Consumer Protections Related to New Home Purchase Agreements and Price Escalations

Regulation Number(s):
Instrument Type:
Bill or Act:
New Home Construction Licensing Act, 2017
Summary of Proposal:
The Ministry of Public and Business Service Delivery (the Ministry) is seeking input on:

1. issues that consumers are experiencing with escalations in the price of new homes after they have already been purchased, including proposals to address price escalations;
2. a legislated cooling-off period for new freehold home purchases; and,
3. a requirement that buyers receive legal advice on their purchase agreements for new homes.

1. Price Escalations

After a buyer has signed an agreement for a new home, some builders may try to increase the price of the home in ways that are unrelated to price adjustments ordinarily associated with completing the purchase of a new home. In some cases, the additional amount that a builder demands from a buyer may be hundreds of thousands of dollars.

The Ministry is seeking information about new home price escalations in the sense described above. The Ministry is also seeking input on the following potential new proposals to protect consumers in these circumstances:

• limits on the amount by which a provision of a new home purchase agreement can permit prices to increase
• limits on the amount by which a builder can increase the price of a new home after the builder has cancelled an agreement to sell it
• permitting consumers to launch class action lawsuits against builders who attempt to escalate the prices of their new homes
• publishing information about the number of purchase agreements for freehold homes (that is, non-condominium homes) a builder has cancelled for a reason unrelated to the fault of the buyer

2. Cooling-Off Period for Buyers of New Freehold Homes

A new home can be the biggest purchase that a person will make in their lifetime, and one that comes with risks that are important for buyers to understand. For example, a purchase agreement between a builder and buyer may have provisions that allow the builder to cancel the agreement or to increase the price. Moreover, some buyers may find that they are not provided enough time to review their agreements before signing them.

The Ministry is seeking input on establishing a cooling-off period for buyers of new freehold homes.

3. Mandatory Legal Review

New home purchase agreements are complex legal contracts and may expose the buyer to certain risks. A legal review could help the buyer understand the risks associated with the purchase agreement and how a buyer may wish to negotiate changes to it.

The ministry is seeking input on whether to make it mandatory for new home buyers to receive a legal review during a new home purchase. In addition, the ministry is seeking input on two distinct approaches to ensuring buyers receive a legal review:

A. A post-purchase legal review period
B. A pre-purchase legal review requirement
Analysis of Regulatory Impact:
Through this consultation, the Ministry is seeking feedback about the potential costs and impacts associated with these proposals. Feedback will help the Ministry determine whether the proposals should be implemented.
Further Information:
Proposal Number:
Posting Date:
June 29, 2023
Comments Due Date:
August 13, 2023
Contact Address:
Ministry of Public and Business Service Delivery
56 Wellesley St West, 6th Floor, Toronto ON, M7A 1C1