Review the Purchase Agreement carefully before signing. Go through the contract with your builder, point by point. This helps eliminate errors or misunderstandings, and it is a great opportunity for you to ask questions. Here are some pointers for your contract review:
- Check for correct spelling of names.
- Verify the description of the home (ie. lot, plan, and elevation).
- All attachments or schedules that form part of the contract must be referenced in the main contract document. This includes site plans, drawings, specification list, design and approvals process for customized homes.
- Make sure you understand what's included and what’s not in the base price of the home - particularly important if you have based your decisions on a show home with a mix of standard and upgraded features.
- Check that any extras and upgrades you have chosen are documented accurately (e.g. model, brand name, size, colour, price).
- If the price includes allowances, the amounts should be noted in the contract with a description of what happens if you go over or under budget.
- How will you pay for the home? This must be noted in the contract. It may be as simple as "cash", or a description of your mortgage (amount, interest rate, term). If the contract is conditional on financing, this must be noted clearly, along with the number of days allotted for obtaining the mortgage, and the process for notifying the builder. It should also be stated clearly what happens if the mortgage application is turned down (e.g. the contract is null and void, and the deposit will be returned in full).
- All other conditions, such as the sale of your current home, must be detailed, leaving nothing to chance or misinterpretation.
- Payment milestones should be clearly outlined (ie. initial deposit upon signing of the contract, additional deposit when conditions have been met, possible construction advances, and amount due when you take possession).
- The builder should issue a receipt for the deposit and a copy should be attached to the contract. The builder's refund policy and third-party deposit warranty should also be described in the contract in the unlikely event that the builder for some reason is unable to honour the contract.
- If the new housing tax rebate is assigned to the builder, it should be noted.
- Provision of condominium documents, including budget, should be noted. This does not pertain to freehold dwellings where ownership includes exterior space.
- The closing date is the day when you take possession of the home; ask your builder how possible delays will be handled.
- Consider having a lawyer review the contract before you sign it.
Building on your own the land - If you are entering into an agreement to build a home on your own land, there are some additional items that should be covered in the contract. The builder must have liability insurance and provide workers' compensation insurance for workers on site; otherwise you run the risk of being responsible if something goes wrong or someone gets hurt. Ask to see proof of coverage.