Buying a pre-construction
residents of a Midtown
NY high-rise were promised a building of “premier luxury caliber” —
but all they got was a crumbling, leaky mess, a $67 million lawsuit
I don't advise buying a condo that has not yet been built.
I believe that it makes more sense to purchase a five or six year old
condo. By then the major construction defects will have surfaced and
you will be able to see if the new board seems competent and you can
tell if this is an owner-occupied building where people take pride in
their building or if it is actually a rental building with 300+
new is risky
Buying a condominium that has not yet been built has its risks.
If you plan to live in your condo, you must be willing to accept delays
and then you may have to move in to a building that is still under
New buyers in an
Ottawa newly built condo
had plenty of complaints and this woman is Mississauga was surprised
when she saw that her new ground floor premium-priced condo had a natural gas installation placed in front of her
Some developments never get built so after waiting for two years or
more, the purchasers get their deposits back and then have to scramble
to find somewhere else to live. (by then prices may have risen.)
Some builders are now selling pre-built units with "future-value
pricing". This is not the price the unit would sell for today but the
price that they think it will be worth once the building is finished.
So there is little hope of buying a pre-construction unit and
once it is ready for occupancy, flipping it and making a profit.
Then there are developers
who build junk, stack the first board with cronies and leave the
owners with unpaid bills and a shoddy building.
Then there are adjustments; also called levies. They use to add up to
$1,500 or so but now they can add up to $30,000 to the price of a unit.
When you sign a sales agreement, have your lawyer put a cap to the
adjustments and yes, you need a lawyer to read the sales agreement
and disclosure documents.
David Fleming in one
of his postings talks about a buyer of a one bedroom plus a den
condo being hit with over $50,000 in closing costs.
It can take five years for any expensive construction defects to
show themselves. By then the warranty period has expired and the owners
will be stuck with paying for the repairs.
excerpt from Globe & Mail 15 Oct 2013
While I love the condo my girlfriend and I moved into, there have been
some issues that I would be quite concerned about if I was an owner.
The building is relatively new, but tenants who have been there almost
a full year are only now enjoying some amenities. Others, like the
party room, gym, and outdoor spaces, were perpetually delayed. A few
unit owners I’ve met in the elevators are upset, since they have been
paying maintenance fees during this time.
There appear to be further problems on the horizon. In the underground
parking lot, cars have slowly sunk into the asphalt under their own
Re-paving will soon be needed, which will likely be time-consuming,
inconvenient and expensive. Maintenance fees for newer buildings seem
to have a funny trend of shooting up after a few years.
Preet Banerjee, a personal finance expert, is the host of Million
Dollar Neighbourhood on The Oprah Winfrey Network.
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