Being happy with your pre-construction home plans and builder is only step 1.
You're presented with a contract to sign, and you see no problems with moving ahead: the home’s price, size and style all fit your needs, and your builder has a good reputation. But when signing a purchase agreement for a pre-construction home, there are some important details you may not know. That’s why taking a pause is important.
The good news: In Ontario, most new homes come with a warranty that’s provided by the builder and supported by Tarion, a consumer protection organization established by the Ontario government. It’s one of the most comprehensive new home warranties in Canada, and it covers your home up to certain limits from the moment you sign the purchase agreement until up to seven years after your home is completed.
Once you’ve checked the Ontario Builder Directory to confirm that your builder is licensed to build and sell homes in Ontario, you can fully vet the purchase agreement they presented you.
It’s important to be comprehensive.
Any home purchase is a big investment that deserves due diligence, but this is especially true for new construction homes.
Buying a home before it’s built can feel like a leap of faith. The goal is to hope less and know more.
With that in mind, make time to complete these steps before signing your purchase agreement.
1. Consult a lawyer. Look for a lawyer with experience in real estate or condo law and invest in a few hours of their expertise. They’ll explain legal or technical terms and ensure that you understand all aspects of the agreement, including the Addendum and Warranty Information Sheet.
2. Confirm what’s included in your purchase. And make sure it’s all clearly described in your signed purchase agreement, including upgrades or customizations.
3. Know your rights in cases of delays or cancellations. When does your builder have to notify you of a delay? How much of your deposit will you get back if your builder can’t complete your home? If answers to questions like these aren’t clear in the purchase agreement or the Addendum to it, it would be wise to get clarity from your lawyer.
4. Know how to terminate the agreement. Your agreement’s addendum will cover your options for this scenario. Read it thoroughly and make sure you understand the conditions for termination.
5. If you’re buying a condo, review the Condo Information Sheet. It outlines the risks of construction cancellations, expected occupancy date and other important details.
Once you’ve signed your contract, register your purchase agreement with Tarion. As a not-for-profit consumer protection organization, Tarion helps you understand your builder’s coverage and can guide you through a warranty claim.
When you create a record of your purchase, you allow Tarion to provide you with key information on the builder’s warranty and coverage while you wait for the keys to your newly built home. Registering also allows Tarion to take swift action in case a builder is selling illegally. You can register at Tarion.com.