If you’re thinking of new condos for sale, the information below provides a brief overview of some of the most important considerations.
Condominium corporation registration – News condos for sale
As discussed above, condominium corporations are created when the builder (referred to as the declarant in the Condominium Act, 1998) registers the declaration and description with a land registry office. For new condo developments, this typically doesn’t happen until construction is complete and people have already taken occupancy of at least some of the units.
The Condominium Act, 1998 does not require that corporations be registered within a specific time frame, but declarants are legally required to take all reasonable steps to finish construction and register the corporation without delay.
The declarant-controlled board
Once the condo corporation has been registered, the declarant is required to appoint at least three people to make up the corporation’s first board of directors. This first board is called the declarant- controlled board, and they are responsible for performing all the duties of a normal board until a majority of the units have been sold to owners.
Once a majority of the units have been sold, the declarant controlled board is required to call a meeting of the owners to elect a new board within 21 days. The meeting must then be held within 21 days of being called, meaning that the meeting must occur within 42 days of a majority of the units being sold. This meeting is called a turn-over meeting.
Turn-over meetings
At the turn-over meeting, the owners will elect a new board to replace the declarant-controlled board. The declarant controlled board will also hand over control of the corporation, along with:
- The seal of the corporation
- The minute book of the corporation, including a copy of the declaration by-laws, current rules, and minutes of all owners’ and board meetings held to-date
- A copy of all agreements entered into by the declarant controlled board on behalf of the corporation or the declarant, including management contracts, deeds, leases, or easements
- A copy of all insurance policies and the insurance certificates
- A copy of all bills of sale or transfer for the corporation’s assets
- All records related to the units or employees of the corporation Within 30 days of the meeting, the declarant is also required to provide additional materials, including:
- All financial records of the corporation and of the declarant for the corporation from the date of registration onwards
- A copy of any reserve fund studies conducted to-date (if any)
- A copy of the most recent disclosure statement
- The declarant-controlled board is also required to provide audited financial statements within 60 days of the meeting.
Pre-construction condominium purchase process for new condos for sale
Purchasing a condominium may be one of the most important decisions of a person’s life. When considering a new condo, you should review purchase agreements, disclosure statements and seek legal advice before signing any documents. Purchase agreements contain a list of potential conditions that may result in the development not proceeding and the termination of the purchase agreement. It’s important that buyers are aware of, and agree on, the potential conditions when signing the purchase agreement. These may include:
- A failure to sell enough condominium units
- An inability to secure financing for the project
- Delays in obtaining the required building or planning approvals
The purchase agreement is not binding until the disclosure statement has been provided to the purchaser. The disclosure statement includes important information such as a copy of the existing or proposed declaration, a copy of the budget statement for the first year after registration of the condominium corporation, and a summary of the most recent reserve fund study.
Pre-construction condominium cancellations / Deposit protection
If a condominium project is cancelled, buyers should receive a refund of their deposit, which they are entitled to under section 19(3) of Ontario Regulation 48/01. Under the Condominium Act, 1998, all funds paid by buyers as a deposit, or otherwise received by the builder of a condominium project, must be held in trust by the builder. The purchaser is entitled to receive all money paid to the developer to date with interest, calculated using the Bank of Canada’s overnight interest rate, minus two per cent. The developer must return this money within 10 days of the purchase agreement being terminated.
Tarion protects deposits by a purchaser of a condominium unit up to a maximum of $20,000. For any deposit amounts that exceed $20,000, the purchaser may be able to make a claim to the third party insurance company, which has provided a deposit protection policy to the builder.
Disclosure Statements for new condos for sale
Every declarant is required to give purchasers of units (or proposed units not yet built) a document called a disclosure statement. This is required under section 72 of the Condominium Act, 1998, and while there is no deadline for providing a disclosure statement in the Act, your purchase agreement is not binding until you receive the disclosure statement from your declarant. The disclosure statement includes a lot of important information, including:
- A copy of the existing or proposed declaration, by-laws, rules, and insurance trust agreement for the condo corporation
- An overview of all agreements entered into by the declarant before the turnover meeting, including agreements for:
- Condo management services
- Services like repairs and landscaping
- An overview of all agreements entered into by the declarant before the turnover meeting, including agreements for:
- Condo management services
- Services like repairs and landscaping
- A copy of the budget statement for the first year after registration of the condo corporation, which includes:
- An overview of the common expenses for the condo corporation, and the projected monthly common expenses fees for each type of unit
- An overview of the portion of these fees that will be contributed to the reserve fund
- A summary of the most recent reserve fund study (if one has been conducted)
You should carefully review the disclosure statement and clarify any questions you might have with the declarant or a legal professional.
If there is a material change to the disclosure statement (e.g., a change in the schedule for when construction on the amenities will be completed), then you may be able to cancel your purchase agreement.
Delayed occupancy
In condominium development projects, construction can sometimes be delayed, and you may not be able to take occupancy of your unit as expected. This is called delayed occupancy.
Your purchase agreement must include an Addendum that sets out important dates for your agreement, including your occupancy date. These are set out in the Statement of Critical Dates. Your Addendum may contain a few different occupancy dates.
There are two dates that are particularly important for delayed occupancy:
- The Outside Occupancy Date: This is the latest date your builder expects to be able to provide you with occupancy to the unit.
- The Firm Occupancy Date: This is a date your builder commits to providing you with occupancy to the unit.
Your Tarion warranty includes delayed occupancy coverage. That means that if you cannot take occupancy of your unit by either the Firm Occupancy Date or the Outside Occupancy Date (whichever is earlier) you may be entitled to delayed occupancy compensation.
Interim occupancy
When you buy a new condo, sometimes you will be able to move in before construction of all the units has been completed (particularly if your unit is closer to the ground floor and will be finished first). This is called interim occupancy, and it is governed by the Condominium Act, 1998.
As your building nears completion, your vendor will advise you of your interim occupancy date. Once the interim occupancy date comes, you can live in your unit, but it is important to note that you don’t own it yet.
That’s because ownership of your unit can only be transferred to you if the condo has been registered with the municipality, and it can only be registered with the municipality once all the construction is complete.
The period from your interim occupancy date to the date ownership is transferred to you is called your interim occupancy period. Interim occupancy periods can be relatively short (perhaps a few weeks or a month), or lengthier (up to a year or more), depending on how far your declarant is from completing all the construction.
During the interim occupancy period, you must pay your builder or vendor an interim occupancy fee, regardless of whether you actually move into the unit or not.
The interim occupancy fee cannot be more than the total of:
- The interest (calculated on a monthly basis) on the unpaid balance of the purchase price at the prescribed interest rate;
- The estimated monthly municipal taxes for the until; and,
- The projected common expense fees for the unit.
In general, shorter interim occupancy periods are better for condo buyers, because you can avoid paying interim occupancy fees. When evaluating potential condos to purchase, you should consider whether a builder has had lengthy interim occupancy periods for other projects.
Once the interim occupancy period ends and ownership of the unit is transferred, you may be owed money if your declarant collected more money for property tax than the actual property tax amount. Alternatively, you may owe your builder money if they collected less property tax than the actual amount that was charged by the municipality.
Looking to purchase a new condos for sale – Yasir Khan at 519-860-7626 or email at info@realtown.ca for more info. Check my MLS Listing for the latest Listing details.
