When buying a new condominium unit, or even a property with a commonly owned component (such as a common roadway – which is managed in the same manner as a standard condo), there are typically two closing dates – the interim closing and the final closing. Why is it important to know the distinction? Well because you won’t officially own title to the property until final closing. You will, however, get the right to occupy the unit on the occupancy closing (also known as the interim closing), and whether or not you occupy the unit, you’ll have to pay occupancy fees to the vendor. This monthly fee includes the estimated cost of property taxes, maintenance fees, and interest on the amount outstanding on the purchase price. It’s important to note that while paying this fee, no portion will go towards a buyer’s equity in the home.
When the title documents for the project are finally registered with the Land Registry Office (creating the individual units to be transferred), the property can then be transferred to the buyer. At this time financing for the entire purchase price is required, and once complete, the buyer will have legal right to title and the freedom to sell and otherwise deal with the property. It’s also important to note that the time frame between occupancy closing and final closing is never known and can sometimes be lengthy. The occupants of the property during this period will affect the eligibility for the HST rebate, and should be consisered. Until final closing occurs, the buyer is still under contract to the builder.
The Pre-Delivery Inspection (“PDI”)
While we would like to think that buying a new home means arriving to a picture-perfect -new property, that’s usually not the case. Your new home will be provided to you just as soon as the vendor can confirm that the property meets the minimal conditions for occupancy. What does that mean? It means that if there’s a shower door missing, damage to the walls or floor, uninstalled cabinets, or the driveway isn’t paved, there really isn’t much recourse at the time of occupancy closing. So long as an occupancy permit has been granted, the vendor will typically have a right to force the closing of the transaction. Failing to do so could put the buyer at risk for being in breach of contract and losing their deposit.
There is an obligation for the vendor to rectify any deficiencies under the Tarion Home Warranty Program, which all new homes must be registered under. Tarion ensures the builder will be held accountable to do so. Nevertheless, for many deficiencies the vendor will have the obligation to fix them within a reasonable amount of time – which means you may have to hang on tight until your ‘perfect’ new home gets to your level of perfection. Patience is certainly a virtue.
If you have already closed on occupancy, ensure you register yourself under Tarion’s MyHome here: https://myhome.tarion.com/hop/ so that your right to follow up on any deficiencies will be ensured. For more clarification on your particular contract, feel free to call our office so we can set you up with a meeting to review things with you personally.