Can a Builder Raise the Price After You Sign in Alberta?

The builder calls or emails to say lumber, labour or materials have cost more than expected, and the price in your signed contract now has to go up. It is stressful, especially if you have paid a deposit, sold your current home or lined up financing around the original number.

A signed contract is not automatically fixed in stone, and it is not automatically open to change either. This article explains how to approach the question, what protections exist if you bought a new condominium, and what to do before you agree to pay more.

This article covers the law of Alberta.

It usually comes down to your contract

For a house or other freehold home, the question of whether a builder can raise the price after signing is generally answered by the contract itself and by ordinary contract law. The reason the builder gives for the increase is only part of the picture. What your agreement says about price changes, and how it says they must be made, matters just as much.

Because the outcome turns on the exact wording, two buyers who were both told the same thing can end up in very different positions. A lawyer can read your agreement and tell you whether the clause the builder is relying on actually does what the builder says.

What to look for in an escalation clause

An escalation clause (sometimes called a price adjustment clause) lets the price change under stated conditions. Read it slowly and compare it to what the builder is now asking for.

• Does the clause exist at all, or is the price stated as fixed?
• What triggers an increase: a particular cost, a date, a change in design?
• Is there a cap or a formula, or is it left to the builder's discretion?
• Must the builder give written notice, and by when?
• Must the builder show proof of the higher cost?
• Do you get a right to cancel and get your deposit back if the price rises past a point?
• Is the price tied to the date you sign, the date of permit, or the date of possession?

If the clause is vague, one-sided or missing, do not assume the builder is right and do not assume you are right. Ask for the builder's position in writing and get advice before you sign anything new.

If you bought a new condominium unit

New condominium purchases from a developer have extra statutory protection under the Condominium Property Act. A developer must not sell or agree to sell a unit or proposed unit unless the required disclosure documents have been delivered to the purchaser. The purchase agreement must also include notice of your right to rescind within 10 days.

You can rescind by written notice to the developer within 10 days of the later of receiving the required documents or signing the agreement, and the developer must return all money paid within 15 days of receiving your notice. A developer or trustee must hold your money in trust until title issues.

• A developer must give you written notice of material changes to the disclosed information before you take possession.
• Any waiver or release of your rights under the Act is void.
• Your remedy under the Act is in addition to any other rights or remedies you have.

Whether a particular price change counts as a material change, and whether your 10-day window is still open, depends on your documents and dates. Check them promptly with a lawyer.

Other things worth checking while you decide

A price dispute can distract from the basics. Confirm that your builder is licensed by searching the Builder Registry, which shows licence status and class, enforcement actions under the Act and homes built since February 1, 2014. A builder who does not appear there is not shown as licensed.

Also confirm the warranty. Builders must make sure the home is enrolled with a warranty provider and that the home under warranty is registered. You can search the Property Registry by civic address, lot/block/plan or builder to see whether the home has coverage and when it started.

What to do next

• Ask the builder to put the request and the reason for it in writing.
• Find your signed agreement and every amendment, and note all dates.
• Do not sign a change order or pay the extra amount until you understand the clause.
• If it is a new condominium, check the dates for your 10-day rescission right right away.
• Keep a record of every call and message.
• Speak with a lawyer before agreeing to a higher price or walking away, since what happens if you cancel depends on your contract and your dates.

Frequently asked questions