Introduction to Red Flags in Real Estate Transactions: This is part of a series of blog posts where we share red flags that lawyers watch out for during real estate transactions as part of the conveyancing process. Sharing these insights can empower home buyers, sellers, and real estate professionals to better serve their clients, ensuring smooth and secure property transactions.
Handling conveyancing for new builds, whether they are houses or condominiums, presents unique challenges that demand a proactive approach. These transactions require starting the process earlier than usual due to their distinctive nature. While they share some commonalities with standard conveyancing, there are essential additional requirements to address:
Builder Contracts: Unlike the AREA standard form contract, new build transactions involve builder contracts with distinct considerations and buyer obligations. These may include high-interest rates payable to the builder if the transaction experiences delays, often ranging from 15% to 20%. Furthermore, real property reports may not be required by the builder, and tenancy-at-will might not be an option if full cash to close isn’t available by noon on completion day. Representations and warranties take on a different tone in new construction, influenced by the mandatory Alberta New Home Warranty and builder warranty policies.
Title Registration: For new build condominiums, it’s crucial to register the title in the buyers’ names before closing. The Land Titles Office offers an expedited process, usually completing new build condo ownership registration sooner. While this process is straightforward, early attention is essential to meet this requirement.
GST Considerations: Be aware that GST applies to new builds, including both condos and houses. This necessitates the signing of additional documents before the transaction closes. New housing GST Rebates generally are only available where the buyer or a relative intends to occupy the property as their principal residence.
In summary, when handling new build conveyancing, initiating the process early, understanding the nuances of builder contracts, and identifying the builder’s legal counsel for timely communication are paramount. Delays in new construction conveyancing can be inconvenient for buyers and financially impactful. Therefore, meticulous attention to these unique considerations is key to a successful transaction.
