Pre construction

1. Definition

Pre-construction properties refer to homes or condos that are purchased directly from a builder before the completion of construction.

– **Advantages**: Potential for customization, lower initial costs, and potential for appreciation before completion.

2. Choosing a Developer

– Research: Investigate the reputation, past projects, and financial stability of the developer.

3. Understanding the Agreement

-Agreement of Purchase and Sale: Review the contract thoroughly, understanding deposit structures, occupancy dates, and cancellation policies.

– Tarion Warranty: In Ontario, new homes come with a Tarion Warranty that provides protection against defects. Understand what is covered and the warranty terms.

4. Financing

– Deposit Structure: Pre-construction purchases often require a deposit structure spread over several installments. Understand these payment schedules.

– Mortgage Pre-Approval: Get pre-approved for a mortgage to understand your budget and ensure financing is in place when the property is completed.

5. Closing Costs

– Additional Costs: Be prepared for additional closing costs, such as land transfer taxes, development charges, and legal fees.

– **HST Rebate**: In Ontario, there’s a potential HST rebate for new homes. Ensure you understand the eligibility criteria and application process.

6. Occupancy and Final Closing

– Occupancy Period: Understand the occupancy period, during which you can move in, even though the building is not officially registered.

– Final Closing: The final closing occurs when the property is registered, and ownership is transferred. Ensure all payments are made, and legal requirements are met.

7. Risks and Considerations

– **Delays**: Construction projects may face delays due to various reasons. Be prepared for potential delays in occupancy and completion dates.

– **Market Fluctuations**: The real estate market can change. While pre-construction can offer appreciation, there are market risks to consider.