If you are on the market for a condo in Toronto, one of the pressing questions many have is whether to buy an existing condo or one that is brand new. Both have pros and cons which you should weigh carefully before you decide. Naturally, the thought of something pristine and unlived in has its appeal, but there are factors to consider first.
Visualize The Potential
When you are shopping for a new condo you must have a creative imagination. You will be looking at floor plans for various layouts and the ground may not even be broken for the project. It is not as easy as you may think to visualize what your finished condo will look like. Most condos also allow you a choice of finishes such as paint colour and flooring and sometimes cabinets and fixtures too.
It’s a good idea to work with a seasoned realtor and not directly through the contractor. Realtors know what to look for to protect you from clauses written into your Agreement of Purchase and Sale that may affect you down the road. Floor plans are sometimes subject to changes such as the layout, size, finishes and features. It is better to be safe now, than sorry later.
Existing condos are usually straightforward. The unit is usually furnished when you view it and all of the amenities are already in place. Compare layout plans and amenities of any new construction condos you are considering against existing resale units that you are like.
Count On Delays With a New Condo
You must also realize that when you are buying a new construction condo that things don’t always go according to plan. Many projects experience delays due to pending approvals, delayed deliveries of materials or unexpected problems. Don’t put all your eggs in one basket when it comes to your occupancy date as it could change. As well, when you get that exciting day when you inspection before you move in you may find that some things aren’t done or not done to your satisfaction. These “deficiencies” almost always pop up in any new build. These problems are fixed after you move in, and the rest of the project likely won’t be finished when you move in. Don’t count on using the gym or the pool right away.
Even when you take possession, the condo is not officially yours either. Title of the condo is not turned over to you until the project finishes and the building authority in the area gives it stamp of approval. In the meantime, you are a renter paying a monthly fee to the contractor.
Programs for New Construction Condos
Fortunately, the Ontario New Home Warranty Program, managed by Tarion, covers new condos. The program was set up to protect purchasers with warranties if there are defects in their condos. It also lays out a timeline that the contractor must adhere to throughout construction to decrease delays. As well, Ontario buyers have 10 days to reconsider even if they sign the Agreement of Purchase and Sale. They may let the contractor know and back out of the deal without penalty during this period. If you are not patient enough for the wait involved with a new condo or you feel more confident when you can actually see what you are buying. An existing condo is probably the answer as the timelines after closing are pretty straightforward.
Know The Financial Status of the Condo Corporation
All buyers will want to get a Status Certificate for the property that they are seriously considering buying. The certificate includes all condo documentation and financial information about the condominium corporation itself. The financial documents should show whether the corporation has obtained a Reserve Fund Study. Also, whether the fund has enough money in it to take care of any repairs that need to be done now and in the future. Also consider if the figures seem reasonable for the age of the building. If there isn’t enough money in the fund, be sure to check how the corporation plans to raise the additional money needed. It will likely be through increased condo fees that you would end up paying if you buy.
Closing on a Condo
Closing a sale of an existing condo is much simpler than a new one. There is only one date to worry about and you can plan around it as there are no building delays. Regardless, work with your lawyer to protect yourself and have them check all your documents before the 10 day conditional period expires. Whichever way you decide to go you will want to know the costs and risks involved.
Condos Sometimes Have Unique Circumstances
When buying a condo, especially new construction, there are sometimes extra contingencies and fine-print involved. Be sure to speak to a real estate professional before signing any documents. Should I buy a new condo or a resale? feel free to contact us here for a free consultation.