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    • Why Buy Pre-Construction

    11 REASONS investing in pre-construction condominiums is the surest and safest way to grow your money and to generate passive income

      1. Brand new property with 7 years of Warranty. New Amenities. Low maintenance. 
      2. You pay down payment (normally 20% of purchase price) in increments instead of all at once (example: 5% in 1 month, 5% in 6 months. 5% in 1 year, 5% in 1.5 year).
      3. You make the return on the entire value of your purchase, despite only paying an initial portion (deposit payment) up front.
      4. Your investment appreciates in value from the first day you purchase the condo unit (after signing the agreement of purchase and sale for preconstruction unit), months before the construction starts, and will continue to appreciate until you decide to sell your unit.
      5. You get the lowest price available which means there’s no room for costly bidding wars.
      6. You close the property (obtain mortgage) once the building is complete, years after purchasing the unit, giving you enough time to grow your income and manage your finances so you are able to obtain mortgage. 
      7. You have the flexibility of selling your agreement (assignment of your agreement) before the closing date to recover your deposit payments and still make great amount of profit. This is in case you are no longer interested in the unit, or if you are not financially able to close the property (obtain mortgage), or if you have to relocate for work or other reasons. 
      8. Once the pre-construction condo unit is built and ready to be leased, it will get more demand and higher rent compared to comparable resale or rental units. Like many other things brand new is always worth more than used-old. People will pay more for new (even if the unit is smaller compared to used/old units). They want modern finishes, latest features and amenities.
      9. Condos draw higher rental income compared to low rise. Managing the tenants is also much easier. No need to spend time for repairs or maintenance (example: roof repair, furnace/ac/water tank repair, plumbing leaks, basement leaks, mold problem, driveway repair in low rise homes) 
      10. In preconstruction, you have plenty of time to find tenant or buyers for your unit. Also, there is no rent control for condos built after 2018.
      11. Preconstruction condos tend to appreciate in value more compared to low rise homes considering their prime locations (transit access and walking score), and considering affordability (substantial price gap between condos and low rise). There is nothing or very limited number of low rise homes or townhomes in downtown Toronto or any other areas in the GTA close to subway or Train station. The price of those properties are substantially higher than the condos in those areas.

    Is it a good time to buy?

    Condo Glossary

    During the purchasing process – there are many documents for you (and your lawyer) to review. Below is a list of some of the terminology used and definitions, which will to help you through the documents.

    Agreement of Purchase and Sale
    The Agreement of Purchase and Sale (APS) is the partnership document that outlines both your and our rights and obligations around the purchase of your condominium. It will include a number of schedules, including the floor plan, decor personal selections, Tarion information, etc.

    Board of Directors
    The Board of Directors is an elected group of homeowners whose purpose is to serve the interests of those living within the community. Once a community has Registered, a Turnover meeting date is established allowing for the election of the Board of Directors to take place. Board members can be elected to a term of 1 to 3 years to the following roles:

    President
    Vice President
    Director at Large
    Treasurer
    Secretary

    Certificate of Completion and Possession (CCP)
    You will receive a copy of Tarion’s Certificate of Completion and Possession (CCP) as part of the New Home Closing Package provided to your lawyer. The CCP includes information specific to each home, including the pre-tax price, Tarion enrolment number, and the date of possession (Occupancy Date). Tarion will require this information from you in the event of a Tarion warranty claim.

    Closing
    Closing is somewhat of a generic term, often used to describe taking possession of your home on your Occupancy date. The Closings will either be an Interim Closing or Final Closing.

    Common Elements
    The Common Elements within a community include all areas of the condominium that are not exclusively owned. These areas include the parking garage, roof, amenities, hallways, and more. The balcony or terrace attached to your suite, is considered an Exclusive Use Common Area. This means that you may exclusively use this area but it falls under community rules with regards to decorations and modifications.

    Community Access & Key Package
    Your Community Access & Key Package includes all of the access devices for your community (suite, mailbox and common area keys, parking fobs/transponders etc.), a quick start guide, and other information to help you feel comfortable in your new home.

    The Community Access & Key Package we will be made available to you on your Occupancy Date, after the lawyers have completed the Closing process , from the Concierge.

    Condominium Corporation
    A Corporation without share capital, created under the Condominium Act for the purposes of administering the operation, maintenance and repair of the common elements and assets of the condominium. The Corporation is guided by a democratically elected Board of Directors consisting of homeowners.

    Condominium Declaration
    The declaration is a “charter” document that creates the Condominium Corporation. It defines the boundaries for each home and the Common Elements. It allocates responsibility for the repair and maintenance of the home and common elements; outlines the condominium’ s provisions regarding occupancy and use (eg. the Rules and Regulations); specifies common expenses and each owner’ s proportionate interest in the common elements; and details each owner’s percentage ownership share of the overall common expenses.

    At this time, all suites can Final Close allowing you to take title of your suite. If you Interim Closed before the community registered, you will be notified of your Final Closing date which will typically take place 4-6 weeks after registration. If you have not closed your suite prior to Registration, your closing process becomes a straight Final Closing.

    Condominium Ownership
    The ownership of a condominium involves 2 aspects:

    Separate ownership and title of your home
    Shared ownership and costs of maintaining and repairing the common elements, which are shared by all homeowners.

    Disclosure Statement
    A summary of the significant features of the proposed condominium, and the relevant condominium documents governing the same.

    Exclusive Use Common Elements
    Particular areas within the condominium’ s common areas which homeowners have the exclusive right to use and enjoy. Examples may include balconies, patios, etc.

    Final Closing
    Final Closing is the process through which you will receive Title to your home. Final Closing occurs about four to six weeks after Registration. If you Interim Closed before the community registered, you will be notified of your Final Closing date which will typically take place 4-6 weeks after registration. If your Occupancy Date occurs after this time, you skip the Interim Closing process, and will move to a straight Final Closing. Mortgages will begin at Final Closing.

    Final Tentative Occupancy Date
    Occupancy dates progress from Tentative, to Final Tentative and then to Firm. Your Final Tentative Occupancy Date is established once the roof is completed for your community. This date will be established no later than 90 days prior to your Tentative Occupancy Date. A Final Tentative Date may be extended only once, by a maximum of 120 days. If your Final Tentative Occupancy Date is extended, or at 90 days prior to your Final Tentative Occupancy Date, your Occupancy Date will become FIRM.

    FIRM Occupancy Date
    Occupancy dates progress from Tentative, to Final Tentative and then to Firm. Your Occupancy Date becomes FIRM, if a Final Tentative date is extended or at 90 days prior to your Occupancy Date. Once your date is FIRM, we generally do not have further changes to your Occupancy Date and will only move your date in the case of an unforeseen emergency (eg. trade strike or material delay.

    Homeowners Insurance
    Insuring your home is required through your Agreement of Purchase and Sale, and can give you peace of mind. Home insurance will generally cover your contents, living expenses, and personal liability. It is important to review and understand the limitations in your policy to make sure you are adequately protected.

    It is good planning to keep an up-to-date inventory of your possessions, including an accurate record of their replacement value, and to store this inventory outside of your home (i.e. in a relative’s home, in secure area at work, or a safety deposit box). For high-value items such as jewellery, furniture or art, separate insurance endorsements are also available from most providers.

    Homeowner Orientation
    The Homeowner Orientation (HOO) is the orientation to your new community and includes the Pre-Delivery Inspection (PDI) for your suite. These appointments to occur approximately four weeks before your occupancy date. The Tarion Homeowner Information Package is another great resource that will provide guidance on what to expect and look out for during your PDI and orientation.

    Interim Closing
    On your Occupancy Date, you will Interim Close or Final Close. Interim Closing occurs if your community has not yet become a Registered Condominium Corporation. At Interim Closing you will not receive Title to the home, and will be required to pay a monthly Occupancy Fee based on the projected realty taxes, Maintenance Fees and interest on the unpaid balance of your home. These fees will continue until Final Closing.

    Maintenance Fees
    Maintenance fees are fees that are paid monthly for your share of ownership of the Condominium Corporation, and begin at Final Closing. Maintenance fees are calculated based on the percentage of ownership attributed to each “Unit” that can be owned within the condominium, which is formally outlined in the Condominium Declaration. While available “Units” will vary between communities, they include residential and retail suites, parking spaces, lockers, hobby rooms etc. For each “Unit” you own, you are responsible for the percentage allocated to each as part of the annual operating budget. Generally speaking the more “Units” you own, and the larger they are, the greater the percentage of the annual budget you will be responsible for.

    Mortgage & Financing
    The majority of homeowners require some type(s) of financing to complete their Final Closing. There are many different types of financing available and it is best to discuss the different options with your financial advisor, realtor and lawyer to help in determining which option is most appropriate for your individual circumstances. Common types of financing include;

    Home Equity Line of Credit – (often called HELOC, pronounced Hee-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period or term, where the collateral is the borrower’s equity in his/her house (akin to a second mortgage). HELOC’s have variable rates and have a range of flexible repayment options. Additionally they can be advantageous if a purchaser wishes to leverage other property holdings to pay for the new property.

    Mortgage – while there are a variety of options for conventional mortgages (such as fixed or variable rates, amortization length and term length), once entered into the terms of repayment, are typically fixed and offer less flexibility than those offered with a HELOC.

    Bridge Loans – are a short term financing option, to “bridge the gap” between Final Closing and another method of financing. Bridge financing typically has a higher risk for the lender, and as such has a higher interest rate than other types of financing.

    One of the most common times Bridge Financing is required is when a suite’s Final Closing occurs shortly before the closing of an existing property. eg. If it is your intention to use the sale of the home you are moving out of, to fully pay for the new condominium that you are moving into. You won’t need a mortgage, however the closing date of the home you are moving out of is two weeks after the Final Closing date of the new condominium suite.

    New Home Closing Package
    The legal New Home Closing Package is the package of documents prepared by the developer, and sent to your lawyer before your Occupancy Date. The documents typically include an Occupancy Agreement, an Updated Annual Budget, GST/HST Affidavit, Utilities enrolments forms, and the Tarion Certificate of Completion and Possession. This package of documents is generated approximately four weeks before your Occupancy Date. Most homeowners find it advantageous to meet with their lawyer one to two weeks before their Occupancy Date to review the package and sign the appropriate documents.

    Occupancy Date
    Your Occupancy Date is when you take legal possession of your new home and are able to move in. On your Occupancy Date you will either Interim Close or Final Close.

    Occupancy Fees
    If your Occupancy Date is before the Final Closing, you will be required to pay Occupancy Fees on a month to month basis until Final Closing.

    The Condominium Act, prescribe how these fees are to be calculated and are based on the following:

    Estimated Monthly Maintenance Fee
    Estimated Monthly Realty Taxes
    Estimated Monthly Interest Component

    Occupancy Fees – Cross Phase Expenses
    A Cross Phase Expense is a common element expense that you are required to pay should you have purchased additional product(s), such as a parking spot or locker, that are in a different phase of your community. A cross phase expense will be applied for the additional products purchased in the different phases OR are purchased in another phase other than the one in which the suite was purchased.

    Outside Occupancy Date
    Every Agreement of Purchase and Sale (APS) will specify an Outside Occupancy Date, which is the latest date that an Occupancy Date can be extended to. In the unlikely event that a home was not delivered by this date, you would have the right to terminate or renegotiate the APS. You can find this date on the Tarion Statement of Critical Dates Addendum included with your APS.

    Registration / Condominium Corporation
    Registration of a community is a process by which the Condominium’ s Declaration and description are formally approved by the City and a Condominium Corporation number is issued, forming the Condominium Corporation. A Condominium Corporation is created under the Condominium Act for the purposes of administering the operation, maintenance and repair of the common elements and assets of the condominium. The Corporation is guided by a democratically elected Board of Directors consisting of homeowners.

    Reserve Fund
    A fund required to be set aside by the Condominium Corporation to cover the major repair and replacement of the common elements and assets of the condominium.

    Stub Period / Stub Payment
    The first payment duration of Occupancy Fees covers the Stub Period. The Stub Payment is paid by certified cheque at the time of Interim Closing, and is in the amount of the partial month of occupancy, and the first full month of occupancy.

    Eg. if your Occupancy Date is April 10th, the Stub Period would be from April 10th to May 31st.

    Tarion
    The Tarion Warranty Corporation is a provincially regulated not for profit organization, established to administer the Ontario New Homes Warranty Plan Act, regulating the new home industry in Ontario. Tarion is responsible for licensing all new home builders in the province and ensuring they have the technical competence, customer service capabilities, and financial capacity required to build new homes.

    Tarion provides consumer protection by setting the minimum warranty and performance standards that new home builders must meet, provides deposit protection, and protection against illegal building.

    Your warranty protection against defects in workmanship and materials is divided into to two areas, your insuite warranty and the Common Element Warranty. The insuite warranty beings on your Occupancy Date. The Common Element warranty begins on the Registration date of the community. Additionally the warranty coverage is separated into three categories with different durations:

    1 Year – All workmanship, Building Code violations, unauthorized substitutions
    2 Year – Water penetration,electrical, plumbing and heating delivery and distribution systems, violations of the Building Code affecting health and safety
    7 Years – Major Structural Defects
    Tarion.com and their Homeowner Information Package (HIP) are great resources for getting to more about Tarion and the protection they offer consumers.

    Tentative Occupancy Date
    Occupancy dates progress from Tentative, to Final Tentative and then to Firm. Your tentative occupancy date is a projected target date as to when your suite will be complete and you can take occupancy. This initial date is established as part of your Agreement of Purchase and Sale, and is the most optimistic date of completion and will change based on a number of factors including:

    The number of sales to allow for the start of construction for the community
    The progress of construction during the construction phase
    The location of your suite within the community
    It is expected that multiple Tentative Occupancy Dates will be set as construction progresses. You will be kept up-to-date on the progress of construction and as required, will be given a Revised Occupancy Date. Occupancy Dates will remain Tentative, until a Final Tentative Occupancy Date is issued.

    Title Insurance
    Title Insurance is an optional, albeit very common insurance policy for new home buyers offered through lawyers and real estate professionals, that protects you and your lender’s against losses relating to a home’s title. These concerns may include, encroachment agreements, liens and errors in public records. It is best to discuss Title Insurance with your lawyer so that you can understand what protections it may offer you and what other options may be appropriate.

    The Financial Services Commission of Ontario has produced a comprehensive brochure called Understanding Title Insurance that may help to answer more questions.

    Title/ Taking Title
    Title is a legal term that means you have legal ownership of the property, and is obtained when the owner signs the deed (transfer document) over to you. Title is then registered in the government’s land registration system.

    The manner in which Title is taken in Ontario falls into two categories; Joint Tenancy, or Tenants in Common. In its simplest terms, Joint Tenancy permits, if two or more people are purchasing a property, that in the event of a death of one of the people, the entire property will become solely owned by the other purchaser. For Tenants in Common, each purchaser retains a percentage of ownership, that in the event of a death, the percentage of ownership will transfer to the person’s estate, rather than to the other owner.

    At Final Closing, Title will be transferred into the name of the purchaser(s) on the Agreement of Purchase and Sale, unless our lawyers receive direction otherwise prior to Final Closing. You should provide instructions to your lawyer about how you wish to Take Title, at least four weeks before Final Closing to avoid additional legal expenses.

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    PRE-CONSTRUCTION