[pancsi]

Hello,

I'm looking at purchasing a new condo but not from the builder but from someone who purchased the unit from the builder. The unit is not expected to be ready until August of 08 but we are trying to do the deal before the end of the month and avoid the Toronto Land Transfer tax.

Can anyone advise me to any pitfalls regarding a purchase like this. I'm told that as part of the sale I will be required to pay the builder 25% of the purchase price (not sure whether this is the original purchase price or my resale purchase price) but at this time I have yet to sell my current property which could make this part difficult. Is this true? Does making the closing date around the time of the building being finished help me in this situation or do I have to pay 25% to the builder now simply to proceed with with the sale with the seller? I will try and contact my lawyer on Monday but I thought I'd get some information before then if I could.

Hopefully this makes sense and someone can pass along some knowledge in this area.

Thanks.

 

[carturo15]

You do not have to pay anything to the builder, unless there are still a deposit due on occupancy. what you are going to do it is an assignment, the original buyer will transfer to you the agreement of purchase and sale with all its rights and obligations. there are 2 types of assignment, normally the seller will want his deposit (the deposit already paid to the builder) plus his profit (difference between the original purchase price and the price you are paying for the unit), with the second option if the seller agrees, you can put a deposit of 10% or 15% and then you wait until the final closing to pay the remaining amount of the purchase price. Since your deal will be ready only until August I don't think that the seller is interested in the second option, he wants all his money and walk away now so you will need to pay a large amount if you want to have the unit, but at least you get a good price compared to the market price

 

[investor]

You do not have to pay anything to the builder, unless there are still a deposit due on occupancy. what you are going to do it is an assignment, the original buyer will transfer to you the agreement of purchase and sale with all its rights and obligations. there are 2 types of assignment, normally the seller will want his deposit (the deposit already paid to the builder) plus his profit (difference between the original purchase price and the price you are paying for the unit), with the second option if the seller agrees, you can put a deposit of 10% or 15% and then you wait until the final closing to pay the remaining amount of the purchase price. Since your deal will be ready only until August I don't think that the seller is interested in the second option, he wants all his money and walk away now so you will need to pay a large amount if you want to have the unit, but at least you get a good price compared to the market price

You should be getting the unit for less than the seller paid- he's stuck with an illiquid obligation to purchase something 8-9 months (if you're lucky) from now. You are relieving him of that obligation (ie risk) and he should be happy to get his deposit money back instead of risking a sale at or above his cost 8 months- 1 year from now, plus a 5% commission!

Don't be a fool and overpay! For everything else ask your lawyer damn it, not the ghosts on this forum!

 

[pancsi]

resale

You should be getting the unit for less than the seller paid- he's stuck with an illiquid obligation to purchase something 8-9 months (if you're lucky) from now. You are relieving him of that obligation (ie risk) and he should be happy to get his deposit money back instead of risking a sale at or above his cost 8 months- 1 year from now, plus a 5% commission!

Don't be a fool and overpay! For everything else ask your lawyer damn it, not the ghosts on this forum!

While I appreciate your input, after all I did post my question in a public forum, you might want to consider there could be other possibilities for the reason for the sale rather than just assume that some guy is trying to flip the unit.

As for the costs the price per square foot is well below that of the remaining units the builder is trying to sell as well as at or below the units that are available from resellers (possibly investors flipping their units). I believe there are about 6 units remain in this building (out of about 300 or so) and maybe 4 for resale. Is he making a profit off of me? Yes. But I believe he bought the unit about 3 years ago and market price have moved up since that time.

I will be contacting my lawyer today (if I can reach him) but late on a Friday night I know he is not available (I'm not some important guy that has his lawyers home number in case I need him in a moments notice).