With the rapid rise in the number of condominium projects being constructed, many purchasers of units are first-time condominium owners. For this reason, many purchasers do not have a complete understanding of how condominiums operate and how condominium ownership differs from the ownership of freehold real estate.
Currently developers of new condominium projects must provide purchasers with a disclosure statement that sets out the details about the particular condominium project in which the purchaser is buying a unit. Bill 106 contemplates that either the Ontario Government or the Condominium Authority (which we described in an earlier blog post) will prepare a condominium guide which developers will be required to deliver to all purchasers of units in new residential and commercial projects.
The condo guide, together with the disclosure statement, would be delivered to purchasers at the time that they enter into a purchase agreement with the developer. Buyers will have ten days after receiving both of these documents to rescind the agreement of purchase and sale and receive a full refund of all deposit monies paid.
While the disclosure statement provides project-specific information, the condo guide will provide general information about buying and owning a condominium. The condo guide would not only describe the purchase and sale process (such as, for example, the purchaser’s right of recession, interim closing v. final closing), but would also describe how condominiums are governed and the rights and responsibilities of the unit owners and the condominium corporation.
As purchasers will have the opportunity to read the condo guide during the ten-day “cooling off” period, purchasers should be better informed at the time that they are committing to buy a condominium. Having better informed purchasers will also be beneficial to condominium corporations. Often, problems with owners that do not comply with the condominium documents or the legislation arise because owners are not aware of their obligations or do not fully understand what is the unit owner’s responsibility and what is the responsibility of the condo corporation.
Hopefully all purchasers will take the time to read the condo guide, considering that for many, the purchase of a condominium unit will be their largest financial commitment. As the purpose of the condo guide is to provide consumer protection, hopefully the government will be able to prepare a guide that is written in plain, easy-to-understand language and is not overly-lengthy.
As Bill 106 has only been moved to second reading, readers should note that the provisions of Bill 106 could change before the legislation is enacted.