Tips for Buying a Resale Condominium
Buying a home is a significant life decision, and choosing a condominium can offer a unique blend of ownership and convenience. However, the resale condo market presents specific nuances that require careful consideration. This comprehensive guide delves into the intricacies of purchasing a resale condominium, providing you with the knowledge and tools necessary to navigate the process with confidence and make informed decisions.
Understanding the Condominium Concept – Not Just Apartments
A condominium is a legal form of ownership, not a specific architectural style. While often visualized as units within high-rise buildings, condominiums can encompass various housing types, including low-rise apartments, townhouses, duplexes, triplexes, even detached houses, and vacant land. This distinction is crucial, as it impacts the legal framework and shared responsibilities within the community. A resale condominium is a unit that has been previously owned and occupied, typically found in established buildings. This offers the distinct advantage of allowing prospective buyers to thoroughly assess the unit, the building itself, the surrounding grounds, and the existing community before committing to a purchase. Condominiums can take on many built forms:
high-rise residential buildings (four or more storeys);
low-rise residential buildings (fewer than four storeys);
townhouse or rowhouse complexes;
stacked townhouses;
duplexes (one unit over another) or a side-by-side;
triplexes (stack of three units);
single-detached houses
Resale vs. Pre-sale or New
Think of "resale condos" like buying a used car instead of a brand new one. Someone else lived there before you, and now they're selling it. A big plus is that you can see what you're getting – the unit itself, the whole building, and the grounds around it – before you commit. You can even chat with some of the neighbours, talk to someone from the condo's board (they're like the neighbourhood's governing body), and ask the property manager (the person who keeps things running smoothly) any questions you have. Basically, you get to do a test drive before you buy!
“Pre-sale” is buying a home that hasn't even been built yet. You're basically picking your place off a drawing (a floor plan). This can be cool because you might be able to customize some things, but it's also risky. What actually gets built might not look exactly like the drawing, or what you imagined, and it might take way longer than they said.
Okay, let's break down the good and the not-so-good about buying a resale condo, nice and simple. Think of it like buying a used car versus a brand new one – there are trade-offs.
The Benefits of Resale Condos (The Pros):
What You See is What You Get: This is HUGE. You can walk through the actual unit, check out the building, and wander around the grounds before you decide to buy. No surprises about what it looks like or how big it is. Imagine buying a pair of shoes without trying them on – that's what buying a new condo sight unseen is like. With resale, you know exactly what you're getting.
Move-In Ready: Unless the seller needs some time to move out, you can usually move in quickly after closing the deal. No waiting months or even years for construction to finish (and potentially get delayed).
Smaller Down Payment: You usually don't need to put as much money down upfront for a resale condo compared to a brand new one. This can make it easier to become a homeowner.
No "Phantom Rent": New condos sometimes have this weird thing called "occupancy fees" or "phantom rent." It's like paying rent to the developer before you actually own the place. Resale condos don't have this. You pay when you own. Developers have an incentive to have you move in as early as possible, even before you technically own the property. They do this for two reasons. 1) The warranty clock starts to run down from the date of occupancy, not legal ownership. 2) Your occupancy fees help cover their costs to complete the project.
No Extra Sales Tax: When you buy an existing home, you pay property transfer tax or land transfer tax (except for Alberta). With a brand new condo, you also have to pay sales tax (GST/HST). Not so with resale condos! That's more money in your pocket.
Meet the Neighbors (and Check Them Out): You can actually meet some of the people who live in the building before you buy. This gives you a chance to see if it's a community you'd like to be a part of. Are they friendly? Is the building well-maintained? You can get a feel for the vibe. Are the condo board meetings heated and political?
Renter Mix: In a fully occupied building, you can ask about the share of rented units. Landlords often have different attitudes toward maintenance and repairs than owner-occupiers. With a new build, you don’t know what your neighbours intend to do with their units (e.g., short-term rental Airbnb hotel).
Bigger Units (Sometimes): Older condo buildings typically have larger units than newer ones. If square footage is important to you, this is something to consider. A large but dated unit can be renovated to modern standards, but a new apartment can’t be made any larger.
Fewer Builder Surprises: With a new condo, you're taking a chance on the builder doing a good job. With a resale, most of the kinks have likely been worked out already (or at least documented). If there were problems with the building, chances are you'll find out about them in the condo corporation's meeting minutes.
Forced Savings: Part of the condo maintenance fees go into its "reserve fund" (think of it like a savings account for major repairs). If you’re not the best at setting aside rainy-day funds, the fact that the condo corporation does it for you is a bonus.
The Challenges with Resale Condos (The Cons):
Dated Appliances and Fixtures (Maybe): Unless the previous owner did some renovating, the appliances and fixtures might be a bit old and not as stylish as you'd like. Be prepared to potentially replace some things.
More Maintenance (Potentially): Older buildings sometimes require more maintenance and repairs than brand new ones. This could mean more headaches (and costs) down the road.
Less Energy Efficient (Possibly): Older units might not be as energy-efficient as newer ones, which could mean higher utility bills.
Big Repairs Coming Soon (Uh Oh!): Major repairs might be on the horizon (like a new roof or updated elevators). This could mean construction in the building or even extra fees (called "special assessments") if the condo corporation doesn't have enough money in its "reserve fund" (think of it like a savings account for repairs).
Limited or No Warranty: New condos come with a warranty from the builder. Resale condos might have a small portion of the warranty left, or it might be completely expired. This means you're on your own if something breaks.
Basically, buying a resale condo is a trade-off. You get to see what you're buying and can move in quickly, but you might have to deal with some older features and potential maintenance issues. Weigh the pros and cons carefully before you make a decision.
Smart Questions to Ask Before Buying a Condo
Buying a condo is a big decision, so it's important to do your homework. Talking to experts and getting information directly from the source can save you time, money, and headaches down the road. Here's a guide to the key questions you should be asking the professionals involved in the process:
Your Real Estate Agent: Finding the Right Condo and Negotiating the Deal
Your real estate agent is your guide through the condo-buying process. Make sure they're a good fit by asking these questions:
Condo Expertise: "How much experience do you have helping people buy condos? Can you give me examples of condo purchases you've handled recently and provide references?" Condos are different from houses, so experience matters.
Loyalty: "Will you be representing my interests exclusively, or are you also working for the seller?" You want an agent who's on your side.
Neighbourhood Knowledge: "How familiar are you with the specific neighbourhoods I'm interested in? Can you tell me about their pros and cons, and how prices compare?" A good agent will be a neighbourhood expert.
Document Review Time: "Will I have enough time to thoroughly review all the paperwork with my lawyer before I have to sign anything?" Don't be rushed!
Protective Clauses: "What special clauses will you include in my offer to protect me as a condo buyer?" There are specific things to watch out for with condos, and your agent should know them.
Fees and Charges: "What fees or charges will I be responsible for paying?" Transparency is key.
Your Lawyer: Protecting Your Legal Interests
Your lawyer is your legal shield. Ask them:
Condo Law Experience: "How much experience do you have with residential condo transactions? Do you specialize in this area?" You need a lawyer who knows condo law inside and out.
Developer Experience (New Builds): "If I'm buying a new condo, have you worked with this developer before? Do you have any insights into their track record?"
Client Focus: "Do you primarily represent buyers and sellers, or just developers?" Some firms specialize, and you want one on your side.
Involvement Timeline: "At what stages of the purchase process will I need your services?" Understanding the timeline helps you plan.
Problem Areas: "What are some common issues that come up in condo purchase agreements that I should be aware of?" A good lawyer can spot potential red flags.
Your Responsibilities: "What will you need from me throughout this process? What documents will I need to provide?"
Fees: "Do you charge a flat fee or an hourly rate? Can you give me an estimate of the total cost?" No surprises!
Closing Costs: "What costs can I expect at closing, such as land transfer tax, appraisal fees, etc.?" Your lawyer should be able to give you a detailed list.
The Condo Board: Getting the Inside Scoop
The condo board members are owners themselves and have valuable insights. If you have the chance to talk to them:
Reserve Fund: "How much money is in the reserve fund, and how is it invested?" This fund covers major repairs, so it needs to be healthy.
Special Assessments: "Have there been any special assessments in the past five years? What were they for, and how much did they cost? Are any expected in the near future?" Frequent or large special assessments can be a warning sign.
Owner Turnover: "What's the typical turnover rate in the building? Do owners tend to stay long-term?" High turnover might suggest problems.
Board Turnover: "Has there been much turnover on the board of directors recently?" Frequent resignations can indicate conflict.
Professional Help: "Has the board needed to hire outside professionals (lawyers, engineers, etc.) for any issues?" This shows they're willing to get expert advice when needed.
Lawsuits: "Is the condo corporation currently involved in any lawsuits?" Lawsuits can be expensive and affect condo fees.
Insurance Claims: "Has the condo corporation made any insurance claims in the past five years? If so, what were they for?" This can give you clues about the building's condition.
By asking these questions, you'll be well-prepared to make an informed decision and protect your investment. Don't be afraid to ask for clarification if anything is unclear – it's your money, and you deserve to understand what you're getting into.
