May 31

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Ontario Announces 10-Day Cooling Off Period for New Homes

With Les Lamb

May 31, 2024


In a bid to enhance consumer protections within Ontario’s real estate sector, the provincial government has introduced the Homeowner Protection Act, 2024, which includes the introduction of a 10-day cooling off period specifically targeted at newly built freehold homes. This proposal aims to provide buyers of newly constructed freehold properties with a window of time to reconsider their purchase decision without facing any penalties or obligations.

Understanding the Proposal

It’s important to clarify that this proposed cooling off period applies solely to newly built homes and does not extend to resale properties. While the purchase of resale homes follows different protocols, the inclusion of a cooling off period for newly built homes underscores the government’s intention to offer additional safeguards for buyers in this segment of the market.

Empowering Informed Decision-Making

Once enacted, the cooling off period for newly built homes would empower buyers by allowing them sufficient time to carefully evaluate their purchase. Within the 10-day period, buyers can review their purchase agreement, seek independent advice, and conduct further due diligence on the property. This provision seeks to facilitate informed decision-making, enabling buyers to proceed confidently with their purchase or reconsider based on their individual circumstances.

Addressing Risks and Uncertainties

Purchasing a newly built home presents unique considerations, such as construction quality, warranty coverage, and project completion timelines. The proposed cooling off period serves as a safeguard against potential risks or uncertainties that may arise post-contract signing. Whether addressing concerns about construction standards or reevaluating personal financial readiness, buyers would have the opportunity to utilize the cooling off period to make well-informed decisions aligned with their best interests.

Promoting Fairness and Transparency

By proposing a standardized cooling off period for newly built homes, the Homeowner Protection Act, 2024, aims to promote fairness and transparency within the real estate industry. This provision would encourage ethical conduct among builders and developers, discourage high-pressure sales tactics, and underscore the importance of consumer rights and protections in real estate transactions.

Other Measures Included in the Act

Additional measures to bolster consumer protections for homeowners in the legislation include:

  • Prohibiting NOSI Registrations: Businesses increasingly abuse Notices of Security Interest (NOSI), pressuring consumers with inflated buyout costs during property sales or financing, prompting a ban.
  • Transparency in Purchase Cancellations: Builders’ histories of canceling purchase agreements for new freehold homes will be publicly disclosed, bolstering buyer confidence.
  • Combatting Illegal Building and Selling: Consultations will address consumer protection against illegal builders, known for bypassing licensing and neglecting enrollment in Ontario’s home warranty program, Tarion, leading to defects, risks, and higher payouts.
  • Condominium Owner Safeguards: The Condominium Authority Tribunal’s jurisdiction expansion and consultations aim to enhance condominium operations, management, and transparency, offering greater protections for owners and buyers.
  • Heritage Conservation Amendment: Amendments to the Ontario Heritage Act grant municipalities until January 2027 to evaluate properties on heritage registers, easing administrative burdens and supporting heritage preservation.
  • Transit-Oriented Housing Development: To streamline mixed-use housing near transit, Ontario proposes exemptions for designated transit-oriented community lands from certain Planning Act provisions, ensuring building partner certainty and optimizing transit investments.

Industry Reaction

In a press release on the day of the announcement, the Ontario Real Estate Association (OREA) praised the move, saying, “Extending this protection to newly constructed homes will enhance consumer protection by allowing buyers a 10-day period to review and cancel an agreement without penalty, leveling the playing field between Ontario’s hardworking families and well-resourced corporate developers with a team of lawyers.”

In a separate statement, the Toronto Regional Real Estate Board (TRREB) agreed: “TRREB commends the government’s proposal to also apply a 10-day cooling-off period to purchasers of new freehold homes, a protection already in place for new condominium buyers. The inclusion of new freehold homes is essential for protecting consumers and fostering trust in the real estate market. It allows buyers to take a step back and get professional advice on the review of contracts and other aspects of a new home purchase.”

In conclusion, the proposal to introduce a 10-day cooling off period for newly built homes under Ontario’s Homeowner Protection Act, 2024, represents a significant step towards strengthening consumer protections in the real estate market. If enacted, this provision would offer buyers valuable reassurance and flexibility, promoting fairness, transparency, and informed decision-making throughout the homebuying process.

Les Lamb

About Les

I'm your hard-working, full-time REALTOR©, serving in and around Durham Region, Ontario. I specialize in client care and communications. My client-centered approach puts you first and takes the stress out of your home buying and selling experience. How can I help you?

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