The Pre-Construction Condo Gamble
By Michael McCann
Imagine: a 50-something couple, looking to condo living several years down the road, visits a presentation centre and sees glossy floor plans, colour renderings and a list of premium unit upgrades.
“Commit to purchasing before the shovels are in the ground,” the pitch goes, “and get a better price than in four years when it’s built.” But after signing the contract and making the deposit, they find life changes in four years: divorce, death, a new job or adjusted financial realities could force them to sell the unit.
But unloading a pre-construction purchase agreement can be an incredibly frustrating experience.
— You’ll have to pay the developers to reassign the agreement.
— The builder can unilaterally make changes to your agreement, including floor plans, construction materials and adding retail/commercial space.
— With waves of new condominiums saturating the market, selling prices have not reflected the gains that some developers’ agents promised.
— If you default, the developer can resell the unit and sue for any losses.
— If you are able to sell, any profit will be subject to capital gains tax because you never lived in it.
A safer approach is to buy pre-existing. By physically viewing the finished product, you’ll know exactly what you’re getting into. Best of all, you’ll be able to sell the unit whenever you please with minimal hassle.