Speakers Corner: What you should know before forking over a deposit for a pre-construction condo – CityNews Toronto

Last Updated Aug 25, 2021 at 5:40 pm EDT

In a series of Speakers Corner reports, we’ve told you about people who’ve struggled to get back hefty deposits they paid to secure pre-construction condos.

Before you hand over your hard-earned savings, there are a few things to keep in mind to make sure your money and future are protected.

It’s no secret, the list of new and proposed condo projects in the Greater Toronto Area is growing.

“There was a bit of a lull during COVID but now there’s been an explosion,” said Real Estate attorney, David Feld. “We’re seeing non-stop new product coming to the market both in Toronto and outside areas. There’s a line up of people looking to buy in, its unbelievable.”

But with new growth, comes new problems. Some proposed projects aren’t making it to the finish line.

“We are seeing an increase in some developments not going through,” Feld said. “It’s not massive but we’re definitely seeing an uptick.”

Which was the case with Trinity Ravine Towers on Markham Road in Scarborough, In a series of reports, CityNews told you about the planned project. It was unveiled in 2016 but so far has failed to make it. That left several people who put down deposits, fighting to get their money back.

Many of them said they wished they had more information before they had bought in.

“The most important thing is to check out the builder, check out their reputation,” Feld said. “Is this a reputable builder? Have they built other buildings and successfully closed on other buildings in the same city?”

Whether the builder is new to the game or experienced — when it comes to new condos in Ontario, buyers have protection.

“If it’s a condo, you’re lucky because there’s a ten day cooling off period under Ontario’s condominium act,” Feld said.

“They can negotiate any terms or issues that have to do with deposits with the builder directly before the cooling off period is over.”

Developers behind all new construction condos must also put that deposit money in a trust and protect it with insurance policies.

“In most cases a builder has to register with Tarion and that is a third party which protects consumers/purchasers,” Feld said.

Tarion will pay out a deposit if a project fails but it may not be the full amount. According to Tarion’s website, if you signed your purchase agreement before January 1, 2018, your deposit is protected by Tarion up to a maximum of $40,000. If you signed on or after January 1, 2018, your deposit coverage depends on the purchase price of your new home.

If you still have problems getting back that deposit money from a failed development, there’s another step you can take.

“Our number one job is to support homebuyers in one of the most significant purchases they will likely ever make,” said Marc Spector, who’s a Deputy Registrar with the Home Construction Regulatory Authority (H.C.R.A.).

H.C.R.A. was launched in February of 2021 to help all buyers purchasing newly constructed homes navigate through the process and deal with any issues that may arise.

If you’re having trouble getting a deposit or down payment refund from a development that has failed, H.C.R.A. can help.

“We’ll hear all of their concerns and we’ll look into them,” Spector said. “The outcome can range from a simple phone call facilitating a conversation all the way to the much more serious sides of legal proceedings involving the revocation of a licence or the initiation of legal charges.”

You can also visit H.C.R.A.’s website to check out a builder before you buy in.

“We’ve all heard the phrase: location, location, location. But I think in 2021, we might want to revise that and say it’s probably now location, location, location — and builder,” Spector said.

If you have an issue, question or story you’d like us to look into, reach out to us by visiting our Speakers Corner homepage.