The guide advises securing the services of a legal professional to help you sift through involuted documents—including the Preconstruction Agreement of Purchase and Sale—as well as to understand the different kinds of condominium corporations, because choosing the wrong one could easily devolve into a nightmare.
Researching builders is imperative, as noted by the provincial government’s mandatory new guide. While the guide advises homebuyers research builders through Tarion, we at CREW recommend you visit builders’ past developments and ascertain for yourself if the quality is to your liking. Don’t be shy about asking residents how satisfied they are with their units, and remember that you can’t go wrong with perusing builder reviews online.
Have a lawyer review the purchase agreement because it must be fully understood before signed. The seasoned eyes of a legal professional will explain to you what the risks are in purchasing a preconstruction unit, as well as what the stipulations are for terminating the deal on either end.
The joint Tarion and Home Construction Regulatory Authority (HCRA) Addendum includes warranties and important dates, while the disclosure statement educates about bylaws and rules for condo corporations, as well as the budgetary statement for the corporation’s first year.
Under the Condo Act, builders hold all of the funds, including deposits, they receive in a trust, and if the project is terminated the monies will be returned with interest, as required by the Tarion Addendum. Homebuyers’ deposits and other payments fall under the Ontario New Home Warranties Plan Act, which covers up to $20,000. Upon entering an agreement, the buyer is entitled to a 10-day cooling off period during which they can contemplate whether or not their purchase is right for them.
The guide also explains to buyers under which conditions a condo project can be cancelled, which include failure to sell enough units, failure to secure financing, and delays in obtaining necessary planning approvals.
If the purchaser wants to lease their unit, they should familiarize themselves with the Residential Tenancies Act (2006) and their condo corporation’s rules governing rentals.
Understanding interim occupancy is crucial for buyers of preconstruction condominiums, particularly if they’re first-time purchasers. When the builder lets the buyer take possession of their unit before title has been registered, which is required to obtain a mortgage, the purchaser will pay the builder occupancy fees. The fees cannot exceed monthly interest on the unpaid balance of the purchase price, the estimated monthly municipal property taxes, and projected maintenance fees.
Don’t forget the pre-delivery inspection (PDI) because it can uncover deficiencies, whether sloppy craftsmanship or actual damage, in your unit. If any issues are noted, a PDI form will be filled out to establish that the defect occurred before you took occupancy, thereby absolving you of responsibility. However, the PDI form isn’t a warranty, and whatever defects haven’t been rectified before you move in must be catalogued on a 30-Day or Year-End Form.
In addition to knowing your obligations, know your rights. Every unit owner has the right to vote in owners’ meetings, seek election to the condo board (provided they’re qualified under the Condo Act), review the condo corporations’ financials, the documentation of meeting minutes, and more. To become a director, the candidate must be an adult with without bankruptcy status, not have been found incapable of managing a property by the courts, and meet disclosure obligations.
The Ontario’s Residential Condominium Buyers’ Guide provides a detailed explanation about how to become elected and the myriad responsibilities election entails, including how to handle governing documents. It also teaches preconstruction condo buyers about different types of insurance and what the rules are governing common areas.
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
As part of its response to Canada’s ongoing housing challenges, the federal government has added another 12 new properties to the Canada Public Land Bank,...
As part of its response to Canada’s ongoing housing challenges, the federal government has added another 12 new properties to the Canada Public Land Bank,...
