Many buyers of new-build homes are aware that they have a builder’s warranty on construction defects that starts when they move in. What many don’t know is that their warranty includes consumer protections that are in effect much sooner.
If you’ve just signed a purchase agreement for a pre-construction home, take a minute to learn about how you’re covered for some of the things that could go wrong before your home is ready.
Protection for your deposit
Deposit protection covers you in cases where your builder goes bankrupt or fundamentally breaches your agreement. It also applies if you lawfully decide to terminate the agreement.
If you’re buying a freehold home with a purchase price of $600,000 or less, the warranty covers your deposit for up to $60,000. If the price is more, you’re protected for 10 per cent of the purchase price, up to a maximum of $100,000.
For a condo, your deposit is protected first and foremost by the Condominium Act, which requires your builder to hold your deposit money in a trust account. If for some reason your deposit was not placed in trust, the new-home warranty provides protection for up to $20,000.
Compensation for unlawful delays
Depending on the terms of your purchase agreement, your builder may be allowed to extend your closing date provided they give you proper advance notification. If they don’t follow the right procedures or delay your closing beyond a certain date, you may be entitled to compensation.
Compensation under the warranty is $150 per day to a maximum of $7,500. It’s intended to cover additional living expenses and other costs you incur due to the delay.
Financial loss coverage for contract homes
You may have contracted someone to build a home on land that you already own. As a buyer of a “contract home,” the warranty covers you against financial loss if the relationship between you and the builder breaks down before your home has been completed. This protection covers the difference between the amount you paid your builder and the work that has been done, up to a maximum of $40,000.
Find more information about buying a new home at tarion.com