Tarion to Add Extra Risk Warnings to Purchase Agreements
Buying a new pre-construction condo is exciting but also scary. There is always a risk of the project or a phase that can be delayed or worse, cancelled. In reality, there isn’t much protection for consumers who are buying pre-built construction.
In 2017, The Gupta Group promised two proposed condo towers named the Icona Condominiums. Located just steps away from the newly built Vaughan Metropolitan Centre, all 1140 units was sold out almost immediately. A year after the project was launched and sold, the Gupta Group announced that it would be cancelled, and that all the clients will be getting their deposits (only) back. For the unfortunate buyers that did major upgrades to their suites, they will not be getting upgrade fees back. Unfortunately this happens often. In the last two years over 12 developments were cancelled.
The pro and cons of purchasing pre-built construction projects
Investing is easier because of the cheaper price
Can be upgraded to your taste
Buying a condo before its built - subject to change or cancel
To hopefully prevent this from happening, Tarion is adding cancellations warnings to purchase agreements to alert consumers to the risk that a project might be delayed or cancelled. Over the years a number of high profile projects were cancelled, leaving buyers feeling fearful of losing money. Even though the consumers get their deposit back, the real estate values had already risen, which makes it frustrating for many. Tarion has also added a new search tool where consumers are able to check the builders’ records. The positive thing is, there are many financially strong and reliable builders. In the end, if it follows through it is still one of the best investments to make. It may not stop future projects from cancelling, but hopefully this gives current and new consumers a peace of mind when purchasing pre-construction projects.