Tariff’s Impact on Completion Dates for Pre-Sale Properties

 Summary:

Labour shortages, material delays, and increased transportation costs, caused by tariffs are giving developers legal grounds to invoke delay clauses in pre-sale contracts. These clauses allow the developer to push out the completion date by a period equal to the delay caused by such events, even after issuing a Completion Notice! Translation: At the time of contract signing, buyers and sellers may not actually know when the building will be finished.

 The Delay Clause in Action

 Here’s a typical clause found in many pre-sale agreements:

 “The Developer shall be entitled to extend the Completion Date by a period equivalent to any delay arising from strikes, lockouts, fire, flood, labour or material shortages, tariffs, transportation delays, governmental actions, or any other event beyond the reasonable control of the Developer.”

 You’ll find this language under headings like “Permitted Delay”, “Extension of Completion Date”, or “Force Majeure.”

 

BUT WAIT… Shouldn’t Tariffs Lower Prices?

 Interestingly, there’s another side to this story. Some economists argue that tariffs may lead to short-term over-supply, especially if developers have pre-purchased materials or if buyers begin to hesitate.

 An increase in inventory—whether from stalled construction or cautious buyers—can push prices downward, as sellers are motivated to move unsold units.

This means your clients may be paying more for uncertainty in completion timing, but potentially less per square foot if market prices soften. It’s a strange paradox that underscores the importance of reading the fine print.

 

Takeaway

 Tariffs are doing more than raising costs—they're introducing legal and market uncertainty into pre-sale deals. From delay clauses to price shifts, your clients need your guidance more than ever. Stay informed, ask good questions, and work with the right professionals to keep deals—and relationships—on track.

 

Leo Yuan
Lawyer
lyuan@infinity-law.com
Phone: 250.385.6004 ext 205
www.infinity-law.com

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