Builders may not be able to squeeze extra money from the buyers.
Monday Jul 24th, 2023
In recent years we have heard of many instances of builders demanding extra money from the purchases of pre-construction residential properties, in many cases the options were to pay thousands of dollars or to terminate the contract.
This may not be that easy going forward, in the case of Dhaliwal v Midland homes the judge recently ruled that the builder must honour the original purchase price and is not entitled to any additional funds.
In summary Dhaliwal’s purchased a pre-construction home from Midland Homes and Development in 2020 for $712,000 in Thorold ON. Approximately a year before the expected closing the builder informed the buyers that the costs increased by 21% or $152,640 and the buyers have two options: pay the difference or terminate the contract and get the deposit back.
In March 2023 Justice J.A. Ramsay ruled that the builder is not entitled to any additional charges and the in summary stated:
“It would be absurd, however, for the purchaser to have given the vendor carte blanche to set the quantum of increased costs due indirectly to government action unrelated to construction”.
The ruling could be a very important precedent setting for costs increases levied by the builders and contract cancelations.