To assist you in your purchase we have provided some useful explanations regarding common elements of the purchase of a new home which are intended to help us serve you more efficiently and make your transaction more understandable to you.
Specific topics covered below include:
BUYING A NEW HOME
AGREEMENT OF PURCHASE AND SALE
EXTENSION OF CLOSING
REVERSE PLAN CONSTRUCTION
LAND TRANSFER TAX
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When you decide to buy a new house, the location in which you are purchasing will dictate which builders generally are available in that area. Before selecting your builder, you can check on the standing on that builder with the Ontario New Home Warranty Program. The warranty program essentially maintains a report card for builders. Although this is not an endorsement by any particular builder by the warranty program, it does provide you with some indication on the performance over the recent past.
AGREEMENT OF PURCHASE AND SALE
In all Real Estate purchases, it is a good idea to have your lawyer review the Agreement of Purchase and Sale before you sign it. This is the case with builder’s offers as well. The realities of the offer process are such that it is sometimes difficult or impractical to have the offer reviewed by a lawyer before you sign it. Although we can usually review your offer within several hours of receiving it, if your offer is being put together on an evening or weekend and we are not available, you can put a Lawyer’s approval condition in the offer. This is a clause in your offer that makes the offer conditional upon your lawyer reviewing and being satisfied with the terms of the Agreement of Purchase and sale.
It is not uncommon for builders to include in the fine print of the Agreement of Purchase and Sale extra charges for various items. Although most local builders do not pass on very many additional costs in this way, there are some builders in the Province of Ontario who pass many additional costs in this fashion (sometimes without adequately disclosing this to purchasers).
Some of the costs passed on to you might include:
- New Home Warranty Program enrollment fee
- Hydro meter installation
- Water meter installation
- Survey
- Tree planting
- Law society insurance levy
- Driveway apron paving
- Curb and utilities damage deposit
In some instances, we have had transactions where these extras have resulted in significant additional costs.
Most builders’ offers have a standard provision to allow the builder to extend the closing date if the house cannot be finished on time. This is a paragraph that can be modified or deleted. Market conditions will dictate the extent to which the builder will be flexible in this regard.
The Ontario New Home Warranty Program provides closing extension rules for builders. If a builder has to extend closing for up to five days, he may do so without any notice to the purchaser. If the builder wants to extend closing for between five and thirty days, he must provide 35 days notice. If the builder wants to extend closing for 31 to 60 days, the builder must provide 65 days notice. If a builder does not give the required notice, the builder may be liable to pay the cost incurred by the purchaser as a result of the delayed closing.
Most builders’ offers provide that the builder may construct a house using the mirror image plan of the house layout that you selected. This means that for some reason the builder does not want to or is not able to construct your house using the orientation you have selected, they may use the reverse plan. If this is important to you, you should make sure that this is deleted or altered in your agreement.
Land Transfer Tax is a large component of the expense of virtually every home purchase. If you have never owned a home before, and you are buying a new home, you may be eligible for a rebate of some or all of your land transfer tax.
Feel free to contact us at any point for assistance or advice with respect to Real Estate law. We may be reached at 705-435-4339 / 1-877-85LEGAL (1-877-855-3425) or contact us via email .
