Builder adjustments are charges added to a new home's purchase price at closing, commonly development and education levies, Tarion enrolment, utility and meter connections and a Law Society levy. On an Ontario new build these typically total $12,000 to $20,000, though your agreement may cap several of them.
The gap between the price and the cost
The number on the sales centre contract is not what you pay. A new build closes with a set of adjustments that a resale purchase simply does not have, and buyers routinely discover them for the first time on a title="The document reconciling the purchase price against the deposit, prepaid taxes, and every other credit and charge, to arrive at the balance due on closing.">statement of adjustments issued a week before closing.
The standard items
Development and education levies. Municipal and school board charges the builder pays and passes to you. This is the largest item and the most volatile, because the municipality can raise its rates between your signing date and your closing date. On a detached home in a growth municipality this alone can exceed $15,000.
Tarion enrolment. The new home warranty enrolment fee, scaled to the price of the home.
Utility and meter connections. Hydro, gas and water meter installation and activation, plus any hookup charges.
Law Society levy. A small fixed transaction levy.
Common expense reserve fund contribution. On a condominium, usually two months of common expenses paid into the corporation's reserve at closing.
The caps are the whole game
Most well-drafted agreements cap the levies at a stated maximum. Many builder agreements do not, or cap them at a number well above the likely charge.
An uncapped levy clause means you carry the full risk of a municipal rate increase between signing and closing, on a closing date the builder controls. That is a genuinely open-ended exposure on a purchase you cannot walk away from.
This is why the ten-day rescission period on a new condominium matters so much. It is the only window where a lawyer's advice can change the deal rather than just explain it.
occupancy fee to the builder and build no equity.">Interim occupancy on a condominium
If you are buying a condo, there is a period between moving in and legally owning, called interim occupancy. During it you pay the builder a monthly occupancy fee made up of notional interest on the unpaid balance, estimated property taxes and estimated common expenses.
None of it reduces your mortgage or builds equity. It is closer to rent. On a long occupancy period it can add up to a significant sum that never appears in anyone's affordability calculation.
Budget for the range, not the estimate
Ask your builder's sales representative for the estimated adjustments in writing and treat it as a floor. Then ask your lawyer to identify which items are capped and which are not, and add the uncapped items at their realistic maximum.
The difference between those two figures is your actual risk.
Work out your number
Put your own figures in and get a full statement of adjustments.
Common questions
Are builder adjustments negotiable?
Rarely after signing, but the caps on them are negotiable before you sign, and during the ten-day rescission period on a new condominium.
Where do I find the caps?
Usually in a schedule to the agreement of purchase and sale, often Schedule B. A lawyer reading that schedule before your rescission period expires is the highest-value hour on the whole file.
Do these apply to a resale home?
No. Development levies and Tarion enrolment are charges on new construction only.
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