Buying a condo when it’s in the run-up to construction can seem a bit rushed. In that scenario, it would appear that the unit is purchased based on architectural drawings from the developer’s sales site. However, the reality is that buying a unit before construction is complete is not that straightforward.
Developers tend to rework designs of a unit layout as work progresses. This is a necessity given the many changes that occur during construction. Purchase contracts are written to be advantageous. For example, a late complex completion will cause buyer delays. They may even be put into the position of occupying your unit while the proper permits are still being developed, as well as certain aspects of the construction itself.
Buyers can also fall victim to developers trying to sell early-stage units that still own more than 51 percent of the condo project. As time passes, the developers may not be able to sell the remaining units.
A condo that cannot attract new buyers will likely experience a significant decrease in the total value of its units. After realizing that there is no significant demand, the developers will decide to rent any units that have not been sold. The overall unit value drops even lower.
Buyers are encouraged to consult with an experienced attorney to include their own terms in any purchase contract. By determining a fixed completion date, the buyer can ensure that their deposits are recovered if a developer gives an inaccurate time estimate. These types of agreements can even help protect the existing value of previously sold units.
The time of completion must be in the hands of the buyer. It is strongly suggested that the proceeds from the sale of a unit, as well as its deed, remain in escrow under the guidance of the developer’s attorney. Only once the developer has sold up to 51 percent of its units should this cease. Whoever acquires the unit will have to pay occupancy fees to the developer, equivalent to the combination of the monthly maintenance fees and the advance mortgage, as long as their contract is carried out as planned. Many developers will try to push them without sticking to the terms you’ve set, so be aware of how your dealings with them proceed.
You should also take into account the maintenance fees for the condo. Only during the first year of operation after the unit owners take over the complex are they guaranteed. Developers tend to calculate a starting budget based on the low end so that condos attract more buyers overall.
As the years go by, most unit owners will take over a complex. It’s almost like it’s a rule. Subsequently, they are hit by a noticeably higher monthly maintenance fee that is meant to take care of excessive developer costs. From the first year on, buyers will accept and expect to see an increase in maintenance fees. Naturally, this occurs after the completion of the condo.