Monday, November 24, 2008

Condominium Living: What You Need to Know When You're Buying New

What questions should prospective buyers of new condo units ask their lawyers, and ask them well before closing? The most important questions cover a basic trinity:
  • the real cost of both closing the deal and then living in that new condo each month;
  • exactly what you will get for the price you pay;
  • the rules by which you will have to abide if you do not want to face everything from neighbours pounding on the walls to the condo board suing you.

Real costs

When you buy a condo, you will take on mortgage payments, of course, but you will face other costs, both lump sums and monthly charges.

When is the best time to consider these costs? As early as possible during the 10-day recision period that follows the signing of the offer to purchase. Any time in those 10 days, you can back out if sticker shock sets in.

A new condo in the $200,000 range may carry total closing costs of $8,000 or more. That includes not just expected costs: legal fees of perhaps $2,000, and both provincial and any applicable municipal land transfer taxes, but a slew of charges levied on the developer by the municipality and then passed on to you.

You, therefore, need to pay close attention to what you will have to fork over every month. Yes, there will be that mortgage payment, but there will also be a monthly maintenance fee that covers your share of the building's operating costs, and that probably does not include your electricity costs since, in most new condos, each unit has its own hydro meter.

You may also face user fees for things that you might expect to be free. That might include a fee to use the party room, or a fee to have your parents or grandchildren stay the night in the guest suite.

What you are getting

If the extra cash required on closing comes as a shock, so might the look of your suite when you finally move in. Don't assume that the finishes and fixtures you see in the model suite or artist's renderings will be the ones that you get in your suite. They may be upgrades. Remember, never assume.

And don't expect your suite to be a mirror image of those model suites, even if they have similar layouts. The model suite may be 1,150 sq. ft., compared with your 1,100 sq. ft.

You have to ask if those are the appliances or the faucets or the tiles you are paying for, or if they are upgrades. You have to know just what a 10-foot-by-10-foot room really looks like.

Purchasers should also understand that occupation and closing dates may well be delayed. Have your lawyer explain the Tarion Warranty Corporation rules governing delays and have a standby plan if your condo is delayed.

Rules and regulations

When it comes to condos, your home is definitely not your castle. Every project is going to have written rules that are aimed at guaranteeing all residents have quiet enjoyment of their homes.

That can mean a limit on the kind, number and size of family pets. It can mean no barbecuing on balconies. It can mean limits on the number of people living in a suite, when, how and with whom you can use the pool, how loud you can play your sound system, and even what colour you can paint your front door.

It is up to you, the buyer, to know all these things before you close the deal. You want to avoid surprises.

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