condominiums

Closing the Deal for Common Element Condominiums (POTL’s)

Don 0 Comments

condo

We have experienced problems recently with agents not using the proper form for the condominium POTL sales and purchasing nor using the proper terms. The Agreement does not mention the condominium corporation at all.  Some Agreements refer to monthly fees without stating what they are for, while some agents do not think that they need to refer to the review of the Status Certificate and make the transaction conditional on lawyer review.  All of the above can prove fatal to the transactions and to the agent.

Purchasers have refused to close transactions because it was not disclosed that they were buying into a condominium corporation. The monthly fee can be very small, as little as $15.00 a month, but if not disclosed as a condominium, the purchaser can walk because even though the fee is small, there is always the potential liability of the condominium corporation which is unknown.

A few closings were delayed because the purchaser refused to close unless the seller paid the condominium fees for 5 years due to the failure to disclose there was a condominium corporation fee. Therefore, it is imperative that there be full disclosure of the status of the property and any condo fees, to ensure that agents are not having to reach into their own pockets.  The deal only closed when the agents agreed to pay the condominium fees for the next 5 years.

Purchaser’s agents must provide for the review of the status certificate on these condos as well.  Failure to do so could result in the purchaser being saddled with unpaid condominium fees, pending special assessments, or possible lawsuit costs pending against the corporation.  The agent would be negligent for not making the offer conditional on review by the Purchaser’s lawyer – obviously a lawyer not obtaining the Status Certificate would also be negligent.

So be sure you get all the facts on the property you are selling and buying, because many properties are now being developed as Common Element Condominiums (POTL) and sellers do not always appreciate what they are selling. The sellers naturally blame their agents when these problems arise.

Knowledge is Power, which results in more business!

If you have any questions or concerns, please feel free to contact us at your convenience.  If you have any suggestions for future topics please let us know.

Prepared by Don Travers, Solicitor with Paquette & Travers.

Contact toll free: 1-877-744-2281                                                      Online: www.paquettetravers.com

Watch for more Travers Tidbits to follow each month!

The Hidden Details Behind New Condo Agreements

Don 0 Comments

condos

Things to remember: Pre-closing Agreements of an Assignment of Purchase for New Condos

When the agreement is assigned, consent is almost always required and charged for by the Builder. Need to determine the cost of consent and who pays it.

  1. Does the Purchase price for the assignment cover (i) The Assignment fee (ii) The Deposit and the extras already paid by the Assignor.
  2. Who will pay the H.S.T on the Assignment and what amount is it on, if payable; just the assignment fee or the assessment fee as well as the deposits.
  3. It is key to remember that the property must never have been occupied prior to closing to get the HST rebate on closing.
  4. The Assignee needs confirmation, that the Builder will credit him/her the HST rebate on closing.

The Key to many of these HST questions is what was the intention of the Purchaser/Assignor at the time of entering into the Purchase Agreement.

  1. If the Purchaser/Assignor’s intention was to resell/assign the agreement the Purchase Agreement will be a Builder under Tarion, and will have to register as much.
  2. The intention also determines if HST is payable on the Assignment. If his/her intention was to resell, HST is payble on the Assignment.
  3. The good thing from the Assignee’s point of view is that regardless of what the purchase agreement states, the Assignee can claim the HST rebate if he/she otherwise qualifies for the rebate.
  4. Unfortunately the OREA forms of Assignment Agreement for condos does not deal with the fundamental questions of intention of the HST. The phrase “included in” does not address the issue of “HST exempt/HST taxable”.

Prepared by : Donald J. Travers of Paquette Travers & Deutschmann

Toll Free: 1-877-744-2281 Email: Don@PaquetteTravers.com