RESOURCES

As a lawyer there is nothing worse than having to explain to clients that are so happy and excited to have bought a pre-construction property that there are significant costs that they will incur that they might not have anticipated or be able to afford as a result of their failure to have their Pre-Construction Contract reviewed by us prior to the expiry of any conditional period or “cooling off” period, if applicable.

Pre-Construction Contracts by their nature are significantly different from an Agreement of Purchase and Sale for a resale property. In addition to unanticipated costs there are a number of other issues that could lead to disappointment, confusion and frustration if not addressed in a timely fashion. The following are some of the issues that have to be considered with Pre-Construction Contracts:

1. HST – is it included in the Purchase Price or in addition to the Purchase Price

2. Deposits – are they insured

3. Occupancy Fees in a condo – how are they calculated

4. Lockers and Parking Spaces in a condo

5. Common Expenses in a condo

6. Termination Rights, Extension Rights, and Delayed Closing Compensation

7. Adjustments in favour of the Builder in addition to the Purchase Price

8. GST/HST New Housing Rebate

9. GST/HST Rental Rebate

10. Prohibition and/or conditions affecting rights to assign, lease, sell, market, advertise

11. Rights in the event of damage and/or incompletion

12. Warning clauses

To avoid disappointment, confusion and frustration it is essential to have a lawyer properly review a Pre-Construction Contract either (i) within a condition period for lawyer review; (ii) within the statutory 10 day “cooling off” period if the property is a condominium; or (iii) before the Pre-Construction Contract is signed.

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David H. Korman is a Partner at Kormans LLP. His practice areas include residential and commercial real estate transactions, commercial leasing and private and institutional lending. You can reach David at dkorman@kormans.ca. All blog entries are for your reading pleasure only and are not posted to provide legal advice. For your matter, we encourage you to consult with a lawyer to review and discuss your specific facts and circumstances. Kormans LLP cannot be responsible for the content of other sites. We expressly disclaim all liability with respect to actions taken or actions not taken based on content received from a third party website linked, directly or indirectly, to that of Kormans LLP.  The link to another site is not to be construed in any way as an endorsement of the host, the site or the information contained therein, nor is such link to be inferred as an association or affiliation with the host.