Note the details when buying a condo

Toronto continues to be the condominium boom capital of North America. The boom shows no signs of letting up during this busy spring market. Sales remain strong and we are seeing more condominium projects than ever before in the Beach, from Kippendavie to the Glen Davis Ravine, from the old Lick’s building on Queen Street to the former Shell Station beside the fire hall, to Beach Hill at Woodbine and Gerrard, and many others that are being planned or are in progress.

Buyers need to have their eyes open when making a purchase of a new condominium unit. There are certain critical things to understand about your prospective purchase.

Cooling Off Period

Unlike a purchase of a used residential house or condominium, the buyer of a new condominium has a 10-day cooling off period to change his or her mind. There is a recognition that buyers may be swept up in the excitement and marketing of the sale. The law gives the buyer a built-in exit strategy to protect them from getting in over their head and a chance for sober second thought. Make sure if you change your mind you give written notice to the vendor before the end of the 10-day period.

Harmonized Sales Tax – HST

The purchase price of a new condominium usually includes HST, which is charged on new construction. Used residential housing, or previously owned properties, are exempt and no HST is charged on the purchase. However, to make the playing field level between buyers of used and new properties, certain rebates are in place. Make sure you have the sales representative explain any rebates so you are clear – there are rules that apply. If you are selling a property and have it listed, be aware that HST is charged on the commission, which usually comes as a shock to many sellers. For example, if the sales commission is $25,000, the HST will be $3,250, for a total bill of $28,250.

Tax and more tax

Toronto remains the only municipality in Canada with a double land transfer tax. Make sure you are clear on the cost of the transfer tax, paid on the closing date. First-time home buyers may qualify for a rebate, which is helpful.

Interim closing and final closing

There are two stages in a new condominium closing which can cause confusion for buyers. The first stage is the interim closing. This is when a buyer takes possession or occupancy. The buyer is like a tenant and pays a certain amount each month based on the interest of the balance of the purchase price, as well as taxes and basic common expenses. The second stage is the final closing. This is when the buyer takes title and if financing is provided from the bank, puts on a mortgage. This usually takes place a few months after the interim closing has been completed. Always ask for information about these timelines when you are purchasing.


Condos tend to be built on avenues and main thoroughfares, and are generally purchased off the builder’s plans, so one cannot feel out the noise factor in advance. Many people may not be familiar with main street noises, including garbage trucks, rumbling street cars, or bars that empty at closing time around 2 a.m. There may also be internal noise. This is a real consideration to think about and address in advance – there is little recourse later.

Development fees

If you and a friend are each buying a unit in the same complex, the builder may cut out some of the development fees. Sometimes this is worth a few thousand dollars off your bottom line. Also, if a family member is a realtor, he or she could possibly put the offer in for you and then apply their commission (or part of it) to the purchase price.


Ask about the builders’ warranty and make sure you are clear on what is covered. Bring a level and another set of eyes when you do your inspection, and speak up if something is on your mind.

These are just a few of the things to keep in mind when making a purchase of a new condominium unit. It is always wise to have any legal agreement reviewed before you sign it.

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