Welcome to the Suburban Dictionary: New Homes Edition. To make sense of it all, we enlisted the help of top agent Manraj Dosanjh from Dexter Realty.
2/5/10 warranty
A 2/5/10 warranty refers to the legally required warranty offered by a third-party insurer on any new home built by a licensed builder in BC. “Two” refers to two years of coverage on labour and materials, including any defects. “Five” refers to five years of coverage on any water penetration of the building envelope (the exterior walls, windows, doors, and anything that separates you from the outdoors). “Ten” refers to ten years of coverage of the structure of the home itself, such as the framing or load-bearing portions. These warranties apply to the home itself, not the homeowners, and will remain in effect if you sell the home while they’re active.
Manraj: So essentially 2/5/10 is two years of any sort of developer defects which usually arise from the building settling upon completion. Five years is the building envelope, so you don't want any sort of water penetration happening within the first five years of the building, so you're protected. And then you have ten years. Ten years is your structure. You don't want ten years to go by, then all of a sudden one side of your building starts, I don't know, going into the ground. That also protects you.
Appliance package
The appliances included in the purchase of a new home, such as a stove, dishwasher, washing machine, dryer and/or other appliances. Depending on the builder or contractor, new homes may come with all, some or no appliances. Often, the appliance package mainly refers to major kitchen appliances.
Manraj: This has now become the sexiest part of most display centres and product offerings. Now we're talking about your kitchens, your stoves, your microwaves, your dishwashers and any other appliances that you'll find more likely in the kitchen space of a new development.
Assignment
An assignment is a sales transaction where the original buyer of a property (the “assignor”) allows another buyer (the “assignee”) to take over the buyer's rights and obligations of the Agreement of Purchase and Sale, before the original buyer closes on the property (that is, where they take possession of the property).
Manraj: An assignment is the ability for a buyer to transfer his or her rights in a contract to someone else prior to the building completing. Buildings typically take anywhere between two to five years to complete. That's a long time. Life can happen. So this gives you the flexibility to assign this contract to someone else so you wash your hands and walk away and continue to live your own life. One thing to note with assignments, there are fees to be paid. They can typically range anywhere between one to three percent. After you've taken off your subjects, you need to give the homeowner a bit of collateral just so they feel safe waiting a month or two before you actually complete the deal itself. Just so you know, the deposit forms part of your final downpayment, which is the amount you need to give to the bank for them to give you a loan.
Deficiency walkthrough
You will receive a “Notice of Completion Date” from the developer of your pre-sale new home around ten days before completion. Before that date, you can do a deficiency walkthrough with yourself, a customer service representative from the developer or one of their agents and your agent. This is your chance to compare what was built with what was in your contract to ensure you’re getting the home you signed up for. The developer will give you a list of deficiencies that you will have to acknowledge.
Manraj: The deficiency walkthrough is an opportunity for you and your realtor to walk through the home prior to you taking possession of the home itself. This is an opportunity for you to point out any nicks that you might see prior to you wanting to take possession.
Fixtures and finishings
A fixture is something permanently fixed to a property and is assumed to be included in the sale unless specifically excluded in writing. Examples include lighting fixtures and built in shelving. Finishings are the materials in your home (tile, flooring, plumbing and light fixtures, cabinets, paint, trim). There is a wide range of prices within each of these material categories.
Manraj: When you're purchasing a new home, you may not be looking at the sink or the toilet or the bathroom faucets. However, you have a choice to really understand what it is you're buying. When you're buying resale, these might not be things that you look at when you're passing through the home. These factors are important because it goes for longevity of whatever it is that you're purchasing and working with a presale expert, they'll be able to help identify some of these nuances that you may just look past.
Framing
The basic skeleton of a structure, including the interior walls, exterior walls (both load-bearing and non-load-bearing) and roof system. Part of the construction process, framing is when the basic shape and layout of a home become visible. Usually, if framing is being built, it means construction financing is in place and the developer is proceeding to complete a structure.
Manraj: Framing is a part of the construction process. Typically, when you buy a pre-sale project, no construction has begun. Framing shows you the developer has now finally received their construction financing and they're able to go ahead and build this building outright.
Freehold
The owner of the freehold interest has full use and control of the land and the buildings on it, subject to any rights of the Crown, local land-use bylaws, and any other restrictions in place at the time of purchase.
Manraj: Essentially freehold is your rights to the property itself. It is the ultimate ownership model. You not only own the structure but the land that the structure sits on. Having said that, there are a lot more leasehold opportunities that you're starting to see pop up throughout the region. One thing to note about leasehold, however, is you only have the right to the structure. The land underneath is actually essentially rented to you for a predetermined amount of years. For new pre-sales that are offered on leasehold land, it's typically about a 99-year lease. Will you be here in 99 years? Who knows?
GST
The Goods and Services Tax (GST) is a tax at the federal level that is charged on the sale of most products and services in Canada, including real estate.
Manraj: GST is a 5% tax that's applied against all new home purchases in BC. Just like if you're buying a couch or if you're buying a TV, a 5% tax is applied against the purchase of that new sale. This is different from the resale market where GST is not applied. It's only applied against new home purchases.
Master-planned community
A master-planned community, or MPC, is a large, planned residential neighborhood. In contrast to most residential developments, MPCs are often self-contained small cities, with commercial properties and extensive recreational, educational, and other amenities.
Manraj: A master-plan community is a large-scale mixed use residential community that is typically built by one singular developer. It's essentially everything that you would need for a self-contained community to thrive on its own.
Occupancy permit
In BC, an occupancy permit is a document issued by a city or municipality certifying that a building is suitable for occupancy. In Vancouver, for example, it must be issued prior to occupying space(s) in any commercial or multi-unit residential building. You need an occupancy permit for any new space created, after major renovations or when you change the proposed use of the space.
Manraj: This is now coming towards the completion of your home. You'll be notified a few weeks to a month or two prior to the completion of your home that the developer is coming up towards completion of the building. In order for them to actually give you possession of the home, the developer needs to receive an occupancy permit from the municipality. This just means that the municipality is essentially giving you final sign off on the building.
PC
A real estate presentation/sales centre usually provides the developer with a venue to show potential buyers the eventual product with scaled architectural models, pictures, floor plans, finishing material display and/or suite mockup.
Manraj: Not to be confused with what you may hear in local politics. PC is a presentation centre. [A] presentation centre is a physical space that you can come and visit that developers build out for consumers or future prospective buyers to come in and physically feel and touch and understand what the development offering is. PCs, [also called] sometimes showrooms, presentation centers, display suites.
Pre-sale
Pre-sale allows you to purchase a home prior to it being move-in ready, frequently before construction has begun. Typically, pre-sale offers you the ability to choose a home with a layout style and number of bedrooms to suit your needs, in a colour scheme that suits your tastes.
Manraj: Pre-sales are typically launched anywhere between three to four years prior to the building actually coming up for completion. This depends whether it's a townhome or a low-rise condo, ranging from three months for townhome completions all the way upwards of four to five years for a high-rise tower that may be as high as 70 stories.
Rescission period
For pre-sale new homes that you purchase from a developer, you get seven days (including weekends and holidays) to rescind an offer with no penalties. For all other property types (except leaseholds), you get up to three business days (that is, according to the law, “a day other than a Saturday or a holiday”) to rescind an offer after the offer has been accepted. You will have to pay 0.25% of the purchase price if you do so.
Manraj: I also like to call this the cooling off period. I actually wish I had this for most things in my life, but when you purchase a new home, you actually have what's called a seven day rescission period. It's that research period and that seven days to really fully understand that, yes, this is what I want to commit myself to.
Strata
A strata development can be buildings or land, divided into separate units, called strata lots. Each strata lot can be individually owned. All the strata lot owners together own the common property as a strata corporation.
Manraj: A strata is another form of ownership typically found within townhome and condo buildings. It's a form of ownership where you own your own particular strata lot, aka your home. However, you as a collective own and operate the common areas. Again, [that’s] the hallways, the parkade, and the land.
Suburban Dictionary: Buyers’ Edition
Become a real estate jargon pro with our list of key terms that all buyers should know.
