The costs of late delivery

Recent amendments to the Regulation on the guarantee plan for new residential buildings have increased the coverage for relocation, moving and storage costs in the event of late delivery, with the maximum compensation now set at $6,000. Do you know what can be compensated?

At the outset, you should know that article 13 of the regulation¹ sets out the criteria for compensation:

“13. The coverage of a plan for an isolated, semi-detached or townhouse single-family home is limited by address to the following amounts:
[...]
(2) for protection with respect to the relocation, removal and storage of the beneficiary's property, upon presentation of supporting documents and provided that there is no unjustified enrichment of the beneficiary, $6,000, i.e.:
(a) reimbursement of the reasonable actual costs incurred for the removal and storage;
b) reimbursement of the reasonable real cost incurred for rehousing including room and board without, however, exceeding, on a daily basis:
— for 1 person: $95;
— for 2 people: $125;
— for 3 people: $160;
— for 4 people and more: $190;

It is therefore expected that the beneficiary who took delivery of the building after the date provided for in the preliminary contract will be able to file a claim in order to be compensated for various costs that he would not have suffered, had it not been for the delay in delivery.

Reimbursement of the reasonable real cost, without unjustified enrichment

Obviously, the protection provided for in the regulation aims to ensure that the beneficiary is compensated in the event of late delivery and not that he benefits from the situation. This is why the legislator saw fit to specify that the beneficiary is entitled to reimbursement of the real reasonable cost of moving and storing, in addition to specifying that the compensation is conditional on the absence of unjustified enrichment.

To illustrate these concepts, let's take the example of a housing beneficiary who was due to receive the delivery of his unit on July 1. Since the unit was delivered late, say on September 1, the unit had to relocate temporarily. This results in storage costs, two moving bills and monthly payments for temporary housing.

By submitting a claim in due form² with supporting documents, the beneficiary will be able to obtain reimbursement of certain expenses: the costs of storing his furniture and the cost of one of his moves since he would not have paid such costs but for the delay in delivery.

However, some amounts will not be refunded to him or at least not in full. In our example, the second move will not be reimbursed because even if the building had been delivered on time, the beneficiary would have incurred moving expenses.

According to this reasoning and in order to prevent unjustified enrichment, the monthly payments may also not be reimbursed or only partially reimbursed: although the beneficiary considers that the amounts paid could have been applied to the capital of his new building, it should not be forgotten that a full refund is equivalent to guaranteeing the concept of free housing. Consequently, a line should be drawn in order to avoid the enrichment of the beneficiary, but also his impoverishment.

In short, it should be remembered that the beneficiary is compensated on a case-by-case basis, by studying the various claims. Knowing this, the wise entrepreneur will have every interest in coming to an agreement with the beneficiary before the beneficiary makes a claim, keeping in mind that the mandatory nature of the warranty plan³ requires compensation for the late fee agreement to be valid.⁴.

DID YOU KNOW THAT?
For new residential buildings, the claims of the persons who participated in the construction of the building do not benefit from warranty coverage.

¹ For buildings owned in divided co-ownership, refer to article 30 of the regulations.
² The complaint must be made no later than 6 months after receipt of the building, art. 17.1 Regulation on the guarantee plan for new residential buildings.
³ Article 140 of the Regulation on the guarantee plan for new residential buildings.
⁴ Koné and Fairmont St-Laurent Inc., Me Roland-Yves Gagné, arbitrator, Canadian Commercial Arbitration Center (CCAC), S13-021501-NP, 2013-05-06.

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