Can a builder increase the price of my new home after I've signed a contract?

Whether a builder can increase your purchase price after you have signed depends on the terms of your specific agreement. Most Ontario new-construction agreements include a fixed purchase price for the home itself, but some agreements include escalation clauses that allow certain costs — such as development charges, levies, or material costs — to be passed through to the buyer if they increase before closing.

These pass-through provisions can result in significant additional costs. Development charges, in particular, are set by municipalities and have increased substantially in some areas of Ontario in recent years. If your agreement does not cap the development charge levy, and charges increase between signing and closing, you may be required to pay the higher amount as a closing adjustment.

However, builders generally cannot simply increase the base purchase price of the home unilaterally after signing — that would be a breach of contract. What builders can do, if the agreement allows it, is pass through certain specified cost increases as adjustments.

Read the adjustments section of your agreement carefully before signing. Ask your lawyer to identify all open-ended items — things that are not fixed at the time of signing — and estimate the potential range of exposure. Going into closing with a realistic sense of the total cost prevents unwelcome surprises.