Watch out for on plan sales

February 5, 2016 – Late condo deliveries are a common occurrence in the Montreal area. This phenomenon is due to the thousands of condos built in recent years.

Strong demand for condominiums created a labor shortage. Construction sites were so numerous that it became extremely difficult to find a plasterer or a bricklayer, to name a few. Therefore, the work progressed very slowly.

Shortage of buyers

"But the situation has changed since the latter part of 2015. Now, we are compelled to admit that we are faced with a lack of buyers," said lawyer Yves Joli-Coeur, (Ad. E.) specialized in co-ownership Law and senior partner in the firm de Grandpré Joli-Coeur. However, notwithstanding a strong market downturn, caused by a large inventory of unsold apartments, delayed deliveries are still occurring.

As there are fewer buyers, developers are postponing the launch of heir project, as they must sell (on plan) at least 60% of the condos in the proposed building, before commencing any work whatsoever. Furthermore, "financial institutions have tightened their requirements to grant financing" emphasizes Yves Joli-Coeur.

Another factor slowing down the advancement of a condominium project: the (occasional) tardiness of municipalities and boroughs to issue building permits. This is precisely the reason given by the developer MUV Condos to Jean-François Simoneau, an on plan condo purchaser   in this project.

"In our contract there was a clause to the effect that we would be compensated in case of a delay, only if it was the fault of the developer," says Jean-François Simoneau. But according to MUV Condos, the delay to get a permit was beyond its control.

Be careful with preliminary contracts

"When  signing the preliminary contract, check what provisions   (if any)are stipulated   in case of a delay," says Acting Director of the” Association des consommateurs pour la qualité dans la construction”(Consumer Association for Quality in Construction), Guy Giasson . If there are none, one may request that it be added. "It is negotiable, even though not easily," he concluded.

Montreal, February 5, 2016

Source: La Presse