Condominium buyers beware of lost money for upgrades in Barrhaven, Nepean, Ontario

Condominium buyers beware of lost money for upgrades in Barrhaven, Nepean, Ontario

Many in Ottawa are familiar with the EcoCite condominium project in the Glebe that was taken over by the lender this past summer. I don't know the specifics about the financial situation of the developer (other than to say it obviously wasn't good), but the end result was that all of the agreements of purchase and sale with the buyers were cancelled.

As a condo buyer, you could still renegotiate with the lender to purchase a unit in the building, but not for the same price as what you had originally agreed to pay.

It's bad enough to lose an opportunity to own the unit that you wanted in the building that you wanted, particularly if you've been waiting around a long time.

It's worse, though, if condo buyers give the developer additional money to pay for upgrades.

On condos, deposits of up to $20,000.00 are protected under the Tarion warranty program. Deposits in excess of this amount are not covered.

The warranty program, which has gone through various premutations and name changes over the years, is meant to protect consumers buying brand new construction. It covers condo buyers as well as those purchasing freehold homes from builders. The coverage includes compensation for delayed closings, workmanship, defects in materials and workmanship, and lost deposits. 

However, monies that you pay to the builder for upgrades, or extras, are not protected by the warranty program at all. If a condo buyer purchases a unit and the builder gets into financial trouble, money you paid for hardwood flooring, or other upgrades could end up being lost. You can always sue the builder, but if they can't pay their own lender, they certainly can't pay you. As a condo buyer, you may be out of luck.

There are a number of new condominum projects slated to open in Barrhaven in 2010. If you're in the market for a new condominium, keep in mind the distinction between deposits (which are protected) and extras (which aren't). In the end, you should always do your homework about a builder's track record and how long they've been in business. You'd do this with any other major purchase, so why not as a condo buyer? 

This blog entry is intended as general information for condo buyers and does not constitute legal advice. If you need legal advice, please speak to a lawyer.

Kerry Fox is a real estate lawyer helping condo buyers in Nepean, Ontario.