Getting Acquainted With Adjustments On New Home Closings
If you believe your purchase cost is the sole amount you will be paying the builder on closing you should go through the fine print of the contract, or better yet, have Suma Law, the best real estate lawyer in Mississauga, take a look at it for you.
Interim Occupancy Closings
Before the final closing for a condominium, there will be an interim occupancy, but minor construction in the building is not complete and the condominium is not yet registered, meaning there isn’t any legal title for the unit that can be transferred to you.
During the interim occupancy stage, you can move into the unit without paying for the balance of your purchase price, but you will pay a monthly occupancy fee. Under the outline of the Condominium Act of Ontario, the occupancy fee includes the following:
- Estimated condo fees,
- An estimated amount of property taxes, and
- Interest on the unpaid balance of the cost of purchase.
While a lot of people believe that an occupancy fee is one more way for builders to pull out money from buyers, builders should not profit from occupancy closings.
Adjustments on Closing
Whether condominium or freehold, the builder may charge you for quite a few adjustments on final closing. The adjustments, which will be presented in a document known as the Statement of Adjustments, will range from water and hydro connection fees, new home warranty enrolment fees, to fees for driveway paving, planting trees, and development levies.
The most erratic is development levies. They can vary from a few hundred of dollars to tens of thousands of dollars unless the builder agreed to limit them to a particular amount at the time of the negotiation stage of the contract.
Every new home offer has an adjustment section in the Agreement of Purchase and Sale and the adjustments are set out; generally in broad strokes or without a particular number attached. Adjustments are supposed to be delineated in the Tarion Addendum, but it by no means seems to quite happen that way.
As the Purchaser, the responsibility is on you to be firm that your adjustments are spelled out. There is nothing worse than coming to the closing and being as an example, $5000 short. No person needs that sort of last-minute pressure, especially when you’ve got a couple of days to close and you find out you do not have an adequate amount of money.
Post-Closing Adjustments
The final closing does not essentially indicate the end of adjustments between a purchaser and builder for the reason that there may be re-adjustments to some charges well after closing.
If the property has got a yard, builders often charge a grading deposit. Often around $1,500, this is the money the builder will hold until the municipality believes liability for your subdivision and confirms that the grading on the property complies with the approved plans of the municipality. For proper municipal assumption, it may take years. However, once it is done, you may get in touch with the builder to ask for a return of the deposit.
Do not forget!
One more key adjustment for which you will need to follow up on is municipal property taxes. The builder may levy you for an approximate sum of property taxes for the reason that the property has not yet been evaluated and taxes are being paid at the vacant land rate. After closing, you will get a supplementary tax bill, pointing to the newly assessed amount of taxes for your property.
Generally, you will be capable of presenting the new tax bill to your builder and have them re-adjust for property taxes since the builder has to pay taxes proportional to their ownership of the property. In the majority of cases, the assessment will mean the builder will pay you back for a portion of your supplementary tax bill.
Do not forget!
The most important thing we would like you to get out of this blog is “Know what it will cost to close!” Understanding the adjustment when you get into the deal is the most excellent way to do that.
To make the most of the adjustments on your new home closing, Suma Law is the best real estate lawyer in Toronto that you can always count on. Do not hesitate to get in touch with us today. We are simply a phone call away – +1 905 461 9860!
