Beware the tiny, turgid prose of the offer
Excerpt from an article by Bob Aaron - Toronto Star
Once upon a time, it was possible to buy a condominium unit from a Toronto-area builder before construction, and rely on the agreement of purchase and sale to determine all of the extras that the builder would add on to the purchase price.
Typically, builder offers for condominium units that are still on the drawing boards include a few thousand dollars’ worth of extras that are, based on the experience of many of my clients, rarely disclosed in the sales office.
In recent years, however, a new practice has developed where some non-construction extras that are charged to the purchaser are not contained in the agreement of purchase and sale but are buried somewhere in the huge pile of condominium documents — including the disclosure statement, declaration, bylaws, rules, agreements and budgets — that accompany each offer.
Take, for example, a recent condominium offer I reviewed for a client who wanted to buy into a downtown-area project that’s now under construction.
After outlining all of the builder extras and instructing my client to obtain a written cap or maximum on the dollar amounts, I began leafing through the condominium disclosure statement.
It was only then I noticed that after the new condominium corporation was created and turned over to the purchaser-controlled board of directors, it would be responsible for purchasing the guest suites for $203,977.30 and the car wash bay at $17,500, for a total of $221,477.30.
Based on the percentage share of common expenses allocated to my client’s unit in the proposed condominium declaration, my client’s capital contribution to the cost of the guest suites and car wash bay would be $834.31 in addition to the purchase price of the condominium unit.
Another offer for a smaller downtown Toronto condominium building priced a guest suite at $169,500. Over the next 11 years, the buyer would be paying more than $2,700 for a share in the suite at the rate of $20.48 a month.
Some purchasers, however, have trouble with the total lack of disclosure of the extra costs right in the agreements of purchase and sale, and burying them in a huge pile of condominium documents.
That’s what happened in the recent case of Peel Condominium Corporation No. 668 v. Dayspring Phase I Ltd.
It’s clear that there is a growing trend for some condominium builders to bury capital cost extras in documents outside the agreement of purchase and sale. As a result, it becomes increasingly important for condominium purchasers to review the huge volume of builder disclosure materials before the 10-day cancellation period runs out. Even better, get a lawyer to review it with you.
Bob Aaron is a Toronto real estate lawyer. He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.
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