Do You Need a Lawyer to Buy a New Build in Alberta?

Buying a new build directly from a builder feels simpler than buying a resale home. The builder gives you a contract, the home has never been lived in, and a warranty is supposed to be in place. That can make a lawyer seem optional.

In practice, the builder's contract is written by the builder, and closing involves legal steps that are easy to get wrong. This article explains the work involved and the Alberta-specific points worth checking.

This article covers the law of Alberta.

What legal work is involved in a new build purchase

A lawyer's role usually covers three areas: reviewing the contract before you sign, handling the transfer of title and funds at closing, and sorting out the final adjustments between you and the builder.

• Contract review: completion and possession dates, what is included in the price, what happens if the builder is late, and any clause allowing the price to change.
• Title: confirming what is registered against the property and that title can be transferred to you as promised.
• Adjustments and closing funds: property taxes, deposits and other amounts that are settled between you and the builder on the closing date.
• Your mortgage: making sure the lender's requirements are met so funds are released.

How a contract treats price changes or late possession on a freehold home depends on the contract and general contract law, so it is worth having a lawyer read those clauses before you sign.

Can you skip a lawyer?

You are generally free to decide how much help you want, but skipping legal advice is a real risk. Your lender may insist on a lawyer for the mortgage and title work, so ask early. The bigger problem is that the main protections are in the contract and in the closing steps, and mistakes there are costly to fix afterward.

If you are thinking of going without, at least have a lawyer review the contract before you sign it. That is usually the point where advice does the most good, because after signing your options narrow.

Alberta checks for a new build

All residential builders in Alberta must have a licence to obtain permits for constructing new homes, and must present the Certificate of Licence and the Approved New Home Registration when applying for a new home building permit. The Builder Registry shows licence status and class, persons in control, enforcement actions under the Act, and the number and locations of homes built since February 1, 2014.

A builder who does not appear in the registry is not shown as licensed, while suspended or cancelled builders still appear with that status. The Property Registry shows the warranty provider, the builder name, whether the home has warranty coverage and when coverage started, and can be searched by civic address, lot/block/plan or builder.

Homes with permits issued on or after February 1, 2014 cannot be sold, offered for sale or listed without warranty coverage and registration in the New Home Buyer Protection System. Coverage attaches to the home and stays in effect on resale until it expires.

Extra protections for new condominium buyers

Under the Condominium Property Act, a developer shall not sell or agree to sell a unit or proposed unit unless the developer has delivered the listed disclosure documents to you, and the purchase agreement must include a notice of your right to rescind within 10 days. You may 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 the notice.

The developer must hold your money in trust until title issues, and must deposit it into a trust account within 3 days of receipt, excluding holidays and Saturdays. Any waiver or release of your rights under the Act is void, and your remedy under the Act is in addition to any other rights or remedies.

A developer that fails to comply with certain of these requirements commits an offence, and the Director can impose administrative penalties of up to $100,000. The 10-day window is short, so get advice quickly after signing.

What to do next

• Ask your lender whether it requires a lawyer for your mortgage.
• Have a lawyer review the contract before you sign, or immediately after if you are a condo buyer within the rescission period.
• Search the Builder Registry and the Property Registry.
• Ask the builder for the warranty provider and coverage details in writing.
• Keep every document, receipt and email from the builder.

Warranty minimums run 1 year for labour and materials, 2 years for delivery and distribution systems, 5 years for the building envelope and 10 years for major structural components. Confirm how they apply to your home with the warranty provider and a lawyer.

Frequently asked questions