Do you think ten days is a long time to make a decision? Is it a long time to rethink a decision?
The Condominium Act, passed in 1998, gives buyers ten days to “give back” a newly purchased condo. It’s essentially a legalized return policy, but it only applies to brand new condominiums. It’s been a lifesaver for so many of my clients... ten days can be a long time.
How it works is this: The 10-day clock starts ticking right when you receive the agreement of purchase and sale that you and your developer have signed. Or when you receive the disclosure statement - whichever comes later. To take advantage of the policy, you or your lawyer have to submit your notice in writing to the developer. You don’t even have to give your reasons. It’s that easy.
Typical rescission rates for brand new condos can be as high as 20%. It’s more than four times as likely for a buyer to renege on a condo deal than a resale home.
That’s pretty high - but I don’t think it’s just because people aren’t thinking their condo purchases through. Many condo buyers are excited, but risk-averse… and that anxiety about the new purchase trumps all excitement as soon as the papers are signed.
My advice for new signers who are completely freaking out about one of the biggest purchases they’ve ever made? Breathe. If you can, sleep on it for one night. Then call me.
Many realtors really, really hate the rescission period. But I have to tell you - I backed out of my very first condo. Not during the ten days (I wish I had done that!) but years down the road, when the income I thought I’d be making never materialized. You can read more about my story here.
But I know very well that escape clauses aren’t just important - they can be life saving. And you’ve come to your decision for a reason. We’ll sit down go over your concerns.
Don’t stress. Eventually, we’ll find the perfect buy for you, even if this particular condo or this particular time isn’t right.
But what happens if the ten-day period has already passed?
There are other circumstances that allow you to rescind. “Material changes” to the project, especially those that were laid out in the disclosure statement, can be grounds for condo divorce. The developer must give you notice about these changes within ten days of their completion.
A “material change” is anything that a buyer can see as being sufficiently important as to affect their decision to buy the unit in the first place. Like removing a balcony, changing the amenities, even switching up how many units are going to be rented in the building. But what constitutes a material change is often up to the developer.
The big one, though, is budget.
The good news is that advance planning (making a kick-ass agreement!) with charge caps and limited fees can keep costs steady. Unfortunately, this doesn’t always occur. And extra fees often don’t count as material changes.
Still, I always negotiate for free assignment. It gives you the ability to sign away the right to the condo (essentially, selling however much of it has been built… even if that’s nothing) without a charge.
Free assignment was almost unheard of five years ago - the price could be up to five grand to re-assign your unit. Now, we can get assignment free or pretty cheap. It’s a great exit strategy, even after your ten days are up.
Ultimately, the key to a tight, no-surprises condo deal is ensuring fees are capped, charges are taken care of, incentives are negotiated and surprises are limited. And, of course, you need to feel great about a project. Once all of those things are in line… you have ten days to reflect. Good luck!