What is the Cooling Off Period?

After carefully exploring the housing market, planning your homeownership objectives, and investigating the condo developer’s track record, you’ve at long last chosen to venture out into the buyer’s world and buy a pre-development home.

However, after signing the agreement of purchase & sale and handing in your deposit, your attorney brings up your agreement is missing the capped-levies clause. Or, after completing the sale, buyer’s remorse starts to set in and you quickly realize that pre-construction isn’t the right fit for you.

Does that mean you’re adhered to and legally obliged to finish a pre-development bargain you accept is a mix-up?

On the off chance that you find yourself in such a circumstance, there’s no need to panic. Regardless of whether you signed an agreement and paid your deposit, you may still be able to withdraw from the deal and get your funds back.

10-day cooling-off period

As per Section 73 of the Condominium Act, individuals in Ontario who purchase a pre-development residence directly from the home builder,  are granted a cooling-off period, during which they can rescind the deal in any capacity whatsoever and basically leave an arrangement without any penalty.

The only challenge is that the cooling-off period is a rather short window of time. In particular, only 10 days. After those 10 days, the cooling-off period does not have any significant bearing anymore and the choice to leave a deal can turn into a legal and monetary challenge.

What you need to about the cooling-off period:

The ability to rescind a sales contract, free of penalty, is only granted to buyers during the first 10 days of entering into an agreement of purchase. Therefore, time is of the essence.

These 10 days do include weekends and not just business days.

The cooling-off period only applies to contracts where a pre-construction condo is bought from a builder. The cooling-off period doesn’t apply to any other type of home purchase, including assignment sales or homes closed upon over the Multiple Listings Service.

Given the fact the cooling-off period only extends to 10 days, buyers must capitalize on this short window of time. Here’s a quick checklist pre-construction buyers should address:

Ensure a real estate lawyer closely analyzes the agreement of purchase and sale to identify if the contract includes unfavourable terms. For example, ensuring development levies are capped and hashing out other details around whether you’re allowed to rent out the unit during the occupancy period should be addressed during the cooling-off period.
Connect with a mortgage broker, or bank, to ensure you’re pre-approved and all your financing is in place.
If you choose to leverage the cooling-off period, you must make the announcement formally, in writing. It highly recommends a lawyer is used during this step.

The cooling-off period automatically adheres to all pre-construction condominium purchases that are direct buys from the builder, in Ontario.  In circumstances where you’re purchasing a freehold home, it merits taking additional measures and looking at with your attorney to see if this 10-day window still applies.