As it stands now, when you buy a new build condo in Alberta, developers are under no obligation to complete the build by a certain time. Meaning you the purchaser, can fork over a very large deposit (often your entire savings for a down payment) that will leave you in limbo if the developer decides to "delay" construction for years at a time. Reasons for this can include legitimate construction delays, but typically it's linked to delays in selling units in the building. Banks don't like to loan Developers money if it's a dud project for whatever reason.
The CondoSensei's quick take:
- While revolutionary for Alberta, BC and Ontario have had similar regulations for quite some time now and I suspect Alberta's legislation will look suspiciously similar...given this I'm curious as to why certain Ontario based developers are so allergic to these new regulations in Alberta....
- Rather than go through all the ins and outs of the somewhat complex regulation around mandatory occupancy dates: I'll cite a few pages from the web that do a rather good job of summarizing how these work using Ontario as an example (A good summary can be found at this link, and the pages from Tarion (Ontario New Home Warranty) is at this link)
- As with any government legislation - we'll have to see what the fine print is on the Alberta legislation. It all *sounds* good, but the fine print always determines how effective this regulation will be in protecting buyers.
- Here's an example of what I mean about fine print: how much will the penalty be for a slow developer? In Ontario, the maximum penalty is $7,500. Is this a lot? Consider the factors:
- In a rising price environment, buyers will be reluctant to cancel their condo purchase. If the market value of the condo has gone up $100,000 sine your pre-buy, you the buyer are sure going to be hesitant to give up that gain for a measly $7,500. Developers would be more than happy to have you bail out in this scenario.
- Whether you're an investor or a home buyer will have a tremendous difference on how you view these delays. As a home buyer you may have sold your existing house already and are paying rent to live somewhere temporarily. $7,500 sure doesn't cover multi year delays in this case. And if you've coughed up most of you're savings for a now stranded down payment, you're trapped from buying a different condo.
- And finally you'd likely have to pay tax on the $7,500 (depending on your circumstances, it may be a gain on investment) so it's even less than you think.
Bottom line - will this really mean a difference to potential buyers and developers? We'll see....