What should I know before buying a pre-construction condo?
Four things: you get a ten day statutory rescission period, occupancy comes long before closing and you pay occupancy fees that build no equity, closing costs include development charges the builder can pass through, and delays of years are normal.
Rescission. Provincial condominium law gives you ten days to cancel after receiving the disclosure statement and signed agreement. Use them, with a lawyer reading the agreement.
Interim occupancy. You move in when your unit is ready but the corporation is not yet registered. During that period you pay an occupancy fee covering interest on the unpaid balance, estimated taxes and common expenses. None of it pays down principal. On a delayed project this can run for many months.
Closing adjustments. Builder agreements typically pass through development charges, levies, utility meter installation, Tarion enrolment and legal fees. Unless the agreement caps them, these are open-ended. Negotiating a cap on development charges before you sign is the single most valuable amendment you can get.
Delay. Multi-year delays are ordinary. Your mortgage approval will have expired and must be redone at rates prevailing then, and if values have fallen the appraisal can come in below your contract price with the gap payable in cash.
Also confirm assignment rights and the deposit structure, and check that deposits are protected under the new home warranty scheme.
Next questions
Do I pay HST when I buy a house?
Not on a resale home. On new construction from a builder you do, though builders normally quote a price that already assigns the new housing rebate, so the tax is inside the price rather than added at closing.
Ontario
Is there a cooling-off period after I sign an offer in Ontario?
Not on a resale purchase. Once both parties sign, the agreement is binding and your only exits are the conditions you wrote into it. New construction from a builder is different and does carry a statutory rescission period.
Ontario
What is a status certificate and what is in it?
The condo corporation's disclosure package about the unit and the corporation: fees, arrears, budget, reserve fund, insurance, litigation, rules and any planned special assessment. The corporation must produce it within ten days and the fee is capped by regulation.
Ontario