Freehold & Contract: coverage for closing dates & delays

Details about the delayed closing warranty are provided in the Addendum, which your builder is required to attach to your purchase agreement. 

The first page of the Addendum to your purchase agreement is a Statement of Critical Dates which must be signed by both you and your builder. It clearly indicates when our builder expects to finish the home and the latest possible dates for permitted extensions. 

The following key dates are provided: 

The First Tentative Closing Date

The anticipated date that the home will be completed and ready to move in as agreed upon by you and your builder. All subsequent critical dates are based on this date. If your home is not completed by this date, your builder is allowed two extensions of 120 days each without paying delayed closing compensation, provided you are given proper written notice.


The Second Tentative Closing Date 

This is the First Tentative Closing Date plus 120 days. Note: This is the maximum extension allowed. Your builder may (by sending a notice to you) set a Second Tentative Closing Date that is sooner, or go straight to a "Firm" Closing Date. 

Firm Closing Date

This is the First Tentative Closing Date plus 240 days. (Note: This reflects the maximum extensions. Your builder may set a Firm Closing Date that is sooner.) If this date is not met, your builder must set a Delayed Closing Date and you are entitled to delayed closing compensation.

The Outside Closing Date
This date is 365 days after the earlier of the Second Tentative Closing Date and the Firm Closing Date. 

The above dates must fall on a business day.

Notice of a Closing Delay 

If a Closing Date is changed, your builder must provide you with proper written notice:


• Notice of a delay beyond the First Tentative Closing Date must be given no later than 90 days before this date or the First Tentative Closing Date automatically becomes the Firm Closing Date.
• Notice of a second delay in closing must be given no later than 90 days before the Second Tentative

Closing Date, or the Second Tentative Closing Date becomes the Firm Closing Date. 

If a notice period begins on a non-business day, notice must then be given on the prior business day to ensure the homeowner receives a full 90 days notice of a delay.

The Purchaser’s Termination Period

If the home is not complete by the Outside Closing Date, you have a 30-day period in which to terminate the agreement.

You may wish to use this Statement of Critical Dates calculator to help you determine the various dates related to your home’s closing. 

Closing dates must not be “floating dates” dependent on some other event. They must be calendar dates or you may be entitled to terminate your purchase agreement.

Early Termination Conditions of Sale

The Addendum contains a section which explains any Early Termination Conditions that apply to your deal. Such conditions may be included if some external approval or event is required before the transaction can be finalized, however only the types of conditions listed in the Addendum are permitted. Conditions which are not permitted are not enforceable. Any condition that is included must be accompanied by a date by which it will be satisfied. If the condition is not satisfied by that date, the purchase agreement may be terminated. 

If your builder includes certain conditions, called Early Termination Conditions, you are entitled to a 3 business day ‘cooling off’ period to review the conditions and, if not satisfied, you may terminate the purchase agreement. Your builder is required to provide you with confirmation of if and when each Early Termination Condition is satisfied. If project viability conditions are included, you are entitled to a 10-day cooling off period.



Acceptable Early Termination Conditions

Most allowable Early Termination Conditions are related to approvals to allow the home to be built and occupied. Examples of such conditions include:

• A consent to creation of a lot(s) or part-lot(s)
• Easements or similar rights serving the property or surrounding area
• A certificate of approval of a septic system or other measure relating to water disposal
• Completion of hard services such as roads, water and sewer lines, and other utilities
• Closing is conditional on the vendor selling a certain number of homes in a project


Each condition must be set out separately, be specific as to the type of approval needed, and identify the approving authority.

An unavoidable delay is an extraordinary circumstance where an Occupancy Date may need to be delayed through no fault of the builder or purchaser. This may be a strike, fire, explosion, ‘act of God’ civil insurrection, act of war or terrorism, or a pandemic. If such a delay occurs, your builder is permitted to extend all deadlines and Occupancy Dates by up to the length of the unavoidable delay period without paying you delayed occupancy compensation. Your builder must inform you at the outset of the delay, provide an estimate of how long it will last and give you written notice as soon as the delay has ended.

If your builder asks you to change a date related to the closing of your new home, you should review the provisions of the Addendum. There are special rules for changing dates by mutual agreement and an amendment may result in your waiving compensation that would otherwise be available to you.

Note: As a general rule, at least 90 days written notice is required to change a closing date.
 

Delayed Occupancy Compensation

Delayed closing compensation up to a maximum of $7,500 is payable:

• If closing occurs on a date after the Firm Closing Date; or
• If you exercised your right to terminate the purchase agreement due to delay as permitted by the Addendum (e.g. as per the Purchaser’s Termination Period). In this case you are also entitled to a full refund of all monies paid (i.e., deposits, extras and upgrades) plus interest.


Delayed closing compensation for living expenses (meals and accommodation) is payable based on a fixed amount of $150 a day for each day of delay until the Delayed Closing Date or the date that the purchase agreement is terminated. Receipts for living expenses are not required. 

Compensation is also payable for costs incurred by you as a result of the delay (for example, additional moving and storage costs). Receipts for these costs must be provided. 

In addition, if your builder fails to give you 10 days notice of a closing delay, you will be compensated in the amount of $1,500 ($150 x 10 days). 


Making a Delayed Occupancy Compensation Claim

If you are entitled to delayed closing compensation, you may make a claim to your builder within 180 days of your closing date or the date on which you terminate your purchase agreement. If your builder does not pay your claim, or if you and your builder are unable to agree on the amount of compensation payable, you may make a claim to Tarion during the first year of possession (or up to 365 days after you terminate your purchase agreement). To do so, please complete the Delayed Closing/Occupancy Claim Form on MyHome, Tarion's online service for homeowners and Condominium Corporations.

Occupancy Certificate

At the time of closing, new home builders are required to provide either a municipal Occupancy Certificate; or a written statement from the builder confirming that all Building Code conditions of occupancy have been satisfied.

Receipts
If you make a claim to your builder, be sure to provide all receipts and other supporting documents for direct costs incurred as a result of the delay. Keep copies of your receipts and other documents as these will be needed if you make a claim to Tarion. Note: Receipts relating to living expenses are not required.