Frequently asked questions by builders needing more information on the impact, rules and best practices for protecting your residential construction agreements during the global coronavirus outbreak.

This FAQ is for legal information purposes only. It is not, and should not be taken as, legal advice. Every situation has unique factors and nuances, we hope this general legal information helps guide builders and vendors navigate the challenging business environment during this unprecedented public health emergency.

Q: If our trades are unable or unwilling to complete the job on time due to isolation or social distancing and our project is delayed, can we extend the closing dates without mutual consent by the purchaser(s)?

A: Paragraph 5 of Tarion’s mandatory Addendum to the Agreement of Purchase and Sale allows the vendor to extend the critical dates without approval by the purchaser and without the requirement to pay delayed closing compensation. However, the delay cannot be longer than the length of the event that causes the unavoidable delay. Importantly, if a builder intends to rely on this provision, they must provide written notice 20 days after the event causing the delay has commenced or the next critical date – whichever is earlier.

Q: Does the coronavirus pandemic qualify as an “unavoidable delay”?

A: Yes. An unavoidable delay includes a pandemic so long as the delay is actually caused by it. The delay can include the pandemic plus any period of delay directly caused by the event which is beyond the control of the vendor and is not caused or contributed to by the fault of the vendor.

Q: How long can we delay closing during the pandemic?

A: The closing can be delayed for the number of days between the purchaser’s receipt of written notice of the start of the delay and the date on which the pandemic, concludes. Once the pandemic is declared to be over, the delay may extend if your trades remain quarantined and you are unable to hire any other trades. Each case will need to be evaluated based on its own facts to determine the end date.

Q: What are the consequences for failing to give notice of the delay?

A: You may be responsible to pay delayed closing compensation to the purchaser if you miss the dates on the Statement of Critical Dates that are set out in the Addendum to the purchase agreement if you do not give notice of the delay.

Q: Can I give notice to my purchasers by making a statement on our website?

A: No. Written notice must be given personally or sent by email, fax, courier or registered mail to the purchaser and the address provided for on the purchase agreement.

Q: Can the purchaser lawfully terminate the contract due to unavoidable delay?

A: No. So long as you follow the rules as set out in the Addendum to the purchase agreement, including those relating to unavoidable delay, then the purchaser is still legally bound to the terms of the contract.

Q: What can I do if the purchaser cannot close on the purchase?

A: Generally speaking, if the purchaser cannot close on a real estate transaction, then at a minimum, the deposit is forfeited and the vendor may keep it. The vendor has an obligation to mitigate their damages after a purchase fails to close. This usually requires listing the property for sale again. The damages in relation to the first failure to close will be the difference between what the original contract price was and the sale price that you ultimately get from the new purchaser. If there is a loss, then in most cases the original purchaser will be responsible for the difference.

Q: What can I do if I need to lay-off employees?

A: You may wish to consider temporary lay-offs during this period if your construction projects must cease work. You will need to give written notice of the temporary lay-off to your employees. You should also provide your employees with Records of Employment so that they can apply for Employment Insurance (EI). The lay-off cannot be longer than 13 weeks at this stage. There are certain circumstances when it can be extended beyond 13 weeks.

To discuss your unique situation, please call (416) 953-3334 or send an email to: today.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Siskind Doyle LLP professionals will be pleased to discuss resolutions to specific legal concerns you may have.