Why Your “Sticker Price” Isn’t the Final Price: Understanding Cost Adjustments
When you walk into a sales office and see a beautiful new condo or home priced at $799,990,
it’s easy to assume that’s the number you’ll be writing on your final cheque. However, as a real
estate lawyer, I see many buyers surprised on closing day when the “sticker price” suddenly
climbs.
In new construction purchase agreements, the price listed on the first page is rarely the price
you end up paying. This is due to cost adjustments—a series of additional charges that can be
extensive and, in some cases, quite substantial.
The Three Main Categories of Adjustments
Most cost adjustments fall into three primary buckets:
● Upgrades: These are the finishes and features you choose at the sales office. Fortunately,
these rarely cause “closing day shock” because they are typically paid for as part of your
deposit structure well in advance.
● The HST Rebate: Purchase prices often assume you qualify for the HST rebate. However,
the builder has the discretion to add this back to your closing bill—usually around
$24,000—if they suspect you won’t qualify (for example, if you aren’t moving in
personally).
● Municipal and Development Charges: This is the “catch-all” category that can go on for
pages. It includes:
1. Development charges the builder must recover from the municipality.
2. Cash-in-lieu of parkland donations.
3. Various administrative and utility hook-up fees.
Why a Lawyer’s Review is Non-Negotiable
While many adjustments are standard, some can be extreme. In 2022, a development in South
Mississauga saw builders asking for $70,000 to $170,000 per unit in adjustments onclosing—roughly 20% of the purchase price.
Taking your deal to a lawyer before it becomes firm and binding allows you to:
- Cap the Charges: A lawyer can often negotiate “caps” on development charges so you
aren’t left with an unlimited bill. - Assess HST Eligibility: We can discuss your specific situation to determine if you truly
qualify for the rebate or if you need to budget for that extra $24,000. - Eliminate Surprises: We explain the “fine print” so you know exactly what you are getting
into before you are legally committed
Disclaimer: This post does not constitute legal advice. Every transaction and personal situation is unique.
