Jan 6, 2012
Marketing Unsold Condos
By: Tara Welat
As the myriad of condominium projects in the GTA approach completion, developers might consider the option of offering “rent-to-own” units as a way of marketing their unsold units.
The term rent-to-own reflects those agreements which combine an occupancy agreement for a specified time period with a purchase agreement, for an agreed-upon price. Monthly “payments” are required of prospective purchasers and a portion of each payment is applied to the purchase price as a “deposit” and the remaining portion is a non-refundable “occupancy fee,” which must be determined in accordance with the Condominium Act (Ontario) (the Act). At the end of the occupancy period, the purchaser must come up with the balance of the purchase price.
From a marketing perspective, it’s easy to see why the rent-to-own option would appeal to prospective homeowners:
- Typical agreements of purchase and sale for condominium units require deposits of at least 20-25 percent of the purchase price while the rent-to-own option allows the opportunity to purchase a condominium unit by payment of five percent of the purchase price.
- Prospective purchasers can lock in a purchase price during the occupancy period until the final closing.
- The option affords the purchaser a longer period of time to arrange mortgage financing and/or repair credit.
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