An Ontario builder is facing investigations from new home regulators after it moved some residents into a new condominium building before it obtained occupancy permits from City of Toronto building inspectors.
“The whole thing is extremely frustrating,” said Melanie Lima-Robeiro who was told by builder First Avenue Properties that she could take interim occupancy of her new-build condo apartment at 859 The Queensway, in Etobico*ke on Sept. 28, 2023. She said the building was incomplete when she moved in and her unit was unfinished with elements such as glass doors for her showers and separations on the terrace balcony still missing.
“They didn’t even paint my unit,” said Ms. Lima-Robeiro, who was three-months pregnant at the time. “I had to pay $4,000 [in occupancy fees] regardless if you move in, so I thought I might as well move in. It’s not like I benefited: there were no amenities, dust was everywhere, the heat went off two or three times. I’m a first-time home buyer, this is all new to me and I didn’t know how to navigate the system.”
There is a great deal of ambiguity over when residents can legally move into a new-constructed condominium. The unit may be livable, but the building has not yet been official registered, the process that allows the subdividing of titles to each individual owner. In the past, this occupancy period – where residents could occupy a unit that is not yet formally registered – was relatively short. But Ontario buyers are now facing occupancy periods of several months or as much as a year.
Since the residents don’t yet legally own their units, the developers charge them occupancy fees as a type of short-term rental agreement. Typically, builders have written into their purchase contracts the monthly fees that buyers need to make under such interim occupancy. Once buyers are told their units are ready for interim occupancy, builders can enter into occupancy agreements with them and begin charging monthly fees. Many purchase agreements carry conditions that buyers who reject or are late with occupancy payments can see their purchases voided and deposits forfeited. The balance of the final purchase price is due upon closing.
Ms. Lima-Robeiro was living in her unit as of Sept. 29, 2023, but documents obtained by The Globe show that 859 West Condos Inc. did not get the permits necessary to legally enter into occupancy agreements with buyers until Oct. 4.
“You can’t put people into a condominium without an occupancy permit, it’s so elementary!” said Audrey Loeb, condominium law expert with Shibley Righton LLP. She doesn’t blame the buyers for not knowing to ask for an occupancy permit. “You would never ask your lawyer if there was an occupancy permit – the average buyer wouldn’t be smart enough – you would just assume your lawyer would do what’s supposed to be done.”
The government-mandated new home warranty insurer Tarion Inc. has numerous measures it can take if a builder announces an occupancy date and then fails to meet it. If notice is not given before an occupancy delay, buyers can make a claim for compensation of up to $7,500. In some cases buyers are also given a 30-day window to cancel the purchase agreement, one of the few ways buyers can safely walk away from an agreement to buy a newly-built property.
Tiina Walker, who purchased a unit next door to Ms. Lima-Robeiro’s, refused to take occupancy on Sept. 28 after her real estate lawyer told her that First Avenue did not have the correct permits. Additionally, Ms. Walker’s monthly occupancy fees were more than $5,000, so she saved $15,000 by not taking occupancy until Dec. 27.
In a statement, Tarion said that it was “investigating and reviewing the cases that homeowners have brought to our attention.”
Andrew Donnachie, manager, media and stakeholder relations with Tarion, said that standard purchase contracts do provide a method for a builder to legally complete occupancy without the proper permits, but it is required to come to a “mutual agreement with the purchaser” after disclosing the reasons why it cannot obtain the permits, outlining the consequences fully.
First Avenue partnered with Latch Development for the 859 West project. The Globe reached out to First Avenue and Latch for comment but received no response.
Ms. Walker complained to the Home Construction Regulatory Authority about her experience with First Avenue, but was told on May 17, 2024: “In this case, the HCRA is taking no further action.” After The Globe contacted HCRA about the missing occupancy permits on May 23, Ms. Walker received a new message from an HCRA investigator on May 24 reversing its earlier decision.
“There were internal discussions this week about reopening the matter based on your last communication with us. At this time, we have expanded the scope and created an inspection which involves all units in the building – not solely specific to your complaint,” said the HCRA investigator.
