Not long ago, a young Toronto couple with two small children made the headlines. What they really wanted was to make it into their new town home. They couldn’t. It simply wasn’t ready for them to move in. That’s not unusual in the world of newly constructed homes and condos. What made their story news was that fact that they had also given up their old place. They had, in effect, no place to call home. Repeated construction delays had resulted in repeated delays by their builder of their move in date. What they thought was the last firm date turned out not to be so firm after all and that left them without a place to live. Understandably they were surprised, frustrated and scrambling.
No one wants to be caught in a situation like this. Ever. This couple’s story is very unfortunate. It is also a tremendous reminder that when buying a new home or condo, expect the unexpected. What happened? Well, they purchased a townhouse in early 2013. Nearly two and half years later it was finally built and they were looking forward to moving in. Built but not finished. The builder was being challenged with multiple delays including having to wait for water and gas service hook-ups. Those building delays contributed to repeated occupancy delays. One delay too many, and the homeowners found themselves without a place to live. Unexpected? Yes. And no.
Zoning or permit delays, material shortages, skilled labour shortages, weather challenges, even waiting for utilities to get hooked-up, can all cause an occupancy date to be delayed.
In a world filled with consumer items that are often manufactured with machine precision, building houses and condos is an old-school human activity. Delays can and do happen for a multitude of reasons. Zoning or permit delays, material shortages, skilled labour shortages, weather challenges, even waiting for utilities to get hooked-up, can all cause an occupancy date to be delayed. Of course, builders are motivated to get homeowners into their new home or condo as quickly as possible and to make sure that the experience is as positive as possible. Forget the fact that most builders take tremendous pride in their work. This is simple economics. Occupancy triggers the release of funds to a builder and their reputation (read ‘future sales’) depends on happy, satisfied homeowners. In that way, the interests of homeowners and home builders are aligned. They both want the same thing – a quality, finished home as soon as possible. And for both, delays are not good.
Builders however are likely to have far more experience with construction delays. Prospective new home owners – especially first time buyers – will have very little experience with these sorts of delays. Probably none. That’s why Tarion introduced a process in 2008 where every Agreement of Purchase and Sale has an addendum that identifies a ‘firm closing date’ and an ‘outside occupancy date’. If possession or occupancy happens after the firm closing date, the homeowner is eligible to claim compensation (up to $150 per day to a maximum of $7,500). If possession or occupancy happens after the outside occupancy date, the homeowner has an opportunity to terminate their purchase agreement within 30 days, with no penalty and they will also be eligible for delayed closing compensation.
In the case of our young couple, they will be moving in after the firm closing date. We’ve been in touch with them and they now know their rights and how to claim compensation for delayed closing. In the meantime, please learn from their experience. In the world of new construction, delays can – and frequently do – happen. That’s why your moving plans should have their own back-up plan so that in the worst case scenario (which this young couple’s story demonstrates can happen) you are prepared. The language we added to the Agreement of Purchase and Sale offers protection but no preparation unless you actually read it and become familiar with it, ideally with the help of a real estate lawyer. In the end, the best advice comes from one of the young homeowners themselves:
“One of the big things we’ve learned here is really know your agreement, know your contract inside and out.”
- Go over your Agreement of Purchase and Sale with your lawyer before signing anything. The critical dates outlined in the Addendum should provide a sense of the timing for your condo purchase.
- Prepare for unavoidable delays. Having a backup plan of where to live in case your condo is not completed on time is essential!
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Tips for using Tarion:
- Find out more about the Addendum’s Statement of Critical Dates for condominiums purchased after 2008.