To rent out a pre-construction condo

[jenna2]

I will be purchasing a new condo on 1st of July. Since I am not the owner yet can I sign a rental lease agreement now or I should wait after the closing date?

[jm1]

My guess is that just because you don't own it doesn't mean you can sublet it. A sublease is between the current tenant and a prospective tenant. Provided your agreement doesn't prohibit it, the tenant follows all the rules and regulations of the condo, and you continue to make your regular payments to the builder, there shouldn't be a problem.

Make sure your tenant knows what they're getting into. I've bought and lived in condos before they closed (i.e. interim occupancy) and even if your floor is finished, there still might be construction elsewhere in the building that makes noise; plumbing, electricity, etc. might go out seemingly randomly while they work out the kinks in the mechanical systems; the elevators will be busy all the time with people moving in; security systems, mailboxes, amentities, etc. might not be set up yet. Your tenant has to understand all this and be willing to deal with it (low rent will help).

[jenna2]

Thanks,

My agreement with the constructor is 1st of July 2009.
What if from now to the delivery date something goes wrong like a fire, and the condo would not be available for another 6 months and I won’t have insurance. Where would the tenant go meantime? Would the constructor compensate the tenant for the delays?

[LoookingForDeals]

From my experience most builder's will not allow subletting or renting out of a unit before ownership. On a slightly related note, most condo's also charge an assignment fee/penalty if you wish to sell it prior to closing, while others prohibit it straight out in the agreement.

I was at a condo meeting for a pre-construction that I had purchased, and the lack of awareness of most of the other purchasers is so high. Many wanted to rent it out or sell it, and nearly 2 years later still was not aware they they couldn't until ownership closing. Prior to purchasing people should read the fine print, it does ones net worth well.

You should double check these things with your lawyer to be sure what the conditions are. Don't guess or assume.

[LoookingForDeals]

Thanks,

My agreement with the constructor is 1st of July 2009.
What if from now to the delivery date something goes wrong like a fire, and the condo would not be available for another 6 months and I won’t have insurance. Where would the tenant go meantime? Would the constructor compensate the tenant for the delays?

After occupancy closing (interim occupancy) you would purchase condo rental insurance. Your tenant should purchase their own tenant insurance (for their contents). Anything that happens before interim occupancy is the builder's problem. Prior to interim occupancy the builder (probably covered in your agreement) is not obliged to pay for any delays etc. Most agreements have clauses that allow them to delay interim occupancy for a specified number of times and/or calendar days as well.

After interim occupancy, you would then wait for final (ownership closing). They should have a condition as to how long after interim occupancy this can be. Again you need to check your agreement and talk to you lawyer. Regarding insurance, after ownership closing you purchase condo owner insurance policy.

Hope that helps

[jenna2]

This is a small condo building 35 units on 4 floors.
There is no "interim occupancy" the occupancy date is after the signing of the deed.

I decided to include the following in the offer to rent.

By offering you a low rent for the first year you should be aware of the fact that you are renting a pre-construction condo from a floor plan, and have only viewed a similar model-condo rather than viewing the actual finished condo. The finished condo could be slightly different from the original plans. You may also face some inconveniences, as a result of ongoing construction and other owners moving in. However you will be the first occupant and will enjoy all the brand new furnishings.

But what really scared me is what if the signing of the deed of sale, (the occupancy date) is delayed. There are clause that the constructor will imbrues for delays etc. but I'm not sure for a tenant.