Do YOU know what Kind of Condo You’re Buying?
Condominiums can come in all shapes and sizes. You could, for example, purchase a condominium townhouse, or perhaps a one bedroom unit in a highrise. They are both classified as “condominiums” because you own your unit while at the same time sharing access (and the associated fees) for facilities ranging from pools and parking garages to elevators and driveways (otherwise known as common elements). However, just because the townhouse and highrise unit are both condos does not necessarily mean that they are defined the same way when it comes to warranty coverage.
There are several types of condos but the most common are “standard condominiums” and “common elements condominiums.” The determination of how a condominium project will be designated happens during the planning stage when the builder proposes the project and the municipality approves it.
When it comes time to buy, you need to know how your condo is classified because it affects the warranty coverage under the Ontario New Home Warranties Plan Act. Standard condominiums have warranty coverage for units and common elements, but common elements condominiums only have unit coverage.
So what would this mean to you as an owner? Let’s say you’ve bought a townhouse that is part of a complex that has underground parking. If there’s a problem in the parking garage – maybe leaks, drainage issues or a faulty door – the condo designation will determine whether there’s warranty coverage. If your unit is a standard condominium development, then the common elements warranty will apply. If it’s a common element condominium development, then repairs might have to be covered by the condo corporation’s insurance, which could impact your condo fees, or it could require a special assessment on all the owners.
How your condo is designated also matters when it comes to how Tarion can help. If a builder is not taking steps to resolve common element issues, we can only assist in situations where there is warranty coverage.
For the sake of both your peace of mind and your wallet, you should have a real estate lawyer review the Declaration and Description attached to your purchase agreement to be sure that you know the designation and boundaries of the unit you’re looking to purchase. And if you have questions about the types of condos and their coverage, our customer service team can help. Contact us at firstname.lastname@example.org or call 1.877.9TARION.
HOWARD BOGACH is president and CEO of Tarion Warranty Corp., a private corporation established to protect the rights of new homebuyers and to regulate new home builders. Tarion.com