Answering your real estate questions

I asked my lovely Instagram followers to let me know what they would like to know or learn more about when it comes to purchasing new construction. I received lots of great questions and picked a few of them to answer here. Keep your questions coming!

Question: How do I know if the building is environmentally friendly and efficient?

Answer: While many developers now install high-efficiency furnaces and appliances in their homes, not many go above and beyond to create a truly environmentally conscious product. With profits being the main driving force behind most new construction, building Green may not always fit into that equation.

A good indicator of whether your future home will be “planet friendly” is if the developer aims to have the project LEED-certified. This certification process is overseen by the Canada Green Building Council—a third-party organization that uses a point system to determine what level of certification will be awarded.

Starting at the level of being “Certified” and going up to “Platinum” level, LEED points are earned using variety of considerations including water and energy efficiency, resourceful utilization of sustainable materials during construction, indoor air quality and much more.

However, some builders may choose not to go through the certification process but could still be implementing many of the same criteria. So, if living in an environmentally friendly home is something that is important to you (as it should be to all of us!), asking the right questions may give you that reassurance.

Q. What protections are in place for consumers?

A. Signing a contract with anyone is a big deal, especially when it involves hundreds of thousands of dollars! The main protection provided to every buyer of new construction homes in Ontario is Tarion. Tarion is a third-party governing body, funded by consumers, that acts as a regulator for all builders in Ontario. It ensures that builders abide by building codes and quality standards of construction and provides warranty protection.

The warranty lasts for seven years and coverage includes any defects in finishes to major structural deficiencies. Tarion provides protection for your deposit in case the builder goes bankrupt or fundamentally breaches the contract—up to $60K for a purchase price under $600K or 10 per cent of purchase price, up to $100K total if the price is above $600K. They also investigate homeowner warranty claims and assist in resolving disputes between homeowners and homebuilders.

Q. Is HST included in the price?

A. For most of us, purchasing real estate is already an expensive venture so it’s important to know whether you will be faced with the extra 13 per cent of taxes to pay on closing. With most big developers, the sales taxes are included in the price of the home. In which case, the homeowner agrees to assign all tax rebates to the developer. The developer then applies for these rebates on the buyer’s behalf. However, if the purchaser does not qualify for the maximum rebate amount provided by the federal and provincial governments, then the difference will be charged back to the purchaser.

Keep in mind though, if you are buying the property for strictly investment purposes and plan on renting it out right away then you will be responsible for paying those taxes on closing and then going through the rebate process yourself. Also important to note—there is a maximum rebate of $24,000. Of course, I advise that you seek a real estate lawyer and an accountant’s advice regarding this matter.

Q. What if my plans change before the home is built and I can no longer go ahead with the purchase?

A. If you are purchasing a home based on renderings and a floorplan long before construction has begun, then it’s very possible that you won’t be taking physical possession of your new home for at least a year or more, and in cases such as a condo, for multiple years. Many things can change during this waiting period. Perhaps your financial situation has changed or you were offered a job in a different city for example? It’s possible that you may no longer be able to, or want to, move ahead with completing your purchase. What happens then?

Legally you are still bound to the purchase. If you break the contract then the developer can keep your deposit and seek further legal action. While this is a scary scenario, there is something you can do to protect yourself. When signing the purchase agreement, make sure that you are allowed to “assign” the contract at any point before the date of occupancy. This would allow you to transfer the purchase to someone else and to no longer be held responsible. While some builders may push back on this, it may be possible to negotiate this inclusion in to the contract.

If there is a topic you would like me to write about in upcoming issues of New Home and Condo Guide, I welcome your suggestions! You can find me on Instagram @irina.pops or Facebook /irinapopovarealestate.

Irina Popova is a real estate agent and co-owner of Blue Panda Realty. She has been specializing in the central Ottawa market since 2013.