Although the Ontario government has deemed construction work and services an essential service, the closure of other non-essential services, and the government’s emphasis to keep physically distant, and work from home (where possible), will no doubt have an impact on the pace of the construction industry, including the occupancy of pre-construction condominiums.
As Doug Ford emphasized yesterday in an update from Queens Park “when it comes to necessities of life, shelter is at the top of the list”. Although construction projects will continue, Doug Ford put the industry on notice and made clear that if construction workers are not being looked after, he will shut them down.
While construction may continue, delays will be inevitable.
Pandemics, such as COVID-19 are contemplated in every purchase agreement for pre-construction condominiums. The Tarion Addendum which forms part of every pre-construction agreement of purchase and sale provides for an “Unavoidable Delay” which is defined in the Tarion Addendum as:
“as an event which delays Occupancy which is a strike, fire, explosion, flood, act of God, civil insurrection, act of war, act of terrorism or pandemic, plus any period of delay directly 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.”
A pandemic, therefore, can cause an Unavoidable Delay.
When an Unavoidable Delay occurs, the Vendor can extend the critical dates for occupancy on the first page of Tarion Addendum by no more than the length of the Unavoidable Delay Period. The Unavoidable Delay Period is defined in the Tarion Addendum as the number of days between the purchaser’s receipt of written notice from the Vendor of the commencement of the Unavoidable Delay, and the date on which the Unavoidable Delay concludes.
The Vendor’s ability to delay occupancy on account of an Unavoidable Delay can be done without the approval of the purchaser and without the requirement to pay delayed occupancy compensation, provided that the Vendor has met the notice requirements for the Unavoidable Delay.
Notice of an Unavoidable Delay must include a description of the delay and an estimate of the duration of the delay and must be provided in writing to purchasers by the earlier of: (i) 20 days after the Vendor knows or ought reasonably to know that an Unavoidable Delay has commenced; and (ii) the next critical date.
The Vendor must also provide written notice no later than 20 days after they know or ought reasonably to know that the Unavoidable Delay has concluded. In this notice, the Vendor must provide new critical dates for occupancy, failing which, the notice may be found ineffective and the existing critical dates will remain unchanged. If notice of an Unavoidable Delay is found ineffective, then Vendors may be on the hook to pay delayed occupancy compensation.
For more information on delayed closings in light of COVID-19, Tarion has provided an Advisory to Homeowners and Builders on PDIs and Delayed Closings. Tarion has also posted an Information Sheet for Builders on COVID-19 and the possible effects on construction schedules for new homes.
For other changes relating to the Ontario government’s Emergency Order, please refer to the recent Advisory from Tarion, which suspends all deadlines with respect to warranty claim submissions (first-year, second-year and major structural defect common element claims), builder repair periods, and requests for conciliation and inspections.
