With one of the hottest condo markets in North America, a growing number of Torontonians are opting to buy pre-construction units. Like any construction project, delays with pre-construction condos can occur. Although condominium projects can fall behind schedule for any number of reasons, delays are especially common when there are a number of competing developments in one area. The good news is that there are rights and protections in place to support buyers when these setbacks occur.
Whether you’re planning on moving in yourself or having tenants, it’s important to understand the potential delays that come with a pre-construction purchase, and what your options are when they arise. In some cases, you’ll be entitled to compensation or have the ability to terminate your contract. Working with your real estate agent can help you alleviate some of the stress that comes with construction delays.
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Defining Delayed Occupancy
Delayed occupancy occurs when a buyer does not receive their unit by the initial tenancy date outlined in the purchase agreement. This is one of the most critical details of a purchase agreement and is something buyers should pay close attention to. It’s also important to note that a purchase agreement can have more than one tenancy date.
There are two crucial occupancy dates outlined in an agreement, firm and outside. The firm occupancy date is the date on which a builder commits to having a buyer’s unit completed. The outside occupancy date refers to the absolute latest date a builder expects to make the unit available to the buyer. These dates are critical for buyers and can both be impacted by delays.
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Keep Track of Changes
In Ontario, builders are allowed to delay the initial tentative occupancy date for any reason as long as they provide tenants with notice of 90 days and set a new tenancy date. Of course, there are restrictions as to how long they can do this. 30 days after the roof is completed on a condo building, a developer is required to set a final tenancy date. If the developer is unable to provide access by the firm occupancy date, the buyer is entitled to compensation and other rights.
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Compensation and Cancellation
Once the firm tenancy date has passed, buyers who don’t yet have tenancy of their unit are officially entitled to compensation. This compensation is generally to help cover temporary living expenses and other costs related to the interruption. In Ontario, the fixed compensation amount is $150 per day, up to a maximum of $7500. Compensation begins the day after the initial occupancy date established in the purchase agreement.
Buyers can also be entitled to compensation for the ten days before the firm tenancy date based on the circumstances. With a maximum total of $1500, this can be claimed if a developer does not provide adequate notice of the delays.
If significant delays to tenancy occur, buyers will also have the option to cancel their purchase. Known as the Purchaser’s Termination Period, this permits buyers who choose to back out of their purchase agreement to receive the relevant fixed compensation amount, plus a full refund of costs they’ve paid on the condo so far. This total refund includes a return on deposits, interest, upgrades and other fees.
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Have a Plan B
For buyers who are planning on living in their condo, one of the most stressful challenges that can come with a delayed tenancy is finding a place to stay while unit access is delayed. Having a backup plan for temporary housing in case of delays is a great way for buyers to avoid disaster.
Purpose-built rentals are a great option for temporary housing as they are typically furnished and offer flexible lease periods. Plus many of these developments offer some incredible amenities for them to enjoy while they wait for their condo to become available.
Explore our list of luxury purpose-built rentals in Toronto here.
Ask an Agent
While potential delays shouldn’t deter buyers from exploring the pre-construction market outright, recognizing the reality of delays can help prevent unpleasant surprises down the line. When purchasing a pre-construction condo, buyers should choose a real estate agent that will advocate for them. As condo market experts, a great agent can help buyers navigate delays and interruptions. They’ll also be able to ensure buyers receive the best compensation possible when setbacks occur.
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