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Compensation for new home closing delays

Region: Ontario Answer # 403

In Ontario, the New Home Warranties Plan includes Delayed Closing/Occupancy coverage to protect you when you purchase a pre-construction house or condominium unit.  A builder must guarantee that a pre-construction home will be ready by the closing date – or the occupancy date in the case of condominiums – that you and the builder agree upon 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.

Real estate matters such as new home closing delays involve large sums of money and complicated legal issues. To get help, ask a lawyer now.

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.

Delayed Closing/Occupancy coverage

The Delayed Closing/Occupancy coverage under the Plan contains rules for both buyers and builders. According to the rules, a delay does not automatically void or cancel an agreement between a buyer and a builder. By law,

  • if the vendor/builder sets a Firm Closing/Occupancy Date and under most circumstances cannot meet this date, they must provide compensation;
  • if the vendor/builder is not able to determine the precise date the home can be completed – called a Tentative Closing/Occupancy Date – 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. This date may be extended multiple times for condominium units;
  • the Outside Closing/Occupancy Date refers to the latest possible date the vendor/builder has to complete the build. This is 365 days from the Firm Closing Date or the Second Tentative Closing Date. For condominiums, this date is decided when the purchase agreement is signed. Buyers have 30 days to cancel the agreement if the home is not completed by the Outside Closing/Occupancy date.

Coverage amounts are determined by which type of Delayed Closing/Occupancy applies in your circumstance. For more information about the New Home Warranties Plan and specific compensation amounts you may qualify for under Delayed Closing/Occupancy coverage for new home closing delays, visit the Tarion website at tarion.com.

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.

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Get legal help

Real estate matters involve large sums of money and complicated legal issues. To get help, ask a lawyer now.


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