Buyer tool
Pre-construction agreement review checklist
Work through the deposit schedule, the HST rebate clause and indemnity, whether development levies are capped, the builder's extension and substitution rights, assignment rights, and the specifications schedule. On a freehold home there is no cooling-off period, so every item has to be checked before you sign.
Use this before you sign, not after. On a freehold home in Ontario there is no cooling-off period, the agreement binds the moment the builder accepts it, so a review afterward only tells you what you are already stuck with.
Print it, take it to your lawyer, and work down the list together.
The two items that matter most
If you only check two things, make them these.
The HST clause. Most Ontario builder agreements state the price inclusive of HST and require you to assign the rebate to the builder at closing. That is normal. What matters is the indemnity: if you turn out not to qualify, you owe the builder the rebate amount on closing day, in certified funds. On a low-rise home that is up to $80,000. How this works.
The levy cap. Development charges rise between signing and a closing three or four years out, and the standard clause passes the increase to you with no ceiling. A cap converts an unknown into a budgetable number. It is the most valuable amendment available and the one buyers most often forget to ask for. Why.
One you will not think to ask for
Assignment rights. Most low-rise agreements restrict or prohibit assignment. Asking for the right at signing costs the builder very little; asking for it two years later, when your circumstances have changed and you need out, is close to impossible. It is the main escape hatch a pre-construction buyer ever gets. More.
The checklist
27 items01 / The money
- Deposit schedule, every amount and every exact date, written on a calendar
- Where each instalment comes from, money you hold, not money you expect
- Whether your deposit exceeds Tarion's protection (10% of price, max $100,000 on freehold)
- Is the price stated inclusive of HST, and what rebate amount is assumed?
- The HST indemnity, exactly what you owe if you turn out not to qualify
- Are development charges, levies and imposts capped? At what figure?
- What the cap actually covers, levies only, or connections, meters and Tarion enrolment too?
- The full list of closing adjustments the builder may charge
02 / The dates
- How many times may the builder extend closing, and on what notice?
- Is the Tarion addendum attached, with the statutory date machinery intact?
- Does the closing timeline work against your lease, your existing home or your rate hold?
- What happens to your deposit if the builder terminates?
03 / What the builder controls
- Substitution rights, materials and finishes of "equal or better quality"
- Grading, sodding and driveway timing, and what is deferred past closing
- Assignment rights, permitted, prohibited, or consent plus a fee?
- Termination rights, and how broadly they are drafted
- Is there a POTL or common elements condominium corporation? Flag this to your lawyer immediately
04 / The schedules at the back
- The specifications, what is actually included, not what the model home shows
- Are appliances included? Which ones, what grade?
- Is central air included or an upgrade?
- Is the hot water tank owned or rented?
- Is rear sod included, or only front? Is fencing included?
- Lot, model and elevation correctly identified, with the premium stated
- Every verbal promise from the sales centre written into an amendment
05 / Not in the agreement, but check anyway
- The builder's delivery record and reliability on closing dates
- Whether a lawyer experienced in new construction has read it, before you sign
- Your own HST rebate eligibility, confirmed in writing by an accountant
Sources