What is a Turn-Key Builder?

Traditionally, most builder/client relationships are considered “turnkey”, meaning an agreement of purchase and sale is signed, a deposit is given, and the remainder of funds are due upon closing, alternatively a cost plus model is also becoming a popular options, especially among custom style builders, other models may also be negotiated.

The builder is responsible for building the home as per the specifications and selections made by the client, and for delivering the home by a specified closing date. The builder chooses and hires crafts and trades people to build the home and ensures that they are paid in full for their service and materials. The builder is also responsible for scheduling work, monitoring the site for safety, ensuring trades are insured, and obtaining *construction insurance for the property while it is under construction. Once the home is built, the builder is required to register it with Tarion’s New Home Warranty Program.

*insurance may be the responsibility of the home-ower in certain circumstances, eg. if the home is being constructed on land not owned by the builder.

Advantages of Traditional Turn-key construction?

The biggest advantage to turnkey construction is financial security. Although significant financial savings can sometimes be had when choosing a contractor to simply project manage the construction of your home, additional costs and risks can arise that eat into profits.  Turnkey construction can help you stay on budget, limit financing needs, and limit your exposure to liability:

  • Budget: The contractor forecasts and commits to the construction of your home costing a certain amount, thereby protecting you against unforeseen increases in the costs of materials, labour, theft, unforeseen errors, or other sometimes costly issues that can arise with a custom home.

  • Financing: Given that the bulk of the payment for a turnkey home is not due until closing, you will require limited to no financing during the construction period. Interest payments, appraisal costs, and legal fees are therefore not incurred.

  • Liability: A worksite is a dangerous place to visit and work; risk of injury to trades people, and others, do exist.  Monitoring safety on the site, as well as ensuring that trades people are adequately insured, is mandatory.   You can face hefty fines and judgments from the Ministry of Labour, and open yourself up to liability, should someone get hurt.  In a turnkey building relationship, if an injury or safety violation occurs, it is the builder’s responsibility — not yours.

Turn-key construction is still preferred by most of our clientele. At Shellstar, we pride ourselves on offering a variety of flexible services to meet each of our clients’ individual circumstances and preferences.