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Unavoidable Delay and New Home Construction – Permitted Extensions Arising from the COVID-19 Pandemic

2 minute read

While construction work in the residential sector was deemed by the Ontario government to be an essential workplace, interruptions to supply of services or work stoppages may result in anticipated delays to a new home closing or occupancy date.

The Tarion Statement of Critical Dates, which is included in an agreement of purchase and sale for any new home, contains a section which permits extension of critical dates due to events of “Unavoidable Delay”. Unavoidable Delay is defined as “an event which delays closing (or occupancy) which is a … pandemic, plus any period of delay caused by the event, which are beyond the reasonable control of the Vendor and are not caused or contributed to by the fault of the Vendor”.

The new home vendor may extend a critical date by no more than the length of the unavoidable delay period without the approval of the buyer and without requirement to pay delayed closing/occupancy compensation, provided the notice requirements of the Statement of Critical Dates are met.

Generally, the vendor is to provide written notice setting out a description and duration of the delay. Notice is to be provided the earlier of 20 days after the unavoidable delay is known and the next critical date. Once the pandemic is over, the new home vendor must determine whether there is any additional period of delay resulting from the pandemic (for example, caused by a backlog of work to be completed by trades or issues with respect to the supply of materials). This additional period is known as the Remobilization Period. The new home vendor must provide a second notice providing the end date of the unavoidable delay period and the Remobilization Period plus the new critical dates.

Failure to provide the proper notice could give rise to delayed closing compensation. Further information is provided on the Tarion Statement of Critical Dates and Tarion’s website.

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