Looking for a new home? Take advantage of the fierce housing market by making a pre-construction home purchase. A pre-construction home can save you money with the incredible incentives builders offer early investors.
But before you jump at the opportunity, it is important to understand what you are agreeing to. A pre-construction home purchase is similar to that of an existing home sale in terms of legalities within the sales contract. To protect your investment, however, make sure to hire a home-buying lawyer in Toronto first.
Benefits of Buying a Pre-Construction Home
With the fluctuating housing market and the sheer competitiveness of some buyers and sellers, more and more people are turning to pre-construction homes. These types of home purchases skip the anticipation and disappointment of bidding wars and allow potential homeowners to have more choices in the home’s features.
Another major benefit is being the first one to live in the home. Because you are the first and only owner, everything will be brand-new. You can customize a pre-construction home to your specific preferences and needs. Builders will work with you to include unique and specialized features that regular homes may not offer.
Since a pre-construction home is brand-new and customized to your style preferences (e.g., flooring, tile patterns, paint colours) the home is also move-in ready/turnkey. A pre-construction home needs no upgrades, renovations, or repairs before the new owner moves in.
Things to Consider Before Buying a Pre-Construction Home
While the process of buying a pre-construction home offers less stress and potential savings compared to purchasing a traditional home, there are several aspects to consider before signing on the dotted line.
Do Some Research and Planning
As with any real estate purchase, it takes time and effort to research and plan for a new home. Builders often have show homes to provide an example of what the future home could look like. It may or may not be in the location where construction will take place. As a buyer, you must visit the deemed location to ensure the area will suit your lifestyle and needs. Online reviews, testimonials, business portfolios, and information from existing show homes in nearby regions can help you narrow down the search for a reputable builder.
Consider the Financial Obligations
Deciding on purchasing a pre-construction home will require a significant financial commitment in comparison to purchasing an existing home. With a pre-built home or condo, the average downpayment is 20% to be paid over a payment schedule during the construction period with the first installment due upon the signing of the contract. Other related fees involve lawyer fees, customizations to the home, add-ons, sales tax, and land transfer tax.
Know the Construction Timeline
One of the key factors that a home or condo-buying lawyer in Toronto will advise you about is the building construction timeline. The sale process for a pre-built home or condo is a longer period than one for an existing property. A buyer will be notified of when construction is expected to begin, as well as when the building is expected to be completed. Find out if you are required to do anything or provide payments during various stages of the construction timeline.
Review your Purchase Agreement Before Signing
The Agreement of Purchase and Sale is the most important legal documentation during the buying process. It provides details on the exact location, names of the interested parties, description of the property, terms and conditions of the contract, and the agreed purchase price. Part of the purchase agreement is a contract known as the Addendum which underlines the closing date, fees, and terms of any potential delays.
Check the Occupancy and Completion Dates
Check the dates for completion and occupancy estimated by the builder. Pre-construction contracts provide a building completion date and a separate “expected” occupancy date for when you should be able to take ownership. Be aware of possible delays due to weather, labour and material shortages, and permit approvals, which are usually controlled by a local government department. One or more of these types of delays could cause the contractual dates to be pushed back either months or years.
Be Familiar with the Legal and Contractual Aspects
Knowing your rights as a buyer of a pre-construction home is an important aspect of the real estate market. Each document is a legally binding contract that protects the buyer and the seller. It is imperative that the legalities and the details of the contract are understood and agreed upon before any documentation is signed. By-laws, restrictions, rules, and hidden fees may be within the contract without verbal notification.
Hire a Real Estate Lawyer to Review the Agreement and Help with the Closing
A real estate closing lawyer can help you understand the complexities of a pre-construction home sale. The closing date can be delayed if there are issues within the initial agreement. From the Agreement of Purchase and Sale to the closing documentation, having the right legal representation is the best way to insure your biggest investment.
Contact Zinati Kay – Real Estate Lawyers Before Buying a Pre-Construction Home in Toronto
Talk to the expert real estate lawyers at Zinati Kay – Real Estate Lawyers before buying a pre-built home. With more than 25,000 successful real estate transactions, we are a team focused on helping you protect your investment.
We have more than 25 years of experience in buying, selling, mortgage refinancing, and title transferring. We offer reasonable fees and fixed closing costs so that there are no surprises. Call us at (416) 321-8766 or email info@zinatikay.com.