What the Construction Shut Down Means for Residential Buyers in Toronto?
The new home building and renovation industry is moving to provide guidance to new home buyers and home builders.
Ontario announced Friday, the shut down of industrial construction while residential construction projects are still considered an essential business. The government’s latest announcement clarified that new residential starts will be stopped, but residential projects “near completion” can continue.
“We are living through anxious, challenging times in the GTA. People’s health and well-being are of the utmost importance right now.”, Dave Wilkes, President and CEO of @BILDgta commented in an interview with the @torontosun today.These are the types of residential construction projects on the essential businesses list, according to ConstructConnect:
1. When a footing permit has been granted for single family, semi-detached and townhome.
2. When an above-grade structural permit has been granted for condominiums, mixed use and other buildings
3. When the project involves renovations to residential properties and construction work that was started before April 4
Construction groups are generally behind the move. The Residential Construction Council of Ontario (RESCON), for instance, said in an April 3 release that the move balanced the safety of workers while acknowledging the need to add housing in a tight market, as well as “contractual responsibilities industry has to homebuyers.”
“There are many people who are waiting for their homes to be finished in the next few weeks. We already have a significant housing crisis in Ontario and most of these homeowners who have sold their homes are at risk of being left on the street without these measures,” said Richard Lyall, RESCON’s president, in the release.
Construction unions had been calling for the shut-down of sites, citing worker safety.
Buyers who have already signed contracts may have to live with delays beyond what was laid out in their contracts, says Azin Ghorbankhani, a lawyer with Seif real-estate law firm.
A delay in occupancy dates and final closings is allowed based on most builder agreements, she says, but this crisis may extend that.
“Almost every pre-construction condo is being sold with Tarion Warranty. The Tarion warranty has a clause in the agreement which states that builders may extend any closing dates due to unavoidable delay.” There is a maximum of $7,500 credit given to purchasers if construction is delayed.
However, she says, “In this case, COVID-19 is declared a pandemic by (the World Health Organization) and therefore considered an unavoidable delay. Builders can extend the critical dates by the length of the unavoidable delay without needing the approval of the purchaser.” So, “if the builder notifies the purchaser in writing setting out the description of the delay and the estimate of the duration, and new critical dates for them,” purchasers may not be eligible for the credit.
But, she adds, if a builder fails to do this, then purchasers can ask for this compensation on the dates mentioned in their agreements.