Buying a newly built home in Ottawa — whether in Kanata North, Barrhaven, Stittsville, or Orleans — feels exciting and relatively straightforward. You visit a sales centre, choose your lot and upgrades, and sign an Agreement of Purchase and Sale. What many buyers do not realize is that the builder's APS is a long, complex legal document drafted entirely by the builder's lawyers, and it contains terms designed to protect the builder from risk that the average buyer would never accept if they understood what they were agreeing to. Independent legal review before you sign is not just advisable — it is essential.
The Builder's Agreement of Purchase and Sale Is Not a Standard Form
Unlike a typical resale transaction, where OREA (Ontario Real Estate Association) standard forms are commonly used, builders use their own custom Agreements of Purchase and Sale. These agreements are lengthy — sometimes 30 to 50 pages — and include provisions that significantly favour the builder. Many buyers sign on the spot in the excitement of the sales centre without reviewing the document with a lawyer. Ontario law gives you a 10-day cooling-off period under the New Home Construction Licensing Act, 2017 during which you may rescind the agreement after signing. Use this period to have the agreement reviewed by your own lawyer.
Occupancy vs. Closing: Understanding the Two Dates
One of the most confusing aspects of buying a new condominium is that there are two separate closing dates. Occupancy closing (also called "interim occupancy") is the date you can move in — but you do not yet own the unit. The builder retains title. During the interim occupancy period, you pay the builder an "occupancy fee" that includes interest on the unpaid purchase price balance, an estimate of property taxes, and projected condo fees. You pay this fee like rent — you do not build equity and your mortgage does not start.
The final closing is when title is transferred to you and your mortgage funds. This date can come months — sometimes over a year — after occupancy. The gap between the two dates is entirely at the builder's pace. During interim occupancy, the APS governs, and understanding your rights and obligations during this period is critical.
Delayed Closing and Tarion Warranty Compensation
Construction delays are common in Ottawa's new home market. Builders have significant latitude to extend the closing date under the APS, but Ontario's Tarion Warranty Corporation — the province's new home warranty program — provides some protections. Builders are required to provide written notice of any delay at prescribed intervals. If a builder fails to provide proper notice, or if the delay exceeds certain thresholds, purchasers may be entitled to compensation under the Ontario New Home Warranties Plan Act for legitimate delay-related losses such as carrying costs, storage, and temporary accommodation. The maximum compensation under Tarion is $7,500 for freehold homes and $7,500 for condominiums.
Always read the closing date provisions in your APS carefully. Many agreements allow the builder to extend the closing date multiple times with minimal notice and no compensation obligation. Your lawyer can explain exactly what protections you have before you sign.
Tarion Warranty Coverage
New homes in Ontario are protected by Tarion's statutory warranty, which covers:
- 1-year warranty: Defects in work and materials, violations of the Ontario Building Code, unauthorized substitutions
- 2-year warranty: Water penetration through the building envelope, defects in windows, doors, and caulking; defects causing damage to the home; faulty electrical, plumbing, and heating systems
- 7-year warranty: Major structural defects that affect the structural integrity of the building
Tarion warranty protection is mandatory for all new homes in Ontario and is not a substitute for your own legal review of the APS — but it does provide an important safety net once you take possession.
Deposit Protection
Deposits paid by purchasers of new homes and condominiums in Ontario are protected under the Ontario New Home Warranties Plan Act. If a builder goes out of business or defaults before closing, Tarion will reimburse your deposit up to a maximum of $60,000 for freehold homes and $20,000 for condominium units. Confirm with your lawyer that your deposits are being held in trust and that the statutory protection applies to your purchase.
Price Adjustments and Upgrades
Many new home APS agreements contain provisions allowing the builder to increase the purchase price for increases in development charges — fees levied by the City of Ottawa on new construction. Some agreements cap the amount of this charge; others do not. Your lawyer should review these provisions carefully. Upgrade costs are also an area of confusion: upgrades selected at the design centre are often added to the purchase price and financed through the mortgage, which means you pay interest on them over the full amortization period.
HST and the New Housing Rebate
New construction homes are subject to HST in Ontario. The purchase price quoted by the builder may or may not include HST — read the APS carefully. Owner-occupants may qualify for the federal New Housing Rebate (up to 36% of the 5% GST portion on homes up to $350,000, with a partial rebate above that to a maximum purchase price of $450,000) and the Ontario New Housing Rebate of 75% of the provincial portion (maximum $24,000 on homes up to $400,000). If you are buying as an investor (i.e., you will rent the unit rather than live in it), the rebate structure is different and the assignment rules must be reviewed. Failing to understand the HST implications can result in a significant unexpected cost at closing.
Why You Need Your Own Lawyer
The builder's lawyer acts for the builder, not for you. They will not advise you on risks in the APS that favour the builder. They will not negotiate terms on your behalf. They will not explain the full implications of the occupancy provisions or the Tarion coverage. Only a lawyer retained by you — with no relationship to the builder — can give you independent advice.
At Silver Crest Law, we review builder Agreements of Purchase and Sale for buyers throughout Ottawa, explain every key term before you commit, and represent you through to final closing. Use your 10-day cooling-off period wisely — contact us before you sign, or immediately after, to book a review.
This article provides general legal information about new construction real estate purchases in Ontario. Tarion coverage limits and HST rebate thresholds are subject to change. This does not constitute legal advice. Consult a real estate lawyer before signing a new home Agreement of Purchase and Sale.