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What happens if your new condo is not ready?

A partially constructed condo building. Stock photo by Getty Images.

Picture this: you are going to be a newly constructed condo owner. You dreamed about it, you saved up for it, you’re all set to move in and then you find out from your lawyer the condo is not ready by the date you were to close. What happens now?

Depending on what province you reside in, there may be protection against delayed closings. However, if you have protection, you should look to see if that policy or legislation has a remedy against delayed closings, because few of them do.

It’s recommended to have your new construction condo contract reviewed by a lawyer before you sign it, and tell the lawyer that delayed closing protection is important to you, so that he or she can outline the protections and options available to you.

However, the signing happened a while ago and now you are facing a delay, so what happens now? The following list outlines what protection is available in the provinces against delayed closings, if any:

Ontario: New condo owners are protected from closing delays by the Tarion Warranty Corp. It’s mandatory for builders to be covered by it and it provides delayed closing protection to buyers. Tarion sets out a schedule of critical dates by which the builder must either have completed the condo or by which the closing has been properly extended and proper notice was given. If there is an improper delay for closing, then the new condo owner may claim up to $7,500 in compensation.

British Columbia: B.C. has the Homeowner’s Protection Act, but it doesn’t really address delayed closing. However, some protection should be provided through the Occupancy Certificate Clause, which allows the buyer of an unfinished home or unit to back out of the deal, because the seller “must have finished all work.” However, that doesn’t mean the home or unit has to be in perfect condition, it just means the premises are safe to occupy. Generally, there is no compensatory scheme for a delayed closing.

Alberta: The province passed the New Home Buyer Protection Act Feb. 1, 2014. However, buyers still need to be careful to check their new condo contract to see if there is an approximate occupancy date, the amount of notice the builder has to give and final possession date. Sometimes if the construction deadlines are not met by a certain amount of time the buyer may be able to back out of the contract.

Manitoba: New Home Warranties Act. Despite the act, it may still be a good idea to buy private insurance or a warranty for delayed closings, as there is not a specific scheme which protects the buyer from a delayed closing nor is there a compensation scheme.

Quebec: Guarantee Plan for New Residential Buildings. There is a new condo section and this new regulation, which was passed in October 2014, gives protection to new home and condo owners. Basically, if you can’t move into a new condo due to builder delays, the guarantee plan kicks in. If your condo is four units or less, you will be protected under this new plan. In fact, there is a compensation structure in the new regulations and the buyer can receive up to $5,000 for delays. There are also private protection plans on the market that Quebeckers have traditionally bought to protect them from delayed closings.

New Brunswick, Newfoundland and Labrador, Northwest Territories, Nunavut, Nova Scotia, Prince Edward Island, Saskatchewan and Yukon: In these provinces there is no legislation that forces builders to provide new home or condo warranties for builders. However, there may be private insurance companies that may provide such protections. Some builders also offer warranties through third-party home warranty programs. Remember though, those warranties don’t necessarily include delayed closing protection. Always make sure it’s included.

If your province does not have legislation or a warranty program, then it pays to research whether there is a private insurance protection plan that includes delayed closing coverage. Ask your lawyer about it if you don’t know where to start. Even where your province has legislation or a mandatory home warranties plan, that may not protect you against delayed closings. Lastly, if you are in a situation of a delayed closing and you have little to no protection from this delay, then your solution may be to either sue the builder or to do nothing. In a situation where your closing has been delayed, it’s usually a good idea to contact your lawyer.

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