November 8th - 2007

Delayed occupancy agreement is not a waiver

Under Ontario's new home legislation there are provisions dealing with a delayed or extended closing of a transaction.

Under Ontario's new home legislation there are provisions dealing with a delayed or extended closing of a transaction. If the buyers are notified in writing at least 65 days prior to the original closing date, the builder of a new home can delay closing for up to 120 days and set a new closing date.
 
There are similar provisions for a 15 day extension on 35 days written notice. These provisions also apply for delayed occupancy of a proposed condominium unit. The builder can delay possession for up to 5 days without giving notice or paying compensation. There is no compensation for delays caused by the buyers or for such matters as strikes and floods. Compensation to buyers for extended delay closings that do not fall within the regulated guidelines can be up to $100 a day to maximum of $5,000.
 
If the parties want to sign an amendment to change the closing date, that may result in a waiver of the right to compensation. For example, in a recent case the closing was delayed several times and the buyers were entitled to make a compensation claim. They signed an extension agreement that did not deal with such a claim. After closing, the buyers wanted compensation of $4,920 for the delay. The builder refused and that was upheld by the Tarion Warranty Corporation. The buyers appealed to the Licence Appeal Tribunal who ruled that the act of signing an amendment for the extension of an occupancy date should not automatically be treated as a waiver of a claim for delay. In a further appeal, the Divisional Court said, "it should be incumbent on the builder to obtain an acknowledgment in writing from the purchaser when signing an amendment for the extension of an occupancy date that it is understood the purchaser is waiving his or her right to compensation."

Markey and Tarion

MERV'S COMMENTS
Builders, their lawyers and REALTORS® should disclose and obtain a written waiver from the buyer to any delayed occupancy claims. Simply using a typical extension or amendment agreement without dealing with the compensation issue is not sufficient.

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