Five Things Every New Condo Buyer Should Know
You’ve finally found the dream condo you’ve been searching for and you’re ready to make it your home. But before you sign off on your deal, consider these things to ensure you understand your rights as a new home buyer.
Get a lawyer to review your agreement
The purchase agreement is a critical part of making a new condo officially yours. But before you grab the pen and sign away, remember, these are lengthy documents with loads of technical language. So have a lawyer that’s familiar with condominium law review your purchase agreement and the accompanying disclosure statement to identify, for example, the items and areas that are part of your condo unit, the items and areas that are common elements that will be shared with other unit owners, items that will be rented instead of owned, and what’s included in the purchase price. Any details agreed to by the sales representative should also be set out in writing. If you decide to sign without legal advice, you may risk being bound to terms you don’t want or understand.
It's important for your lawyer to walk you through the addendum. The addendum contains information about your occupancy date, agreement conditions, fees and charges, along with other important information.
Get to know the Addendum
When reviewing the purchase agreement, it’s important for your lawyer to walk you through the addendum. It’s a document that all builders must attach to every purchase agreement and it contains important information about your occupancy date; conditions that must be satisfied for the agreement to proceed; and the fees and charges, such as utility expenses, realty taxes and municipal taxes, that will be added on to the condo purchase price at closing. Closing costs can significantly add to the budget, but with the details listed in one area, homebuyers can recognize the full costs associated with the purchase.
10-day cooling off period
Once you’ve signed the purchase agreement, there is a 10-day cooling off period. This gives you a chance to have your lawyer thoroughly review your contract after it’s signed. If you don’t like what you find, you can back out of the deal and cancel the contract and receive a deposit refund. However, once the 10 days have passed, the purchase agreement becomes final.
Customizing your finishings
Buying a newly built condo gives you the opportunity to customize it to your preferences before it’s built. Depending on your builder, you can select wall colours, colour and design of counter tops and cabinets, fixtures in your bathroom and kitchen, floor finishes and interior trim styles. These choices are also covered by the new home warranty. Your personal selections should be set out in a written agreement to ensure they’re safeguarded by Tarion. If your agreement included the right to select certain items of construction or finishing, these cannot be substituted without your written consent.
Delayed occupancy and termination of purchase agreements
In your purchase agreement, your builder must provide an occupancy date – the date your unit will be ready for move-in. This date can be either ‘firm’ or ‘tentative’ depending on how confident your builder is of the eventual date of completion. Your agreement will also include an ‘outside occupancy date’ – an estimate of the latest possible date your unit is expected to be completed.
A tentative date means they can delay the completion date as long as they provide at least 90 days notice. Additional delays – with appropriate notice – are also possible. Once a firm occupancy date has been set, if the condo isn’t ready on that date, you may be entitled to delayed occupancy compensation under the Ontario New Home Warranties Plan Act. This compensation -- $150 per day to a maximum of $7,500 -- is meant to cover things like the cost of rental accommodation or storage for your belongings.
If the outside occupancy date comes and goes and your unit still isn’t ready, you will have the right to terminate the purchase agreement. If you terminate, your builder is required to refund your deposit monies and pay delay compensation.
If you’re entitled to delay compensation, make a claim to your builder. If the builder fails to refund your payment, you can make a claim to Tarion within one year of your occupancy date or the date you terminated your purchase agreement.
Carefully review the addendum to understand how occupancy dates may be extended and under what circumstances you can terminate your agreement.
The purchasing process is not an easy job, but it is worth the time and effort to get things right instead of rushing into signing a deal that you may not fully understand. So ease the stress from your purchase and prepare yourself in advance.
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