If you are interested in buying a brand new condo in BC and are considering buying a presale it’s important to have a full understanding of what you are buying. There are some significant differences to buying them opposed to other types of real estate.
Note that in Vancouver and surrounding municipalities such as Burnaby, Surrey and North Vancouver, VIP sales for new developments typically start before construction is even started and the developer will often be required to sell a certain percentage of units before they can get construction financing.
1.) You Only Pay The Deposit
The amount of the deposit and the payment schedule will vary depending on the Developer and the type of project, but generally speaking the longer the time until completion, the higher the deposit will be. Deposits can range from as little as 5% to as high as 25%, but Foreign Nationals may have to pay even more. No other monies are paid until completion and at that time your mortgage will kick in.
2.) Your Deposit is Safe
Your deposit is held in a trust account or guaranteed by a Deposit Protection Contract. If, in the unlikely event that the project does not complete your deposit will be returned to you.
3.) Time Until Completion
You could be waiting many months or even several years before your home is built. Most lowrise buildings usually take 24 months or so to complete and highrises can take 2.5 to 4+ years depending on the complexity and height of the building.
NOTE: developers only offer an estimated date range for completion and this is not a guarantee, and often projects in the Lower mainland are delayed.
4.) Contract Price Does Not Include Taxes
Prices generally do not include the property transfer taxes or GST / HST, so the buyer will have to pay those on completion, if applicable.
5.) Seven Day Right Of Rescission
When you sign a condo presale contract, you have seven days from the time of acceptance to cancel the contract for any reason and get your deposit back in full. After seven days, your contract is FIRM and legally binding.
6.) Legally Binding Contract
The Buyer is obligated to complete the purchase once the unit is constructed. In essence, you are promising to buy a home in the future and if you fail to complete you will be in breach of contract; you could lose your deposits and even be sued by the developer.
The BC Real Estate Development and Marketing Act applies to all condo presales. In effect, this is an act that offers some consumer protection to presale Buyers and regulates how new developments are sold and marketed.
8.) READ The Fine Print!
When you sign your contract you will also be given the Developer’s disclosure statement; this is a VERY IMPORTANT document. We will help explain this to you but it is also recommended that you have a lawyer review it before your seven days right to rescind ends.
The Big Take Away: You are not buying real estate ( your condo does not exist yet), you are promising to buy real estate in the future.
There are some significant advantages to buying a condo presale, but also some risks. You should weigh your options carefully and talk to a presale condo expert before making any decisions.
If you’re thinking about buying or selling a presale, give us a call and we’ll be happy to walk you through the entire process.