It seems as if everywhere you look these days, a new condo is going up. It’s great to see new housing being built – except when it’s not.
Cancelled condo projects have left many disappointed purchasers wondering how this can happen and what to do next.
It can take a very long time for a condo project to go from design plans to a completed structure and a lot has to happen for it to become a reality. There are many different factors that can lead to a cancellation, but the most common are:
– Lack of sales;
– Delays in planning approvals; and
– Failure to obtain financing.
Although the vast majority are completed, there is always a risk a project could be delayed or cancelled altogether. The Ontario government recently announced changes to purchase agreements to help make buyers more aware of these risks before they sign.
For new projects or phases of projects going to market after January 1, 2020, every purchase agreement must include a new information sheet. The information sheet will have additional cautions and disclosures that highlight:
– the risk that pre-construction condominiums may never be completed; early termination conditions that would allow a developer to cancel a project;
– information about the status of the development (e.g., formal zoning approval, relevant approval authority and date of commencement of construction);
– information about any restrictions on the developer’s land title that may prevent the project from going forward;
– a purchaser’s initial 10-day period when they can cancel their purchase under the Condominium Act, 1998; and
– the expected date when a purchaser can take occupancy.
The information sheet also emphasizes the importance of having the agreement reviewed by a lawyer familiar with condominium transactions. Such a review will help buyers be better informed of the risks of purchasing a unit in a pre-construction phase, as well as their rights and obligations. (NC)