With the spike in real estate market prices over the past few years, condominiums have been a popular and relatively affordable option for Canadian homebuyers. While it is an exciting process leading to a future home or a lucrative investment, there can be times when it can result in delays or even cancellations. Some reasons could be due to financial difficulties by the developer, construction delays from labour or material shortages, an economic change in the market, delays in building approvals, or even disputes with the contractors. In this guide, we will outline what options buyers can take if they find themselves in a similar situation.

Before purchasing a pre-construction condo, find out what you should know first!

1. Assess the Situation

At the beginning of the purchasing process, the buyer will receive a purchase agreement with four dates:

  • The First Tentative Closing Date: The expected completion date for your condo, as mutually agreed upon you and the developer, which serves as the reference point for all subsequent crucial dates. In the event your condo is not finished by this agreed-upon date, the developer is permitted two extensions of 120 days each without being obligated to pay compensation for delayed closing, as long as proper written notice is given.
  • The Second Tentative Closing Date: First Tentative Closing Date plus 120 days. This represents the maximum allowable extension. The builder has the option, by providing notice to you, to either establish a Second Tentative Closing Date that is earlier or proceed directly to a “Firm” Closing Date.
  • Firm Closing Date: First Tentative Closing Date plus 240 days. The developer may set a Firm Closing Date that is earlier. Should this deadline not be fulfilled, the developer is required to establish a Delayed Closing Date, and you have the right to receive compensation for the delayed closing. The buyer can receive compensation of a maximum of $150 a day until they move in and a maximum of $7500 in total. This date has to be confirmed by the developer 30 days after the roof is complete or sooner.
  • The Outside Occupancy date: the absolute last day the buyer will receive the condo. Failure to meet this date will give the chance for the buyer to terminate the purchase within 30 days. This date has to occur 365 days following the earlier of the Second Tentative Closing Date and the Firm Closing Date.
  • It is important to note that the above dates must land on a business day.

After being informed about a delay or cancellation, gather information from the 

developer to gain an understanding of the status, reasons, and updated timelines. Review all agreements and look at any information specifically on compensations or refunds regarding delays or cancellations clauses to gain insight into what you can receive.

According to the Ontario New Homes Warranties Plan Act, the vendor is legally allowed to delay the project:

  • By a maximum of 120 days after the firm occupancy date if written notice was given to the buyer at least 65 days beforehand. If the builder is not ready after 120 days, they can delay it for another 120 days with a 65-day written notice given, for a total of 240 days.
  • By a maximum of 15 days if written notice is given to the buyer at least 35 days before the original occupancy date

In the event of a cancellation, the buyer is entitled to the entire deposit and any extra 

payments paid for upgrades.

Visit Tarion for more information on what compensations can be claimed in the event of condominium delays and cancellations in Ontario.

2. Seek Legal Advice

Reaching out to a real estate lawyer can help you determine if there is any additional compensation you are eligible for that is not outlined in the purchase agreement and provide personalized advice. Consulting a professional allows you to understand your rights and can guide you along the process of what you can do next. They can help you review your purchase agreement and ensure everything is legal. Otherwise, they can directly help you negotiate with the developer or take further legal action if necessary. 

3. Speak to a Real Estate Agent

Talking to a real estate agent can also help you navigate through delays or cancellations with their expertise. They can help you find the best alternative according to your personalized preferences and priorities whether it is looking for a new home or receiving the maximum amount of compensation possible.

4. Maintain Communication

Throughout the process of a delay or cancellation, maintaining communication with the developer, real estate professionals, lawyers, and other parties involved is crucial. Being regularly updated and asking relevant questions can help buyers stay updated and begin planning for a solution before it’s too late. 

5. Having a Plan B

Lastly and most importantly, be prepared with a backup plan. Purchasing a home can come with lots of uncertainty and unexpected obstacles. Having a backup plan can lessen the impact of a delay or cancellation and minimize the financial and emotional stress that comes along with the process. Experiencing something like this can cause a change in priorities, especially for the budget. Reassess housing needs, financial goals, and risk levels to determine the next steps.

Some great options for buyers include:

  • Getting a refund: If the project is delayed or cancelled for longer than outlined in the purchase agreement or the legal period of time, buyers can receive a refund on the deposit, including any extra payments they made for upgrades. 
  • Compensation for damages: Depending on how long the project has been delayed, buyers can be entitled to compensation as a result of the inconvenience of the delay or cancellation
  • Legal action: If the developer fails to fulfill any requirements in the purchase agreement or if the delay or cancellation is due to fraudulent or negligence, buyers have to option to take legal action. Consulting with a lawyer can also help determine what the developer can be sued for.
  • Alternative Accommodations: If there is a significant delay or cancellation, buyers can choose to give up waiting and choose another home that will also fit their needs.

As stressful as the process of purchasing a home already is, delays and cancellations are hard to predict and mitigate. However, thoroughly assessing the purchase agreement, seeking legal advice from lawyers and agents, maintaining communication with the developers, and having a backup plan, are all steps to help ease your mind, knowing there are countless solutions.