It seems Canadian homebuyers are still struggling to catch a break. We know all too well that COVID-19 has significantly impacted Canada’s housing market. Low supply and high demand have led to exorbitant purchase prices, and new construction builds have been disrupted by supply chain delays and elevated material costs. 


Regardless of the challenges, many would-be buyers are remaining determined and for some, especially first-timers, entering the housing market by way of a newly-built home is proving to be a viable option. There are many advantages over buying resale, and dodging the all-too-prevalent bidding war ranks near the top. The importance of paying the actual purchase price and avoiding the very real possibility of paying tens of thousands of dollars over asking is certainly understandable. 


Planning one’s dream home is full of exciting possibilities, and watching its creation literally from the ground up should be a rewarding and satisfying experience. But imagine a situation where a builder cancels the construction agreement during the process and asks for more money in order to complete the build?


That’s exactly what has occurred in some Ontario municipalities, including one in southern Ontario where a number of buyers have taken their plight to court. The builder in question cited permit delays with the township as the reason for terminating contracts. Once terminated, they offered the units back to buyers under new agreements but at a much higher cost – in this case, an additional 25%. In a normal housing market environment, paying the surcharge would be a struggle for most people, never mind during a global pandemic. And, when some buyers decided to walk away and start afresh elsewhere, their units were relisted for sale at a higher price by the builder. 


Homebuyers asking for recourse against builder

The group of homebuyers is petitioning against the builder from being able to sell or mortgage the properties by way of a Certificate of Pending Litigation (CPL), where a lien is placed on the property title. They’re also asking the court to order the builder to honour the original sales agreements at their agreed-upon price. 


The Ontario Superior Court has ordered the case to arbitration and agreed to issue the CPL, placing a stay on the units and restricting the builder from reselling the properties. This decision provides a hint of victory and much needed optimism for many Ontario homebuyers who rightfully feel that some form of protection is required in these circumstances. Both buyers and builders will be waiting anxiously to see how the situation plays out.


It’s extremely important to understand your rights as a homebuyer – regardless of the type of home you’re buying. A pre-construction purchase may require additional due diligence given that you’re working with a builder so make sure you’re fully aware of each party’s obligations, rights and responsibilities. Speak to a lawyer before you sign any documentation, especially if they pertain to contract termination conditions. 


Have questions about purchasing a pre-construction home? Answers are a call or email away!