Guide
What to check before signing a builder's agreement
What should I check in a builder's agreement before signing?
Check the deposit schedule against money you actually hold, the HST clause and what you are indemnifying, whether development levies are capped, the builder's extension and substitution rights, assignment rights, and the specifications schedule. On freehold there is no cooling-off period, so all of it has to happen before you sign.
A builder’s agreement runs 40 to 80 pages, is drafted entirely by the builder’s lawyers, and on a freehold home binds you the moment it is accepted, there is no cooling-off period.
Use this as a checklist with your lawyer before signing. Afterward it is just an inventory of what you agreed to.
The money
☐ Deposit schedule, amounts and exact dates. Write them on a calendar. Each one is a contractual obligation and missing one is a default. Typical structures.
☐ Where each instalment comes from. Money you hold, not money you expect from a sale, a bonus or an unconfirmed gift.
☐ Does your deposit exceed Tarion’s protection? Freehold protection is 10% of price up to $100,000 (or $60,000 at or below $600,000). A 20% deposit on a $1.2M home leaves roughly $140,000 uninsured. Important.
☐ The HST clause. Is the price stated HST-inclusive? What rebate amount is assumed? What exactly are you indemnifying the builder against? This is routinely the largest contingent number in the agreement, up to $80,000. Why.
☐ Are development charges and levies capped? If not, ask. This is the most valuable amendment available. Why this one.
☐ The full adjustments list. Connections, meters, Tarion enrolment, grading deposits, builder admin and legal fees. What to expect.
The dates
☐ Extension rights. How many times and by how long may the builder move closing, and on what notice? Delays.
☐ The Tarion addendum. Confirm it is attached and that the statutory date machinery is intact.
☐ Does your closing timeline work against your lease, your existing home, or your rate hold?
The control clauses
☐ Substitution rights. The builder’s ability to substitute materials and finishes of “equal or better quality”, their judgment.
☐ Grading, sodding and driveway timing. Usually deferred past closing. Expect a season or two.
☐ Assignment rights. Most low-rise agreements restrict or prohibit assignment. Ask for the right at signing. It is the main exit if your circumstances change, costs the builder little now, and is nearly impossible to obtain later. More.
☐ Termination rights. On what grounds may the builder terminate? Some clauses are drafted broadly.
☐ Is there a POTL? If the agreement mentions a parcel of tied land or a common elements condominium corporation, flag it to your lawyer immediately, a rescission right may be engaged, and if it exists it is measured in days. POTLs.
The schedules at the back
☐ The specifications. This, not the model home, defines what you are buying. Check appliances, central air, hot water tank ownership, rear sod, fencing, garage door opener. What’s usually excluded.
☐ Lot, model and elevation are correctly identified, with the premium stated.
☐ Every verbal promise appears in writing. A sales representative’s assurance that is not in an amendment does not exist.
The thing not in the agreement
☐ The builder. Delivery record, date reliability, finishing quality, how they handle warranty items. None of this is in the paperwork and all of it matters. How to assess it.
If you are at a sales centre right now
You will be told the lot cannot be held. Sometimes true. Also true: builders release low-rise in phases, and there is almost always another phase. A lot you have not had reviewed is not a bargain.
If a release is genuinely time-sensitive, have your lawyer identified and briefed in advance so a review is a same-day call rather than a week’s delay.
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