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HRCA urges homebuilders to honour contracts

DCN-JOC News Services
HRCA urges homebuilders to honour contracts

TORONTO — The regulator responsible for licensing the people and companies that build and sell new homes in Ontario, the Home Construction Regulatory Authority (HCRA), has issued an advisory to licensees reminding them of the HCRA’s expectations around signed agreements of purchase and sale.

The advisory augments the direction the HCRA gave in “Advisory #2: Honesty & Integrity.”

“The HCRA expects licensees to abide by the agreements they enter into with purchasers in a way that is both legal and ethical,” said Wendy Moir, HCRA CEO and registrar, in a statement. “Failure to treat purchasers fairly – which includes clear communication, full disclosure, and advising them of all options – could be considered professional misconduct and may result in licence suspension or revocation.”

Moir said there may be cases of unexpected increases in costs to the builder, however, there are rules that must be followed to ensure fairness and prevent price gouging.

The advisory sets out explicit actions a builder must take in proposing a price higher than in the signed contract, such as advising purchasers of the amount of the increase and the reason for it; including a summary of how the increase was calculated; and how the figure departs from the initial budgeting for the project.

The advisory also states a builder must advise purchasers of all their options, including the option to continue with the original signed agreement. It also recommends purchasers obtain legal advice from a lawyer who is familiar with real estate transactions. 

The HCRA recognizes if a project is in jeopardy of not being completed, it is fair to explain the situation to purchasers and try to work collaboratively toward a new agreement, states the release.

“If builders want to make a case for purchasers helping to cover the unanticipated costs, they should provide reasons and sufficient evidence,” said Moir. “However, a licensee may not threaten to breach their contract if the purchaser does not agree to a requested increase. A purchaser faced with a request of this nature needs to have enough clear information and independent legal advice in order to be able to make an informed decision without coercion.”

According to the advisory, if a contract is ultimately cancelled the HCRA may step in if the builder tries to relaunch the project on the same property and enter into new sales agreements.

“We will not tolerate a builder cancelling a project just because they think they can sell the units for more,” Moir concluded.

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