The Quick Legal Cheat Sheet for Purchasing a Condo

At Condo Culture, our goal is to do everything we can to make purchasing a condo enjoyable, stress free, and one of the most rewarding experiences you can have. We understand that sometimes legal terms and conditions may be stressful, especially if you don’t fully understand what they mean for you and your purchase.

So together with Sorbara Law, we have put together some helpful information to give you a better understanding of common situations and how they may affect your situation

For First Time Condo Buyers:

Land Transfer Tax Rebate

The Province of Ontario has implemented a program to assist “First Time Condo Buyers” of new and resale condos. Under this program, qualifying buyers may be eligible for an exemption of Land Transfer Tax up to $4,000. There are specific rules that relate to this proposed refund.

First Time Home Buyer Tax Credit

First Time Home Buyers may also be eligible for a federal tax credit of up to $750. The considerations to be a First Time Condo Buyer under the tax credit are different than the considerations under Land Transfer Tax. To be considered a first time condo buyer under the tax credit, a buyer and his/her spouse or common law partner can't have owned and lived in a condo in the year of the purchase or the four preceding years. Consult with your accountant for further information and visit the CRA website.

Preliminary Matters:

How will you take title?

If you have not already done so, how would you like to hold title to the condo.

If there will be two or more owners of the condo, you will have to decide whether you will own as “joint tenants” or as “tenants in common”.

Where title to condo is held as “joint tenants” and one of those owners dies, the other owner automatically becomes the sole owner of the condo. Probate fees are not payable. This is the way title to condo is most commonly held by persons who are spouses.

Where title is held by owners as “tenants in common” and one of those owners dies, the deceased owner's interest in the condo passes to their estate (not the other owner) and then on to the beneficiaries under the will. If there is no will, the deceased owner's interest in the condo will pass to their heirs in accordance with the intestate succession laws for Ontario. This arrangement is most common to people who are buying the condo for partnership, business, or investment purposes.

Other Matters:

Interim Occupancy

With new condos, the developer may provide you with a tentative occupancy date before the building is registered. If the date that you take occupancy of your condo is different from the date that you take ownership of the condo, expect to pay occupancy fees.

Obtain a Condo Insurance Policy

Your condo is either your biggest investment or one of your largest and it is important to protect it. Having an insurance policy in place should be a top priority and when you are arranging financing, your lender will require that you have adequate coverage in place prior to closing.

Arrange a Final Inspection

You may be entitled to have a final inspection of the condo if set out in your Agreement. You must make arrangements for the final inspection through your real estate agent. When you attend for the final inspection, pay careful attention to the condition of the condo as it compares to the condition when you signed. Report to your lawyer if there are any concerns.

New Condos: PDI Inspection

If you are purchasing a new condo, you must meet with the builder to inspect the premises and make a list of issues requiring the builder’s attention. At that time, you will complete the Certificate of Completion and Possession for delivery by the builder to the TARION New Home Warranty Program. The Warranty Certificate issued thereafter should be provided to you within eight weeks of taking possession. The effect of this Warranty is to give certain guarantees with respect to new condos. You may claim for any defect within one year of completion of the sale or any major structural defect within five years after such completion.

Title Insurance

Historically, written opinions confirming that a buyer has acquired a good and marketable title to condo (subject to matters first discussed and accepted) have been given by Ontario lawyers. As an alternative to the written opinion, you can elect to obtain a title insurance policy.

It is important to understand that it is not mandatory for you to purchase a title insurance policy. Keep in mind that if you do choose a title insurance policy, the insurance premium to cover both you and your mortgage lender will cost you approximately $300. In many cases, however, the cost of the policy would eliminate the need for your lawyer having to make certain other necessary and more costly search expenses on your behalf.

We thank Sobara Law for their insights so you can navigate the legalities surrounding buying a condo. If you plan on purchasing a condo sometime soon or down the road, be sure to reach out to our friendly and helpful team to tap into our specialized experience.