If you purchased a home from a builder, the answer is no, unless you made provisions for such an occurrence in the Agreement of Purchase and Sale before you signed. Otherwise your only recourse is to the terms of the Agreement of Purchase and Sale as amended by Tarion, found in every Agreement of Purchase and Sale for a home or condominium to be built. Your Agent may not insist that you see a lawyer before you sign, telling you that you must sign now or lose the deal but only a lawyer can protect you, if you see a lawyer BEFORE you sign.
If you have purchased a resale home then the answer is yes.
A Toronto insurance broker has developed a low-cost policy that covers a buyer's or seller's extra expenses when a real estate deal is delayed or falls through altogether. RES-assure, from Ogilvy and Ogilvy who through American Home Assurance, part of the AIG group of insurance companies have arranged the insurance which cost $40.00 for each agreement of purchase and sale. It covers expenses for up to 180 days, with a maximum of $25,000.00. There is a deductible of $300.00.
What can go wrong with a resale is legendary.
- The Bank failed to transfer the funds to your lawyer in time for closing;
- You lose your Job and the Bank pulls your financing;
- The home you purchased is damaged by fire, water or vandalism before closing;
- Divorce or separation pending divorce of a party to the transaction;
- A family emergency, hospitalization, death;
- Your Lawyer could not close due to delays caused by the lawyer on the other side;
- Your Lawyer failed to be ready to close the transaction.
It's every home buyer's nightmare. All your worldly possessions are in the moving van sitting in what should be your new driveway and the transaction does not close and you find yourself with nowhere to live. The costs mount each day the closing is delayed. You have to find temporary accommodation, put your possessions in storage, find daycare for your children and kennels for your pets. Your lawyer has to do more work and the bank demands bridge financing charges. The policy has a number of exclusions. It does not cover delays caused by flood, earthquake, war, government expropriation, work carried out by contractors (except in an emergency) and seepage, pollution or contamination, however caused.
I would be pleased to discuss this Insurance with you further as an integral part of looking after your real estate transaction.
Revised March 2015