Builder Raises the Price of Your New Condo Before Closing in Ontario

You signed for a pre-construction condo at one price, and now the closing numbers are higher. The builder points to development charges, levies, tax or other adjustments. It is a stressful moment, especially when you have already paid deposits and arranged your mortgage.

Whether you have to pay depends on what your agreement of purchase and sale and its Tarion Addendum actually say. This article explains the usual places to look, the costs that commonly appear, and what you can question.

Start with Schedule B of the Tarion Addendum

Condo builders must list extra charges and expected adjustments to the final price, with dollar values, in Schedule B of the Tarion Addendum. This is the first place to compare against your closing figures. A charge that appears on your statement of adjustments but cannot be found in your agreement deserves a question.

If an adjustment such as development charges could produce rebates, the agreement must say how those rebates will be shared. So if the builder keeps a rebate that came from a charge you paid, check what your agreement says about sharing.

The Tarion Addendum overrides any conflicting terms in the rest of the agreement. That matters when the main agreement contains broad wording that seems to let the builder add whatever it likes.

Charges that commonly show up at closing

Not every higher number is a surprise. Several costs are known to appear on new condo closings, and each has its own rules.

What you may be able to challenge

Whether an increase is valid depends on your documents, so a lawyer should read them. These are common questions to raise:

• Is the charge listed in Schedule B, with a dollar value?
• Does your agreement explain how any rebate from an adjustment is shared?
• Is the interim occupancy fee within the three components allowed by the Condominium Act?
• Does a term in the main agreement conflict with the Tarion Addendum? If so, the Addendum wins.
• Did a material change in the disclosure statement happen? A buyer may rescind after a material change in the information in it.

Keep in mind the timing. The 10-day cooling-off period to rescind a pre-construction purchase is early in the process, and the agreement does not bind you until you receive both the disclosure statement and Ontario's Residential Condominium Buyers' Guide. By closing, that window is long past, so most price disputes turn on the wording of the agreement instead.

Delays, closing dates and price pressure

Price increases sometimes arrive with a changed closing date. Changing a closing date generally needs at least 90 days' written notice. While the occupancy date is tentative, the builder may extend it several times without paying compensation, but must give 90 days' notice of each extension.

A delay can lead to Tarion delayed-occupancy compensation of up to $7,500 in total, with living expenses paid at a fixed $150 a day and no receipts needed. A builder that fails to give 10 days' notice of an occupancy delay must pay the buyer $1,500. If the unit is not ready by the Outside Occupancy Date, you have 30 days to terminate. Terminating is a major step, so talk to a lawyer first.

What to do next

• Ask the builder or its lawyer for a written breakdown of every adjustment.
• Compare each item with Schedule B and the rest of your agreement.
• Check whether any HST rebate or land transfer tax refund applies to you, and confirm the current rules with your lawyer or accountant.
• Keep copies of notices about closing or occupancy dates, with the dates you received them.
• Have a lawyer review the agreement before you sign closing documents, since payment on closing is hard to undo.

Whether a particular charge is allowed depends on the exact wording of your documents, so bring everything to a real estate lawyer early.

Frequently asked questions