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Before You Sign: Understanding Agreements of Purchase and Sale for Newly Built Homes

November 10, 2026

Buying a newly built home is exciting: touring model homes, reviewing floor plans, choosing finishes. But there’s an important step between choosing your home and becoming a homeowner: signing an Agreement of Purchase and Sale (APS). 

Before you sign an APS, it’s important to understand what you’re agreeing to and who you’re entering into that agreement with.  

The Home Construction Regulatory Authority (HCRA) regulates Ontario’s new home builders and sellers, sets professional standards, and enforces the requirements they must follow in conducting business with homebuyers.  

You don’t need to become a legal expert to buy a new home with confidence, but you should understand what you’re signing and who you’re buying from. 

What is an Agreement of Purchase and Sale?

An Agreement of Purchase and Sale is the legal contract between you and the builder or seller for the purchase of your new home. It sets out the rights and responsibilities of both parties and the terms of your purchase (such as the price, deposits, and circumstances that could affect the completion of the home). 

Your APS also includes an applicable mandatory addendum, schedules, and other documents that form part of the agreement. These documents contain important information about potential changes to the purchase price or balance due on closing, delays, and occupancy dates. The schedule of adjustments in your addendum sets out charges, fees, and other anticipated adjustments that may apply to your purchase.  

Every APS is different. It’s important to review your APS and all documents that form part of it with an experienced real estate lawyer.

What You See Is Only Part of the Picture

Renderings, floor plans, and model homes can help you decide whether a new home is right for you. But when it comes to what you’re actually agreeing to buy, your APS is what sets out the terms of your purchase. 

Don’t assume that something shown in brochures or discussed with a salesperson is automatically a term of your agreement. If a feature, finish, upgrade, or other detail is important to you, make sure you know how it’s reflected in your purchase agreement. This is especially important when buying pre-construction, where you’re making decisions about a home before it’s been built.  

Knowing what’s included in your agreement and having important details clearly documented makes it easier for you and your builder to understand what was agreed to.

Understand Your Agreement and Who You’re Buying From  

Part of understanding your APS is knowing who you’re entering into that agreement with and what rules they must follow. 

In Ontario, the HCRA licenses and regulates the people and companies that build and sell new homes. Licensed builders and sellers must meet requirements for professional and ethical conduct, including how they deal with homebuyers and their agreements. 

Here are some important steps you can take to understand your agreement, the builder or seller you’re buying from, and the protections available to you as a homebuyer. 

Check that your builder or seller is licensed by the HCRA 

Before you sign an APS, check the Ontario Builder Directory to confirm that the builder or seller is licensed by the HCRA. 

Unless an exemption applies, a person or company must be licensed by the HCRA to build or sell a new home in Ontario. Unlicensed builders and sellers operate outside the regulatory framework and aren’t accountable to the Code of Ethics. That leaves homebuyers with fewer protections if something goes wrong. 

The directory can also help you learn more about the builder or seller you’re considering, including information about their projects (with warranty information from Tarion) and regulatory history. 

Know the standards your builder or seller must follow 

Licensed builders and sellers are accountable to the HCRA’s Code of Ethics, which sets standards for professional and ethical conduct. These include requirements related to fairness, honesty, integrity, misrepresentation, and compliance with the law. 

These standards apply throughout the homebuying process, including when you’re negotiating an APS. Under the Code, licensees must treat homebuyers fairly, honestly, and with integrity. Consistent with those obligations, the HCRA expects licensees to honour the agreements they enter into with purchasers.  For example, builders and sellers are not allowed to use intimidation, pressure, or harassment to influence your decisions at any time during the homebuying process. Licensees are also expected not to discourage you from getting legal advice or making a complaint to the HCRA (see Advisory 12 – Intimidation, Coercion & Obstruction). If you feel you’re being treated unfairly or that a builder’s conduct doesn’t meet professional standards, you have the right to file a complaint with the HCRA at any time. 

Knowing these standards can help you understand what you should expect when dealing with a licensed builder or seller. 

What homebuyers should know about price adjustments and additional charges 

Questions about price adjustments and additional charges are common when buying a new home. The HCRA has specific expectations for how licensed builders and sellers apply and communicate these costs to purchasers. 

Additional charges, closing costs (both known and unknown at the time of signing the APS), and potential adjustments that may apply must be disclosed in the mandatory addendum. Where price adjustments are allowed, licensees must communicate with purchasers clearly and in a timely manner, explain how an adjustment was calculated, and give you enough time to understand your options and seek legal advice. 

If you negotiate a cap on a price adjustment, make sure the maximum amount is clearly stated in the APS and signed by both you and the builder or seller. Do not rely on an oral agreement about a cap. 

If a builder or seller proposes a new cost, term, or other change not covered in your signed APS, review it carefully with your lawyer before agreeing to it. Where applicable, licensees are required to obtain your consent through an amendment. Failing to honour an agreement, making unclear or potentially misleading changes, or attempting to impose a change without your consent may be considered professional misconduct. 

Don’t Skip the Lawyer

Familiarizing yourself with the APS and requirements that apply to your builder can help you move forward with confidence. But every APS is different and the terms and conditions can be complex, so it’s always recommended to have your APS reviewed by an experienced real estate lawyer before you sign. 

Think of it as two layers of protection for you and your investment:  

• Your lawyer helps you understand the agreement you’re entering into. 
• The HCRA helps you understand who you’re entering into it with and the standards that apply to them. 

Both are important when you’re making one of the biggest purchases of your life. 

Make an Informed Decision Before Signing 

Your agreement establishes the commitments between you and the builder, while HCRA requirements establish standards that licensed builders and sellers must meet when dealing with homebuyers.  

Before you sign, take the time to understand both what you’re agreeing to and who you’re making that agreement with: 

• Check the Ontario Builder Directory to confirm the builder or seller is licensed 
• Contact Tarion to confirm the home has been approved for sale (qualification for enrolment, or QFE) 
• Understand what is included in your purchase (are important features, finishes, upgrades, or other promises reflected in your purchase documents?) 
• Review the mandatory addendum and the schedule of adjustments in your addendum to ensure you understand the purchase price, deposits, and any provisions that could affect the final amount you pay 
• Understand how price adjustments and additional charges must be disclosed and communicated to you 
• Have an experienced real estate lawyer review your APS before you sign 

Taking the time to review both can help you make a confident decision about your new home and the agreement you’re entering into. 

This blog is for general information only and is not legal advice. Your rights and obligations depend on the terms of your agreement and your circumstances. The HCRA recommends having an experienced real estate lawyer review your agreement before you sign.