Law Times

Law Times • January 18, 2010 FOCUS PAGE 13 in for many high-rise condo- minium developments, leaving many real estate lawyers anx- ious to see the impact of the new regime. Merredith MacLennan, an associate at Nelligan O'Brien Payne LLP in Ottawa, says Tarion has held out the prom- ise that the new warranty will give buyers more certainty on closing and occupancy dates. But she questions whether that will happen. "It's been my experience that all of the dealers are using tentative occupancy dates," she says. "So it's not really provid- ing a huge amount of certainty for purchasers in that respect." The new rules were an- nounced in March 2008, but any high-rise condo develop- ment that had at least one unit sold before July 1, 2008, was grandfathered to the old war- ranty. Lawyers expect to start seeing the new warranty take hold for an influx of buildings with closing dates set in the coming months. Some key changes include a new standard form information statement. It gives consumers clearer details on closings, in- cluding important information on the status of the property they are purchasing. The warranty also brings in a 50-per-cent increase in compensation for homebuyers affected by a legitimate delay in closing. That change raises maximum compensation to $7,500 from $5,000. Builders are also now forced to declare important informa- tion at the time of purchase, including details on when con- struction is to start, confirma- tion of building permits, and availability of sewer and water services. The new warranty followed work in 2006 by a special com- mittee led by former Supreme Court of Canada justice Frank Iacobucci. The 12-member committee consisted of repre- sentatives for consumers, land developers, and homebuilders. Tarion president and CEO Greg Gee said at the time the new warranty was released that it "will give Ontario the most extensive warranty coverage re- garding delayed closings that is available anywhere in Canada." While MacLennan isn't convinced the warranty is the kind of panacea Tarion says it is, at least buyers have a height- ened awareness of the potential for delays. Under the old rules, many builders would commit to setting a closing date at a future point in time. With the new rules, it's clearer to buyers that their closing date could be as far away as three years. MacLennan suggests the new rules will also help law- yers better advise clients on delayed-closing compensation. Untitled-9 1 www.lawtimesnews.com 10/26/09 3:36:58 PM Lawyers watching as new warranty takes effect T BY ROBERT TODD Law Times arion Warranty Corp.'s new delayed-closing warranty is set to kick "The rules are set out in the addendum," she notes. "The ad- dendum says that if there's any- thing in the addendum that's contrary to the agreement, then the addendum prevails. As op- posed to looking at the whole agreement and going case by case, there's more certainty in terms of advising clients with respect to the delayed closing." seen a number of instances where there have been signifi- cant delays, and purchasers are still quite happy to wait because they know the value is increasing rapidly, so they're not as fussed about the delayed compensation." Stephen Karr, of Har- ris Sheaffer LLP in Toronto, says the main benefit of the "The bigger organizations have a greater administra- tive capacity with those sort of matters," says Karr. "When you're a one-man show, it's very hard to do all that and not mess up. But I guess that's one of the things Tarion's looking to do — improve that channel of communication." Karr also says there are wor- The bigger organizations have a greater administrative capacity with those sort of matters. When you're a one-man show, it's very hard to do all that and not mess up. But I guess that's one of the things Tarion's looking to do — improve that channel of communication. But as MacLennan notes, at the end of the day most buy- ers take solace in the fact that while their unit may be taking longer to complete than they'd hoped, its value is rising. "As long as prices keep go- ing up, purchasers don't care about delays because their eq- uity is increasing before they even close," she says. "We've new delayed-closing warranty is better communication be- tween builders and purchasers. But on the downside, he notes, it introduces an added level of administrative notices that must go out at specified times. That's not a big deal for large companies within the building industry, but it could create havoc for small firms. ries about new provisions iden- tifying when compensation would be payable if builders fail to give purchasers at least 10 days' notice of a delay. If they don't meet that threshold, com- pensation of $150 per day rises to a flat $1,500, says Karr. "That's a pretty hefty penalty because the reality is that if you walk into a sales office today an upgrade, many delays arise at the last minute due to work holdups. Karr also notes the delay may not even matter to a buyer who plans to move in well past the closing date. Neverthe- less, he says the new warranty fails to account for that. "That's something that ex- perience will indicate how that evolves," he says. LT and we tell you it's going to be on a certain date and then vari- ous notices come out and, yes, they give you that firm occu- pancy date, what they're saying between vendor and purchaser is, 'You better be right or you're paying a $1,500 penalty.'" While it might be possible for a builder to negotiate with a buyer and compensate with [ Keeping real estate transactions where they belong – in your office. ] At Stewart Title, it's how we work that sets us apart. 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