The Ontario government has introduced a new measure to protect condominium buyers, a lot of whom have felt short-shifted in past purchases.
“Realtors in Ontario have been very frustrated that purchasers of preconstruction condos have been misled or ripped off with far too many projects that got delayed, or where the final product was not what they were promised,” Tim Hudak, CEO of the Ontario Real Estate Association, which lobbied the provincial government for mandate, told CREW.
“There are too many stories of people who purchased condos that are either badly delayed, never developed, or not what they were promised. OREA went to bat to raise consumer protection with preconstruction condos. We need a level playing field when it comes to protecting consumers from buying homes.”
Beginning this year, developers operating in Ontario must provide purchasers of new or preconstruction condos with a copy of the Ontario’s Residential Condominium Buyers’ Guide, which was prepared by the Condominium Authority of Ontario, and failure to do so could nullify the purchase agreement.
The 37-page guide will cover everything from the purchasing process to condo corporations and any issues that may arise while the resident is living in their unit.
Moreover, effective Feb. 1, as per the New Home and Construction Licensing Act, Tarion will no longer be responsible for regulating new home builders and vendors, ceding the authority to the Home Construction Regulatory Authority.
Led by Hudak, the former leader of the Progressive Conservative Party of Ontario, OREA had been lobbying the provincial government to expand protections for consumers in the real estate sector because many of them enter purchase agreements at sales presentation centres without fully understanding the terms of the agreements, which can be costly. Hudak says sales centre representatives should adhere to stringent professional standards and ethics like real estate sales agents do.
“It’s a great document that OREA had input on, with clear language about the process, the rights consumers have, and their options if they feel they’re not being provided what they contracted for,” said Hudak.
Erica Mary Smith, broker of record at Stomp Realty, says that, unfortunately, not many consumers who visit presentation centres know what they’re walking into, and seemingly small clauses that can carry hefty price tags can be averted with the guidance of a sales agent.
“My business partner and I worked in sales offices for five or six years, and a lot of people don’t know you can bring a realtor into a preconstruction office and the sales office rep will know they can’t get away with anything,” she said. “Your closing costs for preconstruction are typically 16-20% if you don’t know how to negotiate, whereas a realtor can keep it down to 5%.”
Alex Balikoev, senior vice president of sales at Sotheby’s International Realty Canada, welcomes the government-mandated condo guide because, he says, the majority of condo purchasers grew up in ground-related homes and aren’t familiar with the ins and outs of condominium ownership, often to a surprising degree.
“Even current owners don’t know how condo corporations are run,” he said. “That’s why some buildings have higher condo fees—because owners are not involved, not because they’re lazy, but simply because they’re not aware of how much involvement they can have. A condo corp might interview three or four contractors for repair work, but an active board will interview 10 to 20 and find the best and cheapest ones. It’s all about how active and involved the condo corp is.”
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Written by Canadian Real Estate Wealth.
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Canadian Real Estate Wealth