Purchasing a preconstruction property can be an exciting and lucrative investment opportunity. However, it also comes with its own set of risks and potential financial and legal complications. That is why it is crucial to have a lawyer review your preconstruction contract.
In this blog post, we will delve into the importance of a lawyer review for preconstruction contracts, common issues found through this process, and how it can protect your interests.
Why is a lawyer review important for preconstruction contracts?
A preconstruction contract is a legally binding agreement between the buyer and the developer, outlining the terms of the purchase. These contracts can be complex and filled with legal jargon that may be difficult for the average person to understand. A lawyer review can help ensure that the contract is fair and fully protects the buyer's interests. It also allows for any necessary negotiations or modifications to be made.
Common issues found during review
Preconstruction contracts are inherently different from resale residential contracts. Below are a some key items your lawyer will identify in your contract to ensure there are no surprises, financial or otherwise, when you are locked into this legally binding contact.
Discrepancies between the contract and advertisements
Adjustments in addition to the purchase price
Uncapped development/utility hook up adjustments
Rental equipment contracts
Deposits- are they insured?
HST and your eligibility for a rebate
Condominium Occupancy Fees
Condominium Common Fees
Termination Rights, Delayed Compensation, Extension Rights
Restrictions of assignment, leasing, advertising, selling etc.
Warning Clauses
A lawyer review can identify these issues and address them before they become major problems down the line.
When purchasing a preconstruction property, the time allowed for contract reviews varies depending on the property type. For condominiums, buyers benefit from a 10-day cooling-off period mandated by law, during which they can review the contract, seek legal advice, and conduct due diligence before committing. In contrast, freehold properties do not offer a similar cooling-off period, meaning buyers must have the contract reviewed and all due diligence completed before signing, as the agreement becomes binding immediately.
In conclusion, a lawyer review is a crucial step in the preconstruction property buying process. It can save you from potential legal headaches and ensure that your investment is protected. By having a lawyer review your preconstruction contract, you can feel confident in your purchase knowing that all necessary precautions have been taken and your interests are fully protected.