What is a price adjustment clause in a new build contract in Ontario?

A price adjustment clause is a provision commonly found in builder contracts for new homes in Ontario that allows the builder to pass on increases in certain costs — such as development charges, levies, or HST changes — to the buyer, even after the purchase price has been agreed upon. The result is that the final amount you pay at closing may be higher than the contract price.

These clauses can be capped or uncapped. An uncapped clause means there is no limit on how much extra you might owe at closing. Tarion's warranty program and provincial regulations set some rules around what builders can charge and when, but the specifics are complex.

When reviewing a new build contract, your real estate lawyer will look closely at any price adjustment provisions to understand your exposure. Some builders are willing to cap or negotiate these clauses; others are not. Understanding your total potential cost before signing is critical — do not assume the contract price is the final price you will pay.