Construction Delays

Show me one single condominium that was completed in its entirety, on-time, on the very first occupancy date ever promised.

My bet is: this has never, ever happened.

Delays are simply a part of the process with pre-construction condos, so much so, in fact, that we no longer ask if the project will be delayed, but rather for how long?


I was browsing through the pamphlets on our “condo desk” here at the office of Bosley Real Estate this morning; we have an empty desk on the third floor where agents routinely drop brochures and pre-sale packages for all the various pre-construction condominiums in Toronto.

I picked one up called ‘The Bloor Street Neighborhood,” and while I wasn’t entirely familiar with the project, I was pretty sure I had seen this before.

I picked up the price list and was absolutely astounded by how cheap the prices were!  I read, and then read some more, and finally I caught the cause of the low prices—and I smiled from ear to ear:

Occupancy: March 31st, 2006

For those playing along at home, March 31st, 2006 was a whopping 912 days ago, or 2.5 years.

So what made me smile from ear to ear?  This project is nowhere near completion.

That’s right; this project that was originally scheduled to be completed in the early Spring of 2006 is still in the midst of construction as we speak!

I’m quite used to this by now, since I put my money into a project which finds itself in a similar situation.  I think I’ve documented my troubles with “West Side Lofts” on more than one occasion, but just as a refresher: I was supposed to take possession of my unit on August 1st, 2008, and the good folks at West Side Lofts have yet to put a shovel in the ground!

While delays are now officially common-place, I think that consumers need to know the rules which are in place to protect them.  And as of July 1st, 2008, those rules became a whole lot clearer since the Tarion Warranty Corporation introduced a new and improved set of rules and procedures for delayed closings of freehold homes and condominiums purchased from builders in the Province of Ontario.

For any Agreement of Purchase & Sale dated July 1st, 2008 or later, the builder must do two things:
1) Set out a specific closing date
2) Determine whether that date is firm or tentative

The builder essentially has a choice.

If the builder chooses the firm option, the agreement must provide a specific calendar date for a “firm closing date” and must also provide what is called an “outside closing date.”  This second date is essentially one year after the firm closing date.

Now where the new rules as of July 1st, 2008 drastically differ from the old rules is as follows: if the house or condominium unit is not completed by the outside date, the purchasers have 30 days to terminate the agreement.  They will then receive a full refund of money paid plus delayed closing compensation of up to $150/day after the firm closing date, up to a maximum of $7,500 (this provides for only fifty days compensation).

So what if the builder chooses the “tentative option?”  Well, then things get a little more drawn out.

In this case, the buyer is made aware right off the bat that the builder may change the occupancy date, and four total dates must be determined:
First Tentative Closing Date: The original closing estimate.
Second Tentative Closing Date: Up to 120 days after the first date.
Firm Closing Date: Up to 120 days after the second date.
Outside Closing Date: 365 days after the second tentative date or the firm closing date, whichever is earlier.

If the house or condominium is not completed by the Outside Closing Date, then the purchaser can terminate the agreement as mentioned above, and will receive a full refund in addition to delayed closing compensation.

In addition, if the builder chooses to set a Firm Closing Date of MORE than the specified 120 days, then the situation would become a “delayed closing” and the builder would pay compensation.  Whether this would ever actually happen is doubtful, but the point is that the rules and dates are put into place to protect consumers and allow them to have some sense of when they should expect to move into their new home.

Delays are only oneaspect of pre-construction real estate that consumers need to worry about, since builders can unilaterally terminate an agreement under several different scenarios, ie. if they are unable to obtain a building permit, etc.  But the new rules put in place by Tarion limit the builders ability to terminate the agreement in other scenarios, ie. if they are unable to achieve a sales target.

In the past, projects were being sold to consumers before the developers even had financing in place!  The developer would aim to sell as many units as possible at the start, and then shop for financing by being able to claim “Well, Mr. Lending Institution, we were 75% sold out after only two days, of course you should finance our project!”

Perhaps with the new rules in place, we’ll see fewer pre-construction projects being terminated.

Every day, I wake up and ask myself, “Is today the day that West Side Lofts goes under?”

Unfortunately, I signed my Agreement of Purchase & Sale for West Side Lofts back in December of 2005, way before these new rules were ever put into place.  So the developer can continue to delay the project at will, which is what they’ve been doing for three years.  And to add insult to injury, I receive no compensation.

For more on this topic, go to and check out the section titled “New Delayed Closing Occupancy Information.”

I find that when you sit down with the salespeople at any new development, they act like everything is peachy-keen.  You know in war movies when the soldier who got shot lays on the ground dying while his friend holds him and says “You’re gonna be fine; you’re gonna make it,” even though everybody knows he’s gonna die?  Well, I find pre-construction salespeople to be just like that……and I’m sorry for the miserable analogy but it was just too good to pass up!

Yes, I know this is some element of the pot calling the kettle black since I’m also in sales, but I pride myself on being honest and loyal in order to separate myself from the pack, and the pack of pre-construction salespeople are a whole different breed altogether.  They will rarely stop short of outright lying to you in order to get your signature on the dotted line.  But more often than not, they’ll just leave out pertinent information and not tell you things that are essential, or educate you in the slightest.

This brings me to another topic I want to discuss: Why NOT to go to new home sales sites without your own buyer agent representative.”  I’d like to thank one of my readers for suggesting this topic that I’ll tackle later this week…

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