Buying a newly built condo can be exciting, but it can also be very stressful, especially when you’re surprised by “hidden fees” or so called “adjustments” that suddenly pop up on closing. This items can include anything from new taxes imposed on your home after signing an agreement to interest on the balance of the purchase price. You can suddenly find yourself with a bad case of “sticker shock” or, worse case scenario: The inability to come up with additional money.
Well, thanks to a new consumer protection initiative from Tarion Warranty Corp., builder purchase agreements will now have to disclose all the extras that can be added to the price of a new condo in the agreement before acceptance.
If this becomes a reality, you’ll no longer have to pick through your purchase agreements with a fine toothed comb in the hopes of getting even a general idea of what you can expect to pay. It will now be laid out in a new schedule B. So the good news is builders will NOT be able to collect any additional funds if it is not laid out in this document.
Keep in mind however that there will be fixed costs; but due to certain factors, there will be variables as well. Fixed costs will be the following (Many thanks to Bob Aaron for this list):
- Tarion warranty enrollment fee (varies depending on the purchase price)
- $300 fee for record keeping to hold the purchaser’s deposit in trust.
A fixed fee will also be added to make any changes to the purchaser’s agreement as well as a legal and administration fee if the builder allows the purchaser to “flip” the purchase agreement. HST will also be added.
As for the variable fees:
- A condo units share of the installation of infrastructure and meters,
- Any new taxes imposed on the home after the agreement was signed,
- HST on the cost of any included appliances,
- Interest on the balance of the purchase price (phantom mortgage),
- Any increase in municipal, education or transportation development charges as imposed after the agreement is signed,
- Unlimited contribution to the builders share of all costs associated with a municipal development agreement,
- Unlimited levy for parks, community services, boulevard tree planting, pubic art levy or other municipal charges,
- Any estimated municipal taxes.
With all of these variable charges laid out clearly, the purchaser can now have the awareness to know what is expected, or attempt to negotiate a maximum fixed cost with the builder.
This is great news for those in the market to purchase a condo. We should leave the surprises to birthdays and anniversaries!
