Take advantage of the cooling off period to avoid getting burned on a newbuild condo deal.
Brand new condo purchases hold a unique status in Ontario’s real estate world, carrying with them a slew of extra steps and adjustments that can easily catch out ordinary consumers.
As a result, provincial law requires a 10-day rescission period built into agreements of purchase and sale with developers that allows buyers to walk away from the deal risk-free if they have second thoughts.
This is the perfect time to call an experienced real estate lawyer who can tell you exactly what you’re agreeing to, because it’s better to know about any red flags up front than on closing day, which could be months or even years down the line.
The longer the period between signing a contract and taking possession, the more likely it is that a buyer’s financial situation will change, making a previously attractive deal seem unmanageable in reality.
Sometimes it’s the closing adjustments that prove too much for buyers who have already stretched themselves to afford a deposit and meet the asking price.
These extra charges and fees due on closing – for things like education levies, utility connections and Tarion fees – can range anywhere from $2,000 to as much as $30,000, so you can see why purchasers might not have the necessary cash on hand, if they come as a surprise.
One solution that may be open to struggling pre-construction buyers is an assignment sale, which allows the original purchaser to sell on their contract with the developer to a new buyer.
However, some agreements of purchase and sale prevent assignment, locking the original purchaser into a closing date and price that may no longer work for them. That in turn may put their deposit at risk if they’re unable to complete the deal.
Another common problem I see, revolves around heating and air conditioning equipment, where buyers can find themselves committed to rent appliances for many years at unfavourable rates.
Certain buyers may also be caught out by the recently imposed foreign buyers tax – a 15-per cent levy on purchasers of property in the GTA who are not citizens or permanent residents of Canada.
In recent times, I’ve helped clients with all of these issues and more in the late stages of newbuild condo deals. But I wish they had come to me earlier, because an experienced lawyer can pick them out from the paperwork that comes with a purchase agreement, ensuring buyers are fully informed before they commit themselves. And if it’s done within the 10-day rescission period, they can still back out without any penalty at all.
Disclaimer: The content on this website is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this website are advised to seek specific legal advice by contacting members of Laredo Law (or their own legal counsel) regarding any specific legal issues.
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Jacob Manishevitz is a mortgage agent with iBridge Capital. His brokerage donates to several charities that range from providing drinkable water to people in need in developing countries; and supporting important organizations by way of activity-based fundraising. If you are looking for worthwhile causes and want to jump on board, please reach out to Jacob.