What you need to know about close date extensions

Builder delays kept Steve and Ava out of their new home for three months and led to unexpected expenses. With Tarion’s help the couple received the compensation they were owed.

Unexpected Closing Date Delays

Months, or even years ago, you placed a down payment on a new home. You’ve waited anxiously for your home to be built. And now, your closing date is just around the corner. You’re excited, but there is much work to be done. You give notice on your current home, you’ve squished most of your life into boxes, and you’ve hired the moving truck and lined up all the essential services for your new home –cable, phone, hydro.

And, then, BAM! Your builder tells you your new home won’t be ready in time.

This is just the thing that happened to Steve and Ava (not their real names). Two weeks before their firm closing date, their builder sent an email extending their closing date, originally in November, by two months!

As exacerbating and frustrating as this can be for new home buyers, there can be legitimate reasons why a home’s completion is delayed. A new home must pass several inspections before it is complete, and permits can only be obtained when certain construction milestones are reached. While it is in the builder’s best interests to have homes built on time, it is more essential that the home you live in is safe. Of course, if the reasons for the delays could have been avoided by the builder, you may be eligible for delayed compensation.

Disappointed but seeing their hands were tied, Steve and Ava agreed to the extension but insisted that the builder compensate them for the costs they were incurring as a result of the delay (like storage fees for all those squished boxes).

Moving boxes in empty room

 

 

Were the Delays Unavoidable?

Disappointed but seeing their hands were tied, Steve and Ava agreed to the extension but insisted that the builder compensate them for the costs they were incurring as a result of the delay (like storage fees for all those squished boxes). You see, Steve and Ava had read the warranty for delays and understood their rights as it related to firm closing date delays.

According to the builder, the closing date extensions were a result of “unavoidable delays,” which under the warranty could be caused by strikes, fires, floods or acts of God. In this case, the builder argued that he did not have services in place to provide heat inside the building for the workers. Due to the extreme cold weather, he delayed the construction until it got warmer.

The cold weather persisted and so did Steve and Ava’s frustration. Despite two additional delays, they were denied any compensation from their builder. It wasn’t until early March – more than three months after their original closing date – that the “not-so-happy” couple moved into their new home.

Once they unpacked all those now squashed boxes and were settled into their new home, Steve and Ava turned to Tarion for help.

Once they unpacked all those now squashed boxes and were settled into their new home, Steve and Ava turned to Tarion for help. They filed a claim and submitted all the appropriate documentation they had received from the builder relating to their firm closing date as well as the repeated delay notices. They also kept record of all the expenses they amassed during the delay period.

Tarion determined that Steve and Ava’s claim was valid, and rejected the builder’s argument that the delays were unavoidable. Tarion defines 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. Since the builder’s claim did not fall into any of these circumstances, it was not considered unavoidable. The couple received $7,500 in compensation, the maximum claim available through the new home warranty for delayed compensation.

Lessons Learned

  1. Always review the addendum to your Agreement of Purchase and Sale for important information about your closing date and extensions. Look for the “outside closing date” in this document to get a better picture of the latest date your builder is working towards.
  2. Unavoidable delays, or delays beyond the builder’s control are generally not covered under the warranty. Make sure you read up on Tarion’s website about what is considered an unavoidable delay.
  3. If you experience a delay, keep all copies of your correspondence with your builder as well as any receipts for expenses you incur during the delay period. They will be needed if you make a claim.
  4. If your builder denies coverage of your expenses that you feel should be covered under the warranty, file a claim with Tarion within one year of your closing date.

Do you have a story?

Did you experience an issue with your builder that Tarion helped resolve? If so, share it with us, so other homeowners have the information they need to protect their rights.