What Does "Cooling Off" Period Mean in Pre-Construction?

What Does "Cooling Off" Period Mean in Pre-Construction?Buying a new construction home in Ontario involves a different process than buying an existing property. Before you set out to find homes for sale in Ontario, whether new builds or otherwise, make sure you understand the unique features of pre-construction homes, like the cooling off period. 

What is the cooling off period in pre-construction?

There are many myths about the cooling off period that create some confusion, so let's help clear things up. In Ontario, the cooling-off period for pre-construction real estate purchases is governed by specific regulations under the Condominium Act, 1998 and the Ontario New Home Warranties Plan Act.

The cooling-off period in Ontario is typically 10 calendar days for condominium units and 10 days or longer (depending on the contract) for freehold homes, and the period begins from the date the buyer receives a copy of the signed purchase agreement or a disclosure statement. During this period, you as the buyer have the right to cancel the agreement without penalty. 

The buyer can cancel the agreement by providing written notice to the developer or builder. This notice must be delivered personally, sent by registered mail, or by any other method specified in the agreement. If the buyer cancels within the cooling-off period, any deposits or payments made must be refunded in full, minus certain prescribed deductions such as expenses incurred by the developer up to that point.

What is the purpose of the cooling off period?

The cooling off period allows buyers time to review the purchase agreement and the disclosure statement thoroughly. It gives them an opportunity to seek legal advice or financial consultation to ensure they understand the terms and conditions of the agreement. 

In some cases, you may act quickly to buy a new construction home in Ontario and then decide you have a few reservations. This period is the perfect time to go over the contracts, conditions, and budget with your legal team or financial advisor. We can also help answer any of your questions to help you make sure you're ready to make a confident purchase, or back out without penalty while you can. 

Can I get a refund during the cooling off period?

If the buyer decides to cancel the agreement within the cooling off period, any deposits or payments made must be refunded in full, without deduction. The refund must be provided within 10 days of receiving the cancellation notice. This way, you can take those funds with you to find a different home that is a better fit.

Are there any exceptions where the cooling off period does not apply?

One of the cooling off myths that is perpetuated is that this benefit is a legal protection during all real estate transactions, when in actuality it is solely for new construction purchases. The cooling-off period does not apply to resale homes, commercial properties, or rental properties. It specifically applies to new construction homes and condominium units sold directly by the developer.

Ready to learn more about buying your home in Ontario? Wherever you're looking for a home in the GTA, we've got the updated market knowledge and years of experience you need. Contact us any time to begin your house hunting journey. 

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