Comprehensive Guide to Buying a New Build Home or Condo in Ontario

This guide is designed for buyers considering both single-family new builds and condo new builds. It provides detailed insights into the process, rights and responsibilities, potential issues, and frequently asked questions to help you navigate the complexities of purchasing a new build property.

1. Deciding to Build a New Home or Condo

Detailed Explanation

Building a new home or condo is a significant financial and lifestyle decision. Buyers need to assess their budget, timeline, and desired location to ensure their decision aligns with their needs. Budgeting is particularly important, as new builds often involve staged payments, upgrade costs, and closing fees. Condo buyers should also account for interim occupancy fees (paid before final closing) and potential condo maintenance fees.

The location of the property is critical for lifestyle and resale value. Consider proximity to work, schools, transit, and amenities, and research future development plans to understand how the area may change.

The builder’s reputation is a key factor. Use the Ontario Builder Directory to verify licensing, review complaints, and assess the builder's track record. Whether you’re buying a single-family home or a condo unit, customization options can be a deciding factor. Builders may offer personalization for finishes or layouts in single-family homes, while condo buyers may face more limitations.

Summary (Point Form)

• Assess financial limits, including staged payments, upgrades, closing fees, and interim occupancy fees (for condos).

• Choose a location based on proximity to work, schools, transit, and future developments.

• Research builder licensing and reputation using the Ontario Builder Directory.

• Understand customization options for both single-family homes and condo units.

Example

Anna and James want to build a home. They assess their finances and get pre-approved for a mortgage. They choose a location close to their workplace and check the builder’s record on the Ontario Builder Directory, finding no complaints. They budget for staged payments and decide to include an upgraded kitchen package in their plan.

2. Understanding Deposits for New Builds

Detailed Explanation

Deposits for new builds are paid in stages as outlined in the Agreement of Purchase and Sale (APS). For single-family homes, deposits are protected under TARION up to $100,000, and for condos, up to $20,000. Condo deposits may be paid into a trust account managed by a lawyer, offering additional security.

The APS should clearly outline the deposit structure, including amounts, due dates, and refund conditions. This is particularly important for condo buyers, as deposit funds may be used by the builder during the construction phase. Buyers should ensure the APS specifies how their deposits are protected and what happens in the event of a dispute.

Summary (Point Form)

• Deposits for single-family homes are protected up to $100,000; for condos, up to $20,000.

• Condo deposits are typically held in trust accounts.

• The APS must outline deposit structure, amounts, and refund conditions.

• Verify how funds are protected in case of builder issues or disputes.

Example

Tom signs an APS for a new condo and pays a $15,000 deposit into a trust account managed by the builder’s lawyer. The APS specifies that the deposit will be refunded if the builder cancels the project or delays completion beyond agreed timelines.

3. Cancelling the Agreement

Detailed Explanation

Both buyers and builders have specific rights to cancel a new build APS under certain conditions. However, all cancellation actions or intentions to cancel must first be discussed with and processed through a lawyer. Buyers should avoid directly communicating cancellations or threats to cancel to the builder, as this could complicate their legal position or weaken their case.

Buyers Can Cancel If:

1. Delays Exceed 120 Days:

   • Buyers of both single-family homes and condos can cancel if the original firm closing date is delayed by more than 120 days, provided proper notice and documentation are in place.

   • For condos, interim occupancy delays beyond 120 days may also qualify as grounds for cancellation.

2. APS Breaches by Builder:

   • If the builder breaches the contract, such as failing to meet agreed-upon standards for construction or materials, buyers can cancel the APS. This applies equally to homes and condos.

3. Failure to Enroll in TARION:

   • If the builder fails to enroll the property in the TARION Warranty Program, this constitutes a breach of contract, giving buyers grounds for cancellation.

Builders Can Cancel If:

1. Deposit Payment Obligations Are Unmet:

   • Builders may cancel the APS if buyers fail to make deposits or staged payments as outlined in the agreement.

   • This applies equally to both homes and condos.

2. External Factors Prevent Completion:

   • Builders can cancel if external factors, such as zoning denials, permit issues, or financing problems, make it impossible to proceed with the project.

   • For condos, delays in municipal approvals for registration can also trigger builder cancellations.

Process of Cancellation:

1. Involve a Lawyer:

   • All cancellations must be initiated through a lawyer. A lawyer ensures the APS terms are followed and protects the buyer's or builder’s rights. They will handle all communication with the opposing party.

2. Written Notice:

   • Cancellations must be documented with formal written notice that clearly outlines the reasons for cancellation and references the relevant APS terms.

3. Document All Communication:

   • Buyers and builders should keep thorough records of all communications, delays, and issues leading up to the cancellation to substantiate their claims if disputes arise.

Summary (Point Form)

Buyers Can Cancel:

• Delays Exceed 120 Days: Original firm closing date or interim occupancy delayed by more than 120 days.

• APS Breaches by Builder: Builder fails to meet quality standards or contractual terms.

• Failure to Enroll in TARION: Builder does not register the property in the TARION Warranty Program.

Builders Can Cancel:

• Deposit Payment Issues: Buyer fails to make required deposits or payments.

• External Factors: Zoning, permits, or municipal registration delays prevent project completion.

Cancellation Process:

1. Involve a Lawyer: Handle all communications through legal channels.

2. Written Notice: Provide formal written notice citing reasons for cancellation.

3. Document Communication: Keep detailed records of delays, issues, and builder interactions.

Example

Scenario for a Single-Family Home:
Megan’s builder delays her home’s completion by 140 days, significantly exceeding the firm closing date. Megan consults her lawyer, who confirms her right to cancel under the APS. The lawyer drafts a formal written notice to the builder, referencing the 120-day delay clause and requesting a full refund of her deposit. Megan’s lawyer handles all communication with the builder, ensuring the cancellation is processed correctly.

Scenario for a Condo:
David’s condo was scheduled for occupancy on April 1, but the builder delays the interim occupancy date to October 15—more than 120 days after the original date. David consults his lawyer, who confirms that the delay exceeds TARION’s allowable limits. The lawyer issues a formal cancellation notice to the builder and files for a refund of David’s deposit. The lawyer also ensures David is compensated for interim occupancy delays incurred prior to cancellation.

4. Closing Dates and Delays

Detailed Explanation

Delays are a common part of the new build process for both residential homes and condos, but there are differences in how delays are managed and the additional considerations for condominium buyers. Builders must follow specific notification requirements to communicate delays and protect the rights of buyers.

1. 90-Day Notice Requirement:

   • Builders must provide written notice of delays at least 90 days before the original firm closing date.

   • The notice must explain the reason for the delay and propose a revised tentative closing date.

   • This applies to both residential homes and condos.

2. 65-Day Notice Requirement for Further Delays:

   • If the revised tentative closing date cannot be met, builders must issue a second written notice at least 65 days before the new closing date.

   • This ensures buyers are informed and have time to plan for the additional delays.

3. 120-Day Rule for Cancellation:

   • If delays extend 120 days beyond the original firm closing date, buyers of both homes and condos have the right to:

     • Cancel the Agreement of Purchase and Sale (APS) and receive a full refund of their deposit.

     • Proceed with a revised timeline if they choose to wait for the property’s completion.

4. Condo-Specific Considerations: Interim Occupancy Delays

   • Interim Occupancy Period: Unlike residential homes, condo buyers may take possession of their unit before the condominium is officially registered. During this interim occupancy period, buyers are required to pay interim occupancy fees to the builder. These fees include estimated property taxes, maintenance fees, and builder financing costs.

   • Compensation for Delays: If the interim occupancy period is significantly delayed, condo buyers can claim compensation through TARION. Buyers are eligible for $150 per day, up to a maximum of $7,500, for delays beyond what is reasonable.

   • Interim occupancy does not apply to residential homes, making this a unique consideration for condo buyers.

5. Communication and Documentation:

   • All delay notices must be in writing, and buyers should retain these communications for their records.

   • Buyers should consult a lawyer if delays persist or if they are considering canceling the agreement, especially for condos, where interim occupancy terms can be more complex.

Summary (Point Form):

• For Both Residential Homes and Condos:

  • 90-Day Notice: Builders must notify buyers of delays at least 90 days before the original firm closing date.

  • 65-Day Notice: A second written notice is required 65 days before a revised tentative closing date.

  • 120-Day Rule: Buyers can cancel the APS or proceed with a revised timeline if delays exceed 120 days.

• For Condos Only:

  • Interim Occupancy Period: Buyers may take possession of the unit before the condo is registered and pay interim occupancy fees.

  • Compensation for Delays: Condo buyers can claim $150 per day, up to $7,500, for significant interim occupancy delays.

Example:

Residential Home Scenario:
Ben’s new home is scheduled to close on March 1. On December 1 (90 days before), the builder sends written notice of a delay, revising the closing date to June 1. On March 30 (65 days before the new date), the builder issues another notice extending the closing to July 15. Ben decides to cancel the APS after consulting his lawyer, as the delays exceed 120 days, and he receives a full refund of his $50,000 deposit.

Condo Scenario:
Emily’s condo is scheduled for closing on April 1, but the builder issues a 90-day notice revising the date to September 1. On June 30, the builder sends another notice delaying interim occupancy to October 15. Emily consults her lawyer and decides to proceed, but she claims $4,500 in compensation through TARION for interim occupancy delays beyond September 1.

5. FAQ: Common Buyer Questions

General Questions About Buying a New Build

1. What is the first step in buying a new build?

   1. Assess your financial situation, get pre-approved for a mortgage, and research potential builders. For condos, also check if the builder has successfully completed previous condo projects and delivered units on time. Always review the builder’s reputation and verify their license on the Ontario Builder Directory.

2. How do I choose the right builder?

   1. Check if the builder is licensed using the Ontario Builder Directory. Look for reviews, visit previous developments, and ask for references. For condos, ensure the builder has a strong track record of registering units promptly and managing interim occupancy efficiently.

3. What is included in the base price of a new build?

   1. The base price usually includes standard finishes and features. For single-family homes, this may include basic flooring, cabinetry, and countertops. For condos, the base price generally includes standard appliances, flooring, and finishes for the unit. Always confirm with the builder, as anything beyond the standard list is likely considered an upgrade.

4. Can I customize a new build?

   1. Single-Family Homes: Builders often allow customizations, such as changing floor plans, adding rooms, or upgrading finishes.

   2. Condos: Customization options are limited to finishes like flooring, countertops, and cabinetry. Structural changes are rare and typically not allowed.

5. Are there extra fees when buying a new build?

   1. Yes, both single-family homes and condos come with additional fees. These may include:

      1. Single-Family Homes: Development charges, utility hookup fees, and landscaping.

      2. Condos: Development charges, interim occupancy fees, and legal fees for final registration. Ensure development charges are capped in your APS to avoid surprises.

6. Should I hire a lawyer to review the APS?

   1. Yes, hiring a lawyer is essential for both single-family homes and condos. Lawyers can identify issues, clarify deposit protection, and ensure your rights are protected in case of delays or disputes.

7. What is the difference between firm and tentative closing dates?

   1. Firm Closing Date: A guaranteed date for possession unless delays occur.

   2. Tentative Closing Date: An estimated date that may change based on construction progress. Most condo projects use tentative dates due to the complexity of high-rise construction.

8. What is interim occupancy?

   1. For condos only, interim occupancy is the period during which buyers can live in their unit before legal ownership is transferred. This happens because the building isn’t yet registered as a condominium corporation. Buyers pay interim occupancy fees to cover estimated taxes, maintenance, and builder financing costs.

9. Can I negotiate terms in the APS?

   1. Some terms, like deposit schedules or upgrade costs, may be negotiable. This applies to both single-family homes and condos, though condo agreements are often less flexible.

10. What happens if I miss a deposit payment?

    1. Single-Family Homes: Missing a deposit payment may allow the builder to cancel the contract and retain any previous deposits.

    2. Condos: Similarly, missing a payment can lead to cancellation, though deposits are often held in trust and subject to TARION’s refund policies. Notify the builder immediately if payment issues arise.

TARION Warranty Questions

1. What does the TARION Warranty cover?

   1. TARION provides warranty coverage for both single-family homes and condos:

      1. 1-Year Warranty: Covers defects in materials, workmanship, and compliance with the Ontario Building Code.

      2. 2-Year Warranty: Covers water penetration, plumbing, electrical, HVAC systems, and exterior cladding.

      3. 7-Year Warranty: Covers major structural defects that compromise the home or condo’s safety.

2. How do I verify if a home is enrolled in the TARION Warranty Program?

   1. Check the property’s enrollment on the Ontario Builder Directory or email TARION at ismyhomecovered@tarion.com with the property address.

3. What’s not covered under the TARION Warranty?

   1. Normal wear and tear (e.g., fading paint, scratches on floors).

   2. Damage caused by improper maintenance or homeowner negligence.

   3. Renovations or alterations made after possession.

4. How do I file a TARION claim?

   1. Document the issue with photos and descriptions, notify your builder in writing, and escalate unresolved issues to TARION through their MyHome Portal.

5. Can TARION help with deposit disputes?

   1. Yes, deposits are protected by TARION: up to $100,000 for single-family homes and $20,000 for condos. TARION can assist in resolving disputes if a builder fails to return a protected deposit.

6. What is the compensation for condo interim occupancy delays?

   1. Condo buyers can claim $150 per day, up to a maximum of $7,500, for delays in interim occupancy that extend beyond a reasonable timeframe.

7. What happens if the builder doesn’t enroll the property in TARION?

   1. Failure to enroll a property in the TARION Warranty Program is a breach of contract. Buyers can cancel the agreement and seek a full refund of their deposits.

8. Does TARION cover builder bankruptcy?

   1. Yes, TARION protects deposits and may assist in finding another builder to complete the project or offer financial compensation.

9. How long do I have to file a claim under TARION?

   1. 1-Year Warranty: File claims within the first year of possession.

   2. 2-Year Warranty: File claims within two years of possession for system issues or water penetration.

   3. 7-Year Warranty: File claims within seven years for structural defects.

10. How do I resolve disputes with my builder through TARION?

    1. TARION offers mediation, inspections, and a dispute resolution process to address unresolved issues between buyers and builders.

Deposit and Financial Questions

1. How are deposits handled differently for condos and homes?

   1. Single-Family Homes: Deposits are often paid directly to the builder.

   2. Condos: Deposits are typically held in trust accounts managed by a lawyer, offering additional security.

2. What happens to deposits if I cancel the agreement?

   1. Deposits are refundable if the cancellation falls under allowable conditions, such as delays exceeding 120 days.

3. Are deposits taxed?

   1. No, deposits are not taxed. However, the purchase price of most new builds is subject to HST.

4. Can I assign my APS to another buyer?

   1. Assignment depends on the builder’s terms. Many builders allow assignments for a fee, but restrictions may apply.

5. What happens to my deposit if the builder delays construction?

   1. Deposits remain protected under TARION. If delays exceed 120 days, buyers can cancel and receive a refund.

6. Can I use my deposit as part of the down payment on my mortgage?

   1. Yes, deposits made to the builder are applied toward the down payment on your mortgage at closing.

7. Are deposits different for freehold homes and condos?

   1. Freehold Homes: Deposits are generally higher and more flexible in structure.

   2. Condos: Deposits are often smaller but may have stricter schedules due to trust account requirements.

8. What should I look for in the APS regarding deposits?

   1. Ensure the APS outlines:

      1. The total deposit amount.

      2. Payment schedule and due dates.

      3. Refund conditions and protections under TARION.

9. How do I handle disputes about deposits?

   1. Document all payments and refer to the APS for deposit terms. Consult a lawyer or escalate to TARION if necessary.

10. Can builders increase the required deposit after signing the APS?

    1. No, the deposit amount is fixed in the APS and cannot be increased unless agreed upon by both parties.

Questions About Delays

1. How do builders handle delays differently for condos and single-family homes?

   1. Single-Family Homes: Delays usually relate to weather, materials, or labor shortages.

   2. Condos: Delays may involve zoning, registration, and municipal approvals, which can extend timelines significantly.

2. What is the impact of delays on my mortgage pre-approval?

   1. Mortgage pre-approvals typically expire after 90–120 days (ask your lender). Significant delays may require buyers to reapply for financing.

3. Can I ask the builder for compensation for delays?

   1. Single-Family Homes: Compensation is not guaranteed unless outlined in the APS.

   2. Condos: TARION allows buyers to claim $150/day for interim occupancy delays.

4. How do I confirm the revised timeline is accurate?

   1. Request detailed reasons for the delay and updated timelines. Builders should provide revised dates based on realistic completion estimates.

5. What should I do if the builder fails to notify me of delays?

   1. Failing to notify buyers as required by TARION may allow you to cancel the APS and seek a refund of your deposit. Consult your lawyer immediately.

6. What if the builder delays multiple times?

   1. Keep records of all delay notices. If cumulative delays exceed 120 days beyond the firm closing date, you can cancel the APS or proceed under a revised timeline.

7. Are builders allowed to extend delays indefinitely?

   1. No, builders must adhere to TARION regulations and provide clear notice. Excessive delays allow buyers to cancel the APS.

Scenario-Specific Questions

1. What happens if the builder changes materials without my consent?

   1. Builders must notify buyers of material changes. If the change is significant or reduces the value of the property, you may have grounds to cancel the APS or seek compensation.

2. What should I do if I discover defects during the PDI?

   1. List all defects on the Pre-Delivery Inspection (PDI) form and notify the builder. TARION requires builders to address documented defects promptly.

3. Can a builder cancel the contract if zoning is denied?

   1. Yes, builders can cancel the contract if zoning or permits are denied. In such cases, your deposit will be refunded.

4. What should I do if the builder refuses to fix defects?

   1. Document the defects, notify the builder in writing, and escalate the issue to TARION if the builder fails to act.

5. What happens if I breach the APS?

   1. The builder may cancel the agreement and potentially retain part of your deposit. Always consult a lawyer if issues arise.

6. Can I cancel my APS if I change my mind?

   1. Condos: Buyers have a 10-day cooling-off period to cancel after signing.

   2. Single-Family Homes: Cancellation without cause is not allowed unless the APS includes a specific clause.

7. What happens if my builder goes bankrupt before completing the project?

   1. TARION protects deposits and may help find a new builder to complete the project or offer financial compensation.

8. How do I handle disputes about property registration for condos?

   1. Condo delays in registration may lead to extended interim occupancy. Consult TARION for compensation or your lawyer for further action.

Closing and Post-Closing Questions

1. What is included in the closing costs for new builds?

   1. Single-Family Homes: Closing costs may include legal fees, land transfer tax, and utility connection fees.

   2. Condos: Include legal fees, interim occupancy adjustments, land transfer tax, and HST (if applicable).

2. When do I legally own my condo unit?

   1. Ownership transfers only after the condo is registered with the municipality and the final closing process is complete.

3. What happens if there are outstanding deficiencies on the closing date?

   1. Buyers can document unresolved deficiencies and work with their lawyer to negotiate holdbacks until the issues are resolved.

4. Do I need home insurance for a new build?

   1. Yes, buyers must arrange home insurance for single-family homes before closing. Condo buyers should confirm if the building’s master insurance policy covers their unit, but personal contents insurance is required.

5. Can I move in before the official closing date?

   1. Single-Family Homes: Early occupancy is rare and must be agreed upon by both parties.

   2. Condos: Interim occupancy allows condo buyers to move in before final ownership transfer.

Disclaimer

The information provided on this page is for general informational purposes only and may not be entirely accurate or up to date. All information herein is subject to change without notice. It is not intended to replace legal, financial, or professional advice and should not be solely relied upon when making decisions regarding your new build home or condo purchase. Buyers must refer to the TARION Warranty website, the Home Construction Regulatory Authority (HCRA) website, and their Offer or Agreement of Purchase and Sale for all legally binding details. For specific guidance, always consult with a real estate lawyer, new build specialist, or real estate professional to ensure your decisions are well-informed and your rights are protected.