Pre-Delivery Inspection (PDI) For Condominiums

 

Tarion 

When you purchase a pre-construction condominium, you typically do a Pre-Delivery Inspection around 30 days before you take possession and receive your keys from the builder. 

During the inspection, you will meet with the builder's rep to flag any damage inside the unit and the builder will fix these items before occupancy. 

You will be given information for items that need to be repaired under the Tarion New Home Warranty. The Warranty has a 1 year portion, 2 year portion and a 7 year portion. 

Here's what's covered: 

1 Year: 

• defects in workmanship and materials
• defects that cause the building to be unfit for habitation
• Ontario Building Code violations
• Major structural defects
• Unauthorized substitutions 

2 Year: 

• water penetration through the basement or foundation 
• water penetration through the building envelope
• defects in the electrical, plumbing and heating delivery and distribution systems
• detachment, displacement or deterioration of the exterior cladding
• violations of the Ontario Building Code that affect health and safety
• major structural defects

7 Year: 

• the seven year warranty provides coverage for major structural defects, and is outlined in Tarion's 'Bulletin 24"
• defects that result in failure of a load-bearing portion of the building or materially and adversely affects it's load-bearing function
• defects that materially and adversely affect the use of the building for the purpose of which it was intended

How To Buy A House

 So how do you buy a house? Or a condominium? 

Whether you are traditionally employed by a company or institution or are self-employed, the process will be similar as we see in the following points. 

The very first day: Call a real estate agent and have an in-depth conversation about what you want, and decide if it will be a good fit working together. They can help navigate the overall process and can refer professionals if needed, for example mortgage brokers, lawyers and so forth. 

1) Mortgage Broker - this is the first person to call and determine what your budget is. You will fill out a mortgage application, do a credit check and your mortgage broker will find the best lender out of their database. It is recommended to work with an experienced mortgage broker with several years of experience and good connections in the lending space. 

2a) Real Estate Agent - your real estate agent will work to narrow down properties in your search and arrange showings based on your preferences including budget and area. They will also help refer other professionals if needed: Home inspectors, lawyers, appraisers, surveyors, mortgage brokers etc.

2b) Real Estate Agent - once you find a property you would like to buy, your agent will will negotiate the price, conditions, clauses and closing date, and will help to explain the process of successfully closing. Pick an agent with experience in the industry as there are complexities in the process. Agents are for your benefit and protection, choose wisely! 

3) The Lawyer - your lawyer will be the point of contact once you have an accepted Offer on a property. They will connect with your mortgage broker and lender to transfer funds to the seller on closing, and will assist with title searches and even permit lookups if needed. 

4) Closing - your lawyer will let you know when title is transferred on closing day, and when you are fine to pick up your keys and enter your new home.

5) Celebrate! - buying a new property is challenging and complex in process, so enjoy the day! 

Deposits

Bank Draft or Certified Cheque

Why do we need a deposit with an Offer? 

It is a show of good faith that the buyer intends to close their purchase transaction with the seller. There is no specific requirement for how much the deposit needs to be, but in big markets, 5-6% is desirable to sellers. More than that may be offered to the seller to show their strength in financing. 

When an Agreement of Purchase and Sale has been signed by all parties, typically a deposit will need to be delivered to the listing brokerage in a specific amount of time.

The Agreement may say "Upon Acceptance", "Herewith", or "As otherwise agreed",  and there are different timelines that apply.

• Upon Acceptance: the deposit will be delivered within 24 hours after acceptance. That means that it's 24 hours, not business days. If that means it's on a Sunday, that's how it goes. Appropriate adjustment to verbiage is needed if the Buyers cannot deliver it on Sundays. 

• Herewith: the deposit will be delivered immediately after acceptance. Typically this applies in multiple-offer scenarios where buyers show they are ready to hand it over to the seller's brokerage if their offer is accepted. Sellers like this, and ensures that there will not be a problem where the Buyer does not deliver it as agreed. 

• As otherwise agreed: the deposit may take more than 24 hours to be delivered to the listing brokerage, so this would require specific verbiage to clarify the timelines. 

It is important to understand that once an Offer is accepted by all parties, the deposit is due in the timeline agreed to. If the buyer does not deliver it by the due date/time, they are considered to be in a legal breach, and the Seller has powers available to them to pursue legal action, and/or potentially sell to another Buyer. This is a very complex scenario, so it is best to ensure funds are available to deliver it on time.