Q. We recently purchased a brand new home from a custom builder. Upon inspecting the house when we were ready to sign the Agreement of Purchase and Sale, there were a whole host of items that still needed to be addressed so we added them to our Agreement in a schedule. A couple of days before closing, we did our final inspection with the builder and very few of the outstanding issues had been addressed. We stated we were going to seek a holdback of funds and the builder flatly refused. We turned to our lawyer who stated that if we didn’t provide the full purchase price on closing, the deal would not close; with the pursuant potential for a lawsuit by the vendor. We were absolutely stunned and ended up closing with a whole bunch of items outstanding. How could they get away with this?
A. The problem herein lies that without pointing fingers, holdbacks are not necessarily given freely and even if the deficiencies were itemized in the Agreement of Purchase and Sale, your realtor should have added that a holdback would be provided if the problems had not been addressed.
If the new home was covered under the Ontario New Home Warranty Program, then you wouldn’t have to worry about unfinished work because you would have protection under Tarion. However, as this builder was probably a small custom builder, it was probably not registered. It is then left up to you to pursue the builder after the closing to either fix the deficiencies or pursue him in court. This is not the result you were looking for when you itemized all the problems but one misguided comment gave you some false expectations.
Best of luck!
– Jeffrey Cowan is the principal with Cowan Taylor and McGee, Barristers & Solicitors. The information in this article should not be relied upon as legal advice.
