Purchasing a pre-construction condominium in Ontario can be an exciting opportunity to own a newly built home tailored to one’s building preferences and financial timeline. However, as a buyer, it’s important to exercise due diligence before committing to such a substantial investment. A conventional Agreement of Purchase and Sale (“APS”) for a pre-construction property is a lengthy document that includes many terms not prevalent to a first time and/or inexperienced buyer.

Most pre-construction condominium APS in Ontario statutorily provide for a 10 day “cooling period” whereby buyers can take the 10 days after they have signed the Agreement to review (or have reviewed) their signed documents before committing to proceed with the purchase. It is prevalent for buyers to have their APS reviewed by a lawyer before the expiration of the 10-day cooling period to become familiar with their obligations and have identified any possible issues or risks that may not have been apparent when they were initially presented with the APS. Please note: the 10-day “cooling period” does not apply to all new build purchases and some agreements are binding upon signature of the applicable parties.

It is important to note that having the APS reviewed can help buyers understand deposit structures, payment schedules, and adjustments that will become due at interim occupancy and final closing.  Moreover, a thorough review of the APS helps Buyers understand the builder's responsibilities, title directions, possible changes to the unit(s), and critical dates pertaining to the property. Being well-informed of such provisions can identify any ambiguous language, unfair clauses, or prospective risks that could pose problems for Buyers down the line.

An important provision of the APS that a lawyer’s review will typically highlight are the terms governing the termination and assignment clauses under which either party can terminate the Agreement or assign the purchase to another buyer. Reviewing these clauses is crucial for buyers to understand their rights and any associated penalties or restrictions in the event one needs to terminate or assign the APS.  When buyers understand these terms, they can make informed decisions regarding the flexibility of their purchase.

In conclusion, not only does having a pre-construction APS reviewed shed light on navigating the ambiguities of a new build transaction, but it can also assist with protecting one’s investment by warning buyers of any “in ordinary” provisions or risks that may (or may not) be mentioned in the APS.

If you have any legal questions regarding the purchase of pre-construction condominium, or you would like to have one of our lawyers review your pre-construction condominium Agreement of Purchase and Sale, please do not hesitate to contact us at (905) 270-6660 or e-mail us at:  Info@kormans.ca.

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