Deficiencies Caught at Walkthrough — And Ignored Anyway

The situation

Kenneth had worked as a registered nurse for six years before he felt ready to buy. He was purchasing alone, a two-storey home in a new subdivision in Orillia, in the roughly $550,000 to $850,000 range once upgrades were included. The home was still under construction when he signed, with a builder-estimated closing date about a year out. That gap is normal for new construction, and Kenneth had used the time well: he saved for closing costs, arranged his mortgage financing, and read through the builder's sample agreement of purchase and sale with our office before he ever put down a deposit.

New home purchases in Ontario come with a built-in protection that resale homes do not: the Ontario New Home Warranties Plan Act, administered through Tarion, the corporation that regulates new home warranties and manages the deposit and warranty claim process. Every builder registered under that plan owes buyers a statutory warranty covering defects in work and materials, and every buyer is entitled to a pre-delivery inspection, commonly called a PDI, before taking possession. Kenneth had read enough to know the PDI mattered. He booked it, and he asked us what to expect.

What the walkthrough found

We explained the mechanics before Kenneth ever set foot in the house. A pre-delivery inspection is not a home inspection in the resale sense — there is no inspector poking behind walls with a moisture meter. It is a walkthrough with the builder's representative, usually a few weeks before closing, where the buyer and the builder together note anything that is missing, damaged, or unfinished. Whatever gets written down on the PDI form becomes part of the builder's obligation to complete under the Tarion warranty. Whatever does not get written down is much harder to enforce later, because the form becomes the record both sides point to if a dispute arises.

Kenneth's walkthrough turned up twelve items. Some were cosmetic — a scratched countertop, a dented door panel, paint touch-ups needed around the trim. Others were more substantive: a bathroom exhaust fan that did not turn on, a kitchen cabinet door that would not close flush, a crack in the garage floor slab, and a section of exterior grading that sloped toward the foundation instead of away from it, a detail that matters because water pooling against a foundation is exactly the kind of problem that gets expensive if it is left alone. The builder's representative wrote all twelve on the form, initialled it, and told Kenneth the items would be addressed before closing.

We advised Kenneth to keep his own copy of the signed PDI form, photograph every item the day of the walkthrough, and follow up in writing a few weeks before closing to confirm which items had actually been completed. That follow-up is where the picture changed. The builder's site coordinator replied that the crew was behind schedule across the whole subdivision and that most items, including the grading, would be finished "shortly after closing." Nine of the twelve items on Kenneth's list, including the grading around the foundation, were still outstanding when the closing date arrived.

What we did

1. Confirmed closing could not simply be delayed over deficiencies. Kenneth's first instinct was to refuse to close until everything was fixed. We explained that under a standard new home agreement, outstanding deficiencies noted on a PDI form do not usually give a buyer the right to delay closing — the builder's obligation to complete them survives closing and continues into the statutory warranty period. Refusing to close over items already documented on the PDI form would put Kenneth in breach of his own agreement, at real financial risk, without actually getting the grading fixed any faster.
2. Documented every outstanding item in a formal pre-closing letter. We sent the builder's lawyer a letter itemizing all nine unfinished deficiencies, referencing the signed PDI form and the builder's own written acknowledgment that the work was outstanding. This created a clear paper trail independent of the original PDI form, which matters if a warranty claim is needed later and the builder's memory of what was promised becomes conveniently short.
3. Negotiated a closing holdback with the builder's lawyer. Rather than simply closing and hoping the work got done, we negotiated an amount held back from the builder's proceeds at closing, tied to a checklist of the outstanding items and a defined window for completion. Holdbacks are a common tool in new construction closings precisely because they give the buyer leverage that survives the moment the keys change hands — once a builder has been paid in full with nothing outstanding, the incentive to send a crew back for a cracked garage slab drops considerably.
4. Explained the Tarion claim window and deadlines. We walked Kenneth through how the statutory warranty works in practice: items noted on the PDI form are covered under the first-year warranty, but a homeowner still needs to submit a formal warranty form to Tarion within the required period after closing to preserve the claim, even for items the builder has already promised in writing to fix. Relying on a verbal or emailed promise instead of the formal Tarion process is one of the most common ways new home buyers lose warranty coverage they were otherwise entitled to.
5. Flagged the foundation grading as the priority item. Of the nine outstanding deficiencies, we told Kenneth the grading was the one to watch most closely, since water intrusion at a foundation can turn a cosmetic warranty item into a structural repair if a wet season passes before it is corrected. We recommended he photograph the grading after any heavy rain in the weeks after closing and report it immediately if pooling appeared.

The outcome

Closing proceeded on schedule, with roughly $18,000 held back from the builder's proceeds against the nine outstanding items, released in stages as work was completed and confirmed. Kenneth also filed his formal Tarion warranty form within the required window, covering the same items independently of the holdback agreement, so he had two separate routes to enforcement rather than relying on the builder's goodwill alone.

Over the following four months, the builder completed seven of the nine items, including the exhaust fan, the cabinet door, and — most importantly — the exterior grading, which was corrected before the first significant rainfall after closing. Two cosmetic items, a paint touch-up and a minor trim gap, were resolved through the standard Tarion warranty process after the builder's own crew did not return; Tarion's conciliation process stepped in once the claim was filed, and the builder completed the remaining work under that pressure rather than lose standing with the warranty program.

Kenneth did not get a perfect closing. He spent months chasing a builder who should have finished the work on the timeline it originally promised, and he carried the mental load of watching his new foundation through two rainstorms before the grading was fixed. But nothing on his list became a structural problem, and nothing was lost to a missed deadline. The documentation did the work it was supposed to do: it turned a builder's verbal promise into an enforceable paper trail, and it meant that when the builder was slow, Kenneth had leverage instead of just frustration.

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