Disclosure statement often overlooked by new condo buyers
What is it and why is it important?
The disclosure statement is a compilation of information
describing the condo, units and amenities, financial structure, responsibility
and timing, first year budget, proposed bylaws, etc.. These documents are provided usually in
conjunction or shortly after the signing of the developer's agreement of
purchase and sale. They are important
because many cost details and special terms are often included there, that
every buyer should know.
Buyers have 10 days to rescind their purchase agreement
after receiving the later of the signed copy of the sales agreement or the
Condo disclosure statement.
How and why does it get overlooked?
Most buyers have their lawyer look over the
builder/developer agreement of purchase and sale but according to a real estate
lawyer in Toronto, Nick Iannazzo-very few want to pay their lawyers to review the
disclosure statement. The term the "devil
is in the details" very much applies to this Disclosure Statement as many
details are included in this document that relate to future costs of ownership
and ongoing maintenance costs of the condo.
We believe that many buyers overlook this document because
of the legalese and the fact by the time they receive the document they have
already emotionally "bought" the condo and are not looking for problems with
the purchase.
Consequences:
Developers often retain ownership of certain aspects of the
building complex and "sell" or "lease" those facilities back to the condo ownership
after the first year of ownership. This
could include fitness facilities, guest or function rooms, some building
systems such as HVAC and how costs may be apportioned between retail or
business space in the complex and the residential portion.
Once buyers fully analyse and comprehend the consequences of
the disclosure statement terms, the bargain purchase price of the condo may not
seem to be quite such a great deal after all.
Bottom line:
get your REALTOR® and your lawyer involved in reviewing and explaining all documentation
related to a new "to-be-built" condo-so you understand the risks as well as the
opportunity.
Link below to an article by Brazeau Seller LLP about uncovering
hidden costs in new condo purchase.
http://www.brazeauseller.com/articles/26/4/2011/303.aspx
Comprehensive and objective site for condo buyers and owners
is highly recommended reading.
http://www.condoinformation.ca/
Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
613-435-4692
oasisrealty@rogers.com
www.oasisrealtyottawa.com