Dear David,

I purchased a new build condo as an investment rental when the market was on its upward swing in 2021. The property was supposed to close in two years. I just received interim occupancy, but interest rates have gone up, property values have fallen, and I no longer think I can afford this property. what can I do? – PANIC STRICKEN

DEAR PANIC: I’ve often said how important it is to surround yourself with professionals. The first call you should make is to your Realtor, who can tell you what the market is doing right now. The second call to make is to your lawyer, to explore the option of possibly assigning this deal to a different buyer.

You’ve received interim occupancy, which means registration (or complete ownership) of the condo is coming down the pipe. Builders sometimes grant interim occupancy to owners as individual units in the complex are finished, allowing them or their tenants to move in, provided they pay a monthly fee which often mirrors what they can expect to pay for their mortgage, property taxes and condo fee. The monthly payment provides cashflow for the builder until the rest of the units and common elements are finished. When the complex is complete and registered, the owners’ names go on title and they assume their mortgages. It may be weeks (or months) before this happens, but in the meantime, you or your tenant (depending on the purchase agreement) can live in the unit as though it has already been registered in your name.

Assignment of a purchase agreement means the original buyer of a pre-construction property has allowed another buyer to take over their contract under the existing terms, which essentially means they are re-selling the property before taking possession. Regardless of whether you choose to assign the sale or close, your lawyer can advise you on your rights and opportunities based on your contract, and you may want to reach out to the builder via your agent with this information in hand.

The most important thing to consider right now is your downpayment and the HST is payable on the unit. As this is a new build, I’m guessing your deposit is around 20 percent of the purchase price. With that much money in the builder’s hands, you need to find a way for someone to close on this property (by assignment or your own means), or you could be on the hook for your down payment, plus damages incurred by the builder if you walk away from the deal.

This is a good time to explore your financing options. The amount you qualified for two years ago may be different today, and if assignment isn’t an option, you may need call in a favour and drum up a co-signer to get your mortgage approved.

PRO TIP: Don’t panic! Walking away from a deal is rarely the best solution, and there may be several options available. In my opinion, the real estate market is not crashing. The first quarter of 2023 is already showing signs of a turnaround in Waterloo Region, and it’s my belief that in the next six months to a year, interest rates will stabilize closer to what we consider normal. #Advice #AskDavid #TheNegotiator

David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Call or text today for your free home evaluation! 519-577-1212.