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After recent stories of condo woes in the National Capital Region, including large, unexpected fees and move-in delays, potential buyers may be wondering how they can protect themselves from similar situations.
This newspaper reached out to experts for advice on what to look out for before signing on the dotted line.
Q: Who should I consult with when I want to purchase a condo?
The Canada Mortgage and Housing Corporation, the government’s national housing agency, suggests in its condominium buyer’s guide that prospective buyers consult with a real estate agent, a lawyer, an engineer or inspector and financial advisors before making a decision on a condo.
“Because buying a condominium is different from buying a traditional house, it’s a good idea to enlist the help of professionals who specialize in condominiums,” writes the CMHC.
Matt Richling, an Ottawa real estate agent, says prospective buyers should also check with the people who live in the building by knocking on doors or connecting on social media to find out more about the “culture” of the condo.
“A condo, in theory, is a city within a city,” he says. “Neighbours are the most important thing when you’re buying a house, and that’s the same here. Instead of living the next plot over, you’re sharing a small wall with neighbours.”
Q: What questions should I ask if I plan to buy a newly-built condo?
According to the CMHC, be sure to ask what’s included in the price of the unit. Are common elements like parking or pool access included? How about finishing touches to the interior of the unit? Are utilities separate, or part of the condo fees? These questions will help buyers understand exactly how much bang they’re getting for their buck.
Prospective buyers should also ask how long the wait will be until they can move in.
“It is always important to evaluate the current state of the construction project,” says the CMHC. “Consider whether or not it seems reasonable that the project will be completed by the date set out in the purchase agreement from the developer before making your moving and financing arrangements.”
Make sure to also comb through the purchase agreement, as there may be provisions in there that allow the developer to push back the move-in date.
Buyers should also ask about the building’s new home warranty. According to the CMHC, the developer will usually get an independent audit done some time in the first year, and it has the responsibility to address any deficiencies found. In the event the developer defaults, new home warranty will cover some fixes within a certain timeframe.
Another important document to review is the disclosure agreement. This includes information about the condo’s amenities, governing documents and budget for the first year.
But according to Ottawa real estate lawyer Louis Guertin, buyers should take those budgets with a grain of salt.
“I would expect it to be a little bit more,” he says of the condo’s first year budget, adding that a developer might put their lowest expectations rather than their highest in order to attract buyers.
According to Ontario law, buyers have the right to cancel a sale within 10 days of receiving the fully-signed disclosure agreement, or within 10 days of any significant change to the agreement. If the buyer cancels within this “cooling off” period, the developer must return the deposit.
Q: What questions should I ask if I plan to buy an older unit?
According to Ontario law, buyers looking for an older unit do not have the same “cooling off” timeframe as people looking at new units do.
Buyers must also pay for a status certificate, which discloses the rules and basic information about the condominium, plus any financial or physical information from previous inspections and studies.
“Your lawyer will order it and go through it with you,” says Richling of the status certificate, which he warns is “about an inch thick.”
If a buyer is unsure about any of the physical or technical aspects of the building, the CMHC recommends hiring an inspector with condominium experience and credentials from the Canadian Association of Home and Property Inspectors or a provincial license.
Q: What kind of recurring costs can I expect?
There will be — you guessed it — monthly fees to pay. These will include condo fees, which cover the maintenance of the building and common areas, and reserve fund contributions, which will cover any major repairs or upgrades. In the event of a shortfall in the reserve fund, a “special assessment” may be levied against the owners to increase the fund.
While low monthly reserve fund contributions sound appealing, it may mean that later, when the garage roof or fences need repairing, there won’t be enough in the pot to pay for everything.
But according to Guertin, getting slammed with a special assessment is getting less and less likely.
“Today, most of the condos with reserve fund studies that I review have all caught up to their past insufficiencies because the new law obligated corporations to put in reserve fund studies,” he says, referring to the 2001 change to Ontario law that required reserve fund studies to be done every three years.
“In my personal opinion, when it comes to buying condos, there’s a stigma,” Guertin says. “In the past, there were big surprises of special assessments that came out of the blue. But that’s going to happen a lot less in the future.”
Owners will also have to pay property taxes and mortgage payments, as well as any amenities and utilities not included in the common expenses. Any maintenance costs related to an individual unit, such as new paint or appliances, are also the responsibility of the owner. There’s also the cost of any personal condo insurance an owner may choose to buy.
But these monthly fees shouldn’t scare buyers off, says Guertin.
“When you’re buying a used house, every future expense is yours,” he says. “When you’re buying into a used condo, you’ve got a reserve that covers all the expenses you may have. So that’s a big advantage that you don’t have when you buy a house.”
Q: Should I look into condo insurance for my unit?
While some owners may believe their condominium corporation’s insurance is sufficient, it does not cover everything.
The corporation’s insurance may cover common areas, boilers and other equipment, and some “perils” such as wind or fire damage.
Personal condo insurance isn’t required, but it could cover the owner’s personal belongings and liability. For example, if an owner’s oven catches on fire and damages the unit next door, personal insurance could protect you.
It can also include coverage against “loss assessments,” including the kind of special assessment levied against owners at the 2630 and 2650 Southvale Cres. condos that doubled their monthly payments.
Pete Karageorgos of the Insurance Bureau of Canada says that because special assessments are used to pay for emergency repairs or upgrades, some insurance plans could cover condo owners the same way a homeowner would be covered in the event of wind damage or fire.
“It’s related to the event that caused the special assessment,” he says of personal insurance coverage. “As long as it’s one of these perils, the individual could be reimbursed.”
Condo buyers and owners, Karageorgos advises, should speak to insurance brokers about plans that could cover them in the event of a special assessment and what kinds of repairs would be covered.
“The important thing is to shop around, talk to an insurance broker and find what’s right for you,” he says.
Q: Once I’ve purchased a condo, should I go to my condo meetings?
The short answer is yes.
“I mean, personally, I don’t know if I would. They’re probably pretty boring,” Guertin says with a laugh. “But it’s buyer beware, and you should look at your investment.”
Guertin recommends at least reviewing your condominium corporation’s financial statements and budget to make sure there are no red flags that could cause headaches in the future.
Richling, though, says that being engaged in the financial and physical health of the building is crucial, and that means attending meetings.
“It’s the biggest thing,” he says. “Be involved. Think about what’s important to you.”
查看原文...
This newspaper reached out to experts for advice on what to look out for before signing on the dotted line.
Q: Who should I consult with when I want to purchase a condo?
The Canada Mortgage and Housing Corporation, the government’s national housing agency, suggests in its condominium buyer’s guide that prospective buyers consult with a real estate agent, a lawyer, an engineer or inspector and financial advisors before making a decision on a condo.
“Because buying a condominium is different from buying a traditional house, it’s a good idea to enlist the help of professionals who specialize in condominiums,” writes the CMHC.
Matt Richling, an Ottawa real estate agent, says prospective buyers should also check with the people who live in the building by knocking on doors or connecting on social media to find out more about the “culture” of the condo.
“A condo, in theory, is a city within a city,” he says. “Neighbours are the most important thing when you’re buying a house, and that’s the same here. Instead of living the next plot over, you’re sharing a small wall with neighbours.”
Q: What questions should I ask if I plan to buy a newly-built condo?
According to the CMHC, be sure to ask what’s included in the price of the unit. Are common elements like parking or pool access included? How about finishing touches to the interior of the unit? Are utilities separate, or part of the condo fees? These questions will help buyers understand exactly how much bang they’re getting for their buck.
Prospective buyers should also ask how long the wait will be until they can move in.
“It is always important to evaluate the current state of the construction project,” says the CMHC. “Consider whether or not it seems reasonable that the project will be completed by the date set out in the purchase agreement from the developer before making your moving and financing arrangements.”
Make sure to also comb through the purchase agreement, as there may be provisions in there that allow the developer to push back the move-in date.
Buyers should also ask about the building’s new home warranty. According to the CMHC, the developer will usually get an independent audit done some time in the first year, and it has the responsibility to address any deficiencies found. In the event the developer defaults, new home warranty will cover some fixes within a certain timeframe.
Another important document to review is the disclosure agreement. This includes information about the condo’s amenities, governing documents and budget for the first year.
But according to Ottawa real estate lawyer Louis Guertin, buyers should take those budgets with a grain of salt.
“I would expect it to be a little bit more,” he says of the condo’s first year budget, adding that a developer might put their lowest expectations rather than their highest in order to attract buyers.
According to Ontario law, buyers have the right to cancel a sale within 10 days of receiving the fully-signed disclosure agreement, or within 10 days of any significant change to the agreement. If the buyer cancels within this “cooling off” period, the developer must return the deposit.
Q: What questions should I ask if I plan to buy an older unit?
According to Ontario law, buyers looking for an older unit do not have the same “cooling off” timeframe as people looking at new units do.
Buyers must also pay for a status certificate, which discloses the rules and basic information about the condominium, plus any financial or physical information from previous inspections and studies.
“Your lawyer will order it and go through it with you,” says Richling of the status certificate, which he warns is “about an inch thick.”
If a buyer is unsure about any of the physical or technical aspects of the building, the CMHC recommends hiring an inspector with condominium experience and credentials from the Canadian Association of Home and Property Inspectors or a provincial license.
Q: What kind of recurring costs can I expect?
There will be — you guessed it — monthly fees to pay. These will include condo fees, which cover the maintenance of the building and common areas, and reserve fund contributions, which will cover any major repairs or upgrades. In the event of a shortfall in the reserve fund, a “special assessment” may be levied against the owners to increase the fund.
While low monthly reserve fund contributions sound appealing, it may mean that later, when the garage roof or fences need repairing, there won’t be enough in the pot to pay for everything.
But according to Guertin, getting slammed with a special assessment is getting less and less likely.
“Today, most of the condos with reserve fund studies that I review have all caught up to their past insufficiencies because the new law obligated corporations to put in reserve fund studies,” he says, referring to the 2001 change to Ontario law that required reserve fund studies to be done every three years.
“In my personal opinion, when it comes to buying condos, there’s a stigma,” Guertin says. “In the past, there were big surprises of special assessments that came out of the blue. But that’s going to happen a lot less in the future.”
Owners will also have to pay property taxes and mortgage payments, as well as any amenities and utilities not included in the common expenses. Any maintenance costs related to an individual unit, such as new paint or appliances, are also the responsibility of the owner. There’s also the cost of any personal condo insurance an owner may choose to buy.
But these monthly fees shouldn’t scare buyers off, says Guertin.
“When you’re buying a used house, every future expense is yours,” he says. “When you’re buying into a used condo, you’ve got a reserve that covers all the expenses you may have. So that’s a big advantage that you don’t have when you buy a house.”
Q: Should I look into condo insurance for my unit?
While some owners may believe their condominium corporation’s insurance is sufficient, it does not cover everything.
The corporation’s insurance may cover common areas, boilers and other equipment, and some “perils” such as wind or fire damage.
Personal condo insurance isn’t required, but it could cover the owner’s personal belongings and liability. For example, if an owner’s oven catches on fire and damages the unit next door, personal insurance could protect you.
It can also include coverage against “loss assessments,” including the kind of special assessment levied against owners at the 2630 and 2650 Southvale Cres. condos that doubled their monthly payments.
Pete Karageorgos of the Insurance Bureau of Canada says that because special assessments are used to pay for emergency repairs or upgrades, some insurance plans could cover condo owners the same way a homeowner would be covered in the event of wind damage or fire.
“It’s related to the event that caused the special assessment,” he says of personal insurance coverage. “As long as it’s one of these perils, the individual could be reimbursed.”
Condo buyers and owners, Karageorgos advises, should speak to insurance brokers about plans that could cover them in the event of a special assessment and what kinds of repairs would be covered.
“The important thing is to shop around, talk to an insurance broker and find what’s right for you,” he says.
Q: Once I’ve purchased a condo, should I go to my condo meetings?
The short answer is yes.
“I mean, personally, I don’t know if I would. They’re probably pretty boring,” Guertin says with a laugh. “But it’s buyer beware, and you should look at your investment.”
Guertin recommends at least reviewing your condominium corporation’s financial statements and budget to make sure there are no red flags that could cause headaches in the future.
Richling, though, says that being engaged in the financial and physical health of the building is crucial, and that means attending meetings.
“It’s the biggest thing,” he says. “Be involved. Think about what’s important to you.”
查看原文...
