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December 09, 2004

Condo quickies

For people who want to move into a condo now

Source Media Group

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Conversion Condominiums
Buying a conversion condominium in the early stages of development is similar to buying a new condominium. The biggest difference is that the exterior of the building (or building envelope) already exists. The majority of the construction project usually consists of modifications to some of the common property components and the creation of individual unit spaces. The transfer of the title of ownership may not take place until after occupancy.

Advantages of buying a conversion may include:
• Many of the same advantages of buying a new condominium apply to conversions, (e.g. choice of unit, opportunities for upgrades, etc.).
• Some conversions offer unique designs, (e.g. lofts).
• Converted units are often, but not always, somewhat less expensive than a comparable sized new unit.
• Conversions may be located in established and desirable parts of cities that are well served by entertainment, educational, transit and other amenities. Disadvantages of buying a conversion may include:
• As new home warranty programs may not apply to conversion condominiums (check with your provincial program), there may not be construction warranties other than that offered by the developer.
• The building structure and perhaps some of its internal components will already be old, which may mean major (hence costly) repairs may be needed sooner rather than later. This could be problematic if the condominium corporation has not had sufficient time to build an adequate reserve fund. This may have an impact on condominium fees and extraordinary charges to the unit owners.
• Occupancy dates can be changed due to
construction delays.

Existing/Re-Sale Condominiums
One of the advantages of purchasing an existing condominium is that you get to see the unit, building and grounds before you make your purchase. You also have the opportunity to meet other unit owners, speak with the Board of Directors and ask questions to the property manager.  Consider the age of the building and what repairs have been made and when. Ensure that the condominium is well maintained and managed. All of this will provide you with valuable information as to whether or not the condominium is right for you. Estoppel/Status Certificates: When making an offer on a re-sale unit, ensure it is conditional upon obtaining, and having the time to review, the corporation documents available to the purchaser under provincial legislation, including an estoppel or status certificate. There may be a fee for this certificate, but it will give you the opportunity to review information including the condominium’s governing documents, financial statements and insurance coverage. It is important to thoroughly review these documents, as once you sign the offer to purchase you are contractually bound and cannot change your mind if, for example, you later find out the condominium does not allow pets or requires major repairs. In Alberta, there are services available to help you with the review of condominium document packages. In other provinces you should ask your lawyer or notary to help you review them. Provincial new home warranty programs do not protect deposits made when buying a re-sale condominium and won’t provide protection for construction defects once the applicable warranty periods have expired. Therefore, it is important to have the purchase of the unit contingent upon the satisfactory inspection of the unit and building by a qualified home inspector, professional engineer or architect.

Advantages of buying a re-sale condominium may include:
• You get what you see.
• There are no lengthy waiting periods before you can move in unless provided for in the condition of sale.
• Deposits are often much lower for re-sale purchases and there is no GST.
• You can check out the condominium “community” in advance to see if the corporation is well run and the people who live in it are compatible with your needs and lifestyle.
• Older condominiums can have larger unit sizes.
Disadvantages of buying a re-sale condominium may include:
• Fewer options with regard to choice of unit (within the building), decorating, or upgrades.
• Older re-sale condominiums may require more maintenance and repair than new ones.
• The amenities that you may find desirable (e.g. a workout room or whirlpool, high speed Internet connection, security features) may not be available.
• Older resale units may not be as energy efficient due to different construction standards in newer buildings.
• Major repairs may be coming due that will require extra charges to the unit owners if the reserve fund is under funded.
• You will only receive the portion of the new home warranty that has not yet expired.

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