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Newly Built Condos
There are some substantial differences between purchasing a new house and a new condominium unit. Some of the more pertinent distinctions of new condominium purchases are outlined in this section.
Cooling Off Periods
Buyers of newly constructed condominiums are entitled to a 10 day rescission or “cooling off” period during which they can change their minds about buying the unit from the builder. Buyers have the statutory right to cancel their agreement of purchase and sale for a new condo purchase within 10 days from the later of:
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The date on which you received a copy of the agreement of purchase and sale signed by you and the builder; or
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The date on which you received the complete disclosure package.
If you wish to cancel the purchase, you must send a written notice to the builder within the cooling off period, after which the builder must refund any deposit you gave. You should keep copies of the notice sent together with a receipt for delivery signed by the builder or their representative.
If prior to closing there has been a material change to the disclosure package since it was first delivered to you, the builder is required to deliver an updated package to you. You then have a second 10-day cooling off period in which to cancel the agreement of purchase and sale if you desire.
Disclosure Packages
You will receive a disclosure package at or around the time you sign your agreement of purchase and sale for a new condominium. The package contains the following documents:
Disclosure Documents:
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Disclosure statement.
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Proposed declaration.
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By-laws, resolutions and rules.
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Budget (including estimated common expenses).
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Insurance trust agreement.
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Management agreement.
Occupancy vs. Title
One of the biggest differences between buying a new and resale condo is that there may be two closing dates for the newly constructed condominium. Your builder cannot transfer title to you until after they have registered the condo documents (i.e. declaration and description) with the provincial government. However, the condo building may be substantially completed and ready for occupancy months before the documents are registered. Provincial registration recognizes this reality and allows for two closing dates: Occupancy (Interim) Closing and Unit Transfer (Final) Closing. Unless you are purchasing a condo unit after most construction is complete, you will likely have these two different closing dates in your agreement of purchase and sale.
Occupancy (Interim) Closing
On an occupancy (interim) closing date, you are entitled to move into the condo unit under the terms of an occupancy agreement with the builder, which is usually attached as a schedule to your agreement of purchase and sale. Your agreement will specify the amount of the “mortgage” that you will give back to the builder on the interim closing, and you will be required to pay any balance due on the interim closing in accordance with the interim closing Statement of Adjustments. You also will be responsible for paying monthly occupancy fees, comprised of estimated common expenses and property taxes on the unit together with interest on the “mortgage” given back to the builder. (Note: this mortgage is not registered against the condo unit because you do not have title to the unit yet. That is why this is sometimes called a “phantom mortgage”.)
On an occupancy (interim) closing, you DO NOT get title to the condo unit and you CANNOT arrange a mortgage with your mortgage lender for this date. Your monthly occupancy fees are similar to rent, and you do not receive a credit for these payments on the final closing. You are often required to provide several post-dated cheques to the builder for your occupancy fees.
Unit Transfer (Final) Closing
After the builder has registered the condo documents with the provincial government, they will notify your lawyer and schedule a Unit Transfer (final) Closing date usually within 30 days. The final closing date is when a Deed of Land is registered for the unit in your favour, and you actually receive title to the condo unit. Unless you have made other arrangements, you will be required to repay the “phantom mortgage” on the final closing date, which most people do by registering a new mortgage on the unit with their lender (which can now be done since you have title to the unit). There also may be other adjustments payable. |
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