Buying Pre Construction

FOUR PHASES IN BUYING NEW CONDOMINIUMS:

1. Pre-construction Phase
2. Construction Phase
3. Interim Occupancy Period
4. Title Transfer (Final Closing)

DEPOSITS

• held “in trust” by developer’s lawyer
• deposits are fully insured
• interest is paid from date of deposit to occupancy at Act prescribed rate
• NSF cheques are subject to administrative fees

TITLE

• Can be assigned to immediate family wihtou penalty
• Assignment Clause reuqired for non-family, but assignee remains responsible for closing on unit if assignor defaults

HST

• Included in the purchase price if you are an owner-occupant
• Investors are responsible for paying rebate portion on final closing, but can apply to CRA for full refund after leasing unit for 1 year.

CONDOMINIUM DISCLOSURE STATEMENT

• Includes:

1. Disclosure Statement
2. Budget Statement for Year 1 operations
3. Proposed Declaration
4. Proposed By-Laws
5. Proposed Rules
6. Proposed Management Agreement
7. Preliminary Draft Plan of Condominium (excluding parking levels)

• Defines what items are considered part of your unit and what items are considered part of the common elements
• Defines how common element fees (maintenance fees) are calculated
• Names the Property Management Company for Year 1
• Details how the condominium corporation is to operate and make decisions

FINISHES & COLOUR SELECTIONS

• Developer has right to substitute material of equal or better quality as materials may become discontinued from time of pre-sales to contruction
• Colour selections typically start 12 months prior to occupancy
• Upgrades and pricing are usually not available until colour selection time as availability of materials and pricing at time of pre-sales may change by the time contruction commences
• Upgrades are usually payable 100% at time of selection

INTERIM OCCUPANCY PERIOD

• Period between possession of the unit (occupancy) and title transfer date (final closing) when your mortgage kicks in and you become the legal owner
• Occupancy Fee is payable to Vendor during this period, calculated as:

1. interest in unpaid balance of purchase price, plus
2. estimated municipal realty taxes
3. common expenses (maintenance fees)

• Occupancy fee does not go towards your mortgage
• Occupancy period varies, but typically 3-6 months
• You cannot lease your unit during occupancy period, unless you have signed an Authourization to Lease with the Developer

TARION WARRANTY CORPORATION

• all new home builders are required to be registered with Tarion Warranty Corporation
• all new homes proctected under Ontario New Home Warranties Act
• includes protection for deposits, workmanship and delays
• 1-year warranty: units to be constructed in workmanlike manner and free from defects in materials
• 2-year warranty: covers water penetration of building envelope; electrical plumbing and heating systems; and exterior cladding
• 7-year warranty: covers major structural defects
• all deficiencies documented at Pre-Delivery Inspection (PDI) on Tarion Certificate of Completion and Possession Form

CLOSING COSTS

• Land Trasnfer Tax – Ontario + Toronto
• Adjustments, which are determind at Title Transfer Date (final closing), but may be “capped” if requested
• Adjustments includes:

1. realty taxes estimated from Occupancy to Title Transfer Date
2. PST on chattels (i.e. appliances)
3. new taxes imposed by government
4. increase in development and/or education development charges
5. Tarion Warranty Corporation enrollment fee
6. Park Levies imposed by government
7. utility meters and connection charges
8. HST (if non-owner occupant)

• Legal Fees