Tony Gioventu
Province
Dear Condo Smarts:
Our family is on the hunt for a new condo in Vancouver as an investment and for our kids while they go to university. We don’t need it until fall of 2008, so we thought we would consider a pre-sale that would be ready by next summer.
However, we’ve become very concerned as we hear about all the problems some buyers are having, such as finding out that their costs are significantly higher than expected, or the sale price is different or owners are faced with changes to the condos they thought they were getting.
Could you please explain what type of legislation covers pre-sales and how we can protect ourselves before we make a purchase?
— D.L., Kelowna
Dear DL:
Other than that covering the intended marketing of the units, there’s actually very little legislation related to pre-sales, since no real estate exists yet for conveyance or sale.
Developers have an obligation to disclose to you what they basically intend to sell you. The disclosure includes a description of the units and proposed sizes and estimate of the proposed unit entitlement; proposed agreements for maintenance and operations, leases and contracts; operating budgets and proposed common property, assets and facilities that will become part of the strata.
This is, however, very much a contract agreement. The contracts often reserve the developer’s right to recover additional costs for construction and give him the right to make alterations or amendments to the strata plan that could cause to decide not to proceed with a sale. They may even reserve the right of the developer to cancel the project or the pre-sale agreement.
For every owner dissatisfied with the changes in a pre-sale, there are many people who have successfully made a windfall on the appreciation of property values.
Remember, a pre-sale is also speculative, so along with the benefits of possible increased property values you may also find you’re exposed to the inflationary effects of rising costs for fuel, concrete, window systems and finishing materials.
Before you buy, check out the developer’s history on pre-sales and take the agreement to your lawyer to review the terms and conditions of the contract.
Tony Gioventu is executive director of the Condominium Home Owners Association (CHOA). Contact CHOA at 604-584-2462 or toll-free at 1-877-353-2462 or e-mail directly to [email protected].
© The Vancouver Province 2007
