What you need to know before building a contract or custom home

When dreaming of your new custom home, you might be thinking about cooking in your gourmet kitchen or the number of bedrooms your growing family will need. Along with tile choices and layout plans, you should also be thinking about something else—construction fraud.

Ontario isn’t immune from illegal building, so take the time to ensure that you are properly informed before signing on the dotted line with any homebuilder. If you don’t, you risk exposing yourself to fraud like this couple who came to us after losing their life savings.

Before you enter into a contract with a homebuilder, make sure you do the following:

1. Make sure your builder is registered

The Ontario New Home Warranties Plan Act requires anyone who builds a new home in the province to be registered with Tarion. If they aren’t, your home may be built illegally. An unregistered builder may also fail to tell you about the warranty coverage that comes with almost every new home in the province. They may also neglect to tell you about your rights and responsibilities under the warranty. It only takes a few moments to check if your builder is registered, but it could save you tremendous amounts of time and money. Take a minute now to protect your dream home by checking out our Ontario Builder Directory.


2. Get a written contract

A written contract protects both the home buyer and the builder. If your builder doesn’t insist on one, this could be your first red flag. Verbal agreements are subject to individual interpretation, making them unreliable in legal proceedings. Make sure that your contract is as specific as possible. Address key matters, such as what the finished home will look like, what features it will have, what it will cost, and who is responsible for specific tasks or projects. Your contract should also include a payment schedule to help ensure that all your payments keep pace with actual construction progress. You’re better safe than sorry, and a written contract is your most secure option. This could be the most expensive purchase you ever make. Does it make sense to rely on a handshake alone?  Absolutely not!

3. Get help from a lawyer

Building a new home is one occasion where you definitely don’t want to cut corners with legal matters. Find an experienced real estate lawyer to prepare, or at the very least, review, the written contract before you sign it. A lawyer will help you understand your rights and obligations under the contract and ensure your interests are protected. If the relationship between you and your builder breaks down during construction, or if you have any disagreements with your builder down the road, successfully defending or exercising your rights may well depend on your written contract.   

Like you, we want your dream home to become a reality. By following the steps above, you can better protect yourself from any number of issues that may pop up. If you have any questions, we’re always here to help.

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The goal of this blog is to provide you with general information about the warranty process by sharing real experiences from new homeowners. The blog should not be relied upon as legal advice. For privacy reasons, we will not address or resolve current cases in a public forum, so any comments or questions that are posted on this site that describe individual cases cannot be discussed. If you have a question about your warranty or Tarion generally, we would be pleased to discuss your issue, in the context of your particular circumstances and in confidence. We exercise reasonable care to avoid offensive, illegal or defamatory content from being posted, as well as comments that are intended solely for self-promotion or considered to be spam.