How to protect yourself when buying a new home
To obtain a custom-built home or simply to enjoy a space that has never been lived in, some people choose to buy a property off-plan, i.e. to be built.
Are there any pitfalls to avoid? Yes, there are, and here are a few tips to help you think through your purchase without regret.
Don’t accept too large a deposit.
If the developer offers you a juicy discount on the sale price in exchange for a higher deposit, it’s a bit risky. It’s better to pay reasonable amounts, and to do so gradually, in line with the progress of the work. For example, 5% at signing, 5% at mid-construction and 5% when the walls and roof are finished.
Check the company’s reliability
There are a number of ways to check the reliability of a construction company and its shareholders. For example:
- Do a search in the Registre des entreprises du Québec for the names of shareholders. Then search the Internet for any disputes or comments from former customers.
- Check whether the company holds a licence with the Régie du bâtiment du Québec .
- Consult CanLII to find out if your promoter or his company (current or former) have gone bankrupt or been involved in litigation.
- Go to the Office de la protection du consommateur to find out if the company has received any complaints, and if so, of what nature.
- Check the Registre foncier of the municipality to confirm that the developer actually owns the land.
- Go to the Directory of DGC-accredited companies. You may find the addresses of buildings or houses built by your developer. Take a look at these buildings, and why not ask the owners if they are satisfied?
This research won’t guarantee that everything will go perfectly with the construction company, but it will help you eliminate potential developers from your list.
Deal with a real estate broker
To protect yourself from a disappointing real estate purchase, a real estate broker is just the thing. He knows the laws, applies them and checks them for you.
Check the warranty plan
Since 2015, new constructions are insured by the Guarantee Plan for New Residential Buildings, provided that the contractor is accredited with GCR and registers the home to be built there. Unfortunately, not all contractors do this, so it’s important to make sure you have a warranty plan in place. This plan is essential, since it covers, among other things :
- relocation following construction delays;
- reimbursement of deposits paid to builders (maximum $50,000).
Go on-site during construction
Are you building a single-family, intergenerational or other home? Take a tour of the construction site (safely) a few times a month. This will give you the opportunity to check the quality of the work, to make sure that your requests are being carried out properly and that everything is going according to plan. This way, you can sound the alarm to your contractor if any elements are missing, or if any part seems poorly constructed.
In the case of a unit purchased in a condominium building under construction, you might also want to check that the soundproofing materials used are adequate and up to standard. Even if you don’t have the skills, you can take photos of the various stages as proof in case of defects.
This is an important real estate purchase: do everything you can to ensure total satisfaction.
