Consumer Protection: Protecting Your Rights When Signing on the Dotted Line
While our attention spans are shrinking, the legal documents that we have to sign to participate in an activity, access a service or purchase a product seem to be getting longer. Who among us hasn’t scrolled down to the ‘Agree’ button or signed on the dotted line without reading all the fine print?
When it comes to buying a pre-construction condo, however, it’s important to understand exactly what both parties – buyer and seller – are committing to and under what conditions that agreement can be terminated. Over the past few months, there have been situations in which developers have cancelled condominium projects leaving buyers disappointed and wondering why they were allowed to do it.
A decade ago, there weren’t a lot of rules on what conditions vendors or builders of condominium projects could put into purchase agreements and the conditions themselves could be scattered throughout the document, making them difficult to find.
In 2008 however, Tarion introduced an addendum to be included with every purchase agreement for both homes and condominiums. The purpose of the addendum is to not only restrict the conditions under which builders can terminate agreements early but require them to take ‘all commercially reasonable steps’ to satisfy those conditions. For example, if one of the conditions is zoning approval, the builder would need to have completed all the steps necessary to try to obtain those approvals in a timely manner.
The addendum also requires builders to give buyers information about zoning and construction as well as occupancy dates and conditions under which these dates could be changed. An added benefit to homebuyers is that the addendum collects all this information, and the conditions governing the agreement, in one place so they are easier to review.
Although it cannot eliminate all the risks involved in purchasing a pre-construction condo, the limitations and level of disclosure that the addendum requires helps protect condo buyers and inform them of the risks. But this doesn’t replace the importance of having your purchase agreement reviewed by an experienced real estate lawyer.
A new home is one of life’s biggest investments. The more you know before you enter into the deal, the better equipped you’ll be to protect your rights or at least understand the risks associated with signing on the dotted line.
HOWARD BOGACH is president and CEO of Tarion Warranty Corp., a private corporation established to protect the rights of new homebuyers and to regulate new home builders. Tarion.com