How To Buy A Condo #6

UNDERSTAND YOUR LEGAL OBLIGATIONS

 

Make sure all details of your condo purchase are in writing and never rely on verbal agreements.  Every builder's agreement of purchase and sale documents are unique, so it's important to have your lawyer review them fully.

 

If buying a pre-construction unit, you have a 10-day cooling off period:  use this time to discuss any concerns with your lawyer and confirm your financing.  If you decide you don't want the unit anymore, you can cancel the deal and get your deposit back.  But once the 10 days pass, you are bound to the agreement.

 

All contracts give the builders the option to cancel the contract, but once the 10 day cooling off period is up, this option isn't available to the buyer.

 

A nightmare scenario that happened in Vancouver a couple of years ago shortly after the financial crisis of 2008; prices for pre-construction condos in several markets fell abruptly, in some cases by 20%.  Many people in Vancouver watched as prices of their pre-built condos plummeted to the point they would lose thousands of dollars.  In some cases, lenders withdrew the mortgage pre-approval, because the condos were now worth less than the loan amounts.  The harsh reality?  Those buyers still had legal obligation to buy the condo units at the price agreed to:  if they walked away, not only would they lose their deposits, but the builders could sue for the difference in price.  If you have to pull out of a pre-sale contract, you're often out of luck.  The magnitude of the losses can be huge.

 

Luckily, some builders did choose to renegotiate during the downturn.  But other buyers lost their deposits and were sued.  

1 Comment

  1. condo for sale in calgary 09/10/2014 at 7:27 AM

    Buying a unit involves legally binding contract, thus one should be very careful in signing the agreement. It is for the best if the buyer should consult a lawyer.

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Aaron Moss

Aaron Moss

REALTOR®
CENTURY 21 Assurance Realty Ltd.
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