Court of Appeal Rules on Tarion Warranty Corporation’s Purchase Rider
According to a story in the Toronto Star, Ontario’s highest court has ruled against Tarion Warranty Corporation regarding its compulsory addendum form. According to the Court of Appeals, the addendum that is attached to each builder agreement is complex, particularly confusing, and lacks consumer protection.
In 2016, Anthony Ingarra signed an agreement to purchase a house from Previn Homes. This agreement had the mandatory Tarion addendum and a firm closing date of January 11, 2018. However, on that date, the builder could not close because it did not have the municipal occupancy permit. Instead, the permit was issued the following day.
Unfortunately, Ingarra was not ready to close on this date either as he was not in funds. His lender requested five more days to approve the loan, but the home was incomplete when the appraiser inspected it prior to closing.
According to the Tarion addendum, a compulsory framework must be followed when closings are extended. If the builder is not able to close by the agreed-upon closing date and does not provide notice of the delay, the addendum mandates that the new delayed closing date be 90 days later, unless both parties come to a different agreement.
Legal counsel for both the builder and the buyer paid no regard to the addendum and agreed that the new closing date would be January 15th, which was then moved to January 17th. On January 17th, Ingarra asked for an extension of one more day to close. The builder’s lawyers declined the request, terminated the transaction, and kept Ingarra’s deposit.
Unwilling to give up that easily, Ingarra applied to the Superior Court, asking them to force the builder to close. In May 2019, the judge ruled that Previn Homes breached their contract and ordered that the sale be completed. The builder then appealed to the Court of Appeal.
Justice Peter Lauwers, on behalf of the three-judge panel, ruled that Previn Homes’ termination of the contract was valid. If Ingarra had invoked the automatic 90-day extension provided in the addendum, he could have agreed to close sooner. Since he did not, he no longer had certain rights.
Justice Lauwers commented that reaching this decision gave him no satisfaction. He went on to point out that the Tarion Addendum does not even begin to protect consumers. It’s small-font, single-spaced convoluted, long, and obscured document is a dangerous trap for trusting laypeople.
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