What should I look for in a condo disclosure statement before buying pre-construction?

Under the Condominium Act, builders must provide a disclosure statement to purchasers before the transaction is binding. This document is lengthy and technical, but several sections deserve close attention.

Budget and common expenses: review the projected budget for the first year of the condo corporation. Builders sometimes set budgets unrealistically low to make carrying costs look attractive. A post-registration budget increase is common and can significantly raise your monthly fees.

Reserve fund: check the projected reserve fund study and contributions. An underfunded reserve leads to special assessments — lump-sum charges against all unit owners — to cover major repairs.

Unit characteristics: the disclosure statement defines what you are actually buying, including the unit boundaries (walls-in vs. centre-of-walls), parking and locker allocations, and any easements.

Material changes: if the builder makes a material change to the project after you sign, they must give you notice and you have 10 days to rescind based on that change.

Your real estate lawyer should review the disclosure statement and the Tarion addendum during your 10-day rescission period. The document can be hundreds of pages; a lawyer's summary of the key risks is well worth the cost.