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Professional Standards Manual

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7. New Construction

(j) Homeowner Protection Act Matters - View Entire Section

(XIII) Construction To Be Finished Before Completion Date (for New or Unfinished Construction)

Licensees should discuss the progress of construction with the builder before inserting the Completion Date in the Contract of Purchase and Sale in order to allow enough time to completely finish the house. However, if it appears that unforeseen delays in construction will prevent the house being finished on time, the parties can always agree to extend the Completion and Possession Dates.

Because the parties can disagree on whether the house is ‘‘finished’’ for the purpose of the Completion Date, the use of an Occupancy Permit provides a convenient way to rely on a qualified third party.

Occupancy Certificate Clause

It is a fundamental term of this contract that the Seller must have finished all work, and delivered to the Buyer on or before the Completion Date, an unconditional Municipal/City/Regional District Occupancy Certificate or other evidence satisfactory to the Buyer that construction is finished.

This clause is onerous on the seller because it enables a buyer of an unfinished house to back out if the house is not finished by the Completion Date.

Licensees must remember that an Occupancy Permit does not mean that all deficiencies have been finished (i.e., landscaping). It just means that the buyer can safely occupy the house; however, the clause also says the seller (builder) ‘‘must have finished all work’’, so if there are still deficiencies at the time of completion, the deficiency holdback clause should be added as an addendum to the Contract of Purchase and Sale and delivered to the conveyancer, who will then hold back the appropriate amount.