Risks of Condo Purchase During the Pandemic
Living in a condominium building with shared facilities and tight spaces amid the COVID-19 outbreak presents a number of challenges. However, with less competition among buyers at this time, it may be an ideal opportunity to break into the Toronto real estate market. Here’s what you should know if considering a condo purchase.
1. Condo corporations may face unexpected deficits in their budget, as the novel coronavirus has led many to increase their cleaning regime, which has subsequently upped operating costs. This, however, should be noted in the status certificate. Review of this document should be included as a condition in your offer to purchase as it contains important information regarding the operational, legal and financial health of the condo corporation, as well as the status of the individual unit.
2. Some corporations may experience delays with carrying out an upcoming reserve fund study as a result of the health and safety concerns relating to COVID-19. A reserve fund study must be updated every 3 years to ensure the corporation has enough monies to pay for major repairs and replacements to the condo’s common elements. If the corporation is going to miss its deadline to complete a new study, this should be included in the status certificate along with possible changes to contributions, which are bundled into your condo fees.
3. Amenities like the gym, pool and games room (among others) may be closed to prevent the spread of COVID-19. During this time, which may continue until government lifts the state of emergency and social distancing is no longer required, the corporation is not legally required to reduce owners’ common expenses.
4. If the unit you’re eyeing requires repairs or renovations, you might have to wait to tackle them. The condo board may have implemented restrictions limiting unnecessary visitors on the property, including contractors, as they expose residents to undue risk.
5. Although the Ontario government has deemed construction work an essential service, delays to new condominium projects are likely inevitable. If the delay is unavoidable, which may be caused by a pandemic as noted in the Tarion addendum attached to the Agreement of Purchase and Sale for new homes, the builder/developer can extend the occupancy date without the purchaser’s approval. The builder/developer is also not required to pay delayed occupancy compensation, provided proper notification has been given.
As each situation and corporation is unique, it’s advisable to consult a quality Realtor on how best to proceed with a condo purchase during the COVID-19 pandemic, which is constantly evolving.