When purchasing a pre-construction condo, there’s always a risk that a project could be delayed or cancelled. And if you’re a purchaser, who is facing a cancellation, the following will help you understand your rights and assist you in making informed decisions.
Your purchase agreement contains important information about the unit, project and the rights of the purchaser and builder. To ensure you are protected and understand what you’re signing up for, be sure to have your agreement reviewed by a real estate lawyer.
So if you have second thoughts and decide you want to back out of the deal after you’ve signed, you have an initial 10-day cooling off period, during which you can cancel your purchase and receive a deposit refund. However, once the 10 days have passed, the agreement becomes final.
Termination of purchase agreements
Attached to your purchase agreement is an information sheet that outlines some of the potential risks of buying a pre-construction condo and conditions that, if not satisfied, may result in termination of the agreement.
These conditions may include, for example, the builder’s inability to secure financing for the project or delays in obtaining development approvals.
Additionally, these terms must be clearly stated in the addendum, a document that builders must attach to every purchase agreement. If the conditions agreed to in this document are not fulfilled despite reasonable efforts, your builder can terminate the agreement and must refund your deposit.
Tarion, the private corporation set up by the Ontario government to administer the new home warranty program, may assess the circumstances around a cancellation to confirm that the builder is following the addendum, but cannot require the builder to complete a cancelled project.
If your builder cancels the project, they are required to refund your deposit, plus any applicable interest. Fortunately, every condo unit purchase has an addendum attached to the agreement, which states that if the builder cancels all money paid by the purchaser must be repaid, including funds for upgrades and extras, within 10 days of the cancellation.
Any monies received by a builder must be held in trust, including deposit amounts and other payments made under the purchase agreement. If your builder is unable or unwilling to return the deposit, you can contact the trustee, who is usually a lawyer, and make a claim to retrieve the deposit.
If the money is no longer in trust, you can turn to Tarion for payment of the deposit or the remaining portion that has not been refunded, up to $20,000.
Ontario builder directory
The directory has multiple search tools that can help you make an informed decision. With the condo search tool, you can find information about condo projects such as the builder, the number of units and the project’s current status. The directory also provides a list of advisories on cancelled condo projects.
Editor’s note: This content is relevant in Ontario only.
Courtesy of newscanada.com