If you have not already, be sure to check out Part 1 of this blog to learn where these fees can be found in your Agreement, and what they are.

What will it cost?

There are two types of fees: Stipulated and Unstipulated Fees. Fees can range from one or two thousand dollars, to even tens of thousands of dollars.

The Stipulated Fee List will say exactly what you are being charged for the item. One fee may be charged several times, depending sometimes on the number of times something occurs.  So, just because you see a fee listed for $50.00, does not mean that is the total. You could be charged that fee three times, and incur $150.00 (plus HST) on closing.

Under Unstipulated Fees, you will see a list of what you could be charged for, but the Agreement will not tell you how much each one costs. If a fee is unstipulated, in many cases it means that the builder does not know how much that item will cost at final closing.

Factors that can increase or decrease the cost include:

• Is the charge specific to your Agreement, or charged to the whole building/complex?
• What will the municipality be charging the builder?
• How big is your unit relative to other units? The bigger the unit, in most cases, the more you pay.
• How many other units are there? More units can sometimes mean more variety of fees because the project is more complex. On the other hand, if the fee is being “spread out” over the whole building, more units can mean that a fee will be divided into more, smaller individual payments.

What can you do about the fees?

The first step you can take is to be prepared for the fees. Do not rely on the contract price as the final amount you pay on closing. How much you prepare for will depend on the project. But, you should expect at least a few thousand extra.

The next step you can take is have your Agreement reviewed by a lawyer. Once you sign your new-construction Agreement of Purchase and Sale, in most cases you will have a statutory 10-day “cooling off” period. Take advantage of this time.

Your lawyer will communicate on your behalf to request that some of the fees be capped, or deleted altogether. In many cases, the builder might agree to some of your lawyer’s requests. If they agree, that means no matter how much that item actually costs the builder as the project continues, it makes no difference to you. They cannot pass that cost on to you.

For example: In 2022 you sign a new-construction Agreement of Purchase and Sale, and your lawyer negotiates a cap of “development” fees to $5,000. Several years pass and it is time to close. As it turns out, the builder had to pay much more to the municipality than anticipated for development fees, meaning that the builder actually needs to recover $10,000 from your unit. Because you got a cap, the builder has to collect the remaining $5,000 from other purchasers who did not get their Agreement reviewed by a skilled lawyer.

If you have any legal questions regarding the purchase and/or sale of your property, please do not hesitate to contact us to speak with one of our lawyers at (905) 270-6660 or e-mail us at:  Info@kormans.ca

‍