Resources & Insights

Buying a New House? Undisclosed costs can add up!

New home buyers beware – the price on the front page of your Offer is often not the full purchase price – and the builder/seller has no legal obligation to make full disclosure of extra charges to you.

I was recently reminded of this issue when reviewing a client’s pre-construction purchase contract for a fee simple town home abutting a common element condominium plan for the roads and amenities in the neighbourhood. The 81 page purchase agreement was typical for a pre-construction project. There was a floor plan without measurements of any guaranteed size, with options for the builder to revise the plans, alter elevations or reverse the footprint. Furthermore there was an obligation to pay a number of
undisclosed but unlimited charges. As is usually the case, the contract was custom prepared by the
builder. Also included were the condominium organization documents. I have found these documents
are usually intimidating and incomprehensible to clients, and they do not bother to read them.

Buried in the purchase contract and in the condominium organization documents were a number of
additional costs to the buyer. These included Tarion Warranty registration fees; utility meters and
connection charges, Transfer preparation fees, just to name a few. Additionally there were ongoing
charges to be incurred in the future by the homeowners under the condominium documents.
The lessons: ask about undisclosed charges in the sales office before signing anything, and read
the organizational or disclosure statement for the condominium.

Finally, always have an experienced real estate lawyer review the purchase agreement and condominium documents within the prescribed cancellation or conditional period (usually 10 days).

Be careful out there!

By: David Smith, Partner