New Tarion Form Added to Pre-Construction Agreements
New Tarion Form Added to Pre-Construction Agreements – In recent years several pre-sold condominium apartments have been cancelled for a variety of reasons. So far in 2019, seven condominium projects representing 2,100 units have been cancelled. The increased attention through the media and courts has motivated Tarion to take action.
Starting January 1, 2020, the new-home building regulator will require any vendor selling pre-sale condominiums to include a two-page information sheet about the project that will assist buyers in understanding the potential pitfalls in signing a contract to buy an unbuilt condo from plans. The form will compel sellers to spell out early-termination conditions, any potential title restrictions on the proposed land, as well as expected completion dates and a disclosure notice about whether a building has obtained zoning approval. One piece of information that the form fails to outline is that it does not specifically alert consumers to the financing clause vendors routinely use to get out of the agreement and avoid beginning construction.
Further to the new form, Tarion has added new search tools to its website to help consumers check builders’ records.
To view a copy of the form, click here.
This new measure has come in the wake of a series of high-profile project cancellations, including two multi-tower developments – Liberty Development’s Cosmos Condos and Gupta Group’s Icona Towers at the Vaughan Metropolitan Centre.
Icona was cancelled after Gupta lost a court challenge to lift a restrictive agreement that prevented it from building residential units on the property.
The developer and the company that held the contract subsequently agreed and Gupta now plans to build essentially the same project on that site. However, the original buyers, who are still planning legal action, would have to buy again at what is expected to be a higher price.
Each time a project is cancelled, Tarion will review the circumstances surrounding the cancellation to ensure the vendor complies with the Tarion Addendum, which is part of the pre-construction purchase agreement.
The information yet to be tracked in Tarion’s new data is the growing issue of partial cancellations, where builders offer to return deposits to all or most of a building’s pre-construction buyers without officially cancelling a building.
Tarion has been under review since February when Government and Consumer Services Minister Bill Walker promised to establish a separate regulator for the building industry to avoid conflicts with its consumer protections and warrant functions. This includes the possibility of a multi-provider approach to home warranties, something that is currently available in other provinces.
The office of Consumer Services Minister Lisa Thompson indicated the government plans to make an announcement by the end of the year about Tarion’s future, but a policy direction is still in the works.
It is highly recommended that when preparing to purchase a pre-construction condominium that the agreement is reviewed by a lawyer and a real estate professional.
* New Tarion Form Added to Pre-Construction Agreements written by Benczik Team Realty