HOW ARE CONDO BUYERS PROTECTED IN CASE OF OCCUPANCY DELAYS?

The main advantages of buying a pre-construction condo are that you usually get a better price when you buy at the beginning, and you get to choose to some extent the finishes that your unit will have. For some, there’s the added kick of knowing that no one else has ever lived in their home before. But if you can’t handle the fact that when you buy a pre-construction condo you will have to wait three or four years before you actually move in, you should buy something else.

How certain can you be about the time you’ll have to wait until your condo is complete, and how are you protected against delays in construction? The fact that delays happen is not exactly an industry secret, and to a certain extent, developers are in a bind themselves. George Carras, the head of one of the main real estate industry research firms, RealNet Canada, said recently that labour shortages in Toronto  are making it increasingly difficult to build the huge number of new condos on time. According to Carras, the most that builders can produce with present resources is 15,000 new units a year. But there are currently 55,000 units under construction, and 32,000 more in pre-construction.

There are plenty of other reasons for delays in condo construction—the tighter credit market available to developers, the massive size of some developments, the staging problems of building large buildings in a confined space in the downtown core—but developers are expected to deal with these problems. The best advice to anyone considering purchasing a condo is to check into the developer’s track record before you commit. A good source of information about new home warranties in general, and condominiums in particular, is Tarion.

You the condo  buyer, are quite well protected in Ontario by the Tarion warranty corporation. When you purchase a pre-construction condominium, the builder is required to attach a document called the Tarion Addendum. It contains a Statement of Critical Dates, with the date when the builder expects the condominium to be completed clearly stated. This is obviously important and is one reason many experts recommend that you have either a realtor or a lawyer with you when you sign a purchase agreement.

The Statement of Critical Dates allows the builder a fair amount of wiggle room, and every purchaser needs to be aware of this. The key date here is the Outside Occupancy Date: the builder cannot extend occupancy beyond this date without paying you compensation.

But before you reach that Outside Occupancy Date, you will go through a First Tentative Occupancy Date. As the name suggests, it could be the first of several, and it is “tentative,” representing a target date. In each case of an extended occupancy date by the builder, you must be informed in writing 90 days beforehand.

If the first (or other) tentative occupancy date can’t be met, the builder must set a Final Tentative Occupancy Date, within 30 days of the completion of the building’s roof. If that date can’t be met, the builder must give you 90 days’ written notice to set one more deadline: the Firm Occupancy Date. This is the last occupancy date the builder can set and it can’t be later than the Outside Occupancy Date you both signed off on at the beginning. If the condo isn’t ready by the Outside Occupancy Date, you have thirty days to terminate the agreement if you wish. The Outside Occupancy Date may be as late as 365 days after the Firm Occupancy Date.

A fairly high-profile legal action is now underway in the courts of British Columbia, arising, according to newspaper reports, from a condo developer’s alleged failure to inform purchasers of a delay in construction. One of those purchasers was Kim Campbell, former prime minister of Canada. She and the other purchasers in the upscale building are suing the developer, who delayed completion of the building by more than a year, without, allegedly, informing anyone. Campbell is reported to have signed the purchase agreement in October 2007, with an occupancy date of December 2011. The building was not completed until January 2013.

Builders too are protected, against delays that are considered unavoidable, such as would occur if construction workers were to go on strike, or some kind of disaster caused extensive damage. And there is also a provision that allows the builder to negotiate an extended occupancy date by mutual consent.

 

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Data Reveals Red Hot New Condominium Apartment Sales Across Canada in 2017

TORONTO, Feb. 12, 2018 (GLOBE NEWSWIRE) — Altus Group Limited (“Altus Group”) (TSX:AIF), a leading provider of commercial real estate services, software and data solutions, today released the latest numbers on new condominium apartment sales in key markets across Canada for 2017. The data provides insight into new condominium apartment sales, inventory and pricing in the Greater Toronto Area (“GTA”), other areas of the Greater Golden Horseshoe (“GGH”), Edmonton, Calgary and Vancouver.

In 2017, the GTA was by far the hottest market in the country for new condominium apartments with a record 36,429 units sold. The market saw the largest increase in buying activity across Canada with 7,297 more units sold than the previous year, up by 25%. Despite an increase in the number of new units brought to market by developers in 2017, the pace of sales exceeded the new supply. As a result, available inventory declined to its lowest level since Altus Group has been tracking the market, which prompted rapidly rising prices.

Other areas of the GGH also saw strong sales in 2017 with a combined 3,467 new condominium units sold last year, although the total was down 8% from a buoyant 2016. Hamilton and Kitchener-Waterloo remain the two largest new condominium apartment markets in the GGH regions surrounding the GTA with 783 and 1,257 units sold, respectively.

New condominium apartment sales in Edmonton grew over 60% in 2017, the largest percentage growth of the markets tracked, with 1,289 units sold last year. This significant increase was connected to the downtown condo market where the new Rogers Centre attracted buyers to the city’s core, with sales increasing by 160% year over year. The suburban areas of Edmonton were still dealing with a large supply of inventory and sales were relatively flat compared to 2016.

The recovery of new condominium apartment sales in Alberta was also seen in Calgary, which saw 2,083 new condo units sold last year, increasing by 42% from 2016. After a two-year downturn, buyers are returning to the market but unlike in Edmonton, it was the suburban areas, rather than the downtown core, that saw the stronger increases.

While other key markets in the Altus Group data saw sales in the new condo market either exceed or fall just slightly below their 2016 levels, Vancouver was an outlier last year with a marked decline in overall unit sales, impacted by the sharp drop in new condominium supply coming onto the market. However, the 10,939 units sold in 2017 represent a remarkable 90% sales rate of all new inventory introduced into the market in 2017. Vancouver is the tightest new condominium apartment market in the country and sales levels are not reflective of underlying demand, which remains very strong.

“The sales activity across the country indicates that demand for new condominium apartment product was very strong in 2017, but particularly in the GTA,” said Matthew Boukall, Senior Director at Altus Group. “While we expect to see some moderation in the GTA sales volumes in 2018 given price escalation in recent years, rising interest rates, tighter lending criteria and additional mortgage stress testing, strong demand in Vancouver and Calgary is expected to push new condominium apartment sales higher provided a broader range of affordable product can be brought to market.”

Altus Group took a deeper look into the 2017 figures to compare what buyers with a budget of CAD $500,000 could afford in the downtown areas of the various markets across Canada. Comparing the pricing of available new condominium apartment units found that consumers have considerably more buying power in smaller markets such as Calgary, Edmonton and Kitchener versus the two largest markets, Vancouver and Toronto.

  • In the GGH, a buyer could find two bedroom units over 1,000 sq.ft. near the downtown of Kitchener that could be appealing to those willing to go outside of the GTA in search of affordability.
  • Calgary and Edmonton buyers could also find two bedroom units between 850-1,000 sq.ft. in high-rise buildings in desirable areas near the core.
  • In the Toronto market, buyers would have to settle for a one-bedroom unit with only 430 sq.ft., or approximately half the space of the other markets.
  • In downtown Vancouver, we were unable to find any new condominium apartment units offered for $500,000 or less. In fact, buyers would need to go into nearby markets like Burnaby to find projects offering one bedroom units at this price point.

Source : Altus Group

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