When you buy a Condominium you are actually buying two things: your individual unit and a share in the condominium corporation that owns and maintains the land and all of the common elements such as elevators, outside grounds, security, parking etc. It is just as important that your condominium corporation is in good condition as your individual unit.

To find out the status of the corporation, you should request a ‘Status Certificate’ as part of your offer.

When looking at condominiums, you must also consider the building itself. The choice of the building has a big impact on your ‘lifestyle’. The ‘building lifestyle’ is determined by three factors:

• Amenities
• Location
• Mix of Owners

Condo Maintenance Fee

Why do they differ so much between buildings/corporations? In reality operating costs are virtually the same between buildings. What creates the difference is that some buildings include some or all utilities in the maintenance fees while other buildings have the individual owners pay the utilities directly. Secondly each building pays for different amenities such as 24 hr. security guard or none; valet parking; free shuttle bus; swimming pools etc. Finally each corporation is required to set aside a portion of the condo fees for a reserve fund to pay for major repairs in the future. Some corporations may not charge sufficiently for their reserve fund. To compare expenses between buildings, you must add your condo maintenance fees plus utilities you pay direct to get an accurate comparison.

Information on the status of the corporation including current condo maintenance fees is contained in a ‘Status Certificate’ for that corporation/building. Remember again that you should always request a Status Certificate as a condition of making an offer on a resale condominium property.

What are the advantages of buying a condominium?

Originally condominiums were developed as a cheaper form of housing. Instead of having to buy the land and the building, people could own their building/unit and share the land cost.

It then makes private ownership possible in areas where land values would ordinarily make this too expensive, like living downtown or in a popular community.

Today people buy condominiums as much for “Lifestyle” as they do for price. Downtown you can buy condos for over one million dollars quite easily.

Condo ownership also eliminates some of the problems of upkeep and maintenance often associated with home ownership, since the cost of maintenance is shared and is usually the responsibility of the Condominium Corporation through its property management (Lifestyle). For older people, condominiums represent an attractive ownership alternative when they spend extended periods away from their property.

Status Certificate

When purchasing a resale condominium unit, you should ensure that your offer is conditional on receiving and reviewing a Status Certificate and the accompanying documents, as required by the Act. The certificate is the resale equivalent of a disclosure statement and you must review all the material that comes with the certificate to ensure that you are satisfied that both the condominium unit and the condominium corporation are suitable for you.

This certificate, for which there is a fee of $100 inclusive of HST, must be delivered within 10 days of the request for it. It discloses whether the owner of the unit you are buying is current in the payment of common expenses as well as a picture of the condominium corporation’s financial affairs. It is to be delivered with the documents, which govern the condominium corporation but are not attached. Once the list of agreements is reviewed, you or your lawyer may also wish copies of some or all of them for review. There can be an extra charge for these documents.

Common Questions:

Is there any warranty on my property?

Yes, the Ontario New Home Warranty Program (ONHWP) provides protection for condominium buyers of newly constructed residential units. However, ONHWP does not apply currently to properties which are renovated or built on existing foundations.

There are two ways in which the ONHWP provides protection:

It guarantees the buyer that any deposit or down payment made by the purchaser of a new condominium unit up to a maximum of $20,000 will be returned if the developer is unable to complete the transaction. It warranties construction of the units from the date of occupancy, and the common elements from the date of registration, for one year against most defects . . . for two years for the mechanical and electrical systems the building envelope and water penetration . . . and for seven years against major structural defects.

In addition, there is a warranty for substitutions of key elements in the unit made by the developer without the consent of the purchaser. For further information on what rights you have under the Warranty Program you can contact them at (416) 229-9200 or visit them here Tarion

How are common expenses determined?

The developer is responsible for allocating the contributions to common expenses to each unit. Usually the developer bases the allocation on the size of the unit; the larger the unit the greater the amount of payable towards common expenses. A developer however is not required to use this basis for common expense allocation.

A portion of the common expenses paid by the owners is transferred monthly to reserve fund account. The reserve fund is the unit owners’ savings for the major repair and replacement costs of the common elements which occur as a building gets older.

Who manages the property?

Usually, a property management firm, under the direction of the Board of Directors, runs the day-to-day affairs of a condominium corporation. Some condominium corporations are self-managed. The board is responsible for carrying out the obligations of the Corporation as set out in the Act, the condominium documents (declaration, by-law and rules) and any agreements to which the corporation is a party.

Do I have a say in what happens in the condominium?

Yes – You have the right to participate in the affairs of the condominium corporation.

Can I lease or rent the condominium unit I own?

Yes – An owner who leases his or her unit must give the corporation the name of his or her tenant(s) and a summary of the lease or a copy of the lease. The owner and the tenant are both responsible to the corporation. The tenant is bound by all the same documents as the owners

NEW HOMES AND CONDOMINIUMS (By Mark Weisleder, Lawyer)

When it comes to buying a brand-new home or condominium in Ontario, there are three processes that buyers need to be familiar with in doing their homework. They are the following:

Understand your rights under your provincial new home warranty program.

Research the builder. This includes looking at all the company references.

Hire a lawyer to explain the home-builder or new-condominium standard form agreement of purchase and sale; look for hidden charges.

In Ontario, the Tarion Warranty Corporation provides protection for new-home buyers. Their warranty programs are designed to ensure that all new home and condominium builders are properly licensed, and that all new homeowners receive the home warranty coverage they are entitled to. Tarion also distributes annual awards to recognize excellence in building in Ontario. You can read about the winners for the last four years on the
Tarion website (www.tarion.ca). Similar public and private programs across Canada provide protection for buyers of new homes and condominiums.

Yet as a buyer, it’s your responsibility to research builders. Visit new homes and condominiums built by the same builders, and speak to the people living in them what the builders did after the closing. Did they any deficiencies that were noted on the pre-delivery inspection in a timely manner? In Ontario, go to the Tarion Search the web for convictions or other offences noted builders who did not comply with their obligations under
warranty program.

The first question to ask about builders is: are they registered with the provincial warranty protection program? In Ontario, you can check the Tarion website under t “Find a Builder.” You can find out how many homes they have built in the past ten years, and whether they have had any claims made against them.

If the builder is not registered with the provincial program there is a real risk the home won’t meet the requirements of the provincial building code. The builders may have begun work without obtaining any of the required municipal permits or inspections. Make sure your builder is registered. In Ontario, this means Tarion.

THE TARION WARRANTY PROGRAM

In Ontario, every new home and condominium is covered by a warranty backed by the Tarion Warranty Corporation. The warranty protects deposits of up to $20,000 for new condominium units and $40,000 for new homes. If your agreement requires you to pay more than $40,000 in advance as deposits for a new home, make certain that these funds are paid directly to the builder lawyer in trust, or ask for proof that the builder has a separate insurance policy to protect any deposit over $40,000. There were unfortunate cases where unsuspecting buyers paid builders more than $40,000 in deposits and the builders subsequently went bankrupt. The buyers were only compensated $40,000 by Tarion, which is the limit for deposit protection.

Up to $5,000 can be claimed if your closing occurs more than 120 days late for a new home and 135 days late for a new condominium.

A one-year warranty covers all work and materials used, so you know your new home was constructed in a workmanlike manner. This warranty also protects you against any violations of the Ontario Building Code.

You get a two-year warranty against water penetration through the basement or foundation walls, and against defects in the electrical, plumbing, and heating systems; it also ensures that your home is free of any structural defects.

There is a seven-year warranty on anything — including major defects in the building structure — that significantly affects the use of the building as a home.

In other provinces there are similar warranty plans, as well as some private companies offering the same protection. Discuss warranty coverage with your lawyer before you buy any new home.

ADVANTAGES OF USING A REAL ESTATE SALESPERSON

Many buyers don’t know the advantages of using a real estate salesperson to buy a newly built home. Buyers typically rely on the salespeople working for the builder. But the builder’s salespeople are working primarily for the builder, and their goal is to obtain the highest price possible for their builder client.

Many buyers think it will cost them more to use their own real estate salesperson because the builder will have to pay the buyer salesperson’s commission. This is not true. Most builders recognize real estate salespeople have relationships with many interested buyers; these builders are only too happy to permit salespeople to bring interested buyers into a new home or new condominium development. Buyer salespeople and developers
co-operate with each other regarding the payment of any commission, at no additional cost to the buyer.

Here’s a list of some of the knowledge and experience real estate salespeople bring to a new home or new condominium transaction:

Layout and location of the home: Real estate salespeople can provide timely advice about north and south exposures and advantages when you’re choosing a new home from the builder’s plans. In many cases, builders try to sell the less choice locations first, holding back more premium lots. An expert salesperson will ask questions to ensure that you get a look at all options before making any purchase decisions. A salesperson can also help you visualize the completed subdivision, and tell you what view and sunlight you’ll have once all the homes are completed.

Upgrades: Typically, builders make most of their profits by upgraded finishes at inflated prices. Real estate salespeople tell you if the upgrades will bring you the same additional value when you’re selling your home. You’ll be able to focus your dollars on upgrades that give you the maximum return on your investment.

This same reasoning applies when it comes to choosing a specific unit in a new condominium building. There will be differences in layout, view, and finishes throughout the condominium building.

Resale value: Because real estate salespeople have detailed knowledge of prices in a particular area, they can also provide timely advice about which new home or new condominium development is likely to retain
or increase in value. Their advice will be based on factors, both social and economic, in the development’s area.

Hidden charges: Experienced salespeople should be familiar with some of the hidden charges in the agreement of purchase and sale for a newly built house or condominium building, as discussed in the next section on
the fine print. They are in a better position to negotiate some of the charges before you accept the agreement of purchase and sale. Your buyer salesperson may, for example, ask to add a clause to the agreement that puts a cap on all extra charges, so you know the maximum you’ll have to pay on closing, besides the actual purchase price.

THE FINE_PRINT: There is no such thing as a “standard” new-home or new-condominium agreement. Builders usually hire a law firm to create the agreement; these agreements can differ significantly from builder to builder. So can costs to buyers. Every new-home or new-condominium agreement must be made conditional upon the review and approval of the buyer’s lawyer. An example of this condition is as follows:

“This offer is conditional upon approval of the terms hereof by the seller’s lawyer. Unless the seller gives notice in writing delivered to the buyer or to the buyer’s address as hereinafter indicated not later than ___p.m. on the ___________day of _______,20___, that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the buyer in full without deduction. This condition is included for the benefit of buyer and may be waived at the buyer’s sole option by notice in writing to the seller within the time period stated herein.”

Hidden in the agreement may be all kinds of additional fees payable by the buyer. These could include the buyer’s share of city connection fees, a Tarion enrolment fee, and the reimbursement of other developer fees. Ask the builder’s salesperson for a detailed list of every single charge expected of you on closing, and review the list with your lawyer. Make sure what is written in the standard form accurately reflects the charges on the builder’s list of charges.

When you’re buying a home that hasn’t been built measurements and floor plans are very important, Builders usually calculate their measurements to the outside wall, so the area inside your new home will be smaller than what you may be expecting. Be sure you obtain all interior measurements, so you know the real size of your rooms. Don’t be afraid to measure the model suite or model home, and make sure the expected floor plan with all the expected room sizes is attached to your purchase agreement. You can add a clause to your agreement that states that if the new home is more than two percent smaller than promised, you may terminate the transaction or receive a rebate in the purchase price. A professional real estate salesperson can help you write the clause and get the best deal for your new home.

The agreement will also tell you when you may make selections for the interior and exterior finishes. If you changes partway through the construction, you’ll have to pay surcharges.

THE PRE-DELIVERY INSPECTION

This inspection gives you the opportunity to view your new home in a completed state and to note any deficiencies, damages, or items that may be missing on the pre-delivery inspection (“PDI”) form. During this inspection, the builder will show you how to operate the heating, plumbing, electrical, and air conditioning systems in your new home. Take your time and test everything in the house very carefully. Turn on the heating,
run water in all the sinks, flush the toilets, turn the air conditioning on, check all the lights and electrical outlets, and make sure the appliances are working. Are there any scratches or chips on the countertops, bathtubs, or toilets? Do all windows and doors open easily? Bring your list of selected finishes with you; make sure you received everything you paid for, and that there are no substitutions. If you fail to mention something on the PDI form, you may have difficulty claiming for it later. A builder could say the damage happened after you moved in and was caused by you.

Make sure you follow up regularly with your builder to ensure all deficiencies noted on your PDI form are rectified as soon as possible after your closing. You don’t want to have to file a complaint with Tarion to have the work completed.

NEW CONDOMINIUMS

The Tarion warranty program also works for buyers of new condominiums. There is also a PDI form to complete when the unit is ready for occupancy; be careful to note any deficiencies, damaged, and missing or substituted items.

Developers must give you a disclosure statement when you buy a new condominium unit. The form includes copies of the declaration, the description, and the first year’s proposed budget. You have a ten-day “cooling off” period, during which you can change your mind for any reason, or cancel the agreement and receive a return of your deposit.

Condominium developers and home builders also typically include an “economic-viability clause” in their agreements: if they don’t sell sufficient units or homes, or if unforeseen factors occur, they can cancel the
project without penalty and refund only your deposit. Try to buy from a developer who has already started construction. The farther along the developer is with construction, the less likely he or she will cancel the project.

A change in your circumstances is much more problematic. For example, let’s say you agree to buy a new condominium unit in a building that won’t be built for three years. Say you pay twenty-five percent in deposits over the three-year period. Then you lose your job, or the stock market has a meltdown. If you can’t close, the builder has the right to keep your deposit then sue you if the unit sells for less than you promised to pay.
You can add a clause to your purchase agreement to minimize your losses. For example, the clause can say that if you and your spouse are buying the unit together, and if you or your spouse dies before the closing, you have the right to cancel the transaction on payment of an agreed-upon amount, perhaps five to ten percent of the purchase price. Depending on market conditions, builders should be willing to accept such a provision.

New condominiums may also contain commercial units on the main floor. These units typically are not part of the condominium corporation, and developers have the right to rent them out to the tenants of their choice. Ask who the commercial tenants are; the commercial units may affect the continued enjoyment of your unit after closing.

In other forms of shared ownership, such as co-operatives or co-ownerships, the buildings are not covered by the Tarion warranty, even if they are brand new. Buyers, be careful to conduct home inspections and to check the references of the builder before you buy.

Written by Mark Weisleder

Lawyer, Author, Speaker

Living in Toronto has advantages. Being the 14th most visited city by tourists in the world, Toronto not only has the basic amenities for Canadians; it also has the attractions and luxury that was previously only available in cities like New York, London, or Japan. Toronto, being Canada’s economic capital, is among the world’s top financial cities, with a population of 2.5 million. In 2007, a bulk of condo units and home were purchased by foreigners, most of which were Iranians and people from other Asian countries. According to reports, they chose Toronto because of its reputation from being tolerant to other nationalities, and because of its stable economic standing and real estate price growth rate.

However, choosing to reside in Toronto is only half the problem. Toronto is a huge city with a diverse population. While being in Toronto itself is a good choice, choosing where to live in Toronto requires serious consideration of various factors. One of the main considerations is the property’s distance to importance institutions and establishments, such as schools, shopping and entertainment districts, health facilities, among others. A house or a condominium unit’s distance to these establishments should be considered according to the buyer’s lifestyle and needs.

For one, an individual interested in buying a house or a condominium unit in Toronto with children or dependents and relatives who need to go to school must choose a location near schools and universities. For starters, Toronto is home to three major universities: University of Toronto, York University, and Ryerson University. Because Toronto is home to immigrants from different countries, it also has a number of English as a Second Language schools. Considering this is important primarily because of the distance, especially for dependents who are not staying in dormitories. Living too far from the educational institutions could be an inconvenience in the long run for commuters. In line with this, a buyer should also consider the distance of the real estate property he plans to buy from the location of his job. This is a major factor in deciding what property to buy since one has to take to account his budget for transportation—may it be through private or public vehicles.

The hospitals, too, should be taken in to account. The location of one’s residence should a few minutes away from a health facility. If this is not possible, then one take note of Toronto’s health infrastructures for emergency purposes. Among the public hospitals in Toronto are Mount Sinai Hospital, North York General Hospital, Princess Margaret Hospital, Toronto General Hospital, among others.

The actual status of the real estate is not the only important thing when looking for a property in Toronto. Toronto’s real estate sector is doing very well at the moment, and is expected to do well for the next two years. Buying a real estate property in Toronto is indeed a wise decision. Buyers of real estate properties in Toronto should think about the location of their purchase to fully maximize the benefits the city has to offer.

Like with any purchase, there are things one should know when buying a condominium unit in Toronto. An intelligent buyer, regardless of the purchase, will never enter a transaction blindly. The same should apply when one buys a condominium unit in Toronto. True, Toronto is a great location for a real estate investment such as a condo. However, the location is no longer the issue; although Toronto is now known for supplying Canadians and immigrants top real estate properties, doubtful agents and firms and risky business still abound. Buying a condominium unit in Toronto, like any other business in any other location, is full of risks. Buyers should practice extreme caution.

One of the things a condominium buyer should consider is the model suite. When one buys a unit in a yet-to-be finished complex, there is a risk of not getting the room you paid for. The completed units may look drastically different from the model units. The floor plans could be smaller that what the buyer saw in the model suites, the material used in the actual unit could be different from the ones used in the model suites. When these things happen, the buyer buys a completely different unit from the one he or she had already envisioned.

A solution for this is to buy from an already constructed condominium building. To cut on costs, since new units are expensive, one can buy pre-owned or renovated units which are cheaper and good to go. Since it is already constructed, the buyer can already see the finished product. The buyer can also check if the building and its facilities are working properly if it is already constructed.

However, this is not to say an interested buyer should avoid new condos. One can still opt for new condominiums. However, the buyer should thoroughly check the track record of the condo’s developer to make sure the unit will be at par to standards. The interested buyer should look other buildings built by the developer of the unit he is interested in and ask the tenants if they are happy with their units and if they encountered problems in their residency. If the buyer can afford it, he or she should get an agent. The real estate agent can ask the developer questions regarding the unit that the buyer may not be aware of. The agent can also warn the buyer about issues and risks concerning the purchase of a condominium unit. Also, it is advisable if the buyer gets his own real estate lawyer. The lawyer should be a real estate lawyer in Toronto. The buyer should then show the contract for the condo unit purchase. The real estate lawyer can suggest improvements to the contract, if any, or note potential risks stated in the contract.

The best advice, however, is for the buyer not to believe anything he sees and not believe half of what he hears. Model units and the developer’s testimonials are not meant to paint an accurate picture of the property; they are meant to entice buyers. In the end, buyers must do their homework when buying a condo unit to fully enjoy the benefits of having a real estate property in Toronto.

Recent reports have cited that the United States should start recovering from the current economic crisis since its impact has been less than what was expected. However, this is not to say the international community is already out of the woods, so to speak. While the duration of the slowdown was not as long as expected, what the economic crisis has done to what was once seen as an infallible country is, according to economists, deeper than expected. Various countries with sectors dependent on the United States are still cautious as the damage done by the slowdown can still be felt. Countries like China and India are some of the countries that were deeply affected by the slowdown.

However, according to the Bank of Canada, Toronto—and, in general, Canada—is holding up to the effects of the slowdown. This is especially true in its real estate sector. Real estate experts attribute this to what they say could holdovers from what was previously United States’ market. Because of the unstable real estate of America, Asians and Europeans—and even the Americans themselves—choose toronto for the location of their investments and their properties. Toronto’s real estate is currently home to various international investments in condominiums, housing projects, and luxury hotel. While 2007 was seen as a better year for real estate, the sales from the first few months of 2008 were better than expected. The housing sector of America has clearly cast its shadow over Toronto. For example, existing home sales was down 11 percent. Relatively speaking, however, this is a good start, as other prime locations around the world suffered much bigger decline from 20 to 40 percent. This is proof that while toronto has long been seen as North America’s backwater in terms of real estate, it is holding up against the odds.

Still, although Toronto’s real estate status is better than America and other developed countries, real estate firms and agents are preparing for the effects of the U.S. economic slowdown. An expected decline in real estate sales has been continuously reported for years, but the predicted magnitude of the decline is yet to happen. There is still interest in Toronto’s real estate properties, for sure, but real estate now has to intensify their marketing strategies in other to translate the interest into a sale. Agents also say that there are smart enough parties to see the trend and believe that the turn will definitely turn. The opportunity is there, say real estate agents. In fact, active listings this year were eight percent higher than last year. And while condominium prices were up this year compared to last year’s prices, prices in June 2008 are lower compared to prices in January 2008. This means a real property, as long as it is priced right, will sell, while an ill-priced property would not.

The real estate sector of Toronto is expected to get more stable as the U.S. economy stabilizes next year. This could only mean Toronto’s real estate status will and could only get better.