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[navinball]

Today I learned that there is something called occupancy fees in Canada when you buy a pre-construction condo.

So, when the unit is complete and it's time to move in, supposedly you are not the owner yet and need to wait till the builder registers the whole building with the government and you officially become the owner. Until that happens, you have to pay "occupancy fees" to the builder which is like paying rent and that money doesn't even goes toward your mortgage, which means that this is free money that you are giving to the builder.

Because of the high interest rates, this occupancy fees is super high right now, around 3500 CAD when the max rent for the same unit will be around 2300 CAD.

How is this even legal?

It gets worse. Before your loan gets approved the house gets devalued because of housing market crash you still owe the original price to the builder and the bank will only approve the actual value lol. So if you signed up for 1 million home and it's now 800k. You better come up with the 200k cash or its trouble.

 

[GandiBaat]

Today I learned that there is something called occupancy fees in Canada when you buy a pre-construction condo.

So, when the unit is complete and it's time to move in, supposedly you are not the owner yet and need to wait till the builder registers the whole building with the government and you officially become the owner. Until that happens, you have to pay "occupancy fees" to the builder which is like paying rent and that money doesn't even goes toward your mortgage, which means that this is free money that you are giving to the builder.

Because of the high interest rates, this occupancy fees is super high right now, around 3500 CAD when the max rent for the same unit will be around 2300 CAD.

How is this even legal?

Its legal because you sign a contract and allowed in Condominium Act with a calculation on occupancy fee. It is allowed because during this time Builders own the building and when you sign the purchase contract, you agree to occupy on that date. That said most builders allow you to rent that property. That way you can save some money if your property is in a location that is under rental demand.

Interim fee is the still the least bothersome part of the purchasing a pre-built property. The more bothersome part is typical purchase agreements allow builders to make massive changes to the layout of the condo and location of common amenities like pool, gym, parking location, locker location etc. The legal argument used there is called "material to the contract" and that is not well defined and differs from case to case. So, yes, if you thought you will have a balcony facing the sea, you may be suprised to find that builder is allowed to change that to face a construction site by moving it to another facing of the building... possibly to save construction cost.

The only reason why people go for presales contract is FOMO and the constant absurd rise in the condo prices and rentals. If that is not there, builders will be forced to negotiate and behave and actually provide services. They will have massive sunk cost in the project.

I personally, will NEVER buy an under construction condo. All new condos in Canada are stupidly sized (like 3 bedroom condo in 700-800 Sqft??? WTF???), not meant for living and have stupid construction with shoddy practices. Actually no condo built after 2003-05 in canada is worth living. They are simply shoeboxes in the sky. Or townhouses that are too stupid with 4 floor layout to save land space (typically a basement, main floot, first floor and "loft floor"). These narrow deep and tall abominations are sold at a premium to buyers. If you want a newly built place, buy the land and construct yourself. Otherwise what you will get a unit will be absolute shit. Best Condos/Townhouses in Canada are those built in 70s 80s and 90s (if you are not on western shore.. 90s condos of western shore have an additional issue of failing envelope due to building code stupidity of that time.). At best look for early 2000s condos. Anything post 2008 is SHIT. Just avoid it. If it is past 2015 or 16, just do not even look at it. It will small, overpriced and stupidly laid out.

 

[GandiBaat]

It gets worse. Before your loan gets approved the house gets devalued because of housing market crash you still owe the original price to the builder and the bank will only approve the actual value lol. So if you signed up for 1 million home and it's now 800k. You better come up with the 200k cash or its trouble.

Thats a little far fetched. Depending upon who the lender is, they typically use tax assessment value to decide the value of your property. Assessment values have yet to fall in major markets in Canada. It will be fun when they will fall.

For one thing, in a market like present, never offer more 80% of the assessed value. And yes, never bloody buy a presales offer. Do not buy unless you can get an independent inspector to look at the place and you can check the layout. Its always easier to skip on a deal than to chase a bloody builder for warranty.

My place still shows an assessment above 1.3M from July 2022. When I made an offer, I made it 80% of 2019 assessment value. Realtor told me that it is likely that seller wont agree. I said, good for the seller then. Seller agreed.

 

[navinball]

Thats a little far fetched. Depending upon who the lender is, they typically use tax assessment value to decide the value of your property. Assessment values have yet to fall in major markets in Canada. It will be fun when they will fall.

For one thing, in a market like present, never offer more 80% of the assessed value. And yes, never bloody buy a presales offer. Do not buy unless you can get an independent inspector to look at the place and you can check the layout. Its always easier to skip on a deal than to chase a bloody builder for warranty.

My place still shows an assessment above 1.3M from July 2022. When I made an offer, I made it 80% of 2019 assessment value. Realtor told me that it is likely that seller wont agree. I said, good for the seller then. Seller agreed.

Not far fetched at all. This couple walked away from 150k. Imagine that a 150k loss and they are relieved it's not worse.

 

[seadrag0n]

Condos are the scammiest scams in Canada.

 

[iSaidGoodDay]

Not far fetched at all. This couple walked away from 150k. Imagine that a 150k loss and they are relieved it's not worse.

Your video is about hair cutting for dads.

 

[navinball]

Your video is about hair cutting for dads.

edited

 

[Impatient Dankaroo]

Your video is about hair cutting for dads.

Despite being a slumlord and working tech in US, he still wants to save money on haircuts, a true Gujew

 

[GandiBaat]

Not far fetched at all. This couple walked away from 150k. Imagine that a 150k loss and they are relieved it's not worse.

The complete story is here : https://kitchener.ctvnews.ca/ontario-couple-walks-away-from-140k-after-dispute-with-developer-1.6656706

The issue was not of devaluation per say, it was interim occupancy fee and interim occupancy period that broke their back. Actually there was no devaluation but there were incentives that builder was offering to other customers. This couple did not get those incentives because they had signed on dotted lines much much earlier.

Typically interim occupancy period is 3-6 months, however here it was ..... indefinite. And to add to it, builder DOUBLED the interim occupancy fee and condo maintenance fee. WEIRD! I think these guys never read the purchase agreement nor got it vetted by a lawyer. They ...did not understand the risk in pre-con purchase. LOL! Plus something else is going on here. There are regulations regarding how interim occupancy fee is calculated. Something here is fishy.

And then these folks blame International students for abusing their food banks. LOL! Very Canadian.

And to make the matter ... worse, I am sure as hell they would have not added condition to the offer too.... People in Ontario in 2022 were really going full naked back then just to grab the deal.

 

[GandiBaat]

Condos are the scammiest scams in Canada.

There is nothing scammy about condos, its just that builders are people everywhere which are more slimy than used cars salespeople. There is a special place in hell for builders and telecom operators.

 

[seadrag0n]

There is nothing scammy about condos, its just that builders are people everywhere which are more slimy than used cars salespeople. There is a special place in hell for builders and telecom operators.

Don't forget about insurance companies.

 

[GandiBaat]

Don't forget about insurance companies.

Indeed!

 

[Lord_Tony]

I just was learning all these on housing in outside websites and I 'm happy I'm getting educated on bad stuff about builders in this forums.

 

[navinball]

Despite being a slumlord and working tech in US, he still wants to save money on haircuts, a true Gujew

The city cited me for basement violations because someone like you reported me and now I have to pay 45k CAD to bring it upto code. Does that make you happy you jealous bstad.

 

[primestudio]

Luckily I have a PNP application in progress.

But I was wondering what would happen if I were dumb enough to chase only express entry. There's quite a number of coworkers in my org who're already booking ticket home for good this holiday, most are bachelor graduate so losing a lot of scores due to lack of 1 year of foreign experience. They don't even want to bother with visitor visa unlike many desperate lamdas.

After they have 1 year of foreign experience (on top of 2 years of Canadian experience), I think they should be able to through the express entry with scores in the 520 region (without masters) and 540 if they decide to do one. It'd be interesting to see how many ex-PGWP holder getting PR in the next few years.

If it were me, I would simply work for a year abroad and get masters in other country (or back home). If you do it in other country, you have the opportunity to explore other immigration pathway. Scores should be competitive enough to put me in direct competition with the francophone cohort. Although at that point, one would wonder why bother with Canada at all.