By Ritika Sharma
If you’ve ever opened a new-build’s financial binder and felt a mix of curiosity, confusion, and mild adrenaline… welcome to the club. New-build financials are not boring, they are unpredictable — and sometimes a little dramatic.
On paper, everything looks so simple, a budget, some contracts, and a set of financial statements. In reality, you inherit a building that is still finding itself. Utilities are figuring out how much they cost. Contracts are figuring out when they started. Owners are figuring out how the building works. And auditors are figuring out what they need.
Some days it feels like we manage cash flow, contracts, and construction trauma all at once. But there are lessons — very practical ones — that make the journey easier, more predictable, and sometimes even enjoyable.
1. Documentation isn’t just paperwork — it’s protection.
Documentation is how a corporation proves what it owes — and what it doesn’t. It separates warranty from wear-and-tear and gives managers the confidence to challenge invoices that don’t match reality.
If a vendor cannot provide:
- a contract
- a schedule
- a scope
- a rate table
- and a start/end date
…then you’re not refusing to pay — you’re refusing to guess.
A contract without dates or terms is not a contract; it’s a future dispute waiting for a file number.
2. Budgets are predictions, not prophecies. Verify the reality.
Developer budgets are drafted ahead of occupancy using design assumptions, estimated usage, commissioning timelines, and service expectations — and yes, they’re drafted with the market in mind, because projected common expenses matter when you’re selling units. They set the opening financial scene, but the lived reality only emerges once people move in and the building begins to operate.
Once residents move in, three things begin to rewrite the original assumptions:
- Usage (elevators, water, HVAC, waste)
- Density (more residents = more wear)
- Commissioning timelines (especially utilities, elevators, HVAC and submetering)
If a building is inherited after registration, it is not uncommon to see variances or even a deficit in the first fiscal year — not because the developer’s budget was “wrong,” but because reality simply arrived later than the budget did. The operating environment becomes visible only once systems are commissioned, contracts commence, occupancy ramps up, and utilities start billing.
This is why, When Duka is engaged earlier in the process, during interim occupancy and turnover, we bridge that gap before they impact the fiscal year. This allows the building to enter its first operating year without deficits and with a more accurate financial baseline.
3. Ask for what’s missing before the audit starts.
Auditors expect clarity, not archaeology.
If you hand over half a file, you’ll get twice the questions. Turnover audits already have enough moving parts. Missing schedules or mismatched documents introduce avoidable delays, follow-up requests, and additional audit effort that ultimately adds cost to the corporation.
Smart managers learn to ask early:
“Do we have the turnover balance sheet and supporting schedules?”
“Were common expense contributions made by the developer for developer-held units?”
“Has the developer made the required Reserve Fund contributions, and do we have proof of deposits?”
“Do we have a schedule of all operating expenses paid by the developer after registration?”
“Which service contracts began during interim occupancy or hand-over?”
Asking these questions timely prevents future panic.
4. Do the math — literally.
Buildings are physical, so financials must reflect that physical reality.
If the building has four boilers, the maintenance contract shouldn’t bill for eight.
If a service is billed monthly, an invoice for 18 months at once is not “normal,” it’s “audit suspense account material.”
Managers know the building better than anyone. That operational knowledge has monetary value.
5. Track when contracts actually start.
This one is surprisingly impactful. Many contracts begin during:
- interim occupancy,
- construction hold-over,
- or pre-turnover periods.
Developers don’t always hand over those records, and vendors don’t always invoice promptly. Then year-end arrives with a stack of “catch-up” invoices covering a period no one budgeted for.
The mantra is simple:
If it started, accrue it — even if no one invoiced yet.
6. Clarify what’s “included” versus what’s actually billed.
New-build budgets love the word “included.”
For example:
- “janitorial included”
- “elevator monitoring included”
- “waste management included”
But included with whom?
At what rate?
And until what date?
“Included” can mean:
- until interim occupancy,
- until the developer hands over the keys,
- or sometimes “included in theory, but not in the contract.”
Managers become translators between expectation and invoice.
7. Developer-held units are not theoretical revenue.
Unsold units still owe common expense contributions.
Vacancy does not equal exemption.
If those contributions aren’t being recorded, the corporation is quietly underwriting the developer’s inventory — and that needs to be corrected early. Keeping payments, up-to-date and monitoring lien timelines ensures the corporation remains financially protected during the transition period.
8. Submetering timelines matter financially.
In buildings where the declaration assigns individual unit utilities to the suites instead of the common expenses, everything works beautifully — on paper. The assumption is that the submetering system will track consumption, units will be billed directly, and the corporation will be reimbursed and without needing to intervene.
That only works if the submetering is not just installed but also commissioned and produce complete billing with remittances.
One of the first red flags that something isn’t lined up is when bulk utility invoices are higher than the budget… but there is no remittance coming in from units. That’s when the manager inside you asks:
“Wait — if residents are consuming utilities, why is the corporation paying for them?”
Often the answer is that the submetering system is technically present, but not financially “live” yet. Billing platforms may be waiting on developer documentation, commissioning might not be complete, or occupancy moved faster than activation.
On paper, utilities are privately allocated.
In reality, the corporation is temporarily subsidizing consumption through bulk bills.
And the longer it goes unnoticed, the harder it is to reconcile — retroactive billing is unpopular, auditing becomes messy, and variances start to resemble a mini energy crisis.
The lesson:
Installation ≠ Commissioning ≠ Billing.
All three must align before the financial model works as intended.
When remittances start coming in, check that every unit is billing and showing usage. If a unit reports zero consumption, the meter may not actually be awake yet — and the corporation may still be quietly footing the bill.
9. The Performance Audit is not just technical — it’s financial protection.
One of the most misunderstood steps in a new build is the Performance Audit under Tarion. People often think of it as an engineer’s checklist of deficiencies. In reality, it is one of the corporation’s strongest financial shields.
The Performance Audit establishes, in writing, what was defective in 1st, 2nd and 3 to 7 years and therefore what the developer is still responsible to correct. If items are missed, not documented, or not pursued within Tarion timelines, the financial burden quietly shifts to the corporation. At that point, owners end up paying for repairs that should have been covered under warranty.
If material items are overlooked — like waterproofing issues, building envelope failures, HVAC performance problems, submetering gaps, drainage issues, or elevator commissioning defects — the long-term financial impact can be massive. What should have been a developer obligation can turn into a reserve fund project, a special assessment, or a cash flow problem in year three or four.
The Performance Audit is where managers, boards, engineers, and Tarion timelines intersect. If we treat it as paperwork, we lose money. If we treat it as financial risk management, we protect the corporation from inheriting costly surprises later.
10. Warranties Shift the Financial Baseline as the Building Matures
In the first year of a new build, a large portion of deficiencies and service adjustments fall under builder warranty coverage. This creates a temporary financial subsidy: the corporation benefits from lower out-of-pocket repair costs because common issues are corrected at the developer’s expense instead of the corporations.
As those small-ticket warranties expire, many of the routine repairs and operational adjustments migrate into either the operating budget or the Reserve Fund. Meanwhile, the building’s larger mechanical and structural systems remain under Tarion protection for longer, but the day-to-day service items start to land on the corporation once the warranties are exhausted.
This shift is predictable and happens to every new build. It is not a sign of mismanagement — it is simply lifecycle. Warranty makes Year One look cheaper than it truly is. As the building becomes financially self-funded, Common Element Fees normalize upward to reflect the real cost of operating a lived-in building. The key for managers and boards is identifying which services were warranty-supported in the first year so they can be properly budgeted in subsequent years.
The transition is inevitable; the only surprise should be if no one planned for it.
11. Amortization schedules and leases can quietly reshape the financials.
Many new builds come with equipment leases, mortgages or financing arrangements. These aren’t just operating expenses — they include interest, depreciation, and service wrapped into a single monthly payment.
A key lesson:
The amounts in the amortization schedule should always match the amounts in the lease agreement and your budget.
If the term lengths, monthly totals, or interest components don’t line up, something needs clarification before the corporation accepts the obligation.
This is where having the right documents makes a huge difference. If the documentation is incomplete or mismatched, auditors can spend months waiting for clarity before they can close the file. But if you’re looking at the right numbers and asking the right questions to the right party early, you can bypass a major hurdle — and for a new-build turnover audit, that is no small win.
In short: ask for the right documents early — it turns a difficult turnover audit into a manageable one.
New-build finances may come with surprises, learning curves, and the occasional adrenaline spike, but they do stabilize. Systems catch up, audits close, contracts normalize, and the corporation learns how to financially exist. And that’s the moment where the spreadsheets finally make sense.
Good management isn’t just about paying invoices — it’s about asking the right questions at the right time and protecting the corporation during the period when no one else is looking. If we do that well, owners never feel the turbulence. And that’s always worth the effort.