Lawyers and homebuyers say the plans are a step in the right direction, but they are worried
The Ontario government is proposing new rules that would make it harder for builders to back out of deals or raise prices on people who have already paid for their new homes but are still waiting for them to be built.
The move was made after CBC News reported that some Ontario developers were trying to force buyers to pay more than they had agreed or lose their homes-to-be, sometimes by saying that building costs had gone up. Often, the amounts were tens of thousands of dollars more than what was agreed upon at first.
Premier Doug Ford promised that his government would do more to deal with these kinds of problems. In 2021, he scolded developers who did this by saying, “Nothing irritates me more than a developer trying to make extra money off of hard-working people.”
The province is now starting consultations to try to stop prices from going up and to give people more chances to understand what they are agreeing to when they sign a contract to buy a home. But the consultation paper also says that the government is looking into how a developer can raise prices within certain limits. This makes some people worry that the government may be about to miss the mark.
Home buyers want the government to do more to stop prices from going up
Jennifer LeFeuvre knows what it’s like to sign a contract to buy a home and then be asked for a huge price increase.
She told CBC Toronto that she is in a kind of limbo because Briarwood Development Group told her that she could either back out of a purchase agreement or pay an extra $175,000 for her new home in Stayner, Ont., which is about 130 kilometers northwest of Toronto.
CBC Toronto tried to get in touch with Briarwood Development but was unable to do so.
After living somewhere else for years while waiting for her home to be ready, LeFeuvre says she doesn’t want a limit on how much a developer can raise the price of your home after the agreement of sale is signed. Instead, she wants the government to be tougher on any price hikes.
“Why does Doug Ford let his government do this?””After reading the proposals, I feel like the ministry is going against everything he says,” she said.
“I can buy pots and pans at Walmart, and I have more protection when I buy pots than when I buy the biggest thing I’ll ever buy,” she said.
LeFeuvre says she wouldn’t expect a late-stage discount from developers if the price of lumber went down, so it shouldn’t happen the other way around.
Blair Drummie is a lawyer for real estate. Has the same worries.
He said, “I want us to get back to a normal state where the price was the price.” “Builders before 2020 just didn’t even think about raising the price.”
Colin Blachar, a spokesman for the Ministry of Public and Business Services, told CBC that the government welcomes direct feedback from Ontarians through the consultations and that the goal is to better protect buyers.
“Under Premier Ford, our government has no patience for bad developers who make money off of hard-working Ontarians.”
Lawyers say that a cooling-off period is a good idea
Drummie liked some of the other ideas, and he called the idea of a cooling-off period “a great idea.”
It would let the buyer, who might feel pressured to sign quickly at a site, take the document back to a lawyer and ask, “What have I signed here? What are the ins and outs of this? Please explain it to me.”
“It gives us the chance to talk,” he said.
John Brennan, the partner and founder of JBrennan Law, is happy to see proposals that would make it easy for home buyers to find out if a company has broken contracts or had other problems in the past by using data that is already public.
He is also in favor of mandatory legal reviews, which he says will not only help buyers understand potential risks and liability, but may also stop exploitative terms from being added to contracts in the first place.
Step in the right direction, but too late for some
Brennan says that even though these aren’t the final rules, it doesn’t look like what’s being proposed will help people like LeFeuvre because it doesn’t seem to take into account cases that happened in the past.
He says that he doesn’t think the government did enough to stop a problem that was getting worse.
He said, “The imbalance has been there for longer than most homeowners would think is okay.”
But, he said, as long as the plans could be enforced, they were “a step in the right direction.”
CBC reached out to several developers whose prices went up after a purchase and sale agreement was signed, but did not hear back from any of them on Monday.
The Ministry of Public and Business Service Delivery says it wants to hear what people have to say about the subject until August 13.