(NC) As the market for detached homes has slowed, the demand for condos has continued to grow as people see them as a more affordable option.
While there seems to be no shortage of willing condo buyers, there is a shortage of pre-construction units available for sale. Unfortunately, this is due in part to development projects taking longer than expected, or some being cancelled altogether.
There are many different reasons why some developments never get built. For example, the builders might lack sufficient capital or fail to obtain the necessary zoning or permits. Whatever the cause, a cancelled project can leave purchasers without a home. However, the experience shouldn’t leave them out of pocket.
Under the Condominium Act, if a condo project is cancelled, purchasers are entitled to receive their entire deposit back, including any payments made for extras and upgrades. This is because the builders are required to put these monies in trust or provide alternative acceptable security. If a project is terminated and for some reason the deposits and other amounts are not repaid by the vendor, condo buyers are eligible for protection under the Ontario New Home Warranties Plan Act up to $20,000.
If you’re buying a pre-construction condo, there is always a risk that the project could be delayed or cancelled. There have even been cases where purchase agreements are terminated and then the condos are constructed at a later date.
That’s why it’s important for potential buyers to know that under the Ontario New Home Warranties Plan Act, a builder must attach an Addendum to every condo purchase agreement that requires them to disclose the status of the zoning approval and construction. It also limits what kind of early termination conditions they can impose in the purchase agreement and obliges them to use reasonable efforts to meet these conditions before they can cancel the project.
There are consumer protections in place to ensure that all reasonable steps are taken to complete a condo project, but it is important to understand your rights as a purchaser if it does not. If your purchase agreement is terminated through no fault of your own, you should get your deposit back within 10 days. If you don’t, you can turn to Tarion for help.
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