TARION: Home Buying 101

By Tarion

You’ve researched your builder, visited the model and found the right home for you. What comes next? 

Buying a new home is an exciting time, but can also be overwhelming if you’re unfamiliar with the new home buying process and terminology. So let’s run down some of the basics of buying a new home.

Once you’ve decided on the right home, your builder will ask you to sign a purchase agreement. Before you do, make sure you understand the terms of the deal you are signing; what is and isn’t included in the price; and when your closing date will be. It is also important to check that anything promised by your sales representative is reflected in writing. This includes any upgrades you’ve agreed on. While a handshake is a nice way to seal a deal, you should ALWAYS include specific requests and upgrades in the purchase agreement.

Purchase agreements are typically very lengthy documents and the language can be technical and hard to understand. You should never buy a home without having the purchase agreement thoroughly reviewed by a qualified lawyer. That is the only way you will fully understand what you are getting, how much it is going to cost you upon closing, and when you can take possession of your new home.

You may even wish to add a clause to the purchase agreement making it conditional upon being reviewed and accepted by your lawyer. If you’re purchasing a condo, the Condominium Act provides a 10 day cooling off period for you to review disclosure statements and consult a lawyer. After 10 days, the purchase agreement becomes final.

One of the most important documents your lawyer will walk you through is the Tarion addendum.  An addendum is a form that Tarion requires all builders to attach to every new home purchase agreement.  It will provide you with important information about the status of your new home such as when construction is scheduled to start, whether a building permit has been issued and whether sewer and water services are currently available. This will give you a good idea of the present stage of the project.

The addendum cover page lists all of the key or critical dates related to closing and outlines how at any time after signing the purchase agreement, the builder and purchaser can agree in writing to accelerate or extend one or more critical dates. This may be necessary if a home will be ready for occupancy earlier than expected or if there is a delay. If a critical date is accelerated or extended, the amendment must include a revised Statement of Critical Dates.

Making changes to the critical dates can affect whether delayed closing compensation is payable to a purchaser, so it is important for all parties to understand and acknowledge how potential compensation would be affected if a change in the closing date is made.

The addendum also clearly outlines all closing fees and charges, like realty taxes, utility costs and municipal levies, that are added to the purchase price of a home. Closing costs can substantially add to a home buying budget, so having them listed in one place helps buyers understand the full costs associated with their purchase.

Do you have a question about buying a new home? Visit www.tarion.com or find us on Facebook.