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If you wish to purchase a brand new condo that is under construction, we have some suggestions in order to do a details check on the Purchase Agreement of the condo. However, you should contact a lawyer and have him/her investigate and negotiate with the developer which will be of benefit to you.
1. Time Frame
An agreement should have a time frame which stipulates clearly the staring date for construction as well as its completion date. Check for any extension clauses which normally give the developer a few extra months to complete without incurring any penalties.
2. Price
The agreement should state clearly the price, the payment terms and the payment method. Ideally, in the Purchase Agreement of the Condo this should be listed as a schedule. It should also be calculated by units such as per square meter as plot size may wary after completion. Be wary of additional charges that you have not discussed with the developer.
3. Payment Penalties
Check that the penalties for default of payment are not too burdensome on you. Terms such as immediate rescission of contract and retaining the money you have already paid are not uncommon but there should be a period given to you to remedy this default.
4. Developer’s Default
Ensure that you have some recourse to a full refund in the event that the developer does not complete the construction due to insolvency or for any other reason.
5. Late Completion
Penalties should be given to you if the completion is late. This is normally deducted from the final payment due upon completion.
6. Assignment
Many things can happen in the future so it is useful to have an exit clause should your plans change. An assignment clause allows you to transfer the obligations of the agreement to a third party. Note the administration fee due to the developer for this action.
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