The Show
What you should know before you agree to buy a condo
Great towers of glass and steel are going up in every big city in this country, and in many of the smaller ones too. If you’re looking to buy your first home, or if you're looking to downsize, chances are good you’re looking at condos.
You may be surprised to learn that the beautiful rooms you see in the model suites are not necessarily like the ones you’ll live in once your building is complete. The den on your floor plans may become a walk-in closet by the time you move in. Your ceilings may turn out to be a foot or two lower than the ones you saw in the model suite when you decided to buy.
As Wendy Mesley reports, buying a condo is fraught with risk for you, the buyer. The developers? They’re pretty well protected.
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What to remember when you're buying a condo
Condo developments are hot, and so is the market. The result is an atmosphere with lots of pressure to sign up now and buy quickly. It’s important not to let yourself be pressured into a bad deal.
So.
Have the contract reviewed by a competent lawyer. Get a real estate lawyer, one who is familiar with condos. You may be able to have "weasel" clauses replaced with ones that offer you greater protection. Also, you may be able to have floor plans, finishes or other details written into the contract itself. You may also be able to have certain fees removed from the contract, shifting them to the developer.
Don't believe everything you see in the model suites and read in the brochures. Most people know that many model suites are loaded with upgrades. But Marketplace measured and found that sometimes the model suites can be larger than the suites in the actual floorplans. Also, the floorplan (with room dimensions and square footage) may not be attached to your contract, and legally the contract is all you've got. Try to have it added in, or make sure you can live with what's in the fine print.
Be prepared to walk away. Don't buy only because the salespeople tell you they are mostly sold out and you are caught up in the hype. If you want the place so badly you’re not thinking straight, you’re more likely to make a rash decision. There will be other shiny glass towers. You don't necessarily have to be first to get the best price. When developers are trying to sell enough units later on so they can start construction, they may be willing to strike a bargain with you then too.
Consider using a buyer's real estate agent. The real estate agents at condo sales represent developers' interests and are not legally obligated to tell you certain things unless you ask. If you get your own real estate agent they will represent your interests. Having an advocate who can help you navigate the market could also help you avoid making mistakes. And the best part? It won't cost you anything. As long as you don't register at the sales site, the developer will pay your agent's fees.
Remember that every condo development has "dog" suites. If you don’t want to live next to the garbage chute, you need to know where the garbage chute is. Learn to read your blueprint so you can see for yourself where the columns will be, what rooms have windows and which don't, and where the elevators and utility rooms are.
Try to research your developer. Ask them what other condo developments they have completed. Some developers may be just starting with no track record of completed condos.
Be aware of additional costs. You must be prepared to pay between 1.5% and 2% of the purchase price in closing costs. Watch out for equipment leasing: Builders can lease everything from water heaters to elevators, and pass the costs on to buyers. One common surprise we've heard from condo owners is the occupancy fee. From the time you actually move in to the time your condo closes, you will have to pay an occupancy fee, before you start making mortgage payments.
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What the contract says and what it means
When you buy a condo, the sales agreement usually runs dozens of pages. Combing through the fine print often reveals lots of language designed to protect the developer. Here are some examples. We thought we could put them into language that's a little simpler and easier to understand.
What it says:
The Purchaser acknowledges and agrees that the Vendor may from time to time at its discretion, or as required by any governmental authority or the Vendor's mortgagee, make variations to the plans and specifications pertaining to the building or the development of which the building forms a part (including architectural, structural, engineering, mechanical, site service, grading, landscaping or other plan(s)) or pertaining to any recreational amenities within the development or any other amenity situate within the developments from the plans and specifications existing at the inception of the Purchase and Sale or as may be illustrated in any sales brochure, models in the marketing center or otherwise, and the Purchaser shall have absolutely no claim or cause of action against the Vendor for any such changes, variances, or modifications nor shall the Purchaser be enititled to any notice thereof.
What it means:
The developer can change the plans for the building and the development, and if you don't like it that's tough.
What it says:
In the event the Agreement is terminated through no fault of the Purchaser, all deposit monies paid by the Purchaser towards the Purchase Price, together with any interest required by law shall be returned to the Purchaser; provided however, that the Vendor shall not be obligated to return any monies paid by the Purchaser as an Occupancy Licence Fee or for optional upgrades, changes or extras ordered by the Purchaser. In no event shall the Vendor or its agents be liable for any damages or costs whatsoever and without limiting the generality of the foregoing, for any monies paid to the Vendor for optional upgrades, changes, extras, for any loss of bargain, for any relocating costs, for loss of deposit monies or for any professional or other fees paid in relation to this transaction. This provision may be pleaded by the Vendor as a complete defence to any such claim.
What it means:
If the sale falls through and it's not your fault, you get your deposit back but you don't get back the money you paid for upgrades, or lawyers' fees, or just about anything else. Also, you can't sue.
What it says:
The Purchaser acknowledges and agrees that notwithstanding any rights which he or she might otherwise have at law or in equity arising out of this Agreement, the Purchaser shall not assert any of such rights, nor have any claim or cause of action whatsoever as a result of any matter or thing arising under or in connection with this Agreement (whether based or founded in contract law, tort law, or in equity, and whether for innocent misrepresentation, negligent misrepresentation, breach of contract, breach of fiduciary duty, breach of constructive trust or otherwise) against any person, firm, corporation or other legal entity, other than the person, firm corporation, or legal entity specifically named or defined as the Vendor herein, even though the Vendor may be (or may ultimately be found or ajudged to be) a nominee or agent of another person, firm, corporation or other legal entity, or a trustee for and on behalf of another person, firm, corporation or other legal entity, and this acknowledgement and agreement may be pleaded as an estoppel and bar against the Purchaser in any action, suit, application or proceeding brought by or on behalf of the Purchaser to assert any of such rights, claims, or causes of action against any such third parties.
What it means:
If you sue the developer and the developer turns out to be a shell company working for another company, you don't get to sue the parent company.
What it says:
Floors and specific finishes will depend on Vendor's samples as selected. All specifications, dimensions, and materials are subject to change without notice.
What it means:
You will get the floor you picked out, unless the developer says he can't get it and decides to give you a different one.
What it says:
"Parking Unit" means one (1) parking unit to be located in the underground garage in a location to be specified by the Vendor in its sole discretion prior to the Unit Transfer Date. The Purchaser acknowledges that the Vendor, in its sole discretion, shall have the right to relocate the Parking Unit to another location in the Property prior to the Unit Transfer Date
What it means:
You will get an underground parking spot, unless the developer has to move it and puts the parking spot someplace else.
What it says:
The Purchase Price shall include those items listed on Schedule B attached hereto. The Purchaser acknowledges that only the items set out in Schedule "B" are included in the Purchase Price and that model suite furnishings, appliances, décor, upgrades, artist's renderings, scale model(s), improvements, mirrors, drapes, tracks and wall coverings are for display purposes only and are not included in the Purchase Price unless specified in Schedule "B". The Purchaser further acknowledges that the Vendor shall only be required to provide the amenities to the Condominium as specifically set out in the Condominium Disclosure Statement, notwithstanding any artist renderings, sale models, displays, any advertising or marketing material or otherwise to the contrary. The forgoing may be pleaded by the Vendor as a bar or estoppel to any subsequent action by the Corporation or the Purchaser in this regard.
What it means:
Even if you spell out certain upgrades in your contract ("Schedule B"), if your condo doesn't look anything like the brochure or the model suite, that's too bad for you.
What it says:
The Purchaser covenants and agrees that he shall not directly or indirectly object to nor oppose any official plan amendment(s) rezoning applicatio(s), severance applications(s), minor variance application(s) and/or site plan application(s), nor any other applications ancillary thereto relating to the development of the Property, or any neighbouring or adjacent lands owned by the Vendor or any affiliated, associated or related entitity within the area bounded on the west by 1st Avenue, on the east by 2nd Avenue, on the north by 2nd Street West, and on the south by 1st Street West. The Purchaser further acknowledges and agrees that this covenant may be pleaded as an estoppel or bar to any opposition or objection raised by the Purchaser thereto.
What it means:
If the developer wants to put up another tower that will block your view, or proposes any other re-zoning, you don't get to voice your opposition at City Hall.
What it says:
The Vendor and the Purchaser agree that there is no representation, warranty, collateral agreement or condition affecting this Agreement or the Property or supported hereby other than as expressed herein in writing, whether contained in any sales brochures or alleged to have been made by any sales representatives or agents.
What it means:
It doesn't matter what the salespeople promised you, even if they gave you their word. If it's not in the contract, it may as well have never happened.
What it says:
The Purchaser acknowledges and agrees that the Vendor may, from time to time in its sole discretion, due to site conditions or constraints, or for marketing considerations, or for any other legitimate reason, including without limitation any request or requirement of any of the governmental authorities or any request or requirement of the Vendor's architect or other design consultants:
a)change, vary or modify the plans and specifications pertaining to the Unit (including without limitation its interior layout) or the Condominium, or any portion thereof (including architectural, structural, engineering, landscaping, grading, mechanical, site servicing, and/or other plans and specifications) from the plans and specifications existing at the inception of the project, or existing at the time that the Purchaser has entered into this Agreement, or as same may be illustrated in any sales
b)change, vary or modify the number, size and location of any windows, column(s) and/or bulkhead(s) within or adjacent to (or comprising part of) the Unit, from the number, size and/or location of same as displayed or illustrated in any sales brochure(s), model(s) or floor plan(s) previously delivered or shown to the Purchaser, including the insertion or placement of any window(s), column(s) and/or bulkhead(s) in one or more locations within the Unit which have not been shown or illustrated in any sales brochure(s), model(s) or floor plan(s) previously delivered or shown to the Purchaser (regardless of the extent or impact thereof), as well as the removal of any window(s), column(s) and/or bulkead(s) from any location(s) previously shown or illustrated in any slaes brochure(s), model(s) in the sales office or otherwise ... and that the Purchaser shall have absolutely no claim nor cause of action whatsoever against the Vendor or its sales representatives (whether based or founded in contract, tort or in equity) for any such changes, deletions, alterations or modifications, nor shall the Purchaser be entitled to any abatement or reduction in the Purchase Price whatsoever as a consequence thereof, nor any notice thereof (unless any such change, deletion, alteration or modification to the said plans and specifications is material in nature (as defined by the Act) and significantly affects the fundamental character, use or value of the Unit and/or Condominium, in which case the Vendor shall be obliged to notify the Purchaser in writing of such change, deletion, alteration or modification as soon as reasonably possible after the Vendor proposes to implement same, or otherwise becomes aware of same) and where any such change, deletion, alteration or modification to the said plans and specifications is material in nature, then the Purchaser's only recourse and remedy shall be the termination of this Agreement prior to the Unit Transfer Date (and specifically within 10 days after the Purchaser is notified or otherwise becomes aware of such material change), and the return of the Purchaser's deposit monies, together with interest accrued thereon at the rate prescribed by the Act.
What it means:
The developer can make your apartment smaller, or turn your extra bedroom into a closet, or turn your window into a wall. They don't have to give you any notice unless it's a "material change," but the definition of material is not set it stone; it's something you may have to prove in court if you run into trouble. If you don't like it, you can have your deposit back and find somewhere else to live.
What it says:
The Purchaser acknowledges that, notwithstanding anything contained in any brochures, drawings, plans, advertisements, or other marketing materials, or any statements made by the Vendor's sale representatives, there is no warranty or representation contained herein on the part of the Vendor as to the area of the Unit or any other matter (including without limitation, the amenities to be provided to the Condominium which shall be provided as more particularly set out in the Condominium Disclosure Statement). The Purchaser further acknowledges that any dimensions, ceiling heights, or other data shown on such marketing materials are approximate only and that the Purchaser is not purchasing the Unit on a price per square foot basis. Ceiling heights may vary based upon bulkheads, ducts, or other design requirements. Accordingly, the Purchaser shall not be entitled to any abatement or refund of the Purchase Price based on the precise area and/or final configuration (including without limitation, the construction of the mirror image or reversal of the floor plan layout) and/or ceiling height of the constructed unit.
The Purchaser acknowledges that the net suite area of the Unit, as may be represented or referred to by the Vendor or any sales agent, or which appear in any sales material is approximate only, and is generally measured to the outside of all exterior, corridor and stairwell walls, and to the center line of all party walls separating one dwelling unit from another. Actual useable floor space may vary from any stated or represented floor area or gross floor area, and the extent of the actual or usable living space or net floor area within the confines of the Unit may vary from any represented square footage or floor area measurement(s) made by or on behalf of the Vendor.
What it means:
Square footage is not measured as total living space. It includes the exterior walls and extends midway through shared walls. If the place has lower ceilings or fewer square feet of living space than you were told to expect, that's too bad for you.
What it says:
a)The Purchaser acknowledges and agrees that the Closing Date set out in subparagraph 2(a) of this Agreement is a Tentative Closing Date. The Vendor agrees that it shall provide written notice (the "Notice") to the Purchaser of the confirmed Closing Date (the "Confirmed Closing Date") being a date selected by the Vendor, (which date may differ from the Tentative Closing Date, as may have been extended), at least one hundred and twenty (120) days before the date identified in the notice and confirmed no later than thirty (30) days after the completion of the roof assembly, provided such selected date shall not be more than twenty-four (24) months from the Tentative Closing Date. If the Vendor (i) does not provide the Purchaser with the Notice within the time limitations hereinbefore set out, or (ii) does not provide the Notice at least ninety (90) days prior to the Tentative Closing Date or (iii) provides written confirmation that it intends that the Tentative Closing Date shall constitute the Confirmed Closing Date, the Confirmed Closing Date shall be the Closing Date set out in subparagraph 2(a) of this Agreement. After the Notice has been given, the Closing Date, for all purposes of this Agreement, including extensions, shall be deemed to be the date set out in the Notice as if it had been set out in subparagraph 2(a) of this Agreement in the first instance.
b)The Vendor shall have the unilateral right to extend the Tentative Closing Date for one or more periods of time not exceeding twenty-four (24) months in total to any particular new Tentative Closing Date, upon giving the Purchaser not less than ninety (90) days prior written notice thereof. The Vendor shall have the unilateral right to accelerate the Tentative Closing Date (for one or more periods of time, not exceeding six (6) months in total) to any other particular date, upon giving the Purchaser written notice thereof not less than one hundred and twenty (120) days prior to the said accelerated Tentative Closing Date.
What it means:
The developer can extend your move-in date by two years. And that's just for occupancy; your unit may not close for another two years, meaning you may have to pay an interim occupancy fee for up to two years after you move in.
What it says:
Notwithstanding the provisions of paragraph 14 hereof, the completion of the transaction contemplated by this Agreement is conditional upon the Vendor being satisfied on or before February 28, 2009 (or if extended by the Vendor as set out below, on or before May 31, 2009), in its sole and absolute discretion, with the economic feasibility and viability of proceeding with the development of and/or construction of the Condominium (including the Unit) and/or the viability and/or saleability of this particular unit type, failing which this Agreement shall be null and void and the deposit or deposits returned to the Purchaser with interest in accordance with the Act and without deduction, and this condition shall be deemed satisfied and waived by the Vendor in the event that the Vendor does not post or deliver notice to the contrary to the Purchaser or his Solicitor on or before February 28, 2009 (or, if extended by the Vendor, by May 31, 2009), provided that the Vendor may unilaterally extend this condition to on or before May 31, 2009, provided that the Vendor gives notice of such extension. The Purchaser acknowledges that the commencement of construction of the Condominium (including the Unit) shall not be construed as a waiver or satisfaction of these conditions. The Purchaser further acknowledges that these conditions are for the sole benefit of the Vendor and may be waived by the Vendor at its sole and absolute discretion at any time in whole or in part without notice to the Purchaser.
What it means:
If the developer abandons the project after you've made a deposit, you'll get your deposit back. If housing prices have gone up so much in the meantime that you can't afford to buy anything else, tough.
What it says:
a)Purchasers are advised that despite the inclusion of noise control features in the Condominium, the sound levels from increasing vehicular and road traffic from surrounding roads, including 1st Street, as may be extended and surrounding commercial establishments, as well as noise, vibration, electromagnetic interference ("EMI") and stray current from Transit operations, may be of concern, occasionally interfering with some activities of the dwelling occupants as the noise level exceeds the Municipality's and the Ministry of Environment and Energy's noise criteria. The dwelling unit will be supplied with a central air-conditioning system which will allow windows and exterior doors to remain closed, thereby ensuring that the indoor sound levels are within the City's and the Ministry of the Environment's noise criteria.
b)The Governmental Authorities, or their successors and assigns, has or have right of way rights-of-way or lines within 300 metres of the Property. There may be alterations to, or expansion of the rail facilities on such right-of-way lines in the future including the possibility that the Governmental Authorities, or their successors and assigns, may expand their operations, which expansion may affect the living environment of the residents in the vicinity, notwithstanding the inclusion of any noise and vibration attenuating measures in the design of the development and individual dwellings if necessary. Purchasers further acknowledge that the CNR owns or has interest in certain lands that are abutting or adjacent to the Property that are used for railway purposes, and Purchasers shall not object to the use of such lands for railway purposes or to noise, vibration or odour associated with such use.
What it means:
If it's noisy or it stinks, close your windows. And you can't complain about it.
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