Helpful tips to sell your new condo before registration

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A new condominium that is bought directly from a builder does not have a standard agreement of purchase and sale. As most builders have their own terms in the agreement of sale, it is quite possible that 100 different builders selling condominiums would have different agreements and clauses.There is no set standard.

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Helpful tips to sell your new condo before registration

  1. 1. Helpful Tips to Sell Your New CondoBefore Registration?
  2. 2. A new condominium that is bought directly from a builder does not have a standard agreement of purchase and sale.As most builders have their own terms in the agreement of sale, it is quite possible that 100 different builders selling condominiums would have different agreements and clauses. There is no set standard.
  3. 3. To make things even more complex, in Ontario, there is no set guidelines by the province or by RECO, that a builder must follow except for the New Home Warranty.So till a condominium is registered and closed (that is the day the title is transferred to the buyer), the buyer is restricted by the original agreement with the builder as to what he can do and what he cannot do, before closing the sale.
  4. 4. Selling of a condominium unit before the registration is commonly known as flipping. Flipping is more complex than simply selling a condo after registration.Any condo buyer or investor contemplating selling before the registration of the condominium would be well advised to make himself familiar with the process, issues relating to new home warranty and the income tax consequences.
  5. 5. Flipping During Construction and Before Occupancy:You must have consent from the builder to assign the agreement, don’t think it is automatic. Some builders simply refuse to give consent, especially when they have unsold units; they do not want competition from their buyers.
  6. 6.  Others may ask for fees for giving consent.The fees vary from project to project and builder to builder and these could be from a few thousands to tens of thousands of dollars.
  7. 7. Flipping After Occupancy But Before Registration:You must familiarize yourself with the reselling process and clarify the following important and significant financial issues in the agreement with your buyer:
  8. 8. Who will pay the flipping fees, if the builder decides that he needs some money for giving his consent.Will you get your profit right away or will you have to wait till your buyer closes the sale with the builder.
  9. 9. You as the reseller, must re-register the condominium with Tarion Warranty Corporation make a disclosure that you are a reseller by completing a reseller form and pay a fee of $350.Penalty for not complying with this, is a fine of up to $25,0000 or a jail term of up to One year or both.
  10. 10. To avoid any issues later, clarify that the new buyer may forfeit the HST rebate, if the buyer is an investor or a someone who is going to rent out the condominiumThere may be some rebate coming to the original buyer , if the unit was originally bought under old GST of 6 or 7%. Clarify as to who will be entitled to this transitional rebate.
  11. 11. Clarify the mechanism for property tax adjustments for any retroactive tax assessments imposed by the city.It is quite common for the city to issue a supplementary / retroactive tax bill for new condominiums and it must be clarified as to what obligation you as a seller will have after the sale.
  12. 12. The agreement must specify as to who will be responsible for any development charges, utility connection charges and any other fees imposed by the builder as per the original agreement of purchase and sale with the builder.There should be a provision in the agreement as to how any changes/amendments, before closing imposed by the builder, will be dealt with if the builder’s terms conflict with the new agreement of purchase and sale.
  13. 13. If the condominium unit is flipped before registration or even soon after the registration, and it is proven that you had no intentions of moving in, you will have to pay tax on the total profit as a regular income and not as a capital gain.
  14. 14. A novice buyer is not likely to be familiar with all the complexities of flipping a condominium. If in doubt, retain an experienced Condominium Real Estate Broker and consult a lawyer well before signing the sale.
  15. 15. About Nawel K Seth & Trail Blazers RealtyNawel K Seth is the broker of Record of Trail Blazers Realty. He has been in the Real Estate Brokerage industry for almost 40 years. He holds multiple Post graduate degrees from reputable University of Toronto and can be reached through any of his websites.
  16. 16. Trail Blazers Realty, the developer of the website www.FlipCondos.ca and www.TheRentals.ca , has its offices in Markham, GTA Toronto, Ontario, Canada.Contact information for Nawel K Seth, M.A.Sc; MBA; MVA & Trail Blazers Realty:Tel: 905-660-7999 / Toll free: 1-866- 890-1999.Email: info@FlatFeeCanada.com

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