Before reading this series, be sure to tune into part 1 where we uncover what to know before buying a pre-construction condo. Here in part 2, we’re discussing what happens once you’ve signed the initial paperwork to purchase your new pre-construction unit.
This will cover when you can expect to move in, the fees along the way and the different phases of your closing. After reading this, you’re going to feel all the more informed to move forward in deciding whether pre-construction is the right choice for you.
Cooling Off Period
One of the best parts in purchasing pre-construction is that you have a dedicated cool off period. While every province in Canada is different, the cool off period is generally between 7 and 10 calendar days. For residents in Ontario, the cooling off period is 10 days. This means that you have 10 days after you sign the agreement paperwork to change your mind.
During this time, you can reconsider your decision and determine whether or not you’d like to continue moving forward. This is also a time where you can get your finances in order and ensure that you can afford such a purchase.
Prepare for Delays
Of course, you may have been promised by the developers that move-in is scheduled for Spring 2020. However, it’s absolutely crucial to expect delays and to plan ahead of time for such delays. Unfortunately, developers have far too much power to face any real consequences from these delays.
Far too often, buyers rely too heavily on their anticipated move-in date. When that date continues to be delayed, the buyers find themselves to be out of luck and with nowhere to call home. It’s easy to see how this can become incredibly frustrating for those that continue to face delay-after-delay.
In an effort to protect yourself, plan for your unit to be ready for move-in 6-12 months after their initial date.
Occupancy Period Versus Building Registration
Understanding when you can move into your unit can be confusing when it comes to pre-construction. This is because the building goes through various phases before the official registration of the building. It’s not until the building is officially “registered” that the title will be transferred. Once this title transfer takes place, you will officially own your unit.
However, residents can choose to move in before the condo is officially registered. In this event, the residents will be moving in during the occupancy period. This is referred to as “interim occupancy” and is the period between the occupancy date and the date in which the building is registered.
Prepare for Occupancy Fees
If you move into the building during the interim occupancy period you’re going to have to pay what is called an “occupancy fee”. Sometimes referred to a “ghost mortgage”, these are monthly fees paid to the developer before the building officially registers. Unfortunately, this is just the reality of moving into your building before the registration takes place.
Because the building is not officially complete, you’re unable to begin making your monthly mortgage payments. Once the building officially registers you can stop paying occupancy fees and begin paying your actual mortgage.
It’s worth noting that more experienced developers are less likely to have long and exaggerated occupancy periods. These developers are well aware of how to construct a building in favour of its residents and keep all parties happy. This means that you can look forward to the condo registering as quickly as possible after occupancy.
So, What Now?
Does the notion of pre-construction appeal to you? If so, be sure to connect with a pre-construction specific real estate agent. Not only will you have a better chance at securing a unit in the first place, but you can rest assured that the process is more likely to be smooth.
Let’s face it, throughout the pre-construction process, you’re more than likely going to run into a few bumps in the road. This is why it’s so crucial to work with a professional that knows the market well.
Let Nobul help you navigate this process!