Although similar to standard residential real estate, Condominium transactions are distinct and must comply with separate legislation: The Condominium Act C.C.S.M. c. C170 (hereinafter the "Act").
There are a number of differences between a standard real estate transaction and one involving a Condominium. Most importantly, the Buyer has a right to cancel the agreement (for any reason) until such time as all disclosure is provided and the 7-day cooling-off period has expired. In this article, I will outline some of the notable difference.
1. Disclosure - After an Offer to Purchase is accepted, the Seller is required to provide the Buyer with certain disclosure documents. This disclosure is meant to inform the Buyer about the Condominium Corporation and includes: the Condominium Corporation's approved budget, the most recent financial statements, current and proposed By-Laws and Rules, the property management agreement (if any), the most recent Reserve Fund study, and it identifies whether the Corporation is proposing to amalgamate or withdraw the property from governance under the Act.
2. Cooling-off Period - When the Seller has provided the Buyer with the disclosure required by the Act, the agreement of purchase and sale then enters the 7-day cooling-off period. This gives the Buyer an opportunity to review the disclosure and determine if they want to proceed with the transaction. During the 7-day cooling-off period, the Buyer may cancel the agreement for any reason (see S. 54(1)).
3. Condominium Corporation - Condominiums are operated by a Condominium Corporation made up of Unit Owners. The Condominium Corporation establishes the By-Laws and Rules that Unit Owners must comply with. The By-Laws and Rules can only be changed by vote of the Unit Owners.
4. Common Expense - Common expenses are those expenses related to the Condominium corporation's mandate, duties, and powers. A list of approved Common Expenses can be found within the Condominium Corporation's Declaration. Generally, this includes general maintenance, garbage pick-up, landscaping and snow removal, window cleaning, etc. The Condominium Corporation collects monthly fees from all Unit Owners for this purpose.
5. Reserve Fund - A Condominium Corporation must establish and maintain a Reserve Fund to fund major repairs or replacements. For example: to repair or replace the roof, structure or exterior of the building; major repairs or replacement of the heating, air conditioning, electrical or plumbing systems; or to repair or replace the elevator, laundry facilities, sidewalk or parking lot.
6. Proposed Condominium Units - Proposed Units are those Units that are either (a) not yet built or (b) built, but the Condominium Corporation has not yet registered the Plans, Declaration, and By-Laws with Land Titles. When the Unit is ready to be occupied, but the Building or Project is not yet complete, Builders cannot register the required documents and Title cannot issue to the Buyer. In such a situation, Buyers and Builders are seemingly at an impasse: the Buyer wants to begin occupying the Unit but doesn't want to provide the Builder with the purchase funds, lest the Builder fail to complete the building or Land Titles refuse to issue Title.
Solution: Buyers and Builders can enter into an Interim Occupancy Agreement. Interim Occupancy Agreements allow the Buyer to occupy the Unit until a registrable Transfer can be delivered to the Buyer.
Interim Occupancy Agreements should be carefully drafted to protect the rights of both the Buyer and Builder. These Agreements set out the rights and responsibilities of both parties, and should include the Interim Occupancy Fee, insurance requirements, utility payment responsibilities, and a specific end date (to ensure the Buyer can escape the Agreement should the Builder fail to complete the Condominium as scheduled).
Disclosure for a Proposed Unit: As mentioned above, Disclosure Documents are required in the Purchase of all Condominiums, and this includes Proposed Units. However, the Builder/Seller must provide a different set of documents for the sale of a Proposed Unit. This set includes the proposed Declaration, By-Laws, and Rules.
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