Steps to Building a House in BC
Once you have found the right builder and decided on the home you want, you are ready to work out the contractual arrangements. This can be done at the builder's sales office, where you and the builder (or salesperson) can work through the items that go into the contract. This is the most common approach with large or tract builders. Alternatively, the builder may write up the contract on their own and present it to you for consideration. Or you may choose to have your lawyer prepare the contract.
Commonly referred to as the Agreement of Purchase and Sale, the contract is a legally binding document that outlines the terms and conditions of your purchase. There is no mandatory standard form; many professional new home builders use forms adapted from model contracts developed by their provincial Home Builders' Association or new home warranty program.
Often, the Agreement starts with your offer to purchase the home from the builder under certain terms and conditions. Once you sign it, the offer is binding on you. If your builder accepts the offer and signs the Agreement, it becomes binding on both parties. Similarly, if your builder presents you with a contract, it is an "offer to sell" that becomes legally binding on both parties once you accept.
A sales representative may not be able to "close the deal" without a review by the builder. Approval or counter offer is usually quick. However, under some circumstances, you may consider adding an irrevocable date to your offer-a deadline for the builder's response, after which your offer is no longer valid.
Read the contract carefully before signing it. Professional new home builders will go through the contract with you, point by point. This helps to eliminate errors or possible misunderstandings and is a great opportunity for you to ask questions. Here are some pointers for your contract review:
- Verify the description of the home (e.g. model name) and lot.
- Make sure you understand what's included and not included in the base price of the home - particularly important if you have based your decisions on a model home with a mix of standard and upgraded features.
- Check that any extras and upgrades you have chosen are documented accurately (e.g. model, brand name, size, colour, price).
- If the price includes allowances - for instance, for lighting and kitchen cabinets-the amount should be noted in the contract with a description of what happens if you go over or under budget.
- Payment milestones should be clearly outlined - e.g. initial deposit upon signing of the contract, additional deposit when conditions (if any) have been met, possible construction advances and amount due on closing (when you take possession of your new home).
- The builder (or sales representative) should issue a receipt for the deposit and a copy should be attached to the contract. The builder's refund policy and third-party deposit warranty should also be described in the contract-your protection in the unlikely event that the builder for some reason is unable to honour the contract.
- How will you pay for the home? This must be noted in the contract. It may be as simple as "cash", or a description of your mortgage (amount, interest rate, term). If the contract is conditional on financing, this must be noted clearly, along with the number of days allotted for obtaining the mortgage, the process for notifying the builder and what happens if the mortgage application is turned down (i.e. the contract is null and void, and the deposit will be returned in full).
- All other conditions, such as the sale of your current home or a favorable review of the contract by your lawyer, must be similarly detailed. That way, nothing is left to chance or misinterpretation.
- If the new housing tax rebate is assigned to the builder, it should be noted.
- All attachments or schedules that form part of the contract must be referenced in the main contract document. This includes site plans, drawings, specification list, design and approvals process for customized homes, and so on.
- The closing date is the day you take possession of the home. Ask your builder to explain how possible delays will be handled.
A home purchase is a significant investment, so consider having a lawyer review the contract before you sign it. A good approach is to go ahead and finalize the contractual arrangements with your builder first, but to make them conditional on a favourable legal review. That way, you are certain that you have reached an agreement with your builder before you invest in legal advice.
Thinking about buying a brand new home? One of the images that springs to mind is the construction site, bustling with activity as a succession of workers and subtrades build your home from the ground up.
The reality is that increasingly your new home is built in factories and then assembled on your building site. Pre-fabricated roof trusses, pre-assembled wall panels, ready-to-install kitchen cabinets, pre-finished flooring…these and many other components used to be built piece-by-piece on site. The vast majority of new home builders today take full advantage of the quality, precision and just-in-time delivery of manufactured building components. This allows them to provide their customers with a high quality home efficiently, cost-effectively and within a shorter timeframe.
As manufacturing processes have become more sophisticated, opportunities for moving the construction of homes inside the factory have expanded. Factory-built housing is a growing industry in Canada, reflecting changes in home construction here and elsewhere. In Sweden, for instance, close to 90% of all new homes are factory-built.
Today, homebuyers and new home builders can choose from a number of factory-built systems that provide a home in varying degrees of completion-from modular and manufactured homes that arrive on site virtually complete, to pre-engineered and panelized homes that reduce the amount of work required at the site.
