New rules aim to cut drawn-out closings
Builders face stricter rules on closing dates while compensation to buyers also being hiked
Excerpt from an article by Theresa Boyle, Real Estate Reporter, Toronto Star
Homebuyers should face fewer delays in closings of new homes with the adoption of new rules from a committee appointed to tackle the problem, says the regulator of Ontario’s home- building industry.
“The expectation is with more clarity, disclosure and fairness incorporated into the new rules, it will reduce the number of delays,” said Greg Gee, president of the Tarion Warranty Corp.
The rules, expected to take effect later next year, require builders to disclose to the homebuyer key development and construction milestones that could lead to delays, such as whether a building permit has been issued.
Builders will have to specify either a tentative or firm closing date in the purchase agreement. If a tentative date is set, then at least 90 days before that date, builders must give written notice to homebuyers of a firm closing date. If written notice is not given, then the tentative closing date automatically becomes the firm closing date.
The firm closing date must be no later than 120 days after the tentative one unless the homebuyer consents otherwise.
The five-day grace period whereby a builder could arbitrarily extend the closing date by up to five days without notice or compensation has been eliminated.
Tarion has also agreed to hike the amount of compensation owed to buyers from builders who break the new rules. Compensation will be payable up to a total of $7,500, including $150 a day for living expenses. This is a change from the current rates of $5,000 and $100 respectively.
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