Recently some Oshawa residents brought to my attention the fact their Builder has not returned their new home Security Deposit in full.
I believe others might want to take note of the wording of any clauses in their Builder's Purchase and Sale Agreement regarding the Security Deposit (which also can be referred to as Damage Deposit).
These clauses usually appear under the Adjustments section of the Agreement of Purchase and Sale.
It would be a good idea to have your real estate lawyer read over this particular section because the one transcribed below has become very problematic for several Oshawa homeowners:
"The damage deposit should be maintained by the vendor until the date upon which the plan of subdivision and all municipality services installed within the plan of subdivision have been assumed by the municipality and or any other requisite governmental authorities and all security posted by the vendor and or the subdivider has been released to them at which time the damage deposit shall be returned to the purchaser without interest but either deducting there from the cost of rectifying any damage to the secured servicing installations for which the purchaser is determined to be responsible in accordance with this paragraph.
The parties hereby acknowledge, confirm and agree that the vendor’s consulting engineer shall be the sole authority to determine whether any damage to secured servicing installations as aforesaid has occurred, whether the purchaser should be responsible to reimburse the vendor for such damages as well as the applicable costs for rectifying same and its decision on such matters shall be final and binding on the parties here too with no right to appeal therefrom."
Instead of the $1,500 the homeowners expected to be refunded, the Builder has deducted various charges, in some cases 5, 6 or 7 years after the transaction closed, resulting in the homeowners being invoiced considerable amounts, some even over and above the $1,500 deposit.
This seems to be based on the wording that "the vendor's consulting engineer shall be the sole authority to determine whether any damage to secured servicing installations as aforesaid has occurred".
In each of the cases I was contacted about, the Builder has advised that the homeowner is responsible for certain curb, gutter or sidewalk repair and replacement work.
While these homeowners turned to me for assistance and I am attempting to explore options that may be available to them, it seems there is little the City can do because it is a matter that pertains to a private contract. The City is not a party to the Agreement of Purchase and Sale and does not hold Buyers’ Security (Damage) Deposits.
Homeowners should check their Agreement of Purchase and Sale to see if it provides for the return of a Security Deposit and if so, follow up with the Builder.
Those who have not yet signed a new home purchase Agreement may want to ask their lawyer about trying to amend the clause so that the refund of the Damage Deposit is not, in effect, completely at the discretion of the Builder and its consulting engineer.
I believe others might want to take note of the wording of any clauses in their Builder's Purchase and Sale Agreement regarding the Security Deposit (which also can be referred to as Damage Deposit).
These clauses usually appear under the Adjustments section of the Agreement of Purchase and Sale.
It would be a good idea to have your real estate lawyer read over this particular section because the one transcribed below has become very problematic for several Oshawa homeowners:
"The damage deposit should be maintained by the vendor until the date upon which the plan of subdivision and all municipality services installed within the plan of subdivision have been assumed by the municipality and or any other requisite governmental authorities and all security posted by the vendor and or the subdivider has been released to them at which time the damage deposit shall be returned to the purchaser without interest but either deducting there from the cost of rectifying any damage to the secured servicing installations for which the purchaser is determined to be responsible in accordance with this paragraph.
The parties hereby acknowledge, confirm and agree that the vendor’s consulting engineer shall be the sole authority to determine whether any damage to secured servicing installations as aforesaid has occurred, whether the purchaser should be responsible to reimburse the vendor for such damages as well as the applicable costs for rectifying same and its decision on such matters shall be final and binding on the parties here too with no right to appeal therefrom."
Instead of the $1,500 the homeowners expected to be refunded, the Builder has deducted various charges, in some cases 5, 6 or 7 years after the transaction closed, resulting in the homeowners being invoiced considerable amounts, some even over and above the $1,500 deposit.
This seems to be based on the wording that "the vendor's consulting engineer shall be the sole authority to determine whether any damage to secured servicing installations as aforesaid has occurred".
In each of the cases I was contacted about, the Builder has advised that the homeowner is responsible for certain curb, gutter or sidewalk repair and replacement work.
While these homeowners turned to me for assistance and I am attempting to explore options that may be available to them, it seems there is little the City can do because it is a matter that pertains to a private contract. The City is not a party to the Agreement of Purchase and Sale and does not hold Buyers’ Security (Damage) Deposits.
Homeowners should check their Agreement of Purchase and Sale to see if it provides for the return of a Security Deposit and if so, follow up with the Builder.
Those who have not yet signed a new home purchase Agreement may want to ask their lawyer about trying to amend the clause so that the refund of the Damage Deposit is not, in effect, completely at the discretion of the Builder and its consulting engineer.