Purchasing A Pre-Construction Condominium Unit
Purchasing a pre-construction condominium unit can be a great way to start your journey towards home ownership, however it is often more complicated than purchasing a single family home. Agreements of Purchase and Sale for pre-construction condominiums are accompanied by Disclosure Documents which are dense legal documents and contain information that a purchaser needs to manage expectations and make informed decisions about their purchase.
The Importance of Disclosure Documents
Due to the length of these documents, purchasers often overlook them — but they are very important to review with your lawyer.
When you purchase a condominium unit, you are buying into a set of rules that govern what you can and cannot do in the condominium and the unit. It is important that a purchaser review these documents with their lawyer to ensure that they can abide by the rules, as failure to abide by the rules can have serious legal consequences.
A careful review of the Disclosure Documents will help you decide whether the purchase and the condominium project are right for you.
Once an Agreement of Purchaser and Sale is entered into between the purchaser and the Builder/Developer, the purchaser is entitled to a 10-day cooling-off period which gives them an opportunity to consult a lawyer to review the Agreement of Purchase and Sale and the Disclosure Documents. The purchaser has the right to cancel the Agreement of Purchase and Sale during this10-day cooling-off period.
What Do The Disclosure Documents Include?
In addition to the Agreement of Purchase and Sale your real estate lawyer should also review the disclosure documents which include:
- The Disclosure Statement: This document gives you a general description of the condominium project’s most important features.
- Proposed Budget: This provides a statement as to the budget for the current year and a projected budget once the condominium has been registered.
- Proposed Declaration: This document sets out a significant number of the rights, privileges, and restrictions that affect the lifestyle of your unit. It will reference common expenses, common elements, occupation and use of the units, maintenance and repair, and general administrative matters.
- Proposed By-laws: These documents set out various key aspects of how the condo corporation will govern itself, such as number of directors and board meeting procedures. These aspects are often considered the administrative guide for the condo corporation.
- Proposed Rules: These will dictate what individuals on the condo corporation property can and cannot do.
- Management Agreements (if available): This establishes the property management group to look after the day-to-day operations of the Condo Corporation.
- Condominium Guide: On January 1, 2021, the Condominium Act, 1998 will be amended to require condominium developers to provide potential purchasers of pre-construction and newly-built condominium units with a Condominium Guide. The Condominium Authority of Ontario will be responsible for preparing a Condominium Guide which will provide certain information related to condominium purchasing and condominium ownership.
If you are deciding whether to purchase a pre-construction or newly built condominium unit, or you would like some assistance reviewing the Disclosure Documents, please connect with one of our real estate lawyers. We will be happy to help you understand the terms of your Agreement of Purchase and Sale and the Disclosure Documents.