Buying a new house is exciting. Sometimes, however, people want to buy a condominium and may not realize that things work a little different when purchasing a condominium.
Though the rules and regulations around purchasing condominium units are similar from province to province, they also differ and can, in some cases, differ significantly. For example, terminology can differ, as can rules governing reserve funds. You need to be aware of the legalities and rules of purchasing a condominium for your specific province.
Most people think of condominiums as being high-rise buildings with a lot of units in them, as well as common areas. That is true. However, there are also condominium townhouses that are essentially houses, but follow condominium rules, and yes, you still have to pay monthly common element fees.
One of the costs owners of condominiums have to pay that house owners don’t are monthly common element fees. These are fees that you pay for the maintenance and operation of the common property elements, with a portion going to the reserve fund.
The common element fees vary from building to building and depending on the percentage of your ownership interest. The amount of common element fees a buyer has to pay is explained in the status/estoppel certificate.
Next to having the option to buy a condominium unit or a condominium townhouse, you can also choose whether you want to buy new or resale.
Buying a resale condominium
The most important document for a resale condominium buyer to receive from the sellers before the closing is the status certificate, also called the estoppel certificate in some provinces. Most provinces mandate that the buyer of a condo unit has to be provided with this document package.
The status certificate should include:
- Financial statements;
- The declaration;
- Documents showing that the corporation is insured by whom and for how much; and
- The actual status certificate, which amongst other things will show if there are any lawsuits or legal actions against the corporation, and more.
Unless waived, the buyer of a resale condominium has a few business days to get the status certificate reviewed by a lawyer. This is called a “cooling off period.” The time limit varies from province to province and can vary from contract to contract, as well.
The review of the status certificate should ensure that you are not buying into a condominium corporation or unit that is problematic. If you don’t like what’s in the status certificate, then you have the right to withdraw your offer but only within the time limit specific in the agreement of purchase and sale.
Buying a new condominium
Often builders don’t want to deal with lawyers. Wherever possible, you should get a lawyer involved, preferably before you sign a contract.
However, like in a condominium resale contract, a clause should be included in the builder’s purchase agreement that states the buyer has a few business days to have the agreement reviewed by a lawyer.
These contracts are quite complex and have a lot of clauses. A lawyer who reviews the contract will be able to advise you on the contract.
Also ask the builder for a disclosure statement. This is close to what a status certificate or estoppel certificate is in that it shows you financial information of the condominium corporation and some important documents. It’s mandated in some jurisdictions, but not others.
One plus in buying a new condo is usually that newly built condos cost less than a resale unit. However, there are also some costs associated with newly built condos that you could face and should be aware of.
One of them is occupancy fees. Before you take legal possession, the builder may allow you to occupy your unit, if it is ready. Since occupancy happens before the sale goes through, you then have to pay occupancy fees for the time you occupy the unit until the time you take legal ownership of the unit.
Other items to watch out for are levies, utility hook-up fees, and other costs that you may have to pay. You should consult a lawyer about getting those fees capped.
As you can see purchasing new or resale condominium is complex, especially because of the complexity the purchase agreement and status/estoppel certificates. Whether you are buying a new or resale unit, it’s a good idea to get your real estate lawyer involved as fast as possible.
Condominium Buyer’s Guide
Buying a Condominium