Marie-Claude Dulac

By Marie-Claude Dulac

February 1, 2017

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Purchasing a condo: Four things that warrant your attention

Article revised on 28 February 2019

Decided to invest in a condo? Before you finalize the transaction, you need to make a few important verifications. Here are a few tips to help you make an informed decision, ensure that the purchase you make is in compliance and the seller has provided you with all the information required.

1. Condo fees are very low? Then it’s probably too good to be true!

Are there very low condo fees for covering shared bills such as grounds maintenance and common areas? Beware! Too often, low fees mean an inadequate contingency fund, which is a cash reserve that all co-owners pay into for covering major work on the building.

In Quebec, the law stipulates that at least 5% of condo fees must be paid into the contingency fund. However, this rate is usually insufficient. Reality could catch up with you when major repairs become necessary, gouging a hole in your budget.

The Insurance Bureau of Canada (IBC) recommends you don’t cut corners when it comes to paying into these accounts. This will avoid losses and unnecessary worries.

You should also know that condo fees for new constructions are often cited for information purposes only and may vary significantly.

2. Condo rules and declaration of co-ownership: take them seriously!

Take the time to read through these documents and ensure that you understand them. It’s tempting to skip this when you’re impatient to buy a new home. However, the documents could tip the balance when it comes time to make a decision.

Remember:

  • Some rules are very strict. Examples? In certain condos, it is not permitted to use a barbecue, own a pet or have hardwood flooring.
  • When the time period in your purchase offer to consult these documents has expired, it could mean that you accepted to buy the condo that is regulated by these documents. At that point, you must comply with them.
  • Rules can be very different from one building to another.

3. New condo? Consider title insurance

Is your dream condo under construction? Your notary may suggest that you take out title insurance. This insurance protects the buyer and the mortgage creditor in the event of problems with ownership titles.

Your notary is the best person to advise you on this subject because each title insurance product is different.

For example, title insurance can provide coverage for financial problems that may be caused if the contractor does not pay the sub-contractors or if the work is not in compliance and must be partly re-done. It can also cover other expenses, such as legal fees.

4. The questions to ask before purchasing a condo

When buying a condominium, the purchaser should require in the purchase offer that the seller allow him or her to examine the:

  • Declaration of co-ownership
  • Building rules
  • Minutes of condominium meetings
  • Syndicate’s financial statements

These documents play a major role in the sales process. In fact, the purchase offer may provide that the purchaser must state that he or she is satisfied in order for the sale to be finalized.

Good to know: If the Board of Directors has adopted an expense to be paid at a future date, the seller is obliged to inform the purchaser of this in writing, failing which the seller could be sued by the purchaser for not having sent important information to the buyer.

Buying a new home is a big investment. So invest a little time in getting to know the ins and outs and ensure that the condo you covet meets your needs and expectations. You’ll save yourself a lot of grief!

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