You've done it! You have bought a brand-new condo! Now, buying a new condo will require some paperwork before you're ready to move in, especially when it comes to a new development. There are some documents a developer has to give you as the owner of the new home. These documents discuss different parts of what a condominium developer is required to do, all in an effort to help you fully understand the ownership process.
We've broken down the list of documents required when buying a new condo to give you an idea of what each one is about.
This is the contract between you and the developer that states what’s being built (if the condo isn’t finished), the condo fees to be paid monthly and how these fees are determined. Since this is a legal document, you'll want to make sure to consult a lawyer prior to signing any agreement.
This is probably the most important piece of documentation because it outlines what's included in the condominium, the size of the unit itself, what's common property and what you have exclusive use over (such as a balcony). It will also help you to identify if the unit is conventional or bare land as well as what will be included (doors, windows, yard space, etc.). Property boundaries, nearby buildings, roads, and utilities on the property’s land will also be listed here.
Your condominium plan is also required to list the unit factor, which is used to determine the condo fees. These fees will be outlined and should explain the details of the fees. Unit contributions can be either equal (meaning you pay the same rate regardless of unit size) or they can be proportional (a bigger unit size will incur a larger monthly condo fee).
Bylaws and Condo Rules
This document outlines the various condo bylaws that concern the condominium and the supplementary rules. Bylaws address things such as how the board of directors is elected, when fees are collected, and how rules are passed. The rules for a complex focus on the day-to-day aspects of condo living.
Bylaws can, for example, cover things such as:
- pets (how many, what types)
- age restrictions (seniors building, whether or not children are allowed)
- renovation restrictions (adding hardwood floors, for example, may require extra soundproofing)
- parking restrictions (types of vehicles allowed, visitor parking rules)
Your management agreement will tell you whether your shiny new condominium complex is self-managed or professionally managed.
A self-managed complex is one that is looked after entirely by the condominium board. The board of directors will be in charge of making sure things like the accounting, repairs, and maintenance (snow removal!) are taken care of. The upside of this style of management is no fees are paid to a professional property manager.
The condo board also has the option of hiring a professional condo manager or management company to look after the logistics of running a building. The obvious benefit of this approach is that your building will be well looked after by someone versed in doing maintenance tasks for this type of development.
You will also receive a copy of your mortgage agreement for the unit you’re purchasing. Your copy of this agreement may outline the maximum principle available, your maximum monthly payment, the amortization period, payments terms and interest rates as applicable.
Simply put, a recreational agreement document tells you who can use the shared amenities (such as if there’s a pool or gym) and when they can be used.
Phased Development Disclosure Statement
When buying a condominium that’s under active development, it’s important to review the phased development disclosure statement. This particular set of papers will give you:
- a property description that will outline what each phase will physically look like
- a description of the units themselves (size, the minimum/maximum number of units in each phase), restrictions on units and proposed use for each unit
- description of the common property
- condominium contributions (condo fees)
Conversion Development (Reserve Fund Report and Plan)
If a condominium property is being converted, the corporation involved in the re-development is required by law to establish and maintain a reserve fund. This money will be allocated and kept in a separate bank account to be used to cover the costs of major repairs or replacements to the capital property.
In order for the company to determine how much money needs to be set aside, a study, report, and plan for this contingency fund needs to be completed every five years. What’s important for potential owners to know is how much is in the fund and reading the report will also help you to find out a property’s current state of repair. These two things in combination should give a good indication of the value of your unit as a whole.
Hopefully, this article has cleared things up for you and will make going through all of this legalese a little easier. It's always a good idea to ask questions, do your research, and take your time so that you have all the documents you need for your condo purchase.