How Condos Function
Purchasers of pre-build and brand-new condominiums face a unique two-step closing process. The reason for this is that new condos are generally ready for occupation before the legal title can be given to the owner. Two steps have been introduced to deal with the fact that closing dates often take place after a building is legally registered.
The first stage is the interim closing. This takes place on or around the date the unit is ready for occupancy. On this date, the purchaser pays the balance owing under the contract of purchase, and this money is then held in trust until the purchaser receives legal title. Legal title is transferred on the final closing date.
Between the interim and final close, the purchaser must fulfill all of the agreements laid out in the Agreement of Purchase and Sale, such as abiding by the rules and regulations of the condo and paying a monthly occupancy fee. The final closing takes place when the condo corporation is registered. This is when the purchaser is required to pay the balance of the purchase price, and the deposit money is released from trust. The developer will then provide the purchaser with a deed for his or her unit. Maintenance Generally, a builder will warranty all final finishes for a certain period of time following the completion of the building. During this time, the builder is responsible for all repairs and amendment of deficiency. The builder works with the board and property manager to get any necessary work done. Once the warranty period runs out, all repairs and maintenance become the responsibility of the condo corporation and its residents, and are paid for by the annual maintenance fees.
Repairs When the need for general repairs arises, the property manager and condo board begin reviewing potential service providers, and generally ask for a range of service bids. “We don’t always necessarily choose the lowest bidder, but make the decision based on quality and value,” says Fred Moneta, a Sherwood Park property manager. The cost of any repairs are taken from the annual budget.
Insurance A condo corporation will generally have a blanket policy for the building, but unit owners must still purchase their own home insurance. Homeowners insurance for condo dwellers is slightly different from general homeowners insurance, given that a condo unit owner does not own the entire building. This insurance will protect a condo owner’s personal property from fire, storm, explosion, smoke, theft and more. Improvements and balconies are also generally covered under this insurance. When purchasing insurance for your condo, go with a reputed insurance agency and be sure you are clear on what is covered. Next, make an appointment to meet with a property manager or board member to learn exactly what is covered in the building’s general insurance plan. By Marissa Ponikowski