New-home buying 101 – here's what you need to know

Shopping for a new home or condominium? Buying pre-construction brings with it many advantages, as well as differences, from purchasing resale. Here are just a few things to consider if you are looking at buying new.

Enjoying Tarion warranty coverage is a major reason to choose new over resale. The seven-year warranty takes effect when the owner takes possession and covers major structural defects. There are four main types of warranty coverage during this period including deposit protection, delayed closing/occupancy coverage, condominium cancellations and financial loss coverage for contract homes. Visit tarion.com to find out more.

Rules and by-laws

Purchasing a new condominium is different from buying a new lowrise home. This is especially important to know for people selling their single-detached or semi-detached homes and right-sizing to a condo. Even if you are a seasoned homebuyer, the decision to buy your first condo involves just as much homework and consideration as when you started out. Condominiums are a breed of their own, with protection provided in Ontario through the Ontario Condominium Act. To help ensure you are happy with your purchase, go into it with your eyes wide open, understanding exactly what you are buying and what to expect. For example, as a condo owner, you will own your unit and the exclusive use of your balcony or terrace, if you have one. You also own a percentage interest in the building’s common elements and amenities.

Whether buying lowrise or condo, you will be asked to sign an Agreement of Purchase and Sale and potentially other documents. These differ, however, depending on the type of home you purchase. For a condominium, you will agree to guidelines set out by the condominium corporation such as maintenance fees and a code of conduct. These rules and by-laws are in place to protect everyone’s safety, privacy and general quality of life. One of the documents will be a condominium declaration, which defines your suite’s boundaries and who is responsible for specific damages. Hire a lawyer who is familiar with condominium real estate to look over the paperwork and advise you.

Features and finishes

Another area where lowrise and condominium ownership differs is insurance. Suite owners should have insurance specific to the condo, which should include more than coverage for personal possessions such as clothing and furnishings. Condo owners should also insure “attached” items in their suite such as counters, cupboards, vanities and the like (including any upgrades they purchased). If these become damaged, suite owners are responsible for repairing or replacing them, which can be a major expense.

Whether you choose a new lowrise home or condo, keep in mind that buying early in the selling cycle means you can select the features and finishes that will make your surroundings feel like home to you. Purchase late in the selling cycle, and you may enjoy a discounted price or other perks.

Canada Mortgage and Housing Corp. offers two free buyers’ guides packed with information (visit cmhc-schl.gc.ca).

If in doubt about anything, ask – your real estate agent or lawyer.