Monday March 11, 2019

The Top 6 Things to know when Purchasing a New Construction Condominium

Authored by: Lauren M. Randall Posted in: Real Estate

If you are thinking about putting an offer in on a new construction condominium, there are a couple of things you need to be aware of to prevent any surprises.

  1. Cooling Off Period
    • Once an agreement is signed the developer must provide the purchaser with a copy of the draft declaration and bylaws.  A purchaser has 10 days after receipt to review the declaration and bylaws.  Within those 10 days, a purchaser can terminate the agreement for any reason and have their deposit returned.
  2. Delays in Closing
    • Construction of a large-scale project like a condominium building is often delayed beyond initial projections.  It is set out in the Condominium Act and the agreement of purchase and sale that the developer can extend the closing date twice without requiring the consent of the purchaser;
    • The developer can extend for 180 days unilaterally for any reason at all; and
    • The developer can extend for a further 180 days for reasons that are beyond their control such as weather and labour or material shortages.
    • After this, the developer must get each purchaser consent to delay individual closing dates.
  3. Occupancy Prior to Closing
    • Because each unit is not completed at the same time, a purchaser may be able to take occupancy of a unit before the condominium is registered.  A purchaser can take occupancy of a unit as soon as an occupancy permit is obtained from the municipality.
    • The developer cannot force a purchaser to take occupancy, and if a purchaser chooses to, there are monthly occupancy fees prescribed by the Condominium Act which decrease periodically to encourage the developer to complete the registration without delay.
    • If a purchaser chooses to take occupancy prior to registration of the condominium corporation the pre-closing walkthroughs and deficiency lists will be completed prior to moving in.
  4. Phased Condominiums
    • In a phased condominium project, the developer has no obligation to complete additional phases.
    • The only requirement, should the developer choose not to bring additional phases into the condominium, is that the land be used for a similar purpose.
  5. Common Elements
    • The common elements may not be completed at the time of occupancy but there are proceeds from the first sale held back by the developer’s lawyer until the common elements are complete.
  6. Closing Costs
    • The agreement should be read carefully as there could be additional costs included that are not typical in a used residential transaction.
    • Each purchaser will always be required to contribute 3 months’ worth of common elements expenses to be added to the contingency fund.
    • If there is going to be a superintendent’s unit, it will be owned by the condominium corporation and each purchaser is required to contribute a certain amount towards the purchase of that unit from the developer.
    • Depending on when registration takes place, it is possible that each unit may not be assessed individually for municipal taxes for a full year.  In these cases, the developer will be responsible to pay all of the taxes but will ask for the unit’s proportional contribution, for up to a full years’ worth of taxes, up front, to be held until taxes are due.

For more information on purchasing a new construction condominium please contact one of our skilled Real Estate lawyers.

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