The Sales representatives at the new condo sites are working on behalf of the developer / builder, and are working in their best interest, not necessarily yours. Should you want guidance as to what floor, view, ideal size, value best fits your needs; it is in your best interest to have a realtor accompany you.
Having a realtor accompany you does not change the price you will pay, the price offered is exactly the same (the vendor / developer pays the realtor fees). Most projects are 40 % to 50 % sold before they even reach the public and we may have advanced purchasing privileges, which offer discounts, free upgrades and more.
It is essential to work with a realtor who is educated in the process involved in buying brand new. They will be best suited to explain the entire process, and walk you through step by step.
The price that you buy the property for is usually inclusive of HST; however you may need to confirm this information before you sign any documents.
Even though you sign a contract to buy a condominium at the builders site, the agreement is subject to a 10 day cooling off period should you decide to change your mind or your choice of floor/size etc.
You need to give a deposit cheque at time of signing the contract, which is only cashed after the initial 10 day cooling off period ends.
At the time of signing the contract the on-site Sales Representative shall provide you with a copy of the signed Agreement of Purchase and Sale / Condo Disclosure (which lays out the budget for the first year and the common expenses allocation). It is advised to have a lawyer review these documents to help explain to you all clauses / costs included within the Agreement
In resale the closing costs are usually estimated to be 2 % to 3 % of the purchase price, this includes Land Transfer Tax / Lawyers Fees and other closing adjustments. Whereas, in a brand new development the closing costs over and above the purchase price are estimated to be 3%-3.5 %. This amount is over and above the typical costs of Land Transfer Tax / Lawyers Fees. Some of the typical costs involved in the purchase of a new development are:
Hook Up Costs
Land Development Fees
New Home Warranty
Lawyers Fees etc.
Hydro Meter Installation
HST on Chattels, etc.
Some builders may be willing to cap these unknown amounts giving you peace of mind that you are not going to pay an un-expected amount, on closing.
The builder can delay occupancy of a new condominium for up to five days without giving notice or compensation. Please note that compensation will not be paid for delays caused by events beyond the builders control, such as strikes, weather, labor shortage, percentage of sales etc.
Every purchase agreement for a condominium unit will include either a confirmed occupancy date or a tentative occupancy date.
If the purchase agreement gives a tentative occupancy date, the builder is required to inform the purchaser in writing of the confirmed occupancy date no later than 30 days after the roof assembly is completed (or another specific stage of construction as specified in the purchase agreement).
If the purchaser is not given notice of the confirmed occupancy date 90 days before the tentative occupancy date, then the tentative date automatically becomes the confirmed date for the purpose of calculating compensation for the delay.
Once the confirmed occupancy date is established, the builder is allowed to extend it once by up to 120 days. In this situation, the builder must give the purchaser at least 65 days written notice. The builder can also extend the date by up to 15 days if they give the purchaser at least 35 days written notice.
The builder is permitted to use both of these extensions as long as they give you the required notices and the total of the two extensions does not exceed 135 days.
Once your unit is ready for occupancy the developerís office shall call to set up an appointment for a Pre-delivery Inspection (PDI). During this inspection the inspector shall walk you through your unit and you will point out any deficiencies for which they will make a note of. These deficiencies are usually repaired prior to your move in. In the event that they are not repaired, a 30 day form will be provided to you which can be filled out and sent to the developerís office and a copy to Tarion.
Developers in Ontario are allowed to give you an Occupancy Date, meaning you are allowed to obtain physical possession of the unit prior to registration of the building. Typically they will allow the owners who have bought to move in. The units are usually complete in all aspects however the hallways, lobby and amenities are not finished. The builder will continue to work on these common areas for approximately 3-6 months from the date of first occupancy (which start from the lower floors upward).
The management of the building during the occupancy phase remains with the developer, who shall appoint their owner Property manager, security, supervisor etc.
During the occupancy phase the owner of the unit is required to pay Occupancy Fees (see below) which comprises of Interest only payments on the outstanding amount due (original purchase price less the down payment) usually at posted Bank of Canada rate + plus condo fees + estimated property taxes. Depending on which floor you have bought your unit, occupancy period can range from 3 months to 1 year.
Once the building is registered, the ownerís lawyer shall be given 2 weeks notice prior to the registration of your unit. It is at this time that the interest only payments to the builder are replaced by your mortgage payments. You will also officially get title to the unit and pay all closing costs (Land transfer taxes, builderís costs, etc.)
Now that the building is registered the builder (if provided for in their Condominium disclosure documents) will hold a meeting to elect a board, who in return will elect a property management company to run the day to day affairs of the building and look after its upkeep and maintenance.
Expect the Condo monthly fees to go up after the first year. Most of the time the costs of the utilities have changed, and the labor costs have increased from the time the budget was initially prepared by the developer. The builder is responsible for working with the budget that he stated at the very beginning for the first year and bears any costs over and above what was estimated. Largely the costs are kept low, in order to attract you based on a lower monthly fee.
Property Taxes: The taxes charged are an estimate only till the city finally assesses the building and send a final tax bill. Usually as you have overpaid you can expect a credit for the first year or a cheque from the builder refunding the difference.
Tarion Warranty Corporation: Tarion is responsible for administering the Ontario New Home Warranties Plan Act, which outlines the warranty protection that new home and condominium builders must provide, by law, to their customers.