Are you looking into condo living for the first time? It’s a whole new world, and you'll want to gather some key information from your developer. Communicating with your developer will help the purchasing process run smoothly. In case you’re wondering where to start, here are seven important things to know when buying a condo from a developer.
1. The Road To Completion
First things first: when can you move in? In the same way pre-build homes have a set development timeline and possession date, condominium developers should be able to provide you with estimated, if not firm, completion and possession dates. Ask your developer what work remains to be done. Remember, simply because the unit may be finished, doesn’t mean the common space is entirely finished. There may be some work yet to do before residents can take possession.
2. Understanding The Purchase Agreement
Ideally, the purchase agreement should be reviewed with a lawyer. But as you go through the agreement on your own, here are a few key pieces of information to look for.
Purchase agreements for condominiums should include information about your personal unit as well as the condominium complex’s common property. With respect to each unit, the purchase agreement must disclose the unit factor used to determine an owner’s share of monthly condo fees and how it was set. It should also include the condominium contributions for the unit, or a reasonable estimate, and notice of the consumer’s right to cancel the agreement.
When it comes to common property, the purchase agreement must include a condominium plan showing the interior finishings and all major improvements to the common property. Special amenities, features, and maintenance equipment for the common property should also be covered.
Essentially, the purchase agreement should outline all of the details surrounding the purchase of your unit and the share of the common property. But it’s just one of many documents that your developer should provide you with – more on that to come.
3. Can You Cancel?
Developers have the duty to engage fairly with prospective homebuyers in the purchasing process. This means providing you with a purchase agreement, and notifying you that you have the right to cancel the purchase agreement. The Condominium Property Act allows you to cancel your purchase agreement within 10 days from the date of your signature. This should be stated in writing on the cover or first page of your purchase agreement.
4. Transaction Of Funds
If you purchase a condo unit and are waiting to take possession, the developer must hold your funds in trust until construction of the unit and common property is sufficiently completed. Generally speaking, when it is time to take possession, the transfer of funds and title are dealt with all at the same time through the developer's legal firm (or yours if you are using a separate lawyer).
5. What Is Phased Development?
If you’re purchasing a condo in a new development, particularly if it’s an apartment style development, chances are it may be completed in phases. As a prospective homebuyer, you have the right to a copy of the phased development disclosure statement that's part of the condominium plan.
The phased development disclosure statement should include some key information about the building plan. This may include the total number of units, a full list of amenities expected, and a description of the planned physical appearance and compatibility of each phase.
While this information isn’t overly important when it comes to purchasing a unit, the disclosure statement should give you an idea of the effect on the owners’ contributions for administrative expenses. Also, it should note the corporation’s budget if future phases are not completed, as well as the basis for allocating unit factors.
Why does this matter? Because it affects every unit holder, present and future.
6. What About The Warranty?
Since 2014, all new developments are mandated by the Government of Alberta to be covered by a warranty program. It’s important to speak with the developer about the details of warranty coverage and its implications. You should understand what is covered and by whom.
7. The Document Checklist
Finally, the document checklist. In addition to the purchase agreement, there are a few other key documents that you are entitled to from your developer. Some are only applicable in certain circumstances, but in general, you should look for the following:
- The bylaws and proposed bylaws;
- The management agreement;
- The recreational agreement;
- Any mortgage or proposed mortgage that may affect the title;
- The condominium plan;
- Phased developed disclosure statement, if applicable, and;
- Reserve fund information, if applicable.
Talk With Your Developer
While no two developments are the same, most developers follow similar purchasing processes when selling units in a new complex. As the prospective homebuyer, it’s important to gather all of the information you can upfront, in order to avoid any surprises later.
Be sure to ask your developer questions, read paperwork carefully, and perhaps have legal documents reviewed by professionals. Developers have a duty to provide the homebuyer with information and a good developer will be open to communication, but it's up to you to ask questions! We will be happy to answer all of them.