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What should I know about Residential Real Estate Contracts? FAQs about Contracts for Buying a Home and Contracts for Selling a Home

From a contract law perspective, a typical home purchase and sale can be divided into two stages:
  1. Contract Stage in which you negotiate and enter into an agreement, attend to your due diligence and if appropriate waive / remove your subject to’s; and
  2. Conveyancing Stage in which lawyers typically are involved to [a] prepare the legal documentation and related steps for transferring title to the buyers the seller, including trust conditions and related documents which permit the buyer to register a mortgage before its paid; [b] preparing mortgage documentation and complying with instructions [tax searches, title searches, insurance etc.] provided by the buyer’s lender.

This article highlights some of the considerations involved in the "contract stage".

1.   Contract Stage
This stage involves negotiating the terms of the Agreement of Purchase and Sale of the Property.
Generally, we recommend that a lawyer be consulted at the Contract Stage.

While there are a multitude of matters to be addressed when negotiating, drafting and entering into a contract, we will further divided into the contract stage into the following general timeline:
[a]  Entering into an Agreement -- Offer + Acceptance = Binding Contract;
[b]  Due Diligence Period; and
[c]  Removal of Conditions / Holdbacks.

Again, there are many issues which may arise and can be addressed, and in fact volumes of legal case law, books [and numerous courses at law school] that we are only briefly addressing some of the issues which may arise in the residential purchase, mortgage and sale transactions in Alberta.

[a]   Entering into an Agreement -- Offer + Acceptance = Binding Contract

Generally speaking [again there are volumes of legal text on contracts and contract law], in its simplest form a contract is a written document that sets out in writing the “deal” between parties, setting out the parties’ intent [expectations], obligations [what the parties’ required to do] and rights [what the parties’ are entitled to].

As the contract you enter into when buying or selling a house will govern what your rights and obligations are, it is important that [a] you fully understand the contract; [b] that the contract fully and accurately sets out what you understand your “deal” with the other party to be.

We are often asked as to whether there is a “standard’ contract, and while some forms of contracts are commonly used the more relevant question is does the contract, “standard” or otherwise, set out the deal you think you are entering.

It is important that obtain independent legal advice before entering into a contract not only to assist you in understanding the contract, but also to assist you in identifying potential problems, so that any decision you make is informed and prudent.
Typically, in a real estate transaction, the buyer makes an offer to purchase which is either accepted [if accepted then there is a binding legal agreement] or rejected by the seller. Of course it is open to the to counter-offer.

Again, while you should obtain independent legal advice prior to drafting an agreement, you should consider the following:
  1. Deadline for acceptance -- while often included as part of a negotiation tactic it is important that there be a deadline for the other party to accept your offer, as unless an offer is withdrawn [revoked] or expires it is available for acceptance, and it is easier to put in a deadline and extend that deadline then face legal issues arising from the other party accepting an outstanding offer you thought had expired;
  2. Deposits -- while the specific contract you enter into will govern, but generally speaking, a deposit is at risk of forfeiture [1] if buyers don’t take reasonable effort to waive their condition precedents; or [2] if a buyers waive condition precedents but don’t close. In that light there are competing interest with buyers wanting to minimize the deposit to minimize their loss if they fail to close [ie. lender problems] and the sellers wanting to maximize the deposit as [a] a show of good faith / ability to close from the buyers; and [b] as compensation for losses [damages] if the Buyer fails to close.
  3. Land Titles Searches -- again while specific contract will govern, generally speaking, contracts provide that buyer’s interests will be subject to non-financial registrations which will remain on title such as the following [which is not an exhaustive list]:
  4. Restrictive Covenants, such as Architect Guidelines, prohibited uses of land [Glenora Caveat prohibits use of property for business or rivervalley Caveat prohibits uses which destabilize slope], neighbourhood fencing or walkway etc.;
  5. Development Agreements and Developer’s Registrations which can be significant [charge against the land for Developer’s obligations to the City to develop the neighbourhood or the Developer’s right to re-purchase the lands for a nominal amount or charge the land to ensure the Builder’s compliance with the Developer’s instructions];
  6. Other problematic financial registrations such as WCB or CRA registrations which may require a Court order to discharge or raise issues with respect to your deposit.

Another important part of a contract is condition precedents more commonly referred to as “subject to’s” which are discussed in further detail below.

[B]   Due Diligence -- Condition Precedents / Subject To’s

Generally speaking, again every contract is difference, the Seller does not give representations or warranties as to the condition of the house, and generally speaking the doctrine of Caveat Emptor applies making the buyer responsible for those defects n the condition of the property that were there to be seen.

It is of utmost importance that buyers to [a] take the opportunity to do its due diligence [inspect and make proper inquires]; and [b] identify and address those defects which are there to be seen as the buyer assumes them. Buyers may also wish to consider having the sellers provide a property disclosure statement, which is typically attached as a schedule to the property.

The purpose of “subject to’s” is to provide buyers with the right, obligation and opportunity to do their due diligence, and generally operate as a hang man’s axe / guillotine of contracts so that as long as buyer take reasonable efforts to satisfy their subject to’s if they find a defect or issue respecting a due diligence subject to and don’t waive or remove the subject to’s within the deadline provided then the contract immediately comes to an end and the deposits are returned.

Buyers should include in any offer they make condition precedents or subject to’s which permit them the opportunity to do their due diligence and provide them with a safeguard in the event that a defect or issue which the Buyer is reasonably unwilling or unable to accept arises.

This “safeguard” is not absolute and condition precedents only provide protection from problems which are in respect of the condition precedent. For example, buyers can only properly refuse to waive or remove their “subject to approval of mortgage financing” only if they are having problems obtaining financing and not because of any other reason

You may wish to consider precedents in the nature of the following;
  • Subject to Buyer’s approval for mortgage financing satisfactory to the Buyer;
  • Subject to Buyer’s satisfactory review of title and approval of non-financial and other registrations to remain on title;
  • Subject to Buyer’s satisfactory review and approval of Real Property Report and evidence of Municipal Compliance;
  • Subject to home inspection and Buyer’s satisfactory approval of the home inspection.
  • Subject to Buyer’s Lawyer satisfactory approval of Real Estate Purchase Contract;
  • Subject to Buyer’s and/or the Buyer’s Lawyer satisfactory approval of estoppel certificate, condominium financials, condominium documents and Condominium Property Act section 44 information [if applicable];
  • Subject to sale of Buyer’s home or removal of conditions on the sale of Buyer’s home [if applicable].

The above list is not exhaustive and is not intended to be the particular wording of the condition precedent to be used in a contract.

The protection or safeguards afforded by condition precedents [subject to’s] are not absolute and as a contract is a written document intended to reflect the agreement between the parties, the wording of any “standard” contract and condition precedents only properly applicable if your deal fits the standard contemplated and we strongly recommend you obtain independent legal advice lawyer to discuss the particular wording of any condition, as well as what other conditions would be appropriate for your transaction prior to entering into any agreement.

While we have discussed buyer’s condition precedents, it is open and available to a seller to have subject to’s as well.
Generally speaking, from the seller’s perspective it is important to limit length of time [short deadline] as unless and until the condition precedents are waived/removed or expire, the deal is “pending” and generally speaking ties up the seller’s property.

[C]   Removal of Condition Precedents / Holdbacks

As subject to’s generally operate as a hang man’s axe / guillotine of contracts such that if they are not waived or removed the contract comes to an end.

If a party that has a condition precedent, typically a buyer, wishes to proceed it is important they waive a condition precedent before any deadline. If a condition precedent is NOT waived or removed before their deadline generally the contract provides that the agreement automatically comes to an end.

Often, if buyers identify defects or problems which they have a “subject to” in respect of when conducting their due diligence generally speaking their options are as follows:
[1]       Accept the defect or problems and remove condition precedents and proceed to close the Contract;
[2] Not accept the defect and NOT waive or remove condition terminating the Contract;
[3] Attempt to re-negotiate with the sellers either [a] a reduction in price for the defect; or [b] the obligation of the seller to rectify the defect plus a holdback [money held in trust] to secure the sellers rectifying the defect.

Of course generally speaking you cannot force a Seller to re-negotiate the contract to address a defect or problem.

Each purchase and sale of a home is as unique as the individual Sellers, Buyers, Property and facts and circumstances  involved in the transaction, and it is difficult to say what is involved in a “typical” transaction and this  post is intended to provide a general outline of some of the considerations involved in purchasing and selling a home for informational purposes.

If you need legal advice or assistance, please contact us.

This is not legal advice, and does not create a solicitor-client relationship please see the terms of use respecting the use of our website.

What does a Real Estate Lawyer do to complete a home purchase? FAQs about Buyer's Residential Real Estate Conveyancing

From a contract law perspective, a typical home purchase and sale can be divided into two stages:
  1. Contract Stage in which you negotiate and enter into an agreement, attend to your due diligence and if appropriate waive / remove your subject to’s; and
  2. Conveyancing Stage in which lawyers typically are involved to [a] prepare the legal documentation and related steps for transferring title to the buyers the seller, including trust conditions and related documents which permit the buyer to register a mortgage before its paid; [b] preparing mortgage documentation and complying with instructions [tax searches, title searches, insurance etc.] provided by the buyer’s lender.

This article highlights some of the considerations involved in the "conveyancing stage" for a Buyer.

2.   Conveyancing Stage - Buyer's Conveyancing Considerations:

After a contract is signed and all subject to's [condition precedents] are waived and removed, and the parties are ready to close the transaction, the next stage is the "conveyancing" stage.  

We commonly get asked what a real estate lawyer does at this sage.  

This stage involves the preparation of legal documentation and attendance to the matters required for transferring title, and generally requires the involvement of a lawyer for each party.

Buyer's Conveyancing Considerations 
  1. Complete Copy of the Contract [not applicable to re-financing files].   You will need to get your lawyer a complete copy of the contract including all amendments, addendum and notices as the contract will govern the closing of the deal.
  2. Instructions from your Lender.  If you are obtaining mortgage financing, then you will need to get to your lawyer  your lender’s instructions as soon as possible so that your lawyer can start the conveyancing process.
  3. Down Payment.  If you are obtaining mortgage financing and your lender is requiring you to pay a down payment for the either the purchase of the property or payout of existing financing, whatever part of your down payment hasn't already been paid as a deposit to under the contract will be paid to your conveyancing lawyer which will upon closing be paid [along with the mortgage funds]  to the seller’s lawyer.  As contracts often provide for adjustments to the purchase price for taxes, and monthly condominium fees [if applicable] there will likely be additional amounts included in your down payment.
  4. Multi-Peril Property Insurance.  It will be your responsible for placing insurance on the property you are buying.  We recommend that you obtain insurance coverage for the property as soon as possible preferably as soon as you sign the contract to purchase the property particularly if you pay a deposit.  If you are obtaining financing your lender will  have specific instructions as to the insurance coverage they will require which you must comply with, but generally lenders often require and it is advisable that:  [a]  ​That all owners [legal, registered and beneficial as the case may be] be listed as insured parties;  [b]  That your lender be listed as a first loss payee;  [c]  That the insurance policy and coverage should be a multi-peril policy with broad form or comprehensive form coverage with a replacement cost endorsement or insurance coverage on the improvements equal to or greater than the amount of the mortgage, as well as it is subject to the standard IBC mortgagee’s clause with the Lender stated as first loss payee;
  5. Description on Title.  Title to the property will be transferred to you and as the registered owner you will be described on title, which description has three parts, being your name[s], your mailing address[es] and if there is more than one owner, how the property is jointly owned.
  6. Description on Title - Your name[s] on title.   You are required to register your name[s] to identify whom the registered owner is.  As the intent is to properly identify you, it is advisable that you use the full spelling of your name [first, middle and surnames].  You can as well use a middle initial if you wish.
  7. Description on Title - Mailing Address.  The applicable legislation requires registered owners provide a mailing address that is registered on title, and the legislation further provides that you are deemed to receive any and all registered mail that is sent to the mailing address stated on title.  It is generally advisable that you provide a mailing address that you can guarantee you will be receiving and is not likely to change.  If the property is going to be your primary residence and you will be checking the mail then you can consider using the property address.
  8. Description on Title - Joint ownership.  If there is more than one owner you are required to identify the type of ownership.  There are many different types of joint ownership.  The two most common types of joint ownership are “JOINT TENANTS” and “TENANTS IN COMMON”.  Also, depending upon the circumstances you may want to have a joint ownership agreement setting out the rights and responsibilities of the joint owners.
  9. Joint Ownership - JOINT TENANCY.  Joint tenancy is a unique type of joint ownership where there are two or more owners that own the property equally.  The unique aspect of joint tenancy is that there is the right of survivorship whereby as joint tenancy owners die the deceased joint owners share in the property is automatically by operation of the law transmitted to the surviving joint tenancy owner[s] until there is a surviving owner that owns the whole [or the joint tenancy is severed].  Particularly where joint owners purchasing the property are partners or related this is a common type of ownership and may be a requirement of the lender.  A valid joint tenancy requires  the "four unities":  [1]  unity of interest (each joint tenant must have an equal interest including equality of duration and extent);  [2]  unity of title (the interests must arise from the same document);  [3]  unity of possession (each joint tenant must have an equal right to occupy the entire property); and [4]  unity of time: the interests of the joint tenants must arise at the same time.
  10. Joint Ownership - Tenants in Common.  Tenants in common is a type of co-ownership where the parties have distinct and divided interest in the property.  Unlike a joint tenancy, tenants in common can have either equal or unequal interests in the property.  Unlike a joint tenancy, a tenant in common’s share is fixed and not affected by the death of another tenant in common, such that when a tenant in common dies the deceased tenant in common’s interest in the property will go to the deceased tenant in common’s estate and NOT the surviving tenant[s] in common.
  11. Municipal Taxes.  Municipal taxes and arrears will be required by a buyer and a buyer's lender to be addressed at the time of closing.  How the taxes are dealt with will depend upon:  [a] the time of year [prior to June 1 when taxes are levied or after]; [b]  whether there are arrears and/or penalties; and [c]  whether the buyer wants to enrol in a monthly payment plan.
  12. Real Property Report and Evidence of Compliance.  What is a Real Property Report and evidence of compliance is addressed in detail below.   In the event that the property is NOT a condominium property or is NOT bare land, then the contract between the parties may require the seller to provide a Real Property Report and evidence of compliance often a reasonable time before the closing.
  13. Condominium Documents.  If the property is a condominium the contract between the parties may require the seller to provide  the following documents from the Condominium Corporation:  [a]  Estoppel Certificate; and Confirmation of Insurance for the Condominium Corporation.
  14. Title Insurance.  You may wish to consider title insurance when buying and selling a home.  Title insurance provides coverage for individual transactions, and coverage is valid for the duration of ownership and the policy coverage amount is generally the amount you paid for your property.  Depending upon the facts and circumstances, and the policy of title insurance obtained, title insurance may cover certain losses incurred as a result of unknown title defects or other covered matters that exist at the time of your purchase, but are unknown to you at that time, which may include:
    • someone else claiming an interest in your title;
    • fraud, forgery and false impersonation affecting the validity of your title;
    • existing liens against the title including realty tax arrears and municipal utility charges;
    • violations of municipal zoning by-laws;
    • many forms of encroachments onto the property or adjoining land;
    • existing work orders;
    • lack of legal access to the property;
    • unmarketability of land due to adverse matters that an up-to- date survey/Real Property Report (RPR)/Building Location Certificate would have revealed house;
    • ​but does not include coverage for
      • Title or other defects created, allowed, or agreed to by you;
      • Title or other defects known to you but not the title insurer prior to the policy date;
      • Environmental matters;
      • Native land claims;
      • Matters that result in no loss to you;
      • Matters disclosed in home inspection or building inspection reports obtained by you; and
      • Exclusions and exceptions set forth in the policy of title insurance including transaction and property specific exclusions and exceptions added to your policy arising from searches performed and information provided to the title insurer.

Each purchase and sale of a home is as unique as the individual Sellers, Buyers, Property and facts and circumstances  involved in the transaction, and it is difficult to say what is involved in a “typical” transaction and this  post is intended to provide a general outline of some of the considerations involved in purchasing and selling a home for informational purposes.

If you need legal advice or assistance, please contact us.

This is not legal advice, and does not create a solicitor-client relationship please see the terms of use respecting the use of our website.
​​​

What does a Real Estate Lawyer do to complete a home sale? FAQs about Seller's Residential Real Estate Conveyancing

From a contract law perspective, a typical home purchase and sale can be divided into two stages:
  1. Contract Stage in which you negotiate and enter into an agreement, attend to your due diligence and if appropriate waive / remove your subject to’s; and
  2. Conveyancing Stage in which lawyers typically are involved to [a] prepare the legal documentation and related steps for transferring title to the buyers the seller, including trust conditions and related documents which permit the buyer to register a mortgage before its paid; [b] preparing mortgage documentation and complying with instructions [tax searches, title searches, insurance etc.] provided by the buyer’s lender.

This article highlights some of the considerations involved in the "conveyancing stage" for a Seller.

2.   Conveyancing Stage - Seller's Conveyancing Considerations:

After a contract is signed and all subject to's [condition precedents] are waived and removed, and the parties are ready to close the transaction, the next stage is the "conveyancing" stage.  

We commonly get asked what a real estate lawyer does at this sage.  

This stage involves the preparation of legal documentation and attendance to the matters required for transferring title, and generally requires the involvement of a lawyer for each party.
​
Seller's Conveyancing Considerations:
  1. Complete Copy of the Contract [not applicable to re-financing files].   You will need to get your lawyer a complete copy of the contract including all amendments, addendum and notices as the contract will govern the closing of the deal.
  2. Mortgage / Loan Account Payout Information.  If we are required to payout and discharge a mortgage against title to the Property, then we will require you to provide us with details of your mortgage to permit us to obtain payout instructions from your lender.
    So, if you do have a mortgage to be paid out and discharged in this transaction, then you will need to provide your lawyer with a recent statement or documentation you have from your lender stating the details of your mortgage including:
    [a]            Your mortgage loan account number with your lender; and
    [b]           Name and contact information for the lender which holds your mortgage.
  3. Real Property Report and Evidence of Compliance.  What is a Real Property Report and evidence of compliance is addressed in detail below.   In the event that the property is NOT a condominium property or is NOT bare land, then the contract between the parties may require the seller to provide a Real Property Report and evidence of compliance often a reasonable time before the closing.  Failure to provide a Real Property Report and evidence of compliance as required by the contract in the matter, can have significant consequences including but not limited to:  [a]  Delaying the closing of the transaction;  [b]  Causing additional fees and expenses in order to close the transaction;  [c]  Depending upon the circumstances it may constitute a fundamental breach of the contract in the matter.
  4. Condominium Documents.  If the property is a condominium the contract between the parties may require the seller to provide  the following documents from the Condominium Corporation:  [a]  Estoppel Certificate; and Confirmation of Insurance for the Condominium Corporation.  Failure to provide the required condominium corporation documents can have significant consequences including but not limited to:  [a]  Delaying the closing of the transaction;  [b]  Causing additional fees and expenses in order to close the transaction;  [c]  Depending upon the circumstances it may constitute a fundamental breach of the contract in the matter.
  5. Property Insurance.  You are responsible for cancelling the Property insurance.  You should not cancel your fire insurance policy on this property until such time as all monies have been paid to you. Upon having received all monies owing to you, it is your responsibility to cancel your fire insurance policy and to apply for any refund of premium to which you may be entitled.  If your property will be vacant for a period of time from the time you move out until the Purchaser takes possession or the closing date, you should obtain a vacancy endorsement to your policy.
  6. Municipal Taxes.  Municipal taxes and arrears will be required by a buyer and a buyer's lender to be addressed at the time of closing.  How the taxes are dealt with will depend upon:  [a] the time of year [prior to June 1 when taxes are levied or after]; [b]  whether there are arrears and/or penalties; and [c]  whether the buyer wants to enrol in a monthly payment plan.

Each purchase and sale of a home is as unique as the individual Sellers, Buyers, Property and facts and circumstances  involved in the transaction, and it is difficult to say what is involved in a “typical” transaction and this  post is intended to provide a general outline of some of the considerations involved in purchasing and selling a home for informational purposes.

If you need legal advice or assistance, please contact us.

This is not legal advice, and does not create a solicitor-client relationship please see the terms of use respecting the use of our website.

What is a Real Property Report [RPR] and Why is it needed? FAQs about Real Property Reports and Evidence of Compliance

A contract between a buyer and seller will typically contain a requirement for the seller to provide a Real Property Report and evidence of Municipal Compliance.

A Real Property Report is a document prepared by an Alberta Land Surveyor which accurately and reliably sets out the locations and dimensions of buildings, improvements, rights-of-way, and encroachments relative to boundaries of their property.

Generally, a Real Property should disclose the property boundaries, the location of the buildings and other improvements in relation to the property boundaries, any encroachments onto or from adjacent properties, rights-or-way, easements, and is relied upon by the municipality in determining whether there is compliance with municipal bylaws.

A Compliance Certificate or other evidence compliance refers to a municipalities confirmation that the property and more importantly the improvements meet the requirements of the local bylaws, such as Right of Ways, Easements, and Bylaw Setbacks to name a few.

A buyer's lender, as well as a buyer, will often require that a Real Property Report and evidence of compliance be provided in order to close a transaction because without a Real Property Report and evidence of compliance, it cannot be ascertained whether the buildings and structures purchased are located within the boundaries of the Property, that the Property is free from encroachments by buildings or structures on adjoining properties, easements or on rights of way, or that the Property complies with applicable zoning regulations, and without the Real Property Report to evidence the same on a practicable basis:  [a]  it is very difficult to accurately quantify the likelihood that any risk of costs, loss or damage will arise and the resulting costs, loss or damage from suck risk arising;  [b]  obtain assurances that any holdbacks or any and all steps taken to address such risks or potential are sufficient to protect a buyer's interests; and [c]  while title insurance is recommended as with any insurance there are exclusions to coverage including but not limited to knowledge of pre-existing conditions prior to closing which a lawyer which is very difficult to accurately determine as the lawyer is often not directly involved until the conveyancing stage and not privy to all communications and dealings between the parties.

From a Buyer's perspective they should strongly consider requiring the review and acceptance of a Real Property Report and evidence of compliance as a condition precedent [subject to] of the contract, as set forth above.

From a Seller's perspective the Real Property Report and evidence of compliance should be obtained prior to entering into an contract or dealt with in the contract as failure to provide a Real Property Report and evidence of compliance as required by the contract in the matter, can have significant consequences including but not limited to:  [a]  Delaying the closing of the transaction;  [b]  Causing additional fees and expenses in order to close the transaction;  [c]  Depending upon the circumstances it may constitute a fundamental breach of the contract in the matter.

Please contact us if you want to discuss the Real Property Report and evidence of compliance matters.

Each purchase and sale of a home is as unique as the individual Sellers, Buyers, Property and facts and circumstances  involved in the transaction, and it is difficult to say what is involved in a “typical” transaction and this  post is intended to provide a general outline of some of the considerations involved in purchasing and selling a home for informational purposes.

If you need legal advice or assistance, please contact us.

This is not legal advice, and does not create a solicitor-client relationship please see the terms of use respecting the use of our website.

What should I know about buying a condominium? FAQs about additional considerations to buying a condominium property.

If you are purchasing a condominium then at the "contract stage" your contract must be drafted so that you have the appropriate condition precedents / subject to's to permit you to do the necessary due diligence requiring the seller to provide and the contract subject to the buyer and/or the buyer’s lawyer sole satisfactory approval of an estoppel certificate, condominium financials, condominium documents and Condominium Property Act section 44 information [if applicable].

You may also wish to consider having the condominium documents and financials reviewed by an appropriate expert BEFORE you waive your condition precedents.
​
In addition to the condominium documentation you also want if you are considering purchasing a condominium unit the following is a list of factors you may wish to consider prior to entering into a purchase and sale contract:
The Condominium Corporation, Rules and Regulations
  • Is the condominium corporation in good financial condition?
  • Is all documentation for the condominium accessible and in good order?
  • Are there any legal claims or judgments against the condominium corporation?
  • Is the Estoppel Certificate and Condominium Documents to my satisfaction?
  • Should I discuss the Estoppel Certificate and Condominium Documents with my lawyer?
  • Should my lawyer’s review of the Estoppel Certificate and Condominium Documents be a condition to my contract?
  • Is the reserve fund amounts and contributions sufficient for the costs of major repairs and replacement of common property elements over time?
  • Should I consult a qualified expert on the condominium financial statements, and in particular the reserve fund?
  • Is the condominium corporation self-managed or has the corporation hired a property manager to handle the day to day running of the condominium??
  • Does the management fit my lifestyle (property manager vs. self-managed)?
  • What percentage of the unit owners are tenants of the condominium complex?
  • Who is on the Board of Directors? Are they all unit holders? Are they all tenants of the condominium complex?
  • Are the condominium rules and restrictions clearly defined and understandable?
  • Are the condominium rules and regulations reasonable (can I live under these rules)?
  • Are there rules about the numbers of occupants permitted?
  • Can I rent out my unit?
  • Does the Board of Directors (or developer) seem helpful in explaining the rules?
  • Can I take my pet?
  • Can I operate my business from the condominium?
Affordability
  • What is the amount of the monthly condominium fees?
  • Can I afford the monthly condominium fees along with my mortgage payments, taxes, insurance and other expenses?
  • Is cable/satellite and/or Internet access included in the monthly condominium fees, and if not, how much would they cost?
  • Are utilities included in the monthly condominium fees, and if not, how much can I expect to spend each month?
The Building -- Common Property 
  • Is the condominium in good physical condition?
  • Does it seem well built (or well maintained)?
  • Are the grounds attractive and well maintained?
  • Does it have enough storage space?
  • What is included in the common property?
  • Are there any restricted or exclusive use common property elements -- portions of the common property elements that are reserved for the personal use of one or more of the owners?
  • Are there Parking Stall[s] designated for my condo, and are the Parking Stall[s] on a separate title?
  • Does the condominium have recreational facilities? [exercise room, pool, party room, convenience store etc.]
  • Does it have parking available? Indoor or outdoor? Guest parking?

Each purchase and sale of a home is as unique as the individual Sellers, Buyers, Property and facts and circumstances  involved in the transaction, and it is difficult to say what is involved in a “typical” transaction and this  post is intended to provide a general outline of some of the considerations involved in purchasing and selling a home for informational purposes.

If you need legal advice or assistance, please contact us.

This is not legal advice, and does not create a solicitor-client relationship please see the terms of use respecting the use of our website.

What should I know about buying a condominium under construction? FAQs about additional considerations to buying a condominium under construction.

In the event that the property you are purchasing or considering purchasing is a new condominium that is being constructed then you it is strongly recommended that you have a lawyer assist you in the "contract stage".

Section 14(3) of the Condominium Property Act, R.S.A. 2000, c. C-22, as amended from time to time, provides that a developer or builder must hold in trust all money [other than rents and security deposits] until a certificate of title is issued in the name of a buyer.

It is important to note that the certificate of title can only be issued in the name of a buyer AFTER construction of the ENTIRE  condominium project is complete AND can take quite some time.

While section 14(3) of the Act is ultimately a consumer protection provision, it has had a significant impact upon the rights and obligations of buyers  as in light of this section contracts with developers or builders of condominium projects often  require:
  1. A buyer to take possession of the property and partially pay the purchase price [down payment] BEFORE completion of the construction of the condominium complex, registration of the Plan of Condominium and due formation of the Condominium Corporation;
  2. After taking possession a buyer to pay "rent" or interest on the unpaid balance of the purchase price often at a very substantial rate of interest often substantially in excess of the buyer's mortgage rate and mortgage amount;
  3. A buyer to take possession of the property on limited notice making the buyer liable not only for interest but also condominium fees and utilities for the property on short notice.

From a legal perspective the foregoing can be problematic as without the completion of the construction of the condominium complex, registration of the Plan of Condominium and due formation of the Condominium Corporation it cannot be ascertained:
  1. the legal description of the Condominium Unit the buyer is purchasing , and accordingly, the buyer's interests cannot and will not be registered against the Property until after the registration of the Plan of Condominium and until that time the buyer's interests will be subject to and subordinated to the current registrations on title PRIOR to the registration of the Plan of Condominium and transfer of the Property to the buyer;
  2. whether buildings, structures and improvements forming the Property you are purchasing or the building, structures, improvements and amenities forming the Common Property the buyer acquires an interest in by virtue of ownership of shares in the Condominium Corporation are or will be fully and/or duly constructed;
  3. the financial statements, information and assets and liabilities of the Condominium Corporation cannot be reviewed nor ascertained;
  4. the bylaws of the Condominium Corporation which the buyer's ownership, use and enjoyment of the Property will be subject to and must be in compliance with cannot be reviewed nor ascertained;
  5. the buyer's shareholdings in the Condominium Corporation;
  6. further and other issues which arise from and are related to the incomplete construction of the condominium complex, Registration of the Plan of Condominium and transfer of Property to the buyer, and the due formation of the Condominium Corporation.

Further in the  event that the buyer is obtaining financing to fund the purchase of the property even if the buyer takes possession the buyer's lender may, for whatever reason, decide not to lend you monies or fund this transaction, which is particularly a concern as often builders or developers will require the buyer to take possession on short notice but provide no fixed date upon which construction must be completed and possession granted.  

As it is very common for lenders to put time limits on their mortgage commitments, the failure of the builder or developer to complete construction of the property before the expiry of a commitment can cause significant damage, loss and expense to a buyer with the expiry of the commitment putting the buyer in the position where the buyer can't close or the interest rate has increased and the buyer is paying a greater rate of interest.

Each purchase and sale of a home is as unique as the individual Sellers, Buyers, Property and facts and circumstances  involved in the transaction, and it is difficult to say what is involved in a “typical” transaction and this  post is intended to provide a general outline of some of the considerations involved in purchasing and selling a home for informational purposes.

If you need legal advice or assistance, please contact us.

This is not legal advice, and does not create a solicitor-client relationship please see the terms of use respecting the use of our website.