New Construction Home

Purchasing a New Construction Home in Ontario: Legal Considerations

Purchasing a new-build house in Ontario might be an exciting opportunity for prospective homeowners. However, buying a new construction property differs from a resale because the property is purchased directly from the builder. Additionally, these agreements are often signed even before the construction begins. Therefore, some specific considerations for this type of transaction should not be overlooked.

Understanding New Build Agreements of Purchase and Sale

When buying a new-build house, it is essential to review the builder’s purchase and sale agreement carefully. New-build Agreements of Purchase and Sale differ from standard OREA contracts and are usually more tailored to the developer/builder. This legally binding document outlines the terms and conditions of the transaction. It sets forth the rights and responsibilities of both the buyer and the builder, including the purchase price, payment terms, deposit structure, closing dates and occupancy, and conditions.

The agreement should also include provisions outlining the circumstances under which either party can terminate the agreement, such as failure to fulfill obligations or breach of contract. Understanding the termination and default provisions is crucial to protect your interests in case of unforeseen circumstances.

Closing Adjustments

The agreement should outline any applicable closing adjustments, such as property taxes, utility charges, or other fees that need to be apportioned between the buyer and the builder. These adjustments ensure a fair allocation of costs and expenses related to the property.

Builder’s Warranty Protection

Builders in Ontario are required to provide Tarion warranty coverage for new-build properties. The agreement should detail the warranty coverage, including the duration and types of coverage provided. Reviewing the warranty provisions to ensure you understand what is covered and the process for making warranty claims is essential.

The Tarion addendums serve to incorporate and outline the specific terms and conditions related to Tarion warranty coverage into the agreement. It ensures that both the builder and the buyer understand their rights and obligations under the Tarion warranty program. The addendum, which includes a Statement of Critical Dates and Schedules, is designed to provide transparency and clarity regarding the warranty.

Pre-Construction Due Diligence

Thorough research is essential when purchasing a new-build house. It is crucial to conduct your due diligence on the builder’s reputation, track record, and previous projects. You might want to hire professional assistance in reviewing the project, design options, amenities, infrastructure, and other relevant purchase details.  

Interim Occupancy Period

During the interim occupancy period, it is crucial to understand your rights and responsibilities as a buyer. The interim occupancy can be tentative or firm. Usually, condominiums are available to occupy before the legal ownership is transferred. In this case, the buyer must pay the Occupancy Rent until closing.

Final Closing and Transfer of Ownership

Before buyers take possession of the property, they can walk through their new home with the builder to inspect if anything is damaged or incomplete. This is also referred to as “Pre-Delivery Inspection”.


A new-build Agreement of Purchase and Sale is critical when purchasing a new-build property. Understanding its key elements is essential for prospective buyers to protect their interests. If you need legal assistance from a knowledgeable Toronto real estate lawyer to review your agreement before you embark on your new-build property purchase, contact us today.

The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.

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