If you enter into an Agreement of Purchase and Sale to buy a new build home, your offer could be conditional on having your lawyer review the Agreement of Purchase and Sale. This means that, for a period of a few days after you sign the Agreement of Purchase and Sale, you can take the Agreement to a real estate lawyer to review. This review period is often colloquially called the “cooling off period.” Once your lawyer has completed the review, you can decide whether or not you would like to move ahead with your purchase.
A cooling off period is mandatory in Agreements of Purchase and Sale for new build condominiums. Though it is not mandatory in Agreements of Purchase and Sale for new build freehold homes, it is relatively common.
During the review period, your lawyer will make sure that you understand your responsibilities and entitlements under the Agreement of Purchase and Sale, and will ensure that the Agreement of Purchase and Sale addresses all of the legal requirements for new build homes. For example:
- Is the builder licensed by the Home Construction Regulatory Authority?
- Is the home enrolled in the Tarion New Home Warranties Plan?
- If the transaction involves a condominium corporation (either for the dwelling itself, or for certain shared aspects of the neighbourhood), does the Agreement of Purchase and Sale contain all of the required disclosure documents?
Additionally, your lawyer will confirm your financial obligations under the agreement. For example:
- Will you have to pay periodic deposits towards the purchase price? How much, and when?
- Will the builder expect you to assign your HST rebate to them? What will happen if you cannot qualify for the HST rebate?
- Will the builder require you to pay their legal fees, the fee for enrolling the home in the Tarion New Home Warranties Plan, or other fees?
- What will happen if you cannot get mortgage financing before the closing date?
Your lawyer should also flag other important features of the transaction. For example:
- Can the builder change any of your selections for finishes or upgrades? Can the builder change anything else about the home that you have selected?
- Will the home be part of a condominium corporation or townhome association?
- Will you be required to rent a hot water tank from a specific provider?