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Rescinding on your newly constructed home

There are a number of reasons why Buyers may choose to construct their own homes rather than opt for a home resale. Buyers can customize the home to their taste, use the latest finishing materials and have the reasonable expectation that they will receive what they have chosen on closing day. However, situations may arise where the Builder has made certain changes to the house which are different from what the Buyer had initially requested. These changes could be changes to the home layout, or the overall finishing of the home. Can the Buyer refuse to close the purchase of the newly constructed home? In today’s blog post, we will discuss the attitude of the court towards rescission and the steps Buyers can take to protect their interests.


Factors Courts Consider

In determining whether a Rescission should be granted, Courts consider the Buyer’s reasons for backing out. These could include:

  • Building isn’t what the Buyer wanted: Where the house construction is not going the way the Buyer envisioned and the Builder makes a lot of changes, this may push a Buyer to rescind.

  • Extreme Delay in Delivery Time: Another reason that may influence rescission is when the home construction completion date is taking significantly longer than originally anticipated.

  • Loan fails: Buyers may decide to rescind when the loan they were expecting does not become available, or when they get a lower loan amount than they originally anticipated.

  • Buyer’s remorse: This is a common reason for Buyers as they may have a change of mind or change in their personal lives that may influence the decision.

It is important to clarify here that these reasons will not necessarily permit a buyer to rescind, but courts will looks at these reasons to understand the buyer's motivation.


Apart from the Buyer’s reasons for trying to rescind the contract, courts may also consider whether the Builder was aware of the necessity of a change to the construction without informing the Buyer when the Agreement was signed. Where this is the case, courts may grant the Buyer a rescission or other remedies in the form of damages.


Another factor courts may consider is whether the discrepancy in question can be easily rectified. If it can be easily rectified, courts may not readily grant a rescission to the Buyer.


It is very important for Buyers to consider these factors and be certain a rescission is possible before going ahead to do so. Otherwise, they may be liable for breach of contract and payment of damages to the Builder, which can be significant. It is also advisable for Buyers to engage the services of a lawyer to help them understand whether there are rights or remedies available to the Buyer in their purchase agreement which would permit the termination of the purchase agreement.


For any questions on the rescission of a home construction contract, you can book a free consultation with Northview Law available at this link or you can contact us at 416-639-7639. We look forward to hearing from you soon.