With one of the hottest condo markets in North America, a growing number of Torontonians are opting to buy pre-construction units. Like any construction project, delays with pre-construction condos can occur. Although condominium projects can fall behind schedule for any number of reasons, delays are especially common when there are a number of competing developments in one area. The good news is that there are rights and protections in place to support buyers when these setbacks occur.
Whether you’re planning on moving in yourself or having tenants, it’s important to understand the potential delays that come with a pre-construction purchase, and what your options are when they arise. In some cases, you’ll be entitled to compensation or have the ability to terminate your contract. Working with your real estate agent can help you alleviate some of the stress that comes with construction delays.
Defining Delayed Occupancy
Delayed occupancy occurs when a buyer does not receive their unit by the initial tenancy date outlined in the purchase agreement. This is one of the most critical details of a purchase agreement and is something buyers should pay close attention to. It’s also important to note that a purchase agreement can have more than one tenancy date.
There are two crucial occupancy dates outlined in an agreement, firm and outside. The firm occupancy date is the date on which a builder commits to having a buyer’s unit completed. The outside occupancy date refers to the absolute latest date a builder expects to make the unit available to the buyer. These dates are critical for buyers and can both be impacted by delays.
Keep Track of Changes
In Ontario, builders are allowed to delay the initial tentative occupancy date for any reason as long as they provide tenants with notice of 90 days and set a new tenancy date. Of course, there are restrictions as to how long they can do this. 30 days after the roof is completed on a condo building, a developer is required to set a final tenancy date. If the developer is unable to provide access by the firm occupancy date, the buyer is entitled to compensation and other rights.
Compensation and Cancellation
Once the firm tenancy date has passed, buyers who don’t yet have tenancy of their unit are officially entitled to compensation. This compensation is generally to help cover temporary living expenses and other costs related to the interruption. In Ontario, the fixed compensation amount is $150 per day, up to a maximum of $7500. Compensation begins the day after the initial occupancy date established in the purchase agreement.
Buyers can also be entitled to compensation for the ten days before the firm tenancy date based on the circumstances. With a maximum total of $1500, this can be claimed if a developer does not provide adequate notice of the delays.
If significant delays to tenancy occur, buyers will also have the option to cancel their purchase. Known as the Purchaser’s Termination Period, this permits buyers who choose to back out of their purchase agreement to receive the relevant fixed compensation amount, plus a full refund of costs they’ve paid on the condo so far. This total refund includes a return on deposits, interest, upgrades and other fees.
Have a Plan B
For buyers who are planning on living in their condo, one of the most stressful challenges that can come with a delayed tenancy is finding a place to stay while unit access is delayed. Having a backup plan for temporary housing in case of delays is a great way for buyers to avoid disaster.
Purpose-built rentals are a great option for temporary housing as they are typically furnished and offer flexible lease periods. Plus many of these developments offer some incredible amenities for them to enjoy while they wait for their condo to become available.
Ask an Agent
While potential delays shouldn’t deter buyers from exploring the pre-construction market outright, recognizing the reality of delays can help prevent unpleasant surprises down the line. When purchasing a pre-construction condo, buyers should choose a real estate agent that will advocate for them. As condo market experts, a great agent can help buyers navigate delays and interruptions. They’ll also be able to ensure buyers receive the best compensation possible when setbacks occur.
Article by: torontoism.com
A Real Estate Advisor Will Help Streamline the Process and Keep You Focused
Canadians know the real estate market is growing fast but how unusually fast it’s moving may not be clear. Data from US Federal Reserve researchers might help with that. The numbers show Canadian home prices increased at a rate at least 50% faster than any other G7 country in Q4 2021. The issue isn’t just one or two quarters though, but persistent froth that has accumulated. Home prices in Canada have more than doubled since 2005, rising at least twice as fast as any other G7 country. Some of which have even acknowledged they’re in a real estate bubble.
Canadian Real Estate Grew 1.5x Faster Than Any Other G7 In Q4
Canadian home prices rose much faster than any other G7 country in the last quarter of 2021. Home prices increased 5.7% in Q4 2021, about 1.5x the rate in the UK (3.8%), the second fastest G7 for the quarter. The US (3.5%) is in a distant third, even with substantial growth. It was a huge quarter, topping off a huge year.
Canadian Real Estate Prices Grew 25% In 2021
Home prices surged last year in most advanced economies but none grew like Canada. Annual home price growth reached 25.1% in 2021, about 1.4x the growth rate of the US (17.9%), the second fastest G7. It was a sharp drop off that gets sharper with third place, Germany (12.4%). Growth might seem tiny in contrast to Canada, but it’s a boiling point issue for Germans. Some policymakers have even begun to push for the nationalization of rental stock.
Canadian Home Prices Grew 219% Since 2005, 3x Any Other G7
As mentioned earlier, the issue isn’t one or four quarters of high growth for Canada. The country persistently outperforms other G7 countries, creating a mind blowing gap. Since 2005, Canadian home prices increased 219% — more than double Germany (93%) and over 3x the UK (76%). The US (67%) is considered frothy, but with less than a third of the growth of Canada, it might seem like a deal. The gap really has to be seen to be appreciated.
Similar errors in monetary policy across many countries have sent home prices soaring. This is a point Canada’s banks have been hammering on, arguing this shows it’s a monetary issue. The big difference is countries like the US acknowledge they have a housing bubble. Meanwhile, Canada is slurring its words and explaining it only had a little to drink but thinks it’s still OK to drive home.
Article by: betterdwelling.com