The purpose of this site is to educate the buyers about the complexities of purchasing new construction. My goal is to help inform the buyers about the many things one is to think about when considering purchasing new construction. Here is a basic checklist you will want to ask yourself when purchasing new construction.
A specially crafted contract of purchase and sale may have the terms relating to the building of the house contained within that contract, or the parties may set out those provisions in a separate building contract. In either case, the contract should address the following issues (this list is not exhaustive):
describe the building to be constructed in significant detail, typically by attaching architectural or building plans and landscaping plans;
include detailed specifications as to the materials to be supplied and improvements constructed, including dollar allowances for such things as floor coverings, light fixtures, plumbing fixtures and cabinets;
specify who is responsible for obtaining building and all other permits required as well as any other approvals required;
specify the degree of finishing and the standard or quality of work;
provide for a mechanism to deal with any changes the buyer wants to the building after the building contract has been entered into, and how cost overruns are to be dealt with;
specify the work that will not be included as part of the contract;
establish timelines including when construction should begin, when certain stages of construction should be reached and when construction should be completed;
specify payments schedules and whether the contract will be for specified amount (“fixed price”) or the total cost of all work plus a fee for the builder (“cost plus”) and how and when payments will be made;
detail any and all warranties to be provided by the builder including any new home warranty required under the
Homeowner Protection Act
;
address who will carry insurance on the building while under construction
provide that the builder and all sub-trades will carry Worker Compensation Insurance and liability insurance;
address how deficiencies will be identified and corrected;
provide for a builder lien holdback as well as a deficiency holdback
specify what triggers the Completion Date (issuance of an occupancy permit etc.)
address GST issues; and
include dispute resolution provisions.
As you can imagine building contracts can be long, complex documents, you will want to be assured your are well represented by an experienced realtor.
