OTP, Contact-of-Sale, and Subject-to-Finance

[Kevmeister]

Hi,

I was curious what happens when you buy an OTP unit and want the contract-of-sale subject-to-finance. The reason I ask is that the bank usually won't want to know about the sale until close to completion. eg. If the construction time is 3 years they won't want to know about it for 2.5 years.

Then, from the developer's perspective, he could accept the contract knowing full well it might not go through in 2 1/2 years time?

Anyone have knowledge of this?

Thanks

 

[Donna L]

I've bought three properties OTP and don't know of any "major" developer who would exchange subject to finance. There is no loss to them because once you sign the contract you will risk losing your 10% deposit and paying any other financial loss he incurs if you do not complete the settlement - i.e. if property has dropped in value and he can only sell it for 50K less. If you get a deposit bond for the the exchange then you will already have been assessed as being able to complete the purchase today.