levy and development fees

[harsh]

I'm in a 10 day cooling off period my lawyer requested a cap on these fees but the builder refused to budge stating the low cost to high quality of the condo prevents them from cutting costs further. they also said the fees would be around 5k...I heard horror stories where builders hit you with a lot more if you're lawyer isn't good to catch the fine print.

I know pre construction cost more than RE but is this acceptable? I like the location but I don't want to feel ripped off
What should I do?

 

[cdr108]

Is it worth the risk to buy pre-construction to you?

Have you considered resale ... you see what you're getting already, know the maintenance fees, get a copy of strata, won't be subject to the levies and development fees you're so concerned about, etc.

I would say pass on it ... I'll bet you'll get a call from the sales center within weeks caving in on it. From what I've heard, pre-construction sales are dead as nails ... most of the activity is in re-sales.

 

[harsh]

worth the risk? Don't know but the alternatives...

I want to stay in Scarborough. the re condos here seem outdated(floorplan and material wise) I rather get something new with colours I can choose.

But there's not much pre con condos either unless its right beside srtc and those one's I feel are overpriced and either have awful floor plans(EQ) or will have high maintainance fees(Centro). The one I'm dealing with IMO is better floorplan-wise, location-wise, $/sqft-wise but as a first time buyer in a recession i'm hesitant has anyone dealt with these fees and how much did you have to pay?

 

[Felino]

I'm in a 10 day cooling off period my lawyer requested a cap on these fees but the builder refused to budge stating the low cost to high quality of the condo prevents them from cutting costs further. they also said the fees would be around 5k...I heard horror stories where builders hit you with a lot more if you're lawyer isn't good to catch the fine print.

I know pre construction cost more than RE but is this acceptable? I like the location but I don't want to feel ripped off
What should I do?

Don't buy pre-construction!!! Don't you dare!!! Not until the broken Condominium Act of 2001 is updated. Builders have learned a lot in 8 years and have mastered what they can get away with.

Number 1: the newest trick by developers is leasing the mechanical infrastructure of the building. Find out from your builder if they're doing this, and get it in WRITING!!! If yes, run as fast as you can. Don't believe when they tell you that it costs less in the long run.

Many condo builders are leasing what used to be included in your purchase price. What happens is they work the leasing interest into your maintenance fees!!!!!! CAN YOU BELIEVE IT!!!!!!! You think when you're buying the unit that the mechanics in the building are owned by the condo, but they're not!!! It's a new trick the builders have come up with to save themselves millions and they're all getting away with it now!!!!!!

And your contract will NOT tell you they're leasing it. Their will be VERY vague terms in the contract that the developer uses to justify doing so when they please.

Also, find out if you are on the hook in case the developer needs to take out a loan. What do I mean? Our developer ran out of money and took out a huge multi-million dollar loan to finish the building. Guess who paid for the interest? You got it!!! You'll pay it on your closing costs!!! That's why closing costs are out of control nowadays. Many if not all builders are now taking out loans to finish the projects and the unit holders pay for the interest on the loan!!!!

Many builders are pulling these tricks today and the 2001 Condominium Act has fallen far behind what builders are pulling nowadays. It's time for a new Condo Act, but the city is acting VERY slowly to put developers back in their place.

You have been WARNED!!! DO NO BUY PRE-CONSTRUCTION until the city fixes the CONDO ACT of 2001. You will regret it. All the builders have been pulling the same tricks in the past year. They learn the tricks from each other on what they can get away with and what hidden contract language they can use to get away with it!!!!!

 

[cabeman]

I'm in a 10 day cooling off period my lawyer requested a cap on these fees but the builder refused to budge stating the low cost to high quality of the condo prevents them from cutting costs further. they also said the fees would be around 5k...I heard horror stories where builders hit you with a lot more if you're lawyer isn't good to catch the fine print.

I know pre construction cost more than RE but is this acceptable? I like the location but I don't want to feel ripped off
What should I do?

Keep in mind even with a cap on development and levy fees there are other charges the developer is able to pass along at closing. I just closed mid-January and had my development/levy fees capped at $5500, but the total closing costs ended up to be approximately 6% of my purchase price. I believe I saw at some point elsewhere on the forum that another purchaser pegged their closing costs at roughly 6% of purchase price, so you might want to keep that in mind as a guideline. The other issue you have to consider is that most developers require you to pay for upgrades at the time you choose them, so if you do plan on upgrades be aware that you'll have to cover that cost well before interim occupancy (in my case it was about 15 months between choosing upgrades and interim occupancy).

 

[Urban Newbie]

Originally Posted by harsh
I'm in a 10 day cooling off period my lawyer requested a cap on these fees but the builder refused to budge stating the low cost to high quality of the condo prevents them from cutting costs further. they also said the fees would be around 5k...I heard horror stories where builders hit you with a lot more if you're lawyer isn't good to catch the fine print.

I know pre construction cost more than RE but is this acceptable? I like the location but I don't want to feel ripped off
What should I do?

Felino is a bit jaded after what sounds like a really bad experience. I, on the other hand, have had a great experience with pre-construction. It can go either way, so do your research and weigh the odds.

You cannot get out of paying a bunch of those closing costs. It's just not possible. I had a few things struck out but, at the end of the day, still got dinged $6,000 in total closing costs (including lawyers fees etc.)

You have to ask yourself: Is this a reuptable builder you're working with? Do they have a track record (is it a Monarch, Tridel, Great Gulf?) EVERY builder will have problems, but established ones with a good track record will have fewer and will care more about resolving them. Some builders also have a reputation of taking FOREVER to register their buildings. Others are quick. By the time I moved in (to a higher floor) the building was already registered (took less than 2 months) and I went straight to final closing.

If you love the location and the unit and you feel confident in the builder, I would say bite the bullet and start saving for those closing costs. I've never regretted buying my place.

 

[harsh]

thanks its good to hear both sides of the coin. Urban newbie you're right I"m going to get hit no matter what if I choose pre contruct, but I do love the location(5min drive from work,3 diff bus routes within walking distance, relatives close by close to highway retail, and is a new growing community) only con is the closing costs which I will save to be prepared. Its a shame Scarborough doesnt have much quality options.

 

[plugk]

thanks its good to hear both sides of the coin. Urban newbie you're right I"m going to get hit no matter what if I choose pre contruct, but I do love the location(5min drive from work,3 diff bus routes within walking distance, relatives close by close to highway retail, and is a new growing community) only con is the closing costs which I will save to be prepared. Its a shame Scarborough doesnt have much quality options.

which project is this? please PM if doesn't want to post in here

 

[Penny]

I have purchased two condos pre construction in the past five years. The first was in Scarborough and it was built by Tridel. They had no problem taking out the clause and the whole experience was excellent. The second condo was a different builder - they refused to take the clause out and it cost me a few thousand dollars, which I expected, but after the other problems I had with the unit, I was bitter about it. If I were in your situation I would walk away and go with a resale. In my experience, it's just not worth the surprise costs, etc.