The Ontario government is considering whether to mandate the legal review of purchase agreements for units in new condominium developments. A recently released discussion paper outlines two possible approaches for implementing such a requirement and seeks input from prospective purchasers, the legal community and residential builders.

The proposal is a part of a public consultation related to Ontario’s New Home Construction Licensing Act, which also explores mechanisms to limit builders’ ability to increase prices above the original purchase agreement and the feasibility of establishing a cooling off period that would allow purchasers of new freehold homes to withdraw from the agreement without penalty. A mandatory legal review is framed as a consumer protection measure that could help identify ambiguous provisions in purchase agreements that leave buyers open to price increases, delayed closing or contract cancellation.

“New home purchase agreements are complex legal contracts and may expose the buyer to certain risks,” the discussion paper states. “A legal review could help the buyer understand the risks associated with the purchase agreement and how a buyer may wish to negotiate changes to it.”

It’s suggested that could occur as a post-purchase review, in which the buyer would have a specified period to provide proof that a legal review had been conducted before the agreement could become binding. Or, it could entail a pre-purchase review, in which the buyer would have to submit evidence that a legal review had been conducted before entering into a purchase agreement.

The discussion paper poses questions about: the potential costs of required legal services and administrative costs for builders; whether purchasers should have an option to waive the legal review; and how to guard against pressure tactics to do so, particularly in the pre-purchase review scenario. Interested parties can submit comments until August 13, 2023.