Several years ago, I decided to buy a condominium for investment. It was still not built yet and I had to pay some installments of down payment as described in their schedule. The plan was that I just wanted to rent the property after the building was ready, so it would pay itself without further investing on this.
Now they call to say the closing date was coming up. This is actually not a real closing date as the new building was not yet registered. Any new building in Toronto won't be registered with the government for a while and anyone who purchased the property will basically pay a monthly rent to the builder until the building is registered. So this interim closing is the date you can move in but not yet own the place.
Since I have my own place to live, it doesn't really make sense to me to have this closed before the registration, but that is something expected to do in case of the new building. So I was fine to have this interim closing done and I was planning to rent the place to someone.
Then, they tell me that "as in the document, you can not rent the property privately. You have to go with our rental office". Really? When did I sign such an agreement?
The builder is Tridel, reputable builder. I bought their building instead of other building because they make luxurious high quality building. I was informed about their rental service, which you have to pay one month rent as the registration fee and pay 6% every month while the renter is renting. This is quite expensive service and of course, it is a good alternative in case you can't find anyone, but as long as you find a good tenant, you can easily manage by yourself. After all this is a new unit and any major issues within first 7 years are covered by Tarion.
So I asked my lawyer where did it say that I can't rent privately without going with the builder's rental office? The lawyer explained to me that there was no place that explicitly says that I have to pay such fee to go through their rental office before the registration, but it says that I have to get "approval" by the builder in the document.
So now "getting approval by the builder" can be interpreted in many way and the builder can take advantage of this to bully the purchaser to impose the condition of renting through their service.
Of course, I don't want to spend more on lawyer's fee to fight for this for a bit of fee, but it just makes me feel that this is really a dirty trick on builder's side. They should have put more explicit clause about this instead so that I understood the meaning of this before signing the document.
So, if you are buying the new property for investment, beware of the tricks they use. Make sure that you have a choice of rent your own before and after the registration. You don't want to be stuck with paying high fee for their management.