Legal Questions – New Condo FAQ’s
When does a lawyer get involved in the pre-construction condo purchase?
It is advisable to retain a lawyer at the very beginning, before even signing an Agreement of Purchase and Sale (APS). Two simple but powerful reasons for getting a good lawyer is to save time and money and to protect yourself from risks.
While real estate contracts have evolved to be as readily understandable as possible, there are still a number of legal terms that an ordinary person will not be familiar with. These legal terms can mean the difference between giving the condo buyer a preferred right or imposing on the buyer a heavy financial burden. For example, new condo buyers who have consulted an experienced real estate lawyer before will not be caught by surprise at the time of closing when they find out the various closing adjustments to be paid.
Real estate purchase will probably be one of the biggest financial decisions in a person’s life; getting a real estate lawyer early on is one way of protecting your investment and taking control of the condo buying process.
This question was answered by Shaffiq Dar (Real Estate Lawyer)
What happens to my money if the project fails?
All deposits are paid into the trust account of the lawyer representing the developer. The deposit funds in the trust account can ONLY be used for the purpose of developing the project.
If for any reasons the project fails, the buyers deposits are protected and will be returned in full to the buyer.
It is important to work with reputable developers with a track record of building in Toronto.
How long can a developer extend the occupancy without penalty?
The Statement of Critical Dates will set out 3 dates:
The First Tentative Occupancy Date
The Final Tentative Occupancy Date
Firm Occupancy Date
What is important in these three dates is the Firm Occupancy Date because if the builder fails to deliver the unit to the buyer for occupancy on this date, the builder will have to pay the buyer a delayed occupancy compensation of up to $7,500.
There are, however, instances where the delay is caused by an event which is beyond the control of the builder. These events include workers’ strikes, widespread emergencies and war, among others.
This question was answered by Shaffiq Dar (Real Estate Lawyer)
What is TARION?
Tarion is tasked with protecting buyers of new homes to ensure that they get what they paid for their new homes.
To do this, Tarion requires that home builders enrol a new home with a warranty which covers the home from major defects in the structure, workmanship and materials.
As a regulator of Ontario’s new home building industry, Tarion registers new home builders and vendors, enrols new homes for warranty coverage, investigates illegal building practices, resolves warranty disputes between builders/vendors and homeowners, and promotes high standards of construction among Ontario’s new home builders.
This question was answered by Shaffiq Dar (Real Estate Lawyer)
Is there any benefit to being a first time home buyer when purchasing a Pre-Construction Condo?
Is there any benefit to being a first time home buyer? A first time home buyer is eligible for a rebate on the Land Transfer Tax. To qualify for the rebate, you:
Must be at least 18 years of age;
Must occupy the home as your principal residence within 9 months of the date of the transfer; and
Cannot have ever owned a home, or an interest in a home, anywhere in the world. Note: your spouse cannot have owned a home, or an interest in a home, anywhere in the world while being your spouse.
A first time home buyer can also get a tax credit from the federal government.
This question was answered by Shaffiq Dar (Real Estate Lawyer)
What is a Limited Power of Attorney and when is it safe to use?
A limited POA is one which only allows the attorney to do specific acts or sign specific documents such as cheques. Because it specifies and restricts the acts which may be done by an attorney than a regular POA, it minimizes the chances that an attorney may do acts or sign documents that would not have been allowed or intended by the person who made or granted the POA.
A limited POA must expressly set out the circumstances under which the POA can be used. For instance, to execute the Agreement of Purchase and Sale and all closing documents related to the purchase of a certain property.
This question was answered by Shaffiq Dar (Real Estate Lawyer)
What do I need to be aware of when signing a Power of Attorney when purchasing a Pre-Construction Condo?
A Power of Attorney (POA) is a legal document which allows a person to authorize someone he trusts (the “attorney”) to make decisions, sign documents and perform acts on the person’s behalf.
The POA is a very convenient tool for parties who will be unable to personally sign the documents in the course of the transaction. However, as POAs are a way of transferring one’s authority to act to another, there is always the possibility of mistake and abuse where the attorney performs other acts other than those it was originally intended for. In worst cases, POAs have been used for fraud.
In a purchase funded by a mortgage lender, the mortgage lender will typically require that it pre-approves the use of a POA. Bear in mind that most lenders will not permit the execution of mortgage documents under a POA.
Where the purchase is also insured by a title insurer, the purchaser’s lawyer must also ensure that the title insurer will allow the use of a POA.
This question was answered by Shaffiq Dar (Real Estate Lawyer)
I need a Power of Attorney to close the transaction, what do I need to know?
Before signing a POA or asking someone to act as your attorney, be sure that the other parties involved in your purchase of a condo allow for the use of a POA. If you will be arranging a mortgage to finance the purchase, check if the lender allows for a POA under the terms of the mortgage.
Your lawyer will also need to inform the title insurer that a POA is to be used in the transaction. Thus, you must let the lawyer know well in advance so as to avoid any delays on closing.
This question was answered by Shaffiq Dar (Real Estate Lawyer)
Do I need to be in Canada to close on my Condo purchase?
The buyer is not required by law to be present on the closing date nor to close the purchase. The buyer’s documents necessary for closing the transaction may be signed by the buyer well in advance of the closing date or by the buyer’s agent.
There are also instances when the buyer is not present during the period when the specifics of the condo purchase materialize, such as when the buyer is on extended stay abroad. In these situations, the buyer can simply execute a Power of Attorney in favor of a trusted family member or friend who can sign the documents and/or do other acts needed to complete the purchase for the buyer.
This question was answered by Shaffiq Dar (Real Estate Lawyer)
