New vs. Resale Condos

New Condos

When buying a new condo from a building or development company, whether from floor plans or as it is just being completed, purchasers should make sure that the real estate lawyer carefully examines the agreement of purchase and sale, the disclosure statement, and the condo declaration.

In fact, some builders add extra charges that are not well specified in the agreement and are certainly not mentioned by the sales staff. These charges can amount to several thousands of dollars that prospective buyers have not included in the calculations of what they can afford.

The condo’s declaration should be examined to make certain that the property is as advertised.

In fact, retaining a copy of the floor plan is essential: You have to make sure that the unit you get is the one you bought and is located at the same place you wanted. Also, the declaration will allow you to know whether the development is strictly residential or if it will also contain commercial and business units (mixed-use condos). (Click here for What’s a Condo Declaration?)

Above all, the disclosure statement and the declaration may contain items that will have to be shared by all owners via their condo fees later (and for many years), thus increasing their fees. These items may not be mentioned by the sales staff and do not appear in the ads. These include some recreational facilities and guest suites that will  have to be repayed by the corporation over a period of time. Others might be equipment that is leased rather than owned by the condo. These leased items range from boilers, furnaces, energy savings equipment, special decorative items, and so on.

So, basically, prospective owners want to know if the condo owns outright everything which is in the building or on the property. This is the best situation.

In addition, purchasers should always let their lawyer know what is important to them so that the lawyer keeps this in mind while inspecting the documents.

The declaration is a thick document that is not always easy to read or understand. In addition, declarations vary from condo to condo, even in a same district, and this may create confusion for persons who are buying units in different developments. For instance, what are exclusive-use common elements in some condos are fully owned in others, such as parking areas or in-suite heating/cooling systems. (Click here for Who Is Responsible for Maintenance, Repairs & Alterations?)

The declaration of townhouse developments will indicate whether patios and backyards are exclusive-use common elements or freehold—that is, individually owned. And the same applies to garages and lockers, where available.

In some cases, even the roof, the outside walls, and the windows are individually owned: Such situations result in more maintenance responsibilities for owners in the long term. However, this should also lower condo fees.

One problem that recurs in condos being sold by agents on behalf of builders is that these agents are not always forthcoming with the full picture. Neither are the ads. For instance, they will not necessarily tell you that another building will soon rise and block your view. Others will tell you that the party room is sound proofed, or that owners of penthouses will have first pick when time comes to choosing a locker, or that your parking space will be on the first level.

None of these things may happen. It’s important to have verbal promises written in the agreement of purchase and sale in order to have legal recourse if they don’t materialize.

There is a 10-day cooling off period during which purchasers can change their mind at no cost when buying a new condo. As well, Ontario purchasers should want to ensure that the builder is governed by Tarion’s new home ownership warranty. 

Resale Condos

For resale units, the purchase agreement may be conditional upon the purchaser being satisfied with the contents of the status certificate.  This "certificate" (actually a very thick document) is very important because it also includes financial information such as fees and special assessments that may be forthcoming. Litigations that a condo may be involved in should also be mentioned--and litigations are never a good sign of things to come (Click here for Why Is a Status Certificate So Important?)

The status certificate also includes the declaration, by-laws, and rules. And, here as well, the same problem applies as described above in the section for new condos.

Lawyers should be informed of what is important to a purchaser’s lifestyle. Lawyers will then verify that rules or the declaration will not interfere. A good example would be rules prohibiting dogs when the purchaser has just acquired a pooch. The advice, then, is: don’t buy!

In Ontario, at least, prospective owners and their agent should make sure that alterations made in a unit (including on balconies and patios) by a previous owner had been approved by the board of directors. 

Some red flags which should lead prospective buyers to check on this situation are: hard wood or laminate floorings, additional A/C systems, tiles on balconies or patios that no one else has, jacuzzis, a wall that has been eliminated or added. Such alterations could create problems later if they were made without a board permission. A board could, for instance, require that tiles be removed or that the laminate floor does not have proper underpadding and is not sufficiently sound proof (after having received justified complaints).

It may be helpful to read parts of Owners’ Money Facts.


Condo Gardens