Buying a Home / Chris
The Deposit:
When purchasing a pre-construction condo in Toronto, you will be required to provide a deposit to secure your unit. The deposit amount is typically a percentage of the purchase price and is paid in installments over a specific period. It’s important to understand the deposit structure and ensure you have the necessary funds available.
The 10-day Cooling Off Period:
In Ontario, there is a mandatory 10-day cooling off period for buyers of pre-construction condos. During this period, you have the opportunity to review the purchase agreement, consult with a lawyer, and make an informed decision. If you decide to cancel the purchase within this period, you can do so without penalty.
Waiting, Waiting, Waiting:
Patience is key when buying a pre-construction condo. Construction timelines can be subject to delays due to various factors such as weather, permits, or labor shortages. It’s important to be prepared for potential delays and have a realistic expectation of when your unit will be ready for occupancy.
The Only Constant is Change:
During the construction process, developers may make modifications to the building’s design or layout. These changes can be minor or significant, and they are typically within the developer’s rights. It’s essential to review the purchase agreement to understand the developer’s rights regarding changes and ensure you are comfortable with potential alterations.
The Interim Occupancy Period:
After the completion of the building’s structure, there is a period known as interim occupancy. During this time, you may be allowed to move into your unit before the official closing date. However, keep in mind that the building may not have received its final approvals and amenities might not be fully operational during this period.
Condo Fees in New Buildings are Usually Set Arbitrarily Low:
When a new condo building is first established, the developer typically sets the initial condo fees. These fees are often artificially low to attract buyers, but they may increase significantly once the condominium corporation assumes control and establishes the true operating costs. It’s important to anticipate potential fee increases in the future.
Registration of the Condo:
Once the construction is complete, the condominium must go through a process called registration. This process involves transferring the ownership of individual units from the developer to the buyers. It can take several months for the registration to be finalized, and during this time, you do not have legal ownership of your unit.
Builder Closing Costs:
In addition to the purchase price of the condo, buyers are typically responsible for paying closing costs. These costs can include land transfer taxes, development charges, utility connection fees, and legal fees. It’s crucial to budget for these expenses to avoid any surprises at closing.
The Condo Reserve Fund:
Every condominium corporation must establish a reserve fund to cover future repairs and maintenance. As a buyer, you should inquire about the reserve fund and its adequacy. A well-funded reserve fund ensures that there are sufficient funds to address future maintenance needs without imposing substantial special assessments on unit owners.
HST:
When purchasing a new construction condo, the purchase price is subject to Harmonized Sales Tax (HST). However, there are rebates available for primary residences under certain conditions. It’s important to understand the HST implications and consult with a tax professional to determine your eligibility for any applicable rebates.
Buying a pre-construction condo in Toronto can be an exciting investment opportunity, but it’s crucial to be well-informed and prepared. Understanding these ten factors will help you navigate the process and make informed decisions throughout your purchase journey. Remember to consult with professionals such as real estate agents, lawyers, and accountants to ensure a smooth and successful transaction.