Please note: The terms Development charges or development levies are interchangeable.

“They are fees collected from developers at the time a building permit is issued, to help pay for the cost of infrastructure required to provide municipal services to new development, such as roads, transit, water and sewer infrastructure, community centres and fire and police facilities.” 

The fees are sometimes charged separately, or combined with the development charges above. The fees for an assortment of levies are payable to the city whenever a new space is developed. The developers’ requirement to pay the municipality for Education Levies, Community Improvement Fees (community resources and/or public art projects), Park Levies (new green/park space) if applicable, are all charged to the developer, – who then applies it to the buyer’s costs.

The more capped development charges/levies, the better it is for you as the purchaser!

https://www.toronto.ca/city-government/budget-finances/city-finance/development-charges/

According to the city of Toronto, “The term “Section 37” refers to the section of Ontario’s Planning Act which allows the City to ask for benefits to construct or improve facilities when a development requires a Zoning By-law amendment. 

Under Toronto’s Official Plan, developments that exceed a threshold of 10,000 square metres of gross floor area, and where the application increases the permitted density by at least 1,500 square metres, and/or significantly increases the permitted height, are typically subject to Section 37 provisions 

Section 37 benefits differ from other revenue tools available to the City of Toronto. 

•       Section 37 benefits cover a variety of community services and facilities, allowing greater flexibility than Development Charges and Parkland Contributions. Typical benefits are outlined in the Official Plan’s Section 5.1.1 or in Secondary Plans. 
•       Section 37 cash-in-lieu benefits are held in a separate reserve fund account, while other revenue sources are collected by the City and distributed centrally. 
•       As Section 37 is intended to address the needs created by growth, the Planning Act requires benefits to have a reasonable geographic relationship with a proposed development.

Section 37 benefits are secured by the City through two different methods, in-kind and cash-in-lieu. 

•       In-kind contributions occur where a development applicant agrees to directly provide the negotiated benefit, such as dedicating physical space within a building for use by non-profit groups. 
•       Alternatively, a development applicant can provide cash-in-lieu of the negotiated benefit, transferring responsibility for implementation to the City. Cash-in-lieu can occur either as a single contribution towards a community benefit or be saved for future use in cases where the City is pooling funds to achieve a major investment, or a number of identified benefits. 
•       Over the past five years, the City of Toronto has secured approximately 850 Section 37 benefits, 55% of which were in-kind, and 45% of which were cash-in-lieu contributions valued at over $200 million.

https://www.toronto.ca/wp-content/uploads/2017/09/8e38-SECTION37_Final_JK.pdf

So essentially, the city is condoning cash payments AKA legal bribes from builders in exchange for zoning approvals, or extra density (more floors added) Ie: a developer may pay the city $3million to allow them to build 35 storeys instead of 25. And guess who ends up paying for the cost of those payments to the city? The buyer. 

Under section 73 (2) “Notice of rescission,” of the Condominium Act, all buyers who purchased from a developer/builder are automatically entitled to have a 10-day cooling-off period, in which you can rescind (also known as cancel or revoke) your agreement of purchase and sale (contract). This 10-day period begins immediately when you receive the agreement of purchase and sale, disclosure documents. 

Please note: the 10 days DO include weekends, and not just business days. For holidays, it is best to ask your agent, as every developer works differently.

This 10-day period is when you should send your agreement to a lawyer who is familiar with the preconstruction process

 And keep in mind, that the cooling-off period does not apply to other types of home purchases, including assignment sales or pre-construction freehold homes, and sometimes townhomes.

https://www.ontario.ca/laws/statute/98c19

Ontario Builder Directory

This directory is a searchable database that provides information about Ontario’s approximately 5000 home builders and vendors provided by the Home Construction Regulatory Authority. As Ontario’s home building regulator, HCRA is the official source for all licensing information about home builders and vendors.

You can begin your search right away if you know the name of the builder you are searching. Alternatively, you can search by location.

https://obd.hcraontario.ca

Under the new home warranty, purchasers of new homes (not including contract homes) are entitled to statutory deposit protection if:

• the builder goes bankrupt resulting in the transaction not closing;
• the builder fundamentally breaches the purchase agreement resulting in the transaction not closing; or,
• the purchaser exercises a statutory right to rescind the purchase agreement before closing.

As of January 2018, deposit protection includes other payments made by the purchaser, such as those made for upgrades and extras.

Deposit protection does not apply to any payments made to reserve or hold a home or a condominium unit before the purchase agreement is signed.

Deposit protection for freehold homes 

For purchase agreements signed between February 1, 2003 and January 1, 2018, deposits are protected up to a maximum of $40,000.

For purchase agreements signed on or after January 1, 2018, deposit coverage depends on the purchase price of the home:

• If the price of the home is $600,000 or less, the purchaser’s deposit is protected for up to $60,000.
• If the price of the home exceeds $600,000, deposit protection equals 10% of the purchase price up to a maximum of $100,000.

Deposit protection for condominium units

Condominium unit deposits must be placed in trust under the provisions of the Condominium Act. If you terminate a purchase agreement, you must return the purchaser’s deposit in full within 10 days. Tarion provides deposit protection of up to $20,000 plus a limited amount of interest that has accrued.

Deposit refund claims

If you fail to refund a deposit to a purchaser, the purchaser may make a deposit refund claim to Tarion. Tarion will provide you with copy of the documentation submitted by the purchaser and give you an opportunity to respond.

https://www.tarion.com/builders/pre-occupancy-protections/deposit-protection

Under the new home warranty, purchasers of new homes (not including contract homes) are entitled to statutory deposit protection if:

• the builder goes bankrupt resulting in the transaction not closing;
• the builder fundamentally breaches the purchase agreement resulting in the transaction not closing; or,
• the purchaser exercises a statutory right to rescind the purchase agreement before closing.

As of January 2018, deposit protection includes other payments made by the purchaser, such as those made for upgrades and extras.

Deposit protection does not apply to any payments made to reserve or hold a home or a condominium unit before the purchase agreement is signed.

Deposit protection for freehold homes 

For purchase agreements signed between February 1, 2003 and January 1, 2018, deposits are protected up to a maximum of $40,000.

For projects or phases of projects that go to market after January 1, 2020, condo buyers will benefit from more information that will help ensure they can make a more informed purchase. Specifically, this requirement applies to any project or phase of a project where the first agreement of purchase and sale is signed after January 1, 2020. 

All agreements of purchase and sale will include an information sheet at the front of the purchase agreement that outlines some of the key potential risks of buying a residential condominium unit in a pre-construction standard or phased condo project. These may include potential early termination conditions such as reaching a minimum sales threshold for the project to proceed, the developer securing necessary financing for construction and completion of the project, and obtaining the required approvals from the municipality. 

Deposit Refunds

If a project is terminated, the vendor is obliged under Condominium Act to refund all monies paid by the purchaser, plus interest calculated in accordance with the Condominium Act (see section 82 and section 19 of O. Reg. 48/01). Under these provisions of the Act, the interest required to be paid is 2 percentage points less than the Bank of Canada rate which is recalculated every 6 months.  Since 2008, that bank rate has been less than 2% and thus effective interest rate payable has been 0%.

There are several layers of protection for deposit monies paid in relation to a condominium unit purchase.

First, the Tarion Addendum, which is required to be attached to every agreement of purchase and sale for a condominium unit specifically addresses this situation. The Addendum requires that if the purchase agreement is terminated that the vendor will refund all the monies paid by the purchaser including any monies paid for upgrades and extras, within 10 days.

In addition, under the Condominium Act, any monies received by the vendor of a condominium project must be held in trust. This includes deposit amounts and any other payments made under the purchase agreement, such as for upgrades and extras. The vendor does have a right to have some or all of the deposit monies released from trust but only if the vendor has arranged for acceptable security to protect the return of deposit obligation.

If for some reason the vendor is unable or unwilling to return the deposit, then the purchaser is entitled to turn to the trustee who was obligated to hold the deposit monies in trust. The purchaser can then make a claim to the trustee (usually a lawyer) for return of the deposit from trust accounts maintained by the trustee.

For questions about a condominium project or the condominium cancellation process, please email L&U@tarion.com or call 1-877-982-7466 ext. 3001.

Tarion is a not-for-profit consumer protection organization established by the Ontario government to administer the province’s new home warranty program. For over 40 years, Tarion has served new home buyers and new homeowners by ensuring that one of their life’s biggest investments is protected.  

What They Do:

By law, all new homes built in Ontario are provided with a warranty by the builder. Tarion’s role is to ensure that buyers of newly built homes in Ontario receive the coverage they are entitled to under their builder’s warranty. Tarion’s responsibilities include:

•       Protecting consumers when builders fail to fulfill their warranty obligations;
•       Educating new home buyers and new home owners about their warranty rights and responsibilities;
•       Administering the MyHome online portal, which allows homeowners to manage their warranty and report defects to the builder and Tarion;
•       Facilitating the fair resolution of disputes between homeowners and builders over warranty coverage, repairs or customer service;
•       Assessing warranty claims to determine if they are valid either through an on-site inspection or alternative method of investigation;
•       In cases where a builder fails to address a valid warranty claim, resolving the claim directly with the homeowner either through compensation or repairs by a third party; and
•       Managing a guarantee fund to protect new home buyers, out of which compensation for warranty claims is paid.

Effective February 1, 2021, Tarion’s previous licensing responsibilities have been transitioned to the Home Construction Regulatory Authority. The HCRA is now responsible for regulating new home builders and vendors in the province. To learn more about the HCRA, visit www.hcraontario.ca. 

With every pre-construction (precon) condo unit purchase, you will be signing or e-signing a document entitled an Agreement of Purchase and Sale. Essentially, people refer to it as a contract. 

When purchasing precon condos, you have a 10-day “cooling off” period, otherwise known as a recission period. This 10-day period begins immediately when you receive the agreement of purchase and sale, disclosure documents. Please note: the 10 days DO include weekends, and not just business days. For holidays, it is best to ask your agent, as every developer works differently.

Your lawyer should provide you with a summary of your approximate closing costs and the HST implications.

 This 10-day period is when you should send your agreement to a lawyer who is familiar with the preconstruction process, as they can review the contract, and protect your interests. Please note; the majority of contracts are standard, and used by most developers. 

 Please be sure to send your lawyer all the documents such as, the agreement, and any incentives that are being offered, so they can cross correlate it.

And keep in mind, that the cooling-off period does not apply to other types of home purchases, including assignment sales or pre-construction freehold homes, and townhomes that are not part of a condominium project.

You may be eligible for a GST/HST New Residential Rental Property Rebate (NRRP Rebate) also known as the Condo HST Rebate for up to $30,000. For people living in their new home, it is much easier to claim your partial refund. If you are renting out your newly bought home, you can claim your rebate through the HST Rental Rebate program. 

Who is Eligible for a Condo HST Rebate/ GST/HST Rental Rebate?

Most Ontario residents know of the HST home for principal residence. This is offered only to homebuyers who live in the home primarily. Many people, however, are not aware of the GST/HST Rental Rebate offered to purchasers intending to use the property for rentals.

If you have purchased a newly built condo as an investment property, you can apply for an GST/HST New Residential Rental Rebate. There are 2 criteria: 1)  You have at least a one-year lease agreement. 2) The final closing took place in the past two years.

On closing, most new property buyers are asked if they intend on making it their principal residence. This is because builders include a portion of an HST reduction for principal residences in the original purchase price. This can be a credit of up to $30,000 of the total HST payable on the property. Some homebuyers are confused when they are told that the final purchase price includes the HST. Be aware that most builders present prices that include HST, minus the new housing rebate for primary residence homebuyers. Since many purchasers, especially condo investors do not move into their units, they are required to add extra HST on closing.

Please note: the HST Guidelines are stipulated by the Canada Revenue Agency and can change at any time.

Most recently, the CRA is charging the HST to any and all agreements that have the “Right to Lease” clause in their contract.

 If you need any assistance with your rebate, please let us know and we can assist you.