How Do Deposits Work For Presale Condos?
How Do Deposits Work For Presale Condos?
When you go to buy a presale condo you are paying for a condo that is not completely built yet. A presale is a piece of property (condo) that a developer offers for sale before the construction of the building starts.
If you’re looking to buy a presale condo, the deposit is the only amount of money you need to start with, then you wait until after the building is complete.
The mortgage payments on your condo don’t start until the building is finished. That is also when you’d need to pay the remainder of your down payment, at the time of completion of the condo.
A trust account is created and that is where your deposit will be held.
Typically deposits varies in amounts, this depends on a variety of reasons including the developer, the project and timeline.
Deposit Schedules
It is common practice to see anywhere from 15-25% due for deposit schedules paid over a period of time throughout the project, generally around 18 months.
The developers know certain local real estate agents and recognize their efforts in assisting buyers, agents like Ravi Bhindi with iPreSale can assist you.
An example of how a presale condo deposit schedule would work goes something similar to model:
Let’s say $1,000 upon writing an offer. Then you have the remaining 10% of purchase price upon the 7 day rescission period.
You then have the additional 5% due at the 12 month mark. After that you have the additional 5% due at 18 months. The result of this in a total is of 20% due over the course of 18 months for a presale condo deposit.
To sum up when dealing with a presale condo deposit there is usually an initial deposit upon writing, another deposit due after the 7 day rescission, period, and then one or two more deposits over a period of time
Recission Period
In the example given above, you can see that it is common practice for the purchaser of a presale condo to have to put an initial deposit down upon writing the offer.
However, it is important to note that in British Columbia, Canada, you have the right to cancel the contract to purchase the property for 7 days after the developer has accepted the offer.
This right is called your 7 day rescission period, and is a part of provincial law in BC, through the Real Estate Development Marketing Act.This 7 day rescission period allows you to walk away from the purchase for any reason, regardless of whether it’s related to financing, interest, deposit funds, or for any other.
No matter what the reason may be, you have the right to cancel the contract on the ,spot within those 7 days and have your initial deposit that you put down at the time of writing returned to you.
Keep in mind that if you pass the 7 day rescission period and decide to back out after that time, you will not receive your deposit back.
When The Rescission Period Actually Starts
In order for the rescission period to begin, two steps must both be completed.
First the purchaser has received the Disclosure Statement and any Amendments to the Disclosure if applicable, this includes the signed form acknowledging this.
Second, the final Accepted Contract of Purchase and Sale is signed by all parties – this is between the buyer and the developer. The 7 days does not begin until there is a legally binding accepted offer.
This includes all offers and counter offers must be completed and both parties have agreed to all associated terms or addendums to the contract.
What To Accomplish During 7 Days Rescission
There are multiple things to consider doing during the 7 day rescission period.
Working with a Realtor, like Ravi Bhindi with iPreSales, will help to make sure that all your due diligence is done and that you’re prepared, and he will most notably guide you through the following steps that should be done during the 7 day rescission period in presales.
Some things to consider would be, talking to a mortgage broker about financing, review the final contract with your Realtor and attorney, carefully read through any disclosure statements, converse in detail to your accountant and make sure you understand the tax implications, and lastly get your deposit ready.
Enlist A Season Real Estate Agent
Whether you’re looking for a condo pre-construction or resale, it’s always best to work with a real estate agent that is experienced in the Greater Vancouver Market. By working with an agent who has experience in both pre-construction and resale condos, you can rest assured that you’ll get all the information you need to make an informed decision about your next purchase.
For more information on condo developments in Surrey, contact the team at Ipresalecondos.
Ipresale Condos is not just an agency that sells real estate, but our agents believe in educating each client deal with their own professional situation. Please call or text at 604-825-8881 or email at info@ipresalecondos.com
