Builder Closing Adjustments in Ontario: What the Tarion Addendum Allows
Why buyers are surprised on closing
You agreed to a fixed price, often years ago. Then, weeks before closing, the builder's statement of adjustments arrives with tens of thousands of dollars in extra charges.
The charges usually carry official-sounding labels: development charges, utility connections, meter costs, administration fees. Many buyers assume they have no choice but to pay. That assumption is often wrong.
We act for many purchasers of new homes and pre-construction condominiums who are challenging builder adjustments. In every case, the starting point is the same document: the Tarion Addendum.
What the Tarion Addendum is
Every agreement of purchase and sale for a new home or new condominium unit in Ontario must include the Tarion Addendum. It is a prescribed form under the Ontario New Home Warranties Plan Act. Builders cannot contract out of it, and a conflicting term in the builder's agreement is void.
The Court of Appeal has been candid about the document. In Ingarra v. 301099 Ontario Limited, 2020 ONCA 103, Justice Lauwers called it "a trap for the unwary, particularly the unwary lay person." He added that "the Addendum is the territory of real estate lawyers."
What the Addendum says about closing adjustments
Section 8 of the Addendum controls adjustments. In short, the builder may charge on closing only the adjustments specifically set out in Schedule B to the Addendum. No other adjustments may be made.
Schedule B has two parts. Part I lists adjustments that are fixed or known when you sign. Part II lists adjustments whose amount cannot be known at signing, such as property taxes, development levies or new connection charges, but whose category must still be described.
Together, the two parts form a closed list. A charge that is not disclosed in Schedule B, or that is described only in vague or open-ended terms, is open to challenge and, under the recent case law, generally cannot be enforced.
The purpose is predictability. You are entitled to know, before you sign, every category of extra charge you may face.
What the courts have said
For years, builders treated the Addendum as boilerplate. Recent Superior Court decisions have enforced it as a consumer protection measure.
Reddy v. 1945086 Ontario Inc., 2019 ONSC 2554: Justice Penny described the Addendum as a consumer protection and remedial instrument, to be interpreted broadly. Clauses giving a builder unfettered discretion over price or terms are inconsistent with that purpose.
Dhaliwal v. Midland Homes, 2023 ONSC 1620: the builder demanded a $152,640 "Added Cost Adjustment," blaming changes in government obligations during the pandemic. The court held that general inflation, supply shortages and pandemic disruption did not qualify, and that the builder's own statutory declaration was not proof. Our firm acted for the purchasers.
Bellisario v. 2200 Bromsgrove Development Inc., 2025 ONSC 2546: the builder charged tens of thousands of dollars in "utility infrastructure" costs under a clause for fees paid to a "utility service provider," including payments to its own subcontractors. The court held that the phrase means outside entities such as municipal utilities, not the builder's own trades, and read the ambiguity in the purchasers' favour.
Taheripouresfahani v. Dormer Bond Inc., 2025 ONSC 5833: the builder's statement of adjustments added nearly $60,000, including development charges, meter costs and "alternative materials" charges, with no invoices. The court held that purchasers are "entitled to see the math." The unsupported adjustments were treated as an anticipatory breach, and the purchasers were entitled to terminate the agreement.
The common thread is simple. The builder must prove both its right to a charge and the amount, and ambiguity in the builder's own form is read against the builder.
Charges that often deserve a second look
Based on the decided cases and our own files, these items frequently warrant scrutiny:
Development charges or levies that Schedule B does not disclose, that exceed any cap in your agreement, or that come with no proof of the amount actually paid.
Utility, hydro, water or meter connection charges, especially where the builder is passing on its own subcontractors' costs.
"Added cost" or price increase adjustments based on inflation or supply costs, rather than a genuine change in law that directly increased construction costs.
Vague categories such as "administration fee," "other builder costs" or "miscellaneous construction costs."
Any charge with no invoice, receipt or stated authority behind it.
Can a builder charge development charges on closing? Only if the category is properly disclosed in Schedule B, within the limits of your agreement, and the builder can show how the amount was calculated.
How to review your statement of adjustments
The best time to challenge vague categories is before you are locked in, ideally during any cooling-off period after signing. The next best time is as soon as the builder's draft statement of adjustments arrives.
Gather the agreement, all schedules and amendments, and the Tarion Addendum with its Schedule B.
Compare each line on the statement of adjustments against the categories disclosed in Schedule B.
Flag any charge that is not listed, or that relies on a vague or catch-all category.
For listed categories, ask for the calculation and the supporting invoices. Disclosure and proof are separate obligations.
Keep every notice and email from the builder. A clear chronology matters if the dispute goes further.
If the builder will not back down
Start with a written demand, through your lawyer, for substantiation of each disputed charge. Asking the builder to produce documents is the logical first step, because the builder bears the burden of proof.
If the builder insists on payment, closing "under protest" is often an option. A contemporaneous written protest, delivered through counsel, is intended to preserve your right to recover the disputed amounts after closing and to rebut any suggestion that you waived them.
Disputes that do not resolve are usually decided by application or summary judgment motion in the Superior Court of Justice. These cases turn almost entirely on the documents, so an early, well-organized record matters.
In some cases, as in Taheripouresfahani, a builder's insistence on unlawful and unsupported charges may give the purchaser grounds to terminate. That is a serious step with real risk, and it requires legal advice on your specific facts before you act.
How we can help
Greg Weedon is certified by the Law Society of Ontario as a Specialist in Real Estate Law and as a Specialist in Civil Litigation. Our firm acts for many purchasers challenging builder closing adjustments on new homes and pre-construction condominiums.
For background, see our post on the Toronto Star's coverage of builders' extra charges and our Real Estate Litigation page.
If your closing is approaching and the numbers do not match your agreement, contact us. Send us your agreement, the Tarion Addendum and the builder's statement of adjustments, and we will review where you stand.
General information only, not legal advice. Every matter turns on its own facts.
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