Buying A New Condo From A Builder

Buying a new condominium in Canada can be challenging. With real estate regulations changing frequently, it is important that you consult a real estate lawyer.
You may consider many factors at this time including the stage of condo development, experience level and the experience of the builder you ultimately select. The factors to be considered are outlined below:

Your Cooling-Off Period

At the time of getting into an agreement of sale and purchase with a Builder for a newly built condominium, a 10-day cooling off period exists. This date is counted from the date when both the parties signed the agreement. Any capping of charges should be done within this period.

If no active steps are taken to annul the agreement during the cooling off period, the agreement of sale and purchase generally, turns into a binding and firm contract. It is recommended to get the agreement reviewed by a real estate lawyer to confirm when the cooling off period will start.

Purchase Agreement Review

It is recommended to get in touch with a real estate lawyer to thoroughly understand your purchase agreement. The lawyer will also help you to review the fees expectation and interim occupancy periods for pre-construction condos.

Interim Occupancy Period

For condos in pre-construction stage, many years may pass before you actually move into it. Even after you move in, you may not own the condo. The number of days between the occupancy date promised by the builder and the actual condo ownership transfer is the interim occupancy period.

Any condo ownership can be transferred only after the building gets registered with the local municipality. The municipality registration can be done once all the units in the building are completed. Typically, interim occupancy periods are longer for the lower floors as compared to the higher floors. The interim occupancy fees are payable to the builder, once the interim occupancy period starts. It does not matter if you may have moved or not.

Interim occupancy requires planning which can be done by saving expenses in advance. You can also time the exit and entry of your home to coincide with the interim occupancy date.

Shorter interim occupancy periods are more favorable to the buyer as the outstanding amount on the new condo purchase is not reduced because of the interim occupancy fee paid.


Before project completion, many investors end up selling their builder agreement properties. Assignment is the process in which the interest of the purchaser-investor in the builder agreement of purchase and sale is transferred to a new buyer or assignee.

Builder’s written consent is required before assignment can be done by the purchaser-investor. Many builders can also withhold the assignment clause as per their agreement.

Whether you are moving into the property or purchasing a condo for investment, it is advisable to get the agreement reviewed by a real estate lawyer. You can understand your options and request an amendment to the agreement to allow for future assignment.

Closing Costs

Closing costs apply to the sale of any property. In case of purchasing a new condo from a builder, the builder’s agreement likely contains reams of clauses which differ from one builder to another. The builder agreement does not have a standard format. Also, a resale condo typically has fewer clauses.

There are many adjustments which are charged to the property cost at the time of closing the transaction. Usually, closing costs include legal disbursements, land transfer taxes, legal fees and any upgrades ordered at the time of color selection.

Few builders also include cost items like the unit’s share of the building’s sewer connection charges, bulk hydrometer, estimated property taxes, education and development charges to move the purchase price of the property upwards. The estimated closing costs can range from a hundred dollars to many thousand dollars. You can speak to your Real Estate Lawyer and get these charges capped.

Capping on Charges

Sales of newly built builder properties have many associated levies attached to them such as eduFree cational, development and utility levies for hydro, sewage, gas and many others.

These levies are proportionately divided amongst all the condo units in the condominium building. They are included in the respective condo contracts by the builders and assigned to unit owners. The caps on the charges are

In the condo contracts, they are mostly left open-ended where any exact amounts are not provided. It is essential to cap these levies and other charges like closing adjustments by putting caps on them. It is recommended to consult your Real Estate Lawyer to make sure caps are present on each one of these charges. The caps may be on the higher side, but a cap needs to be in place to establish a ceiling on all your charges. Caps should be done within the conditional period before the agreement for purchase and sale becomes final and binding on both the parties.

Condominium Room Dimensions

Condo room dimensions and floor layout are usually highlighted in the property’s sales brochures along with different models with varying room dimensions and square footage.

At the time of signing the offer to purchase, the clear floor plan with room layout and dimensions is not available.

Do note that the terms and conditions in the agreement of sale and purchase between the builder and purchaser has much higher value than any promotional advertising. Verbal talks and assurances hold no value from anyone, so make sure that the floor plan with room dimensions and precise square footages are included in the written agreement which you will sign.

Deposit Insurance

Do check if the builder has adequate deposit insurance. New buildings are usually covered by the Tarion warranty which covers $20,000 worth of deposits. You need to make sure that your deposit will be secure in case the builder goes bankrupt. Ideally, the required deposit should be a maximum of $20,000 which is the coverage as per the Tarion warranty.

Leased Equipment

Determine if the condo has any leased equipment as their costs are passed on to the owner of the property. So, if the furnace is owned by the condo corporation and tankless hot water system is leased, buying the latter would mean an additional cost. Although the system ensures lower hydro prices, still the hot water rental would be incurred on a monthly basis. It is essential to know the differences in ownership to make an informed decision.

Interest on Deposit

Section 82 of the Condominium Act mentions that the condo buyer is entitled to receive interest on all deposits paid before the closing of interim occupancy. This clause is valid up to the closing date of such interim occupancy.

The latest rate of interest regulations mentions payment of 2% per annum below the Bank of Canada overnight bank rate. The deposit amount is not earning anything substantial right now due to the rate of interest being only 1%.

There are interim occupancy fees to be paid by the buyer before the registration of the condo corporation. By this time the condo unit is also ready for occupancy. Interim Occupancy fees can include the land portion of property taxes, condo fees and any prorated amount for common spaces in the condo. Interest on mortgage may be included if you are not a cash buyer.

HST Application on Purchase of a New Condo from a Builder

HST will apply to the purchase of newly constructed houses and condominiums when the closing occurs after July 1, 2010. For purchases of newly built residential houses or condominiums, the purchase price on the Agreement of Purchase and Sale with the Builder is generally already inclusive of HST and an HST New Housing Rebate for persons who purchase new homes to use as a primary residence. To know more, click here.

Basic Finishes

Understand the basic finishes included in the condo purchase cost and which ones are considered as an upgrade to the condo. Ceramic tiles, hardwood floors and stainless-steel appliances are all items which can be part of either basic or upgrade finishes.

Accessibility & Amenities

Do check out if the condo unit and the building are wheelchair accessible. It is vital if you have seniors in the family or may have visitors who may be users of mobility devices. Make sure if it is the part of an upgrade if not included in the basic finish in case you need it anytime in the future.

Amenities come with higher condo fees so take your time to check out if any amenities are present.

How We Can Help

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