Putting in a deposit for a home that has not yet been built can certainly cause headaches. New constructions often seem to end up taking much longer than anticipated. In a recent edition of the Ottawa Citizen, Les Vandor answered a question posed by a couple who's condo finish date was pushed back by over a year. They had paid their deposit on the home in September 2007 with the expectation that it would be built by July 2008. However, the ready date was postponed to August 2009 and then again to December 2009. Clearly frustrated, the couple was wondering if they could ask for their deposit back or sell the condo before it was completed.
The options available to the couple, according to Mr. Vandor, really depend on the original terms of the agreement signed by the couple when purchasing the home. The contract may or may not allow for cancellation on payment of a penalty and it again may or may not allow for a sale before completion. Either way the couple is bound to the terms of the agreement. One option they may have is to negotiate a separate deal with the developer, if the developer is willing. Ultimately, this will likely involve the loss of some or all of the deposit (especially given the market slowdown).
This is just another reason to carefully examine contracts before you sign them, so that you understand the consequences as much as possible. Legal advice, while expensive, may also be helpful in saving you hassle and large sums of money down the line.
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