TKTKTK
Senior Member
What are you even talking about?
How is paying an extra $20,000 that evaporates nearly into thin air (as opposed to being counted against his mortgage) not putting him behind? That's the price of a new(ish) car!
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Condo buyers should prepare for 'phantom' rent
- Thread starter cdr108
- Start date
What are you even talking about?
How is paying an extra $20,000 that evaporates nearly into thin air (as opposed to being counted against his mortgage) not putting him behind? That's the price of a new(ish) car!
mdot
New Member
Wow this is a weirdly hostile post. I think what Longre meant is that you are not actually losing the full $2000/month that you are paying in occupancy fees. As you mentioned the occupancy fee includes maintenance and estimated property taxes. I don't know what your maintenance fee is but say its $300/month, and your property tax is $200/month. These are amounts you would have paid anyway on top of your mortgage so really you are only losing $1500/month by paying the fee (the interest portion of the occupancy fee).
You are actually losing even less than $1500/month as if you had a mortgage you would have paid interest on that as well. If you have a great credit rating and are going with a variable mortgage you might get a rate of 3.5%. I think you said the builder has set your interest rate at 7.25%, so what you're really losing is the extra 3.75% in interest costs that the builder is charging you on the outstanding principle. It definitely doesn't feel good to loose that money but its also not a 20K loss over 10 months.
TKTKTK
Senior Member
So of the $24,000 in occupancy fees he'll end up paying this year, he's 'only' losing $18,000 progress on his mortgage and its interest. Well, now that you've pointed that out - Mot should be partying, no?
He's losing far more than the difference in interest rates; instead of paying down his mortgage, he's stuck servicing the developer's. One builds principal, the other maintain's someone else's principal. Hardly equal. (Though if you firmly believe that, you can send me a couple of your mortgage cheques. It's not like it would be any different, you'd still be paying the same amount out of pocket, right?)
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mdot
New Member
I don't think the loss in Mot's case is $18k/year. He said that his unit cost $250K and the builder is charging 7.25% interst on the outstanding principle. By the time occupancy rolled around Mot probably had put down 25% of the price of his unit. So at the builders rate of interest he will pay13K/year in interest (on the outstanding 187K balance) as opposed to the 6.5K in interest he would have paid if he had a 3.5% 25 year mortgage (I'm using a pretty generous rate, he may have a higher interest rate and amortization period) so his yearly loss is $6.5K. Yes its also a loss that he couldn't put anything towards his principle but in the first year of your mortgage the bulk of your payments are interest so the loss stemming from that is relatively small.
Unless his unit currently sells for $6.5K less than the $250K he bought it for, Mot should still fell pretty good about his decision to purchase in Star. This is not a completely doom and gloom situation. Again, if even the 6.5K loss really sticks in your craw next time buy a unit resale or presale from a tested builder. Pricier but less hassle!
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Mot
Active Member
Even if my mortagage starts after one year of occupancy as already pointed out none of it is going toward the interest or principal, so I am a year behind no matter what happens. I've wasted thousand of dollars on the incompetence of a builder. I could be renting for much less than I am for this unit in my neighbourhood.
But I guess I should be throwing a party that it's not worse according to some here. It's just moronic to even defend these builders treating consumers this way by saying to us "it's not really all that bad". It is that bad, it's wasteful and wrong.
Another piece of advice from those of us who are actually trying to be helpful here, put a clause in your contract stating you will not accept occupancy until the building is registered.
Yes its also a loss that he couldn't put anything towards his principle but in the first year of your mortgage the bulk of your payments are interest so the loss stemming from that is relatively small.
How is this supposed to make a buyer feel better? I've still paid out a year of hard earned money and my mortgage starting a year later puts me that much further behind. I cannot regain that financial ground lost. It's just gone to rent.
But I guess I should be throwing a party that it's not worse according to some here. It's just moronic to even defend these builders treating consumers this way by saying to us "it's not really all that bad". It is that bad, it's wasteful and wrong.
Another piece of advice from those of us who are actually trying to be helpful here, put a clause in your contract stating you will not accept occupancy until the building is registered.
Yes its also a loss that he couldn't put anything towards his principle but in the first year of your mortgage the bulk of your payments are interest so the loss stemming from that is relatively small.
How is this supposed to make a buyer feel better? I've still paid out a year of hard earned money and my mortgage starting a year later puts me that much further behind. I cannot regain that financial ground lost. It's just gone to rent.
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Solaris
Senior Member
yeah that would be a great idea for sure ... however I think buiders would not sign-off on such amendments to the Agreement of Purchase + Sale, because that means they can't pass you the operating cost of units when the building is constructed and they would have to continue paying ... haha I'm sure their accounting / business people would never let that fly (unfortunately)
cdr108
Senior Member
yeah that would be a great idea for sure ... however I think buiders would not sign-off on such amendments to the Agreement of Purchase + Sale, because that means they can't pass you the operating cost of units when the building is constructed and they would have to continue paying ... haha I'm sure their accounting / business people would never let that fly (unfortunately)
Great advice Mot.
Sorry to hear about your situation.
It's a joke that anyone would side with the developers and not consumers unless they had a vested interest.
Does anyone have information on when, or if legislation regarding 6 month max for occupancy fees has been passed?
IMO occupancy should be changed to only when a building is registered as this will make the developer more accountable to get the building COMPLETED and PROPERLY, instead of shifting their trades to another project.
Perhaps developers will be more willing to accomodate buyers now since we are seeing all these advertorials from RE agents and developers that it's a great time to buy buy buy !?!?!
AKS
Senior Member
cdr108
Senior Member
A move in the right direction for consumer protection; however, the new legislation only applies to OCCUPANCY dates and not condo registration dates.
Alot of the issues discussed in the article seems to have to do with occupancy, which is helpful, but details about delayed closing were not in the article even though they hinted at it; or were they referring to the occupancy dates as the delay in closing???
Greater consumer protection should be there for delayed condo REGISTRATION dates since the time from occupancy to registration could be indefinite as some members have experienced at Star of Downtown and several Cityplace projects on the west side of Spadina.
RE and developers always emphasize owning your a home and paying your mortgage instead of rent, then they should be the first to step up to the plate. Bloody unlikely though, since it brings responsibilty and liability to them when all they want to do is sell you a place.
Alot of the issues discussed in the article seems to have to do with occupancy, which is helpful, but details about delayed closing were not in the article even though they hinted at it; or were they referring to the occupancy dates as the delay in closing???
Greater consumer protection should be there for delayed condo REGISTRATION dates since the time from occupancy to registration could be indefinite as some members have experienced at Star of Downtown and several Cityplace projects on the west side of Spadina.
RE and developers always emphasize owning your a home and paying your mortgage instead of rent, then they should be the first to step up to the plate. Bloody unlikely though, since it brings responsibilty and liability to them when all they want to do is sell you a place.
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AKS
Senior Member
I think registration means occupancy? Because they charge you pre-occupancy charges (before registration). However there's probably still a loop hole there. Like the person posted mentioned, it's not very clear.
dpylyp
Active Member
Occupancy V Registration
The contract is clear;
Occupancy occurs when your unit is given (approval) for an occupancy permit. Maybe your unit is ready on the 11 floor but no one is ready on the 20th.
The building itself may not be complete or the rec center or other facilities. You are moving in and there are workman in the unfinished lobby.
The builder/developer needs to submit final plans and documents for the completion of the condo, that could be months if (I hope not) not years.
I would be pleased to see legislation that unit purchasers are protected by rules that make post 6 month of occupancy the maximum, but what would trigger the date? Final unit ready? Then the developer leaves a few in complete....
The contract is clear;
Occupancy occurs when your unit is given (approval) for an occupancy permit. Maybe your unit is ready on the 11 floor but no one is ready on the 20th.
The building itself may not be complete or the rec center or other facilities. You are moving in and there are workman in the unfinished lobby.
The builder/developer needs to submit final plans and documents for the completion of the condo, that could be months if (I hope not) not years.
I would be pleased to see legislation that unit purchasers are protected by rules that make post 6 month of occupancy the maximum, but what would trigger the date? Final unit ready? Then the developer leaves a few in complete....
digi
Active Member
...and this is when you start paying the phantom mortgage, weather you move in or not.