A typical builder’s Agreement of Purchase and Sale is a long and complex document which many buyers sign without the benefit of legal advice. Whether you have bought a brand new condominium or freehold, there are many reasons why the Agreement of Purchase and Sale should be reviewed by an experienced real estate lawyer. With brand new condominium purchases, there is an automatic 10 day cooling off period for a buyer to have the Agreement of Purchase and Sale reviewed and cancelled if so requested by the buyer.
Here are some important points to be aware of when purchasing a property from a builder:
- Extra costs – The purchase price is subject to adjustments to the purchase price. These can amount to several thousand dollars for such items as lot levies, development charges, Tarion enrolment fees and grading deposits. Your lawyer can request that these be deleted or capped during the cooling off period.
- Closing – The builder can dictate the closing date even if the property is not completely finished. You can be forced to move into a property, if the builder deems it to be substantially completed and you must close without any compensation from the builder. The builder can also extend the closing date multiple times without sufficient notice. Compensation may be available from the Tarion warranty corporation but there are monetary limits.
- Changes to Size/Plans – What you see in plans or brochures is not always what you will get. The builder can to some extent, reduce the square footage or size of the property or its rooms without providing any compensation. Similarly, the builder can substitute materials or finishes.
- Extension and Penalties – Should you need an extension of the closing, the builder can refuse your request. The builder may grant you an extension, however, the costs can be significant depending on how long of an extension you need. The lesson here is simple – get your financing in place early enough to avoid penalties for extensions.
- Promises mean nothing – Anything verbally promised at the sales office carries no weight. Unobstructed views? Glamourous lobby with access to subway? Most Agreements state that representations made at the sales office cannot be relied upon and you cannot refuse to close should the builder fail to deliver on its promises.
- Changes to the Agreement – Should you wish to transfer or assign the Agreement of Purchase and Sale to someone else , the builder can refuse this or may charge a significant fee to allow this. If you want to add or delete a name on the Agreement of Purchase and Sale , the builder can charge you for this as well.
- Deposit Protection – Tarion provides some degree of protection for your deposit. However, if your deposit exceeds the statutory maximum, you deposit could be at risk if the builder has financial troubles.
- Final Closing Dates (Condominiums) – The final closing date will take place once the builder registers the condominium declaration. There is no definitive timeline for this which means that you will be required to pay occupancy fees for an undetermined time.
For all of the foregoing reasons, it is crucial to have your builder’s Agreement reviewed by an experienced real estate lawyer before it becomes a firm and binding contract.