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What is a statement of adjustments?

Written by Jason Lau Tuesday, 12 February 2013 21:15

The Statement of Adjustments often catches many homebuyers off guard. Put simply, the Statement of Adjustments sets out any items that need to be added or subtracted from the purchase price, and shows the total amount of money that the purchaser will have to pay to the builder on closing day. The items that will be adjusted on closing are set out in the Agreement of Purchase and Sale. These items may be negotiable with the builder BEFORE the Agreement of Purchase and Sale is signed. Very rarely is the purchase price set out in the Agreement of Purchase and Sale the same amount that will be transferred on closing, as there are a number of items that need to be adjusted for, including:

Read more: What is a statement of adjustments?

 

Why Get Pre-Approved Before You Buy A Condo?

Written by Jason Lau Tuesday, 12 February 2013 21:14

It’s critical to apply for a loan before shopping for a home, and it’s true; this is an essential first step for both first-time home buyers or seasoned investors. With buying pre-construction properties, many builders now require this document to fulfill construction loan conditions as set out by banking institutions that finance the project. The mortgage pre-approval is typically requested by the builder or their affiliates after the purchase becomes a legally binding contract or sale (aka a “firm deal”). Instead of being reactive, many savvy buyers and investors prepare their mortgage pre-approvals prior to purchasing, saving time, gaining confidence and avoiding disillusionment; you can minimize anxiety and remove last-minute loan surprises that could disqualify you, also sleep better at night knowing that the home you selected is yours.

 

Advantages of Assignments?

Written by Jason Lau Tuesday, 12 February 2013 21:11

There are advantages to both the buyer (assignee) and the seller (assignor).

Assignors (Sellers): Can save money on occupancy fees, closing costs, property taxes.  They may need the money for other potential investments or their circumstances may have changed and they no longer can hold on to the investment eg divorce or family crisis.  They may also be moving or they can not come up with closing costs so they need to Sell!

Assignees (Buyers): Benefit from buying a unit at a reduced discounted price saving thousands of dollars compared to purchasing a resale unit at market value.  They benefit since their money is not tied up for years in a pre-construction condo purchase and  they get a short closing without having to wait.  They also get convenience and luxury of buying brand a new unit and often pay lower maintenance fees.  You can sometimes get a land transfer tax benefit (depending on when the assignor bought the unit), may still be able to select their own finishes, colors & upgrades, can inherit extras such as credits on closing and may also benefit from GST/HST credits.

 

What is an Assignment?

Written by Jason Lau Tuesday, 12 February 2013 21:08

A Condo Assignment is a legal sales transaction whereby the Original Purchaser (the “Assignor”) of a property sells, and thereby transfers, their interest and obligations under the original contract to a new Purchaser (the “Assignee”). This  Condo Assignment takes place during or before interim occupancy or before final registration. The “Assignee” will assume all of the “Assignor’s” duties and obligations under the original Purchase & Sale Agreement. These rights and obligations are stated in the original Purchase & Sale Agreement and include terms such as payments of mortgage, taxes and maintenance fees during interim occupancy. Upon Completion, the “Assignee” is granted the Title to the real property and will incur all final closing costs.

An Assignment fee may be charged by the Developer and is normally a cost borne by the “Assignor” (the Original Purchaser).  This fee is usually $3000-$5000.

Read more: What is an Assignment?

 

What is involved in Buying a Condo Assignment?

Written by Jason Lau Tuesday, 12 February 2013 21:06

First you need to be able to afford to pay the “original buyers” deposit money they have already given to the builder.  That can be 10 to 25% of the original purchase price.

Second- you have to pay the difference between what you and the original buyer agree to as the new purchase price.

Thirdly – you have to be Mortgage Approved by the bank for the original purchase price.

Read more: What is involved in Buying a Condo Assignment?

 

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