The Ontario government is undertaking consultations on the implementation of a cooling-off period for new freehold home sales.
The Province announced the move in a news release on Friday, along with its intention to seek input on whether it should be mandatory to receive legal advice before signing a purchase agreement for a new home. These measures, the Province says, are part of a plan to "provide people with the very best in consumer protection to ensure they have the necessary tools when they buy a new home."
“Hard-working Ontarians can rest assured this government has their backs and is doing everything to protect them when making one of the biggest purchases of their lives -- a new home,” said Kaleed Rasheed, Minister of Public and Business Service Delivery. “These new measures that we are consulting on will help us protect and inform home buyers and consumers alike, empowering Ontarians to keep making smarter, safer decisions when choosing this province as their forever-home.”
Currently, the Condominium Act provides a 10-day cancellation period for purchasers of new condominiums from a builder, but no such cooling-off period exists for new freehold homes. If approved, builders would be required to inform buyers of the cooling-off period, which would then allow buyers to rescind their purchase agreement within a specific timeframe.
Before moving forward with the legislation, the government says it will consult with consumer groups, the public, and the home building sector through the Ontario Regulatory Registry.
Ontario wouldn't be the first province to implement an expanded cooling-off safety net, with BC implementing a three-day cancellation period just last year on all home sales, giving buyers time to arrange inspections, secure financing, or rescind offers. If BC buyers do rescind an offer, they are faced with a cancellation fee of 0.25% of the purchase price, so if a buyer were to back out of a $1M sale, for example, they would have to pay a fee of $2,500.
The BC cooling-off period faced some pushback, with naysayers pointing out that a reneged deal could force sellers to re-list in a cooler market -- a pertinent issue today as home prices continue their slow decline.
In addition to their exploratory initiatives, the Ontario government also announced on Friday an expansion of deposit insurance for First Home Savings Accounts to Ontario credit unions. The First Home Savings Accounts, introduced by the federal government and rolling out across Canadian banks on April 1, is a tax-free savings account intended to help Canadians save up for their first home.
“By expanding coverage under the Deposit Insurance Fund Reserve Fund for First Home Savings Accounts of Ontario’s credit union members, we are providing more ways for people to save for their first home, while providing institutional safeguards for credit unions and caisses populaires," said Peter Bethlenfalvy, Minister of Finance.