Homeowner Protection Act, 2024: What Ontario Builders and Developers Need to Know

By Matthew Reardon lawyer at Merovitz Potechin LLP on Monday April 14, 2025

The Homeowner Protection Act, 2024 was introduced on June 6, 2024, resulting in significant updates to Ontario’s real estate landscape. One of the most notable changes is the introduction of a 10-day cooling-off period for buyers of newly constructed freehold homes – a legal protection that has long existed for new condominium buyers

This new legislation aims to create greater fairness and transparency in Ontario’s housing market. Here’s what freehold builders and developers need to know.

What the 10-Day Cooling-Off Period Means for Freehold Builders and Developers

Under the new provisions, buyers of newly constructed freehold homes now have the right to cancel (rescind) their purchase agreements without penalty within a 10-day period.

The 10-day cooling-off period begins at the latest of the following dates:​

1. The date the buyer receives all required (prescribed) information related to the home;
2. The date the builder satisfies any legal requirements related to the required information; and
3. The date the buyer receives a fully executed copy of the purchase agreement.

To exercise the right to cancel or right of rescission, buyers must deliver written notice to the seller within this 10-day window, and the seller must receive it within this period.

Builder and Developer Obligations Under the Act

The Homeowner Protection Act introduces new obligations for builders and developers, requiring them to adjust both operational and legal practices. Key responsibilities include:

1- Timely Refunds with Interest:

If a buyer exercises their right to rescind within the 10-day period, builders must refund all monies paid—including interest. The interest rate will be prescribed by forthcoming regulations and will accrue from the date the funds were received until the refund is issued.

2- Providing Prescribed Information:

The Act mandates that builders provide purchasers with specific information, the details of which will be outlined in forthcoming regulations. This information is crucial as it influences the commencement of the cooling-off period (along with receipt of the fully executed, purchase agreement.

3- Administrative Compliance:

Non-compliance with the Act, such as failing to provide the required information, could result in administrative penalties. The Home Construction Regulatory Authority (HCRA) has the power to impose fines of up to $50,000 for these sorts of violations .

Implications on the Industry

The introduction of the cooling-off period necessitates that builders and developers adjust their sales and administrative processes.  

1- Contractual Adjustments:

Agreements of Purchase and Sale may need to be updated to reflect the new cooling-off provisions, ensuring clarity and compliance with the Act.​

2- Information Dissemination:

Builders may be required to provide buyers with an information sheet detailing their rights under the Act. This measure would aim to enhance transparency and ensure buyers are well-informed about their rescission rights. ​These measures are not yet in force but have been proposed by the Ministry of Public and Business Service Delivery and Procurement.

3- Financial Planning for Potential Refunds:

Given the potential for contract rescissions within the 10-day period, builders should anticipate the need for prompt refunds, including interest, and plan their cash flow accordingly.​ The interest rate has not yet been prescribed but has been proposed as follows:

From April 1st to September 30th of each year, 2% per annum below the bank rate at the end of March 31 of that year; and

For the period from October 1st of each year to March 31st in the following year, 2% per annum below the bank rate at the end of September 30th immediately before that October.

When does the 10-Day Cooling-Off Period Come into Effect?

The 10-Day Cooling Off Period provisions are not yet in effect. They are to come into effect on a future date to be proclaimed by the Lieutenant Governor of Ontario. Builders and developers should begin reviewing their practices now to prepare for the upcoming changes.

How can we Help?

At Merovitz Potechin LLP, our Real Estate Team works closely with builders and developers across Ontario. We can help ensure your contracts, disclosure practices, and refund procedures align with the new requirements under the Homeowner Protection Act, 2024.

Contact us today to learn how we can support your compliance strategy.