News

Ontario home builders will have to come clean about the tentative nature of closing dates, and will lose a five-day grace period allowed them for unforeseen delays, under new regulations being proposed by the industry's regulating body.

"There will be greater transparency about closing dates and the consequences of missing them," former Supreme Court Justice Frank Iacobucci, who headed a special committee on closing delays for Tarion Warranty Corp., told a media briefing at which recommended rule changes were unveiled this week.

"Late closings have become one of the most troubling issues for consumers, and for the industry too," Tarion president Greg Gee told reporters.

Surveys of home buyers by J.D. Power and Associates found that home readiness was their number one concern and chief complaint in the past two years.

The Tarion committee was struck on the request of Ontario's government services minister, Gerry Phillips. The committee will continue hearing submissions until November, but the Tarion board has already approved the new regulations in principle.

The committee, which had nine members from the development and building industries, one from the Consumers Council of Canada and one from Mr. Phillips's ministry, recommended that:

Purchase-and-sale agreements for new freehold homes must specify either a tentative or firm closing date. If a tentative date is given, the builder must set a firm date that is no more than 120 days later.

They must also notify the buyer about it at least 90 days prior to the tentative date.

Sellers must also disclose in the agreement the status of building permits and development approvals.

Agreements for condominium purchases must stipulate a tentative or firm occupancy date, but no 120-day maximum would be applied for setting a firm date after a tentative one.

Once a firm date has been set, failure to deliver the home on time would trigger compensation payments, which would be raised 50 per cent from the present level (set in 1988) to $150 a day for living expenses up to a cap of $7,500.

There would be two ways to avoid paying compensation for a delayed closing: by getting consent of the purchaser to the delay, or by showing that unavoidable circumstances caused the delay.

Contracts would no longer be automatically terminated 240 days after a closing date was missed. The period is extended to one year under the proposed changes.

The existing regulations provide floating closing dates and allow builders to delay delivery of a home by five days without triggering compensation payments.

"[The changes] will give home buyers sufficient time to organize their affairs," said John Terry, a lawyer who spoke on behalf of the Consumers Council at the briefing.

The Ontario Home Builders Association said it supported many of the proposals, but expressed concern that the root causes of delay were not addressed.

"There are many helpful changes . . . that will help avoid unfulfilled expectations by consumers in their purchase of a new home," OHBA president Brian Johnston said in a release.

But he added that "there are systemic delays throughout the planning process that involve both municipal governments and other bodies that must be reviewed and resolved."

New regulations are not expected to become law until the middle of next year.