In Ontario, all builder condominium agreements pretty much look the same. In general, they are very one-sided, in favour of the builder.
- Delay closings
- Change the layout or finishings, and
- Exercise the right to cancel agreements under certain circumstances
This leaves Ontario buyers with a tremendous disadvantage, with little recourse.
Legally, buyers of new condominium units have 10 days from signing their agreement to just change their minds – for any reason.
However, if you are buying a freehold property from a builder, you do not have a 10-day cooling off period, but you can still make your agreement conditional on lawyer approval.
When buyers come to me to review their agreements, here are the main lessons I share with them as they consider whether to go ahead or cancel the agreement.
1. Do your research and know the builder developer’s history!
Have you seen other projects completed by this builder developer? Visit other completed projects, and ask the buyers:
- Was their unit was completed on time?
- Were they given what they were promised?
- Did the builder complete all deficiencies in a timely manner?
This applies to all condominium and freehold detached home builders.
2. Do you have the right to assign your unit before occupancy or final closing?
Condominium projects can take several years to be completed. By the time they are done, your circumstances may change. While you may have initially planned to move into the unit, you may – in some cases – need to sell your agreement to someone else before closing.
Many builders will provide a limited right to assign the agreement as an incentive when you sign your agreement in the first place. This usually will require a fee and they may limit your right to advertise the unit for sale on any MLS system.
But it is still better to have this right written in your agreement right away.
In my experience, it is easier to negotiate this right in a new condominium purchase. It is not as easy with a freehold detached home purchase.
3. What are the additional charges? Know what you are paying for, and how much it will all cost!
The purchase price stated standard includes HST but there are other additional charges specified in your agreement. You must understand the charges as they will have to be paid at final closing and sometimes they can add thousands of dollars to the final amount. Many builders will put a cap on these charges right away at the sales office to give you a better idea as to what the total additional charges will be at final closing.
4. Will you be able to rent the unit out at occupancy?
Many condominium builder agreements do not permit you to do this.
Therefore, if you are buying your unit as an investment property, you will want to include in your agreement an ability to be able to rent the unit out once you are given occupancy of your unit. If you don’t do this, you may have to wait 8-12 months before the building is registered. You may also want to do this in the event that you don’t have an income stream to pay the rent during the occupancy period.
In short, if you do the proper research and ask the right questions when you sign with a builder, you will avoid future problems and be part of a successful close.
Still confused? RealEstateLawyers.ca can help. If you have any questions about your new home agreement or need them reviewed, please contact me at [email protected] or call me toll free at 1-888-876-5529.