Reading the Occupancy Clause Before Signing on a New Build

The situation

Tom worked as an office manager and Paulo as a real estate agent, and after three years of renting they had put down a deposit on a pre-construction condominium unit in Toronto, priced at roughly $650,000. The building was still two years from completion. They had signed the builder's agreement of purchase and sale at the sales office on a Saturday afternoon, caught up in the excitement of choosing finishes and picking a floor. Ines, a colleague of Paulo's who worked in real estate herself, mentioned in passing that new condominium purchases in Ontario come with a short window to have the paperwork looked at before it is final. Tom and Paulo had not thought to ask about that at the sales office, and nobody there had raised it either.

They had budgeted carefully for the purchase, timing the sale of a small investment property Tom owned to cover the deposit installments and planning to give notice on their current apartment roughly a month before the builder's estimated occupancy date. That plan assumed the occupancy date on the agreement was a reasonably firm number. Neither of them had reason to think otherwise — it was printed clearly on the first page, months and a specific date, and it looked no different from a closing date on a resale purchase. They brought the agreement to Treadstone Law five days after signing, with the clock already running on the cooling-off period they had only just learned existed.

What the review found

Under the Condominium Act, 1998, a buyer of a new condominium unit from the declarant has a short statutory right to cancel the purchase for any reason, without penalty, on written notice. The clock does not start at signing, though — it runs from the later of the day the buyer receives a fully signed copy of the agreement and the day the disclosure statement is received, and the notice has to be delivered the way the Act requires. It exists precisely because these agreements are long, one-sided documents handed to buyers in a high-pressure sales environment, and the law assumes most people sign before they have had a chance to read the fine print carefully. Once that window closes, the buyer is generally bound by the terms as written, and changing anything afterward requires the builder's agreement — which builders rarely give. The right to get out is not gone entirely, though: a material change the builder later makes to the disclosure statement can open a fresh cancellation right, and the delayed-closing rules can also give a buyer grounds to end the deal.

Reviewing the agreement inside that window, our team focused on the occupancy provisions, since that is where new-build purchasers most often get hurt. The agreement gave the builder the right to postpone the occupancy date through a series of notice periods, each extending the closing by roughly 90 days, with very limited financial consequence to the builder for the early extensions. Ontario's new home warranty program does compensate buyers for delayed closing or occupancy, at a set daily rate subject to an overall cap, and that compensation is lost entirely if the buyer misses the deadline to file a written claim with the warranty provider after closing. It accrues from the day after whatever closing date the builder is currently bound to, though, not after some set number of delay days have passed — which is exactly why the agreement's notice periods mattered: each proper notice simply reset the date the builder was bound to, pushing the compensation clock back along with it, and cost the builder little for as long as it kept using them. Buried in the agreement was also a clause requiring the buyer to close and take occupancy — and start paying occupancy fees to the builder — well before the unit's final registered ownership transfer, meaning Tom and Paulo could end up paying the builder monthly occupancy fees on top of their existing rent for an extended period if the building's registration was delayed, with no guarantee the warranty program's modest compensation would come close to covering it.

None of this made the agreement unusual. Most builder agreements are written this way, and most buyers never have them reviewed before the cooling-off period closes. The risk was not that Tom and Paulo had done anything wrong — it was that the standard terms exposed them to a cost they had not budgeted for and did not know was coming.

What we did

1. Calculated the real exposure. Using the agreement's own extension schedule, we worked out that a builder facing the kind of delays common on mid-sized Toronto condominium projects could push occupancy back by six to nine months beyond the original date with minimal cost to itself, while Tom and Paulo continued paying rent on their current apartment and, once interim occupancy began, occupancy fees on the new unit at the same time.
2. Wrote to the builder's lawyer before the rescission deadline. Because the statutory cancellation window was still open, Tom and Paulo had real leverage — the builder had a strong interest in keeping the sale rather than losing it and re-listing the unit. We proposed specific amendments: a firm outside occupancy date beyond which the buyers could cancel and receive their full deposit back with interest, and a delay-compensation formula that started accruing sooner and paid more than the statutory minimum.
3. Flagged the deposit exposure separately. The agreement's deposit structure had Tom and Paulo paying installments through the construction period, and deposit protection is a different question from occupancy delay entirely — a buyer can win one and lose the other without noticing. We confirmed how those funds were protected under the new home warranty program's deposit insurance, checked the coverage limit against the total deposit being paid, and made sure the amended agreement did not inadvertently weaken that protection while the other changes were being negotiated.
4. Explained the trade-off honestly. We told Tom and Paulo plainly that no amendment removes construction risk entirely — builders face genuine supply and labour delays, and a project can still run late even under a well-drafted agreement. The point of the changes was to make sure that if delay happened, the financial pain landed more fairly between builder and buyer instead of resting almost entirely on them.
5. Confirmed the amendments in writing before the deadline passed. A verbal agreement from the builder's representative would have meant nothing once the rescission window closed, since only the signed agreement of purchase and sale governs what either side can be held to. The builder's lawyer accepted the outside occupancy date and an improved compensation formula in a signed amendment delivered two days before the rescission period expired, so Tom and Paulo never had to choose between walking away from a unit they wanted and living with terms that put them at financial risk.

The outcome

Tom and Paulo kept the purchase, on amended terms that gave them a genuine outside date and a compensation formula that would actually reflect the cost of a long delay if one happened. About fourteen months into construction, the project did fall behind schedule — not unusual for a building of that size — and occupancy shifted back by roughly four months from the original date. Because of the amendment, Tom and Paulo received delay compensation that covered most of the overlapping housing costs during that stretch, rather than the token amount the original agreement's terms would have produced. They took occupancy the following spring, having paid out of pocket for only about three weeks of overlap between their old lease ending and the new unit becoming available, instead of the several months of double housing costs the unamended agreement would have left them exposed to.

Nothing dramatic happened in this file. There was no lawsuit, no standoff, no last-minute crisis. The value of the work was entirely in what it prevented — a buyer locked into paying two housing costs for months with no meaningful recourse, discovered only after it was too late to do anything about it. That is the pattern with pre-construction purchases generally: the moment to catch a problem is inside the short window the law gives you, not after the building is half built, and not after occupancy has already shifted. Tom and Paulo later said the review had felt like an unnecessary expense in the moment, five days after a purchase they had already decided to make, and only made sense to them in hindsight once the delay actually happened and the amended compensation formula did what it was written to do. They also said they had assumed, wrongly, that a printed occupancy date on a builder's form carried roughly the same weight as a closing date on a resale deal — a mistake common enough among first-time pre-construction buyers that it is worth stating plainly: it does not.

What you can learn from this