Imagine that you found your dream home. You saw your future in the plans of a pre-sale opportunity to buy into a new housing development or new ‘ground-up’ condominium. You may have seen a fully furnished and impeccably staged display unit that was just perfect and then ‘things happened.’ Between the time you paid your deposit and signed the papers to purchase and waited to take possession – something changed. Is there enough change for you to seek solutions from a real estate litigation lawyer? Consult with Arsen Krekovic, an experienced lawyer with Hoogbruin & Co to find your answers.
Real estate litigation specialist cautions pre-sale real estate property buyers
There are many scenarios that might arise from that perfect setting, that is the display suite in a condominium building or a housing complex. A recent one, Krekovic was called to resolve was for one young couple purchasing their starter home – an apartment within a newly built, condominium complex.
The builder altered some room dimensions due to construction requirements. A formerly ample, high-ceilinged closet was reduced in size. It now also had a false ceiling which eliminated their shelving installations, and it hid a continuously running fan that was a mandatory feature for air safety. Together, they are working on resolutions.
What is a Presale Contract?
It’s important to know that when you purchase a presale property you are signing a contract that gives you the right to buy a development unit. The deal is only done until the property is completed. You are not buying tangible property. You are buying a contractual interest.
You are getting the right to receive – at some time in the future – the obligation to pay for a finished condo or house. This is irrespective of market conditions or the buyer’s financial situation. The contract can be very lengthy and attempts to cover all details that are known or anticipated. The reality is not so inclusive and perfect. Many questions and potential problem areas may go unaddressed.
Buyers beware of both the advantages and pitfalls to pre-purchase real estate sales.
You may find one of these situations arising in your pre-sale:
- No backing out, even if the market drops: The value of your presale condo may fall below what you originally agreed to pay due to market forces, lags in construction. Be sure you can actually complete the agreement.
- More delays, and delayed gratification: It can be difficult to be patient when the completed home may not be ready for months, or years. Pre-sold buildings may not be completed on time. Labour and equipment are always at a premium and builders struggle and juggle which makes individual planning a challenge. Litigation may be your only long-term remedy, but in the short term – plan for alternatives in advance such as storage, a place to live. The project may not be ready within the stipulated time and these delays might me months or years.
- You may not get ‘exactly’ what you paid for: Your contract is not the standard agreement for Purchase or Sale. Developers usually have a lot of fine print that protects them for those ‘things that happen.’
The project may not align with your expectations, and you may be powerless to object to the changes made along the way. It may be the appearance of a major feature like the kitchen, the alteration of room sizes or even layouts. These may be in sharp contrast to what you signed up for even years earlier.
When is it time to talk to a real estate litigation expert about the pre-sale?
Talk to your lawyer. You may be able to claim damages if the final product is very different from what was promised in the contract. For purchasers there is always a risk in pre-sales as builders protect themselves and it is wise to measure whether taking them on is worth the costs ahead.
Communication is a legal factor in the pre-sale situation
Updating the buyer is an obligation of the developer. They must inform the purchaser consistently about recent changes to the development. This allows the purchaser to sue for damages, including rent costs for the deferred time period if they are not apprised of material changes. It is advisable for the buyer to consult with a litigation lawyer to weigh the costs and the potential results of legal action.
The buyer must be prepared for a short, 10-day notice of project completion. This means having financing in place to complete the deal of a presale contract and be ready with a mortgage application.
There are many details to be considered with a pre-sale beyond the features of your new home. As a home buyer you have obligations that are not easy to walk out on, but you also have opportunities by law to take time or actions needed.
Growing pains that go with new home ownership under a pre-sale
Yes, you get to move into a brand-new space where you have had design and décor input. There will no doubt be problems and surprises as you settle in. These may be extra needs in the home, including security systems or far bigger structural problems.
Overall, it may be a great purchase and has already risen in value since your original agreement was signed.
If the circumstances of your pre-sale situation are complex and may warrant legal action, consult a lawyer expert in real estate litigation.