Purchasing a condominium unit during the pre-construction phase may seem like an easy proposition. The future unit is purchased from the architectural plans on the developer’s sales site. However, in real life, buying a unit before it is built can be anything but easy.
Developers often redesign unit layouts as they go along, as a result of changes required during construction. In addition, they draft the purchase contracts in your favor. For example, if the complex is delayed, the buyer is forced to accept delays or occupy the unit while the complex is still awaiting occupancy permits for units that may still be under construction.
Unsuspecting buyers could also become victims of developers selling them early-stage units where they still own more than 51 percent of the condominium project. Over time, the developers may not be able to sell the rest of the units.
A condominium unable to attract new buyers may experience a rapid decline in the value of its units. Realizing that there was no longer a demand for their units, developers may resort to leasing unsold units, lowering overall unit values.
Buyers are advised to consult an experienced attorney and insert their own conditions into purchase contracts. By specifying a fixed end date, buyers can position themselves to get their deposits back in case the developer miscalculates the time of completion. Completion time is to be determined by the buyer. I strongly suggest yet another contingency in which the developer’s attorney holds the proceeds from the sale of the unit, along with your deed, in escrow until the developer sells at least 51 percent of the units to individual unit buyers.
Until that time, the unit buyer must pay occupancy fees to the developers, equal to the monthly maintenance fees plus the monthly mortgage payment in advance. Said arrangement would establish that after the expiration of the specific time, the buyers would be entitled to a refund of their deposits and/or proceeds from the sale, in cases where the complexes have not been completed on time, or respectively, when the 51 percent of the complex is not finished. t sold to the other shareholders. Such an arrangement would help protect the values of units already sold. Avoid any purchase where the developer is not willing to agree to your terms, otherwise you may put yourself at the mercy of the developer.
Another thing to keep in mind is the condominium maintenance fees. They are guaranteed only during the first year of operation from the moment the owners of the units take control of the complex. Developers often calculate their starting budget on the low end to make condo units more attractive to buyers.
Almost as a rule, in the second and third year after the majority of unit owners take over the complex from the developer, unit owners are hit with significantly higher monthly maintenance fees to cover cost overruns. developer. Buyers should assume and expect that there will be an increase in maintenance fees from the first year onwards, after the completion of a new condo.
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Beware of contracts that force you to purchase the condo unit even if the completion of construction of the entire complex is delayed.
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When buying during preconstruction, expect higher maintenance fees than originally calculated by the developer.
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Check the reputation and history of the developer and builder before you buy.
