New-Build Home Buying - Scrutinizing The Purchase Agreement

In real estate, little else beats the fresh feel of wandering through a model home and contemplating life in a spanking-new, untouched piece of real property. But before the move, there's the paperwork - pages upon pages of clauses and appendices that can strike fear into the hardiest of buyers.

Our post this week looks at just a handful of the items that buyers need to watch out for in a new-build Agreement of Purchase and Sale.

Specs - As a start, these outline the basics of the product, such as lot, model and elevation. Further, keep in mind that a model home often displays a mix of standard and upgraded features. The contract must be clear about what's included in the specific deal, and it should spell out details such as brand, colour, size and price.

Payments, financing and policies - Beyond the price of the home, the contract should indicate such particulars as:

  • Deposits, advances and amounts due on closing
  • Method of payment, including mortgage terms
  • Refund policy
  • Applicable tax rebates

Conditional Clauses - These are points on which the success of the entire deal may hinge, such as:

  • Obtaining a mortgage, ideally at the interest rate that you want
  • Favourable review of the Agreement by your lawyer
  • Successful sale of your current home

Requirements and bylaws - Anything set out by the subdivision or municipality that may affect your rights or usage. This can include the government's use of your property to place a fire hydrant or electrical box. It can also restrict you on such things as parking, landscaping or the creation of a basement apartment.

Timelines and milestones - Particularly in the case of a new condominium, there may be a difference between the date that you move in and when you officially own the unit. The Agreement should also outline your rights in the event of a construction delay. It may also stipulate irrevocable dates that counter-offers or other conditions must be fulfilled, failing which the Agreement will no longer be valid.

Buying new can be filled with opportunities - and risks. To maximize the former and avoid the latter, prudent buyers involve a lawyer from the outset.

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