New legislation favours condominium buyers
One example: extends cooling-down period to seven days
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This article was published 03/02/2015 (2971 days ago), so information in it may no longer be current.
NEW legislation came into effect this week that provides better protection for condo buyers, but also creates some potential headaches for some sellers.
One of the key provisions in Manitoba’s new Condominium Act, which came into effect Sunday, extends the so-called cooling-down period for condo buyers to seven days from two days.
That means they now have seven days in which to review all of the related documents — things such as financial statements and the bylaws of the condo complex they’re buying into — and decide whether to proceed with their purchase.
While industry officials agreed Monday a longer cool-down period was needed, it also means five extra days of waiting before condo owners know if their unit has been sold.
But even more worrisome for sellers is a new “material change” provision in the act. It states if a “material change” occurs between the purchase date and the possession date, condo buyers have another seven-day cooling-down period in which they can back out of the deal.
And that could cause major headaches for the seller if he or she has already purchased another home and needs the money from the sale of the old condo to qualify for financing for the new home.
“So it can get dicey,” Manitoba Real Estate Association president Roberta Weiss said in an interview Monday. “The whole process makes the seller’s position far more insecure…”
She said while these situations don’t arise all that often, “the seller needs to be advised that it could happen.”
The new legislation doesn’t define what constitutes a material change. But Rob Giesbrecht, past-president of the Manitoba Chapter of the Canadian Condominium Institute, said the most common example would be if a major repair or maintenance problem comes to light, and there isn’t enough money in the condo corporation’s reserve fund to cover the costs. So a special assessment has to be levied against the condo owners to raise the necessary funds.
He said the government obviously felt the buyer shouldn’t be the one left holding the bag in these situations. And he predicted in most cases, the buyer and seller will likely renegotiate the purchase price and the deal will go ahead.
He noted that in the past, if buyers were concerned about the possibility of a special assessment being levied before they take possession, they’d have their agent include a clause in the purchase agreement spelling out how it would be dealt with.
“So it probably won’t cause as many problems as people think it will,” he added.
Giesbrecht and Weiss both said while it’s going to take time to educate real estate agents, condo corporations and condo buyers and sellers about the changes, industry officials agree changes were required.
Weiss noted the old condominium act hadn’t been revised since the 1960s, and not only are a lot more people buying condos these days, but condo transactions are becoming increasingly complex. She noted the government did consult with realtors and lawyers before making the changes.
“By and large, we’re pleased with the new legislation and pleased the government has responded to our request for an update of the legislation,” Giesbrecht added. “It may cause some short-term distress for some people, but any time there’s a change in a regime, you have to make some adjustments in the way you do things.”
Additional information about the new act is available at: www.manitoba.ca/condo.