On May 27th, 2024, new provisions of the Ontario government’s Homeowner Protection Act came into force, bringing significant changes to the residential real estate market. Whether you’re a real estate agent or a new home buyer or seller, understanding these changes is crucial for navigating the current landscape. Let’s break down the key aspects of the new legislation.

Cooling Off Period: What It Means for Buyers and Sellers

One of the most notable changes is the introduction of a cooling off period for new builds. This period applies exclusively to newly constructed homes, giving buyers seven days after signing a purchase agreement to reconsider their decision and cancel the purchase without facing any penalties. This cooling off period allows buyers to conduct additional secure financing and ensure they are making a well-informed decision without the pressure of losing their deposit.

For buyers, this provides peace of mind and an opportunity for due diligence. During this period, they can thoroughly inspect the property, review any related documentation, and consult with professionals to ensure everything is in order. For builders, transparency is crucial. They need to be upfront about the property to minimize the likelihood of cancellations.

Binding Agreements for Resale Homes

The cooling off period does not apply to the sale of existing homes (resale homes). Once a purchase agreement for a resale home is signed, it is binding. There is no statutory cooling off period to reconsider the decision. This means buyers should perform all necessary inspections and secure financing before signing the agreement, as they won’t have a grace period to back out. For sellers, this provides more certainty once an agreement is signed, as buyers do not have a statutory period to cancel without penalties. It’s still crucial for sellers to present accurate and comprehensive information about the property to prevent any disputes or issues post-agreement – see ‘Court Ruling Reinforces Buyer Beware in Real Estate Transactions’ for more information on disclose requirements.

Enhanced Consumer Protection Measures

Several additional measures have been introduced to further protect home buyers. Deposits must be held in a trust account managed by a licensed real estate brokerage until the deal is finalized. This ensures that buyers can recover their deposit if a deal falls through due to misrepresentation or other valid reasons. Additionally, buyers are given the explicit right to conduct home inspections before finalizing a purchase. Sellers cannot discourage or prevent buyers from bringing in professional inspectors.

What This Means for You

For real estate agents, staying informed about the new requirements is essential to avoid penalties. Educating clients about the cooling off period and other changes helps ensure smooth transactions. Ensuring all property listings are accurate and complete and maintaining open communication with clients are key responsibilities.

For home buyers, especially those considering new builds, taking advantage of the cooling off period to thoroughly evaluate your purchase is crucial. Conduct all necessary inspections and ask for detailed disclosure statements. Knowing your rights and seeking professional advice when needed is always a good practice.

Conclusion

The Homeowner Protection Act, 2024, aims to create a more transparent and fair real estate market in Ontario. By understanding these changes, real estate agents, buyers, and sellers can navigate the process with greater confidence and security. For more detailed information or specific advice, consulting with a member of our residential real estate team.