Knowing Your Rights to Delayed Occupancy Compensation Under the Tarion New Home Warranty
Under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31, all new homes built in Ontario are provided with a warranty by the Builder. Tarion Warranty coverage includes compensation for delays in the occupancy date (or closing date for freehold homes). It is important to know your rights relating to such delayed occupancy/closing compensation, so that you are submitting the proper claims on closing.
All Agreements of Purchase and Sale for new build homes will have a Statement of Critical Dates attached. The Statement of Critical Dates will usually set a First Tentative Occupancy/Closing Date. If a Builder is unable to meet the First Tentative Occupancy/Closing Date, they must provide at least 90 days’ written notice to the Purchaser to set a subsequent Tentative Occupancy/Closing Date. If 90 days’ notice is not provided for such delay, the most recent Tentative Occupancy/Closing Date becomes your FIRM Occupancy/Closing Date.
Any delays to the Firm Occupancy/Closing Date that is not caused by an “Unavoidable Delay” such as trade strikes and pandemic will trigger delayed occupancy/closing compensation. The compensation is calculated at $150 per day of delay, up to a maximum of $7,500:
$150 per day of delay is earned automatically on account of living expenses, without a requirement for any receipts;
Any other expenses that may be incurred by the Purchaser such as moving or storage costs may be claimed separately;
If the Builder fails to provide at least 10 days’ prior written notice of the delay, an extra 10 days’ worth of compensation is payable.
Claims for delayed occupancy compensation should first be submitted to the Builder prior to closing. The Builder may choose to credit the Purchaser with the compensation on final (or occupancy) closing. If the Builder refuses to pay the claim on closing, the Purchaser is then responsible for the submitting the claim through Tarion.
An important note to Purchasers: sometimes, Builders (who are unable to meet the firm occupancy/closing date) will send an amendment to the Agreement of Purchase and Sale amending the firm occupancy/closing date. Purchsers should NEVER sign any amendments to the Agreement of Purchase and Sale without consulting with their lawyer. In some instances, these amendments will incorrectly indicate that the amendment to the firm occupancy/closing date has been mutually agreed upon between the parties. If the Purchaser unwittingly signs this amendment, they would be agreeing to waive any rights that they may have to delayed occupancy/closing compensation.
For more information on the Tarion Warranty, refer to the Tarion Website: http://www.tarion.com/.
Author:
Jennifer Park
Partner
e: jpark@realtycarelaw.com