When purchasing a new home or condominium, there are two main types of warranty coverage before occupancy to be aware of: deposit protection and delayed closing/occupancy coverage.
Deposit Protection
If you sign a purchase agreement for a new home or condominium unit and provide a deposit to the builder, Tarion protects those funds up to a specified limit if the sale does not proceed due to:
- Bankruptcy of the builder.
- Fundamental breach of the purchase agreement by the builder.
- Statutory rights allowing you to terminate the purchase agreement.
Deposit Protection for Freehold Homes
- Signed before January 1, 2018: Tarion protects your deposit up to $40,000.
- Signed on or after January 1, 2018:
- Homes priced at $600,000 or less: Up to $60,000.
- Homes priced over $600,000: 10% of the purchase price, up to a maximum of $100,000.
Deposit Protection for Condominium Units
Under the Condominium Act, deposits for condominium units must be placed in trust. If your builder terminates your purchase agreement, they are required to return your deposit in full within 10 days. If the builder fails to do so, Tarion offers deposit protection up to $20,000.
Delayed Occupancy Warranty
Every builder of a new condominium in Ontario is required to offer a delayed occupancy warranty to buyers when the purchase agreement is signed. This warranty ensures that your condominium unit will be ready for occupancy by either a mutually agreed-upon Occupancy Date or an Occupancy Date that has been properly extended.
Details about the delayed occupancy warranty are included in the Addendum attached to your purchase agreement. If you have concerns or questions about your rights regarding occupancy delays, it may be advisable to consult with a lawyer.
Firm Occupancy Date (Condominiums) or Firm Closing Date (Freehold Homes)
A Firm Occupancy Date or Firm Closing Date is a definite date agreed upon for occupancy/closing. If your builder commits to a specific date for the occupancy readiness of your condominium unit or home, they must provide compensation for delayed occupancy if they do not meet that deadline.
The first page of the Addendum contains a Statement of Critical Dates that requires signatures from both you and your builder. This statement clearly specifies the anticipated completion date for your condominium unit or home, known as the Firm Occupancy Date (or Firm Closing Date for freehold homes), and the latest permissible date for any extensions to this timeline.
- Firm Occupancy Date (Condominiums) or Firm Closing Date (Freehold Homes): If this date is not met, your builder must establish a Delayed Occupancy Date or Delayed Closing Date, entitling you to delayed occupancy/closing compensation.
- Outside Occupancy Date (Condominiums) or Outside Closing Date (Freehold Homes): This represents the latest permissible date by which your builder commits to providing occupancy of your condominium unit or new home. This date is mutually agreed upon at the time of signing the purchase agreement and is 365 days following the Firm Closing Date.
Tentative Occupancy Date (Condominiums) or Tentative Closing Date (Freehold Homes)
A Tentative Occupancy Date or Tentative Closing Date is subject to change, typically due to construction timelines or other factors. The Tarion Addendum outlines details regarding the delayed occupancy/closing warranty and includes:
- First Tentative Occupancy Date (Condominiums) or First Tentative Closing Date (Freehold Homes): The initial projected date for when your condominium unit or home should be ready for you to move in.
- Final Tentative Occupancy Date (Condominiums): If the current tentative occupancy date cannot be met, a final tentative occupancy date must be established within 30 days of completing the roof.
- Second Tentative Closing Date (Freehold Homes): This represents the First Tentative Closing Date plus an additional 120 days.
- Firm Occupancy Date (Condominiums) or Firm Closing Date (Freehold Homes): Set by the builder with 90 days’ notice if an existing tentative occupancy date cannot be met.
- Outside Occupancy Date (Condominiums) or Outside Closing Date (Freehold Homes): The latest date by which your builder has agreed to provide you with occupancy of your unit or home.
Compensation for Delayed Occupancy/Closing
Compensation for delayed occupancy/closing, up to a maximum of $7,500, is applicable under the following conditions:
- If occupancy/closing occurs after the Firm/Tentative Occupancy/Closing Date.
- If you terminate the purchase agreement due to a delay as allowed by the Addendum (e.g., during the Purchaser’s Termination Period).
Compensation for living expenses (such as meals and accommodation) is calculated at a fixed rate of $150 per day for each day of delay until the Delayed Occupancy Date/Delayed Firm Date or the date of purchase agreement termination. Receipts are not required for living expenses.
Compensation is also available for expenses incurred directly due to the delay, such as additional moving and storage costs. Receipts must be provided for these expenses.
If the builder fails to give at least 10 days’ notice of an occupancy/closing delay, a compensation amount of $1,500 ($150 x 10 days) is payable.
Unavoidable Delays
An unavoidable delay is an exceptional circumstance where an Occupancy Date/Closing Date may need to be postponed through no fault of the builder or purchaser. Such situations may include a strike, fire, explosion, act of God, civil insurrection, act of war or terrorism, or a pandemic. In the event of such a delay, the builder is authorized to extend all deadlines and Occupancy Dates/Closing Dates by the duration of the unavoidable delay period, without being required to compensate the purchaser for delayed occupancy/closing. The builder must notify the purchaser promptly at the onset of the delay, provide an estimated duration, and furnish written notice upon the delay’s conclusion.
For more information and specific details, always refer to the Tarion Addendum attached to your purchase agreement and consult with your legal advisor if needed.