IF YOU ARE BUYING, RENTING, OR SELLING A CONDO LOOK TO DAVIES CONDOS FOR ANSWERS TO ALL YOUR QUESTIONS
What is a condo?
A condo is a form of ownership and NOT a type or style of real estate. Condominiums are created in multi-units situations (can be residential, commercial, industrial, vacant land) where ownership is a unit plus a propionate share of common elements. Common elements are defined to be all of the real estate, land, and structure that is NOT unitized. For residential developments, typically, common areas are things like: hallways, elevators, underground parking, the pool, the exterior grounds. Common areas can be accessible or non-accessible by the residents and can also be for common use or exclusive use. Title transfer to several different owners can occur only when the condominium is registered as a condominium. Before that, it is one piece of real estate.
What is a co-op and how is it different?
A co-op is short term for co-operative and the ownership type is quite different than a condo. In the residential example, a multi-residential building is collectively owned through shares of a corporation. There is one owner on title, the corporation. You do not technically own the unit but a share in the company. Your share gives you the right to occupy a specific unit.
Why buy a condo?
Beware! Condos are not for everyone; however, there a multitude of reasons why condos are the real estate of choice for so many. Some of the advantages of condo living are as follows:
- eliminates the worry, work, and cost of house maintenance
- freedom to travel and simply lock the door
- hotel style living where everything is just a corridor away: gym, sauna, and pool
- enhanced security with close neighbours, 24-hour staffed concierge and/or security, on-site cameras, enter-phone systems, panic buttons
- social, recreational and entertainment prospects
- investment opportunities
- condos are usually situated in urban areas with an abundance of local amenities: shops & restaurants
What do I need to know before buying a condo?
As a condo owner and resident of the building, you are bound by the rules and regulations, contained in the condominiums declarations, by-laws, and rules. All buyers are encouraged to ascertain whether any restrictive regulation will affect them personally. These regulations address things like noise levels, visitor parking regulations, rules on smoking and pet policies. Also, be alerted that these can change over time. Up to date information is obtained by ordering a Status Certificate.
What is a Status Certificate?
Any buyer should request a Status Certificate when intending to buy. A condition can be inserted in the purchase agreement allowing you and your solicitor to review the contents. A condo realtor will advise you regarding this step. A Status Certificate is like a “report card” of the condo and contains all of the necessary information for you to make a wise decision. It includes such things as the financial statements, restrictive rules and regulations, whether the condo is involved in any active lawsuits and much more information. The Status Certificate must also disclose any contemplated special assessments.
What are the move-in arrangements?
Remember – condos have elevators. Before planning your move to a condo you will need to reserve a moving elevator and make accommodations for your movers through the property management firm or security desk. Do not book your movers until you are assured you will have access to the moving elevator. It is inappropriate to move large items in through the underground, pedestrian elevators and, in fact, is usually prohibited.
How do I know if a particular condo community is right for me?
All buildings are different and offer different features. You will want to consider what is truly important to you/your lifestyle. Some of the key differentiating features are:
- Location: is the condo in close proximity to amenities, recreation, and transit lines?
- Amenities: does the condo have: a pool (outdoor or indoor), hot tub, sauna, gym, yoga studio, party room, organized condo community events, communal outdoor garden and terrace space?
- Age: is the building old or new? This can affect condo fees and possible special assessments.
- Parking: does the condo have underground parking or is it surface parking? Is there visitor parking available for my guests in the building?
- Guest Suites: does the building have guest suites that can be booked in the case of overnight guests?
- Building Style: mid-rise, low-rise, or high-rise building?
- Security: is 24-hour concierge or security on duty important?
Hint: observe interactions in the lobby, talk to the other residents, get recommendations, talk to the security, look at the postings on the bulletin boards.
What if I change my mind?
Purchasing a new condominium has some special Consumer Protection with respect to the unilateral right of the Buyer to cancel the contract. Beware though, this is only for a very short period of time. There is a 10-day cooling off period after you enter into the agreement AND you have received the Disclosure Documents from the builder. After the 10 days has elapsed, in the absence of any other conditions, the Agreement of Purchase and Sale is a binding contract subject to requirements in the contract. Any failure to live up to your obligations in a contract could result in the other party seeking damages for breach. This can have serious financial ramifications. Do not let the 10 days go by unless you are prepared to follow through with the transaction.
What protections do I have that my condo will be delivered on time?
Every builder of a new condominium in Ontario must provide the delayed occupancy warranty to buyers at the time the purchase agreement is signed. Through this warranty, your builder is guaranteeing that your condominium unit will be completed by a mutually agreed upon Occupancy Date, or by an Occupancy Date that has been properly extended.
Details about the delayed occupancy warranty are provided in the Tarion Addendum attached to your purchase agreement. If you are unsure about your rights regarding occupancy delays you may wish to seek the advice of a lawyer.
Your builder has the option of providing one of two types of Occupancy Dates:
Firm Occupancy Date – For when your builder is confident your condominium unit can be completed by a specified date. If the date is not met, your builder is required to provide delayed occupancy compensation.
Tentative Occupancy Date – For when your builder is less able to determine a precise date that your condominium unit can be completed. For example, if construction has not yet started, or if there are unpredictable obstacles which could slow completion.
I understand I won’t own my condo immediately when I move in? Why?
Your condo unit will be physically ready for occupancy before title can be conveyed. The condominium doesn’t actually exist until it is registered as a condominium in the land titles office. So, essentially, when you first occupy your unit, the land and building are still owned by the builder until he goes through the legal process of registration. After this, title to the unit can be transferred to you, the buyer. You have received “the goods” (the property minus title); therefore the builder is entitled to charge you. You may elect to pay the full balance at this point or some portion thereof. During this Occupancy Period, the buyers pay to the builder an occupancy fee as outlined in The Condominium Act. The formula consists of three components: interest on the outstanding balance + condo fees + estimated taxes.
Why don’t builders just register condos BEFORE occupancy?
The units are ready for occupancy BEFORE the builder is able to register the project as a condominium. After occupancy but before registration there are many legal steps and several inspections performed by many agencies: building inspections and fire to name a couple. It is in the buyers’ interest that these processes take place to ensure that the builder is supplying what was promised. The time period between initial occupancy and title transfer can vary from a couple of months to a year, depending on deficiencies and the size of the project.
Can I sell my contract before I close?
Builders usually maintain tight control over these types of activities before title closing. There are several reasons for this. One is the builder does not want resellers competing with his own product if he isn’t sold out. Another is that the builder may wish to avoid instability in the sales process with a flood of reselling on the market before his buyers have actually closed. This provides a protection for all buyers in that the number of “flippers” is reduced and units are not flooding the market all at once. Some builders will allow assignments (occasionally for a fee) either with no restrictions or only when the project is sold out. If this is important to you, one way or the other, check your agreement carefully.
Can I rent the condo?
Once you have title to your unit, you own a piece of real estate. You can sell it, rent it, do nothing with it, give it away, as is ingrained in your property rights (subject, of course to any condominium declaration restrictions or protocols). During the occupancy period, many builders maintain control over the reselling and renting process. He is still the owner and wants to protect the integrity of the development for everyone’s benefit.
What top 3 suggestions (caveats) do you have for new condo buyers?
- Check the reputation of the builder and ask about other projects he has built.
- Check if approvals and zoning are in place.
- Check selling process—are there bulk units being sold for rentals?
I want to live in a nice condo and want to make sure the landlord won’t give me notice after one year. How do I protect myself?
In the world of condominium rentals, tenants are renting usually from an individual investor NOT a big company. Beyond your original lease arrangement, your security of tenure may be limited. It is always a possibility that a private landlord may want to sell and or move into the unit himself when your lease expires. People looking for long-term security should consider looking at actual rental buildings. Alternately, enquire about a long-term (multi-year) lease arrangement with the individual owner.
What if the owner wants to sell? What are my rights?
Should your landlord want to sell, he/she can do this but subject to honouring your lease. That is, the landlord can sell, but the new owner “inherits” you as a tenant if he/she closes during the currency of your lease. According to provincial legislation, a landlord cannot evict you prior to your lease expiry for the purpose of selling. He can still offer the property for sale, but as stated, he cannot offer vacant possession until the end of your lease or unless you voluntarily agree to an earlier date. Any landlord is obligated to give you 60 clear days notice from a payment date in advance of your lease expiry. In order for a landlord to serve a tenant with such notice, they must have a firm agreement of purchase and sale for the property.
Note: If you rent a condo AND your landlord offers the property for sale during your tenancy, there will be the question of showings and making the property available for viewings from prospective buyers.
What happens at the end of my lease?
At the end of your lease, in the absence of any renewed lease agreement, you are deemed to enter into a month to month tenancy. You will still be considered a tenant and all tenant/landlord obligations under the Residential Tenancies Act (RTA) remain in effect. www.ontario.ca/laws/statute/06r17. You will continue to pay your rent on the payment date outlined in your lease agreement. For example, if you paid your lease on the 1st of each month then you will continue to pay at this frequency. When in a month to month either party is required to give 60 clear days notice from a payment date to terminate the tenancy.
There is a condo rule of no smoking on the balcony, but I’m not an owner. Do I have to adhere to this rule?
Yes, you are required to abide by all the rules set out by the condominium.
Keys, fobs, and garage door openers—these belong to the unit owner. What if I lose some of them?
All property keys given to a tenant should be returned when vacating a property. A tenant can be held responsible for lose. Keys, fobs and garage door openers can be costly. A key exchange form acknowledging receipt of these items is often used to prevent misunderstandings. It is becoming more popular for a landlord to obtain a refundable deposit for these items.
What about security deposit/rent deposit?
Once you decided to rent a condo, a landlord can legally collect; at most, the equivalent of one month’s rent as deposit. It is illegal for a Landlord to collect a security deposit. Deposits for keys can be taken if refundable and can be no more than the expected key replacement cost.
What about damages at the end of my tenancy?
Normal wear and tear is anticipated and is the responsibility of the landlord. You are expected to leave the property clean and in “broom-swept” condition when you leave. A good rule of thumb is “leave it as you found it”. If you damage or abuse the premises you will be expected to fix it. Damage or abuse would be items such as damaged floors, broken items or large holes made in walls to mount a T.V.
What is the difference between selling a condo and selling a house?
Due to their nature, condos react quite differently on the market. For one a condominium building is usually designed in “stacks” which means there will be units that are identical in terms of size and layout. If there are recent sales, this can make the predictable sale price easier to define. Some of the factors that affect the value of condos are different than houses: view, heights, reserve funds, the condition of hallways, lobby and common areas, management, community development. Some of these things are out of the control of the homeowner. The marketing and consumer reach should be targeted to typical condo candidates. Make sure your agent knows condos, understand condos and targets a condo market.
Is there a better time of year to sell my condo?
The condo market is less seasonal than the rest of the market. Many condo purchases are discretionary ones, and, therefore, the typical buyer will wait until the perfect one becomes available. Condo buyers often will target a certain building and be ready to pounce when the right one comes up regardless of time of year. The best-kept secret in selling is to list a little earlier in the year than the typical “spring market” of April or May. This is a time (January – March) when there is less competition and many buyers turn their heads to a possible move after the flurry of holidays.
Is staging important for selling a condo?
Professional staging may or may not be needed or very simply, not be in the budget. Your realtor can advise in this regard. First and foremost, consider decluttering. Also be sure to consider floor space and remove any unnecessary pieces of furniture to help maximize the look of your overall square footage. Ensure everything is in good condition and in good working order, such as, appliances, taps, sinks, shower stalls, window coverings and sliding closet doors. Condo purchasers are looking to reduce maintenance and ongoing repairs and they really look forward to that hassle-free lifestyle. Don’t give them work the minute they move in.
What is a Status Certificate?
Buyers will usually make their offers conditional upon reviewing and approving the Status Certificate. This is very normal. A Status Certificate is like a “report card” of the condo including your unit. It includes all of the by-laws and rules. It includes such things as the financial statements, rules and regulations, whether the condo is involved in any active lawsuits and much more. The status certificate must also disclose any contemplated special assessments. It also indicates whether the condominium fees are up to date. Owners can order status certificates ahead of time, contemplating this buyer’s request.
Do condos have an Open House?
Condos can feel a little mysterious. Rarely are for sale signs on the lawns, open houses are often prohibited in high rises. It is challenging for buyers get a feel for a condo neighbourhood. This is another good reason to make sure you use a condo specialist who targets the condo buyer.
What conditions can I expect to see in an offer on my condo?
The following are typical condition and the average time requested:
- Approving the Status Certificate—2 weeks
- Finacing—5 days to 2 weeks
- Inspection—3 days to 1 week
- Condition on sale of property—2 weeks to 2 months
How will my tenant make rent payments?
If you and your tenant would like to have the rent paid by email transfer, these arrangements can be made at the beginning of the lease. Your tenant will send you the link each month, and you can deposit into your account electronically.
Historically tenants have paid their rent by cheque. This practice is declining but is still done. You can request post-dated cheques if this is the tenant’s preferred method, but you cannot legally demand them and occasionally tenants prefer to provide cheques one at a time.
Who does the tenant call if there is a problem in the condo?
With rentals, the tenant occasionally needs to get in touch with the owner of the unit for repairs, etc. You can provide your contact, or as is often preferred, you can appoint an agent to be the contact. This preserves your privacy and prevents nuisance calls. Davies Condos Leasing Services Brochure explains additional services we provide and associated costs if any.
What happens at the end of the lease? What if I want to sell my unit?
There are a number of options at the end of the lease, depending on the wishes of you and your tenant.
If you want to continue renting the unit and your tenant wants to stay, you have the option of signing another fixed term lease, or the tenant can stay on a month to month basis. If the tenant stays month to month, they will still need to provide 60 days’ clear notice to vacate (they just don’t have to wait a year to do so). Ultimately this is the tenant’s choice – you cannot force them to sign another lease if they prefer month to month.
If your tenant is staying, you can increase the rent, or keep it the same. To increase the rent you need to give 90 days’ notice, and you can only increase by the amount outlined by The Ontario Ministry of Municipal Affairs and Housing, once every 12 months.
If your tenant wants to move out, you can choose to list the unit for rent or sale.
If you want to sell the unit, you can list it towards the end of the lease term. Showings can happen while the tenant is living there, and once you have a firm offer, you can give 60 days’ clear notice IF the closing date is after the lease term is up.
The lease that you sign with your tenant will be protected under the Residential Tenancies Act (RTA), meaning that you cannot sell the unit before the end of the lease unless the new owner agrees to honour the remainder of the term.
If you (or a family member) wants to move into the unit, you can give 60 days’ clear notice to your tenant (at or after the end of the term) to vacate the unit.
What if the tenant loses keys?
All property keys given to a tenant should be returned when vacating a property. A tenant can be held responsible for loss. Keys, fobs and garage door openers can be costly. We will collect a $100 refundable key deposit from your tenant to help pay for lost items and have them sign a key exchange form acknowledging receipt of these items. However, you will be responsible for replacing any items that the tenant doesn’t.
What about security deposit/rent deposit?
It is illegal for a landlord to collect a security deposit.
A landlord can legally collect, at most, the equivalent of one month’s rent as deposit which is credited to the tenant for their last month’s rent (that is, the last month they live in the unit, NOT the last month of the initial lease term)
Your tenant will pay first & last at the time of application and approval and this whole amount is deposited to a Trust Account. On the first day of the lease, these monies are dispersed appropriately: to the leasing agency (us) and the landlord (you). The leasing fee or commission is the equivalent of one month’s rent (+HST). This is paid directly to us from the Trust account. The balance is paid out to the landlord. Even though the landlord does not actually receive the “last month’s rent” deposit it is considered to be held by him until the tenant moves out.
The mechanics are as follows: After a tenant is approved by you, the first & last months’ rent is collected and deposited into our Trust Account. On the start date of the tenancy, funds will be released from the Trust account, apportioned appropriately between you, the client and us the agent. Our commission (1 months’ rent + HST for a 1-year lease) is paid out of this deposit and the balance is forwarded to you. For example, if you rent your unit for $1500/mth, we will collect $3000 from your tenant. On the first day of the tenancy, our fee ($1500 + HST = $1695) will be paid to Davies Condos from the Trust Account and the client/landlord will receive $1305. On the first day of the tenancy, you will receive a month’s rent less the HST owing (just under one months’ rent).