While the Tarion Warranty Corporation requires that a delayed occupancy warranty be attached to every agreement of purchase and sale of a newly constructed dwelling, the nature and extent of permissible delays vary depending on the facts of each individual case, Toronto real estate lawyer Lisa Laredo writes in Lawyers Weekly.
The delayed occupancy warranty does not in any way deal with the closing date on which title is transferred — it deals only with the date on which occupancy is given, writes Laredo.
It also must be understood, she says, that a tentative occupancy date is set by the contract and is incorporated into the warranty as the starting point for the discussion of delay.
“The warranty requires that an outside occupancy date be set and inserted into the warranty addendum. The outside occupancy date is the latest date that the vendor agrees to provide occupancy to the purchaser. This date is purely contractual and is not the result of any formula based upon the tentative occupancy date,” she writes.
“While the tentative occupancy date will normally be two or three years after the date of the agreement of purchase and sale, the outside occupancy date may be set at any number of years after the tentative occupancy date.”
The actual scheme of the warranty looks at the building process in two phases: before the roof assembly is complete, and after said roof assembly has been completed, writes Laredo. In phase one, the tentative occupancy date may be extended any number of times within certain parameters, while in phase two, the vendor’s ability to extend without cost is greatly restricted, says the article.
“It is obliged to fix a final occupancy date. If the final occupancy date is tentative, it can be extended once more, to a firm date, but the extension is limited to 120 days,” writes Laredo. “Further extensions of occupancy are possible but only with the payment of compensation for the delay.”
However, writes Laredo, exceptions can be made in cases of unavoidable delays.
“An unavoidable delay is defined as a delay caused by a strike, fire, explosion, flood, act of God, civil insurrection, act of war, act of terrorism or pandemic, which is beyond the reasonable control of the vendor and is not caused by or contributed to by the fault of the vendor,” she writes.
“Where an unavoidable delay does occur caused by the events enumerated, the vendor is entitled to extend the date of occupancy during the period of unavoidable delay without incurring any liability to pay compensation. All critical occupancy dates (i.e. firm occupancy date) are extended for a period equal to the period of the unavoidable delay.”
Where occupancy has not been granted by the outside occupancy date, the purchaser has a 30-day period commencing on the outside occupancy date during which she can rescind the contract by notice in writing and receive back her money paid toward the purchase, says Laredo.
“Should the purchaser fail to exercise her right of rescission within the prescribed time period, the agreement continues, a new delayed occupancy date is set and the agreement remains binding on all parties,” she writes.