entitled to delayed closing compensation. A homeowner can claim compensation of up to $150 a day for living expenses and is also eligible for compensation for other legitimate expenses, such as moving costs or storage expenses. The maximum amount that can be recovered is $7,500 plus GST/HST, based on the number of days of delay and any provable expenses. In order to make a claim, a homeowner must complete a Delayed Closing/Occupancy Claim Form available on the Tarion website. The form must be submitted to Tarion, and a copy delivered to the builder.
If the home is not completed by 365 days after the allowable extensions, the homeowner has a 30-day period in which to cancel the agreement. The Warranties Plan also sets rules requiring the ‘notice of delay’ to be delivered by builders to buyers.
It is important to note that these rules may not apply, or the clock may begin over, if the purchaser agrees in writing to an extension of the completion deadline or closing date. For more information about the New Home Warranties Plan and compensation for new home closing delays, visit the Tarion website at tarion.com.
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