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Are you a first-time home or condo buyer and have a bunch of questions you’re too scared to ask? Going through this process for the first time is a complicated experience. There are strict timelines to keep in mind, documents and forms required, and applications to be filled out.
Whether you are considering real estate lawyers in Toronto, Ontario, or looking for a real estate lawyer near you, it’s crucial to have professional guidance.
Law firms in Toronto, Ontario like Humber Bay Law offers a range of services to help you navigate this risky area a nd avoid common pitfalls. To assist you, we have compiled the NEED TO KNOW facts and answers to the most common questions clients ask.
1. How do you purchase a pre-construction home? Usually, you can walk into a Sales Office and deal with the Builder’s Sales Team directly. You do not need your own real estate agent for this step. If you decide to buy the home, you will sign an Agreement of Purchase and Sale.
2. Agreement Review Period: Usually, there is a standard 10-day period in which you can review the Agreement of Purchase and Sale with your lawyer and back out of the deal if you need to. Your lawyer can also write to the builder’s lawyer and negotiate terms before confirming that you will proceed with the purchase. You should receive and approve the negotiation letter with your lawyer before it goes out.
3. Legal Fees: Your lawyer will charge a fee to review your Agreement of Purchase and Sale. This fee also usually includes any letters and review of the builder’s reply. You should budget about $300 for this step. If you're considering real estate lawyers in Etobicoke, they often provide comprehensive reviews and advice for such transactions.
4. Deposit Dates: The Agreement of Purchase and Sale will have a breakdown of deposit dates on which you will need to provide a set amount of funds towards your home purchase.
5. Be Prepared for Delays: Purchasing pre-construction homes means that anything could happen during the time your home is being built, and it is very common for the project to be delayed for months and even years.
6. Investment Considerations: New construction properties are a good choice for investors who are not in a rush for a property or a buyer who is not in a rush and requires more time to save money and has a deposit structure to follow.
7. Closing Date: The date on which the deposit payments have all been made and the house is ready for you to move in is called the Closing date. You will get a Final Statement of Adjustments on this day, which will include additional fees you will need to pay. These fees will be about $10,000 and are used to cover levies/development charges, etc.
8. Extensions and Penalties: If you are unable to move into the unit on Closing and need an extension, this will cost you some penalty fees. Builders have discretion on how much penalty to charge. Your lawyer should ask the Builder for an extension, if required, well in advance. In some cases, the penalties are noted in the Agreement of Purchase and Sale; otherwise, it may have to be a negotiation with the Builder.
9. HST Rebate Eligibility: If you are purchasing a new construction property and you will not be living in the property, nor any immediate family members, then you WILL NOT be entitled to the HST rebate. However, you could apply to get it as a Landlord – it can take some time before you are approved for such a rebate.
10. Primary Residence and HST Rebate: If you want to use the property as your primary residence and/or you are purchasing the property for an immediate family member to live in, you should notify the Builder so they can provide the necessary HST rebate forms and credits for final closing.
Once you have a Purchase Agreement, you should take it to your lawyer for review (about $350.00). This should be done as soon as possible because you only have 10 days to rescind the Agreement if you choose to walk away from the purchase.
There are two stages in this purchase: the Occupancy Closing and the Final Closing.
1. Occupancy Permit: Happens when the Builder deems the unit to be livable and an occupancy permit is issued by the City/Town. The Builder will then notify each purchaser that Occupancy Closing has been scheduled. This stage is similar to paying rent until you take ownership. You are required under the terms of the Agreement to occupy or at least pay occupancy fees every month. These fees include estimated common expense fees, property taxes, and interest.
2. Extensions: If you are unable to move into the unit on Occupancy date and need an extension, this will cost you some penalty fees.
3. Occupancy Duration: The Occupancy stage can last any where from 2-10 months, depending on the project.
4. Mortgage Preparation: If you are taking out a mortgage, it is very important to keep your Mortgage Representative updated on each process so they can start preparing and ensure there will be no delays by the time Final Closing is scheduled.
5. Early Mortgage Application: You should apply and prepare for your mortgage early on in the process.
6. Statement of Adjustments: The Builder’s lawyer will provide a short-form Statement of Adjustments out lining the amount they require for this stage.
7. Occupancy Deposit: The balance due and paid on Occupancy Closing is treated as a deposit for Final Closing.
8. Final Adjustments: The Statement of Adjustments provided on Final Closing should reflect the amount you paid on Occupancy.
9. Final Closing Date: Once the Declaration is registered, a final closing date is established, and notice is usually provided to the Purchaser and their Lawyer.
10. Mortgage Documentation: You need to send this Notice to your Mortgage Representative as soon as possible so they can start preparing your mortgage documents.
Whether you are buying in Toronto or the Peel region, it’s essential to have experienced professionals by your side. Whether you are a first-time or repeat buyer, these considerations apply to everyone. Happy bargain hunting, everyone!
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