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Archive for July, 2014

Six things to ask when buying a cottage

Buying a house in the city or suburbs can be complicated enough, but buying a cottage or vacation property outside of town requires even more due diligence.

In town, you probably wouldn’t ask if the water coming out of the tap is drinkable. Nor would you wonder if the plumbing was hooked up to the sanitary sewer. But these are exactly the sorts of questions you should ask when buying a cottage, plus a few more.

1. Get an inspection: Cottages are usually occasional residences and so may not be as properly maintained as they should be. This is why every purchase should be conditional a satisfactory professional home inspection.

If the cottage has a wood-burning stove or fireplace, then a certificate must be requested from a Wood Energy Technical Transfer specialist, to confirm that the system was installed and is operating correctly. To find out more about this, go to www.wettinc.ca.

2. Is the water drinkable? There are two areas of potential concern when it comes to water – the quantity and quality. Is there enough to satisfy family needs and is it good enough to pass the local health department requirements.

Ask the sellers for these things:

A potability certificate from the local health authority, confirming the water is safe to drink; •Confirmation that the well, the pump and related equipment have performed adequately during the Seller’s occupancy;
• Confirmation that there is an adequate rate of flow for normal household use;
• Provision of a well driller’s certificate, if available; and
• The location of the well.
A separate inspection may be needed by a well specialist. If nothing else it gives you an idea of what it would cost to replace the well if it fails.

3. How’s the septic system? Septic systems present their own difficulties because it is usually difficult to tell during an inspection how long the system may last. The replacement cost can be up to $20,000, especially if there are stringent environmental regulations in effect in your area.

Buyers should ask for confirmation that:
• The system was installed with all necessary permits;
• The system has been adequately maintained;
• The seller is not aware of any malfunctions;
• The seller will provide copies of any inspection or approval reports in their possession;
• The seller agrees to pump out the tank at their expense prior to closing; and
• There are no work orders on file with the Ministry of the Environment or the local municipality.
The buyer should arrange for their own separate inspection of the system itself.

4. What’s the road allowance? Even if your cottage fronts on water, this does not give you ownership of the land up to the lake. The first 66 feet fronting onto the lake is typically owned by the local municipality and is referred to as the shore road allowance.

Although you have access to the water, you can’t stop others from using it. Nor can you build anything on that 66-foot piece of land. Many cottagers have found out afterwards that either all or part of their cottage was built on land that they do not own. In addition, if the water at the shore has receded through natural causes, then the owner may have acquired ownership of this extra land.

Conversely, if the water line has advanced, you may have lost land to the Ministry of Natural Resources.

You may be able to buy the land from the municipality or the Province, as the case may be, but it is a process and the cost can be approximately $10,000. If you can get an up to date survey from the seller, this should answer your questions. Also inquire to make sure that any required permits were obtained to build a dock or boathouse, as there is no automatic right to do this.

In all cases, make sure you have title insurance, which should assist with most of these types of issues.

5. What about Hydro easements? Check to see if there are any hydro poles or lines on the property. It is possible that Hydro has easements which could affect where your cottage can be built that are not registered on title.

Lawyers typically do searches with the appropriate hydro authority to find out.

6. Access to the cottage: If you do not have year round access by a city road, then you must ask how you get from the road to your property. If it is a private right of way over a neighbour’s land, you must understand the terms of this agreement to ensure it is year round access and it is clear who is responsible for maintaining the road.

If there is no registered right of way, it can be a nightmare, with owners fighting over who has the right of way and who owns it.

In addition, check the local zoning by-laws to make sure the property is not zoned only for “seasonal” use. In these cases, the municipality may not be providing road maintenance, snow removal, garage pick up or emergency services during the winter.

For all of these reasons, it is recommended that buyers work with a local real estate agent who should be familiar not only with each of these issues, but more importantly, will be able to recommend the professional inspectors and town officials who can satisfy a buyer’s concerns.
By being properly prepared before buying a cottage, you will avoid unwelcome surprises after closing.

Mark Weisleder is a lawyer, author and speaker to the real estate industry.


Check the condition of your rental investment

OK - this is an exaggeration!

OK – this is an exaggeration!

Owning a rental property is not just about collecting the rent on time. It is also about making sure that your property is being properly maintained. If you are not careful, you can face expensive repair bills.

Here’s why:

Mostafa Said owned a home at 11804 Stephen St. in Maple Ridge, British Columbia in 2005. He planned to take his family on a trip to his native Egypt for a year and hired Meadow Ridge Classic Realty to be his property manager to find a tenant and manage the property while he was away. Meadow Ridge found a tenant, Sherry Fontaine, who eventually trashed the place during her one year tenancy. When Said returned, the place was in a terrible condition and he sued Meadow Ridge for his damages.

Said told the judge that since he could not afford a lawyer, he sued in Small Claims Court, where he claimed the maximum of $25,000 as his damages.
The management contract said that Meadow Ridge would only be responsible for “gross negligence”. In a decision dated June 16, 2014, Provincial Court Judge T. S. Woods in the BC Provincial Small Claims Court awarded Said the maximum amount permitted in Small Claims Court, being $25,000.

Judge Woods found that as a result of the failure of the property manager to properly qualify the tenant, recognize red flags and not inspect the property on a consistent basis, they were in fact grossly negligent in their conduct. As an example, the judge pointed out that had the property manager just googled the name of the tenant, they would have discovered a story about Sherry Fontaine in 2004, indicating that she had a criminal record, prior drug use and that her children were taken away from her by authorities in BC after her child was mauled to death by a dog in 2004. In addition, the application form of the tenant was incomplete, with no information about her employers, banking information or credit cards. No questions were asked as to how she could afford the Said home rental of $1,495 when her prior rental was only $700.

The property manager also took no pictures at the beginning of the tenancy to prove what condition the property was in at that time and despite the fact that the first rent cheque bounced, no additional measures were taken to watch the property more carefully. Instead, the tenant, two other adults and three children, described by the judge as “her entourage”, were permitted into the property. In addition, Sherry rented out rooms to transients during her tenancy, all without permission, and placed locks on some of the doors to create additional units in the home.

Under the law in Ontario, a landlord is permitted to access the rental unit by giving 24 hours’ notice for repairs, to show the property to potential buyers and to view the state of repair. This means that a landlord can get in to make sure that the tenant is properly maintaining the home. This does not mean that the landlord can come every day or once a week, as this could be interpreted as harassment. However, once a month or once every two months would be considered permissible.

When you hire a property manager, ask how often they will attend to inspect your property as part of their management duties. Also ask what checks they do to properly qualify any potential tenants. Remember to google the tenant as well to see if their social media information is consistent with their tenancy application. Also make sure you document the condition of the unit when the tenant moves in so you can prove any damages that may occur during the tenancy.
By doing careful screening in advance and conducting regular visits to your property, you will avoid any unpleasant surprises when your tenant leaves.

By Mark Weisleder


Save on Airbnb, but is it legal?

Airbnb? I’d never heard of it. Mark Weisleder sounds a few alarms though.

A friend told me that she went to the Caribbean for a holiday on a deal and it cost her $1,000 for 10 days. While she was away, she rented out her downtown Toronto condo on Airbnb for $1,500. Sounds good. But is what she did legal in Ontario?

Here’s what Airbnb is all about:

Airbnb is a website that connects travellers from all over the world to homeowners who are looking to make extra money by renting out their entire homes, or in some cases, an extra room, for short periods of time. In just 6 years, the company has grown to now have over 550,000 room listings available on their website. You hook up with your prospective homeowner through the website and Airbnb takes a cut of the money that you pay. You can see the appeal.

Travellers can find a place in some of the best parts of a city such as Paris, London or San Francisco and pay a fraction of what it would cost to stay in a hotel. Some travellers prefer to stay in a private home so that they can obtain an authentic local experience. Still others warn that you must do your due diligence in advance and check for references so you are not disappointed when you arrive.

The company offers insurance to a host to cover some damages that may be caused by a traveller, but there are many exclusions so read the policy carefully. The company, which doesn’t own any hotels, is now valued at over ten billion dollars, more than many of the large hotel chains.

As you can imagine, the hotel industry is not happy about this and some cities are fighting back. In New York City, for example, it is now illegal to rent your home for less than 30 days. Quebec also has passed laws against renting homes for short periods of time.

Is this legal in Ontario? While Ontario does not have express laws against renting your home for short periods of time, there are other matters to consider.

For example, most condominiums have rules that do not permit short term rentals. This is primarily due to security concerns, as the owners are wary of different people just showing up each night at a neighbouring unit. In the case of Skyline Executive Properties v. Metro Toronto Condominium Corporation #1280, Skyline was renting out units at 109 Front St. East as hotel rooms for visiting executives on behalf of the owners. The building had rules preventing short term rentals and took Skyline to court to stop this.

The court agreed and in a decision dated September 6, 2001, Ontario Superior Court Judge EM Macdonald agreed with the condominium corporation and stopped the short term rentals, stating as follows: “the use of the building by transients offends the reasonable expectations of the majority of the other owners, who use their units for private single family purposes only.”

It is interesting that property addresses are not included on the Airbnb website. You can find out about the property through pictures, information about your host and reviews by other travellers. If anyone in the building complains, the board can bring an action against you and you will likely have to pay the board’s legal fees if you do not stop.

I am also hearing that many tenants are doing this without their landlord’s permission. This is probably a violation of Ontario’s Residential Tenancies Act, since a tenant is not permitted to sublet their unit for an amount greater than what the landlord is charging. In most cases, the daily rent charged will be much higher than what the tenant is paying in rent.

If you do rent out your home for short periods of time, you’d better advise your insurance company. While this may cause your premiums to rise, failure to advise could result in your insurer denying coverage if something does happen during the stay, since the risk increases when strangers use your home.

As you can imagine, the hospitality industry is not pleased with Airbnb. Tony Elenis, President and CEO of the Ontario Restaurant Hotel and Motel Association, sent me a list of all the regulatory burdens that hotel and motel operators must follow, including items such as having proper business and liquor licenses, Health and Safety requirements, proper signage and customer identification. As Tony states:

“The hospitality industry is extremely regulated and topping the list is the rules on health and safety of our employees and guests. We take pride in compliance here. This takes much training and understanding of meeting these objectives that only comes within a business structure and people involved in this profession.”

Even bed and breakfast companies must obtain proper licenses to operate from their local city and are subject to health and safety inspections to ensure the safety of their guests.

If you want to make extra money on Airbnb, be aware that if one neighbour complains, you may be shut down. If you want to use the site for a cheaper travel experience, remember to do a lot of due diligence in advance, to make sure you are not disappointed later.

By Mark Weisleder


Seven questions to ask when building a deck

Now that summer has finally arrived, many home owners may think about building a backyard deck by themselves. Be careful; if it is not done correctly, you may run into problems later when you try and sell your home. Here are seven things to remember:

1. Do you need a building permit?

Every City has its own rules, but typically, if your deck is higher than two feet above the ground and is larger than 108 square feet, you will need a building permit before starting. In some cities, if the deck is attached to your home, then you always need a building permit before you build. In my opinion, by getting a proper permit in advance, it is easier to answer any questions about your deck when you sell your home later. This is because the City will do a proper inspection when your deck is completed to make sure that everything was built correctly.

2. What material should I use when I build a deck?

David Power, President of www.thedeckbuilders.com in Toronto, tells me that while the foundation of most decks is usually pressure treated wood, the veneer and railings are usually cedar. David warns that if you decide to stain your cedar deck, you should pre-stain all six sides of the wood before you install it. In addition, make sure that there is at least a one-quarter inch gap between each piece of wood.

3. Will it matter how large I build a deck or whether it is close to the boundary line?

The answer is yes. As explained to me by planner Michael Goldberg of www.goldberggroup.ca, the square footage area of a deck may count when determining whether your home complies with the zoning by-laws regarding how close any structure can be to the lot lines and how much square feet is permitted to be built inside your entire lot. For example, if the deck is at least 48 inches off the ground or the foundation is extended for construction of the deck, then it will count towards how many total square feet you can build on your land. In addition, if the deck is built too close to the lot line, it could also violate the local zooming by-laws. If you make a mistake, you could be forced to remove all or part of your deck.

4. Should you do it yourself or use an expert?

In my opinion, you should always use an expert. If the deck is not properly secured to your home, it could lead to water in the basement later. In addition, improper design and construction could lead to the deck rotting out and collapsing under the weight of people on it. If it happens, you will be liable for any injuries caused to guests who may be injured while visiting your home. Experts will make sure that your deck has the proper footings in place for the foundation so that it meets all building code requirements and that it is properly secured to your home to prevent problems later.

5. Is deck design important before you start?

It is very important. Figure out in advance where your barbecue is going to go, and any furniture you may want to include. If you are going to install a hot tub as part of your deck, make sure you leave enough space for this as well. Some owners prefer the hot tub close to their home so they can use it in the winter. Others prefer it in another area of the yard, so that they can have more room to entertain on the deck.

6. Will I need guard rails?

If the deck is higher than 24 inches off the ground, you will likely need a guard rail that is at least 36 inches high. Once the deck is higher than six feet off the ground, it will require a 42 inch high guard rail. In all cases, the openings in the guard rails cannot be larger than four inches so that no one falls through.

7. Should a deck be inspected as part of any home inspection when buying a resale home?

The answer is yes. Professional home inspectors should be able to tell you whether the deck is deficient in any way and whether it may have to be replaced as a result of poor workmanship.

When you are looking for a deck contractor, get references and look at examples of the work they have done elsewhere. Properly constructed decks should last for at least 20 years.
by Mark Weisleder
Real estate lawyer, speaker, author


Every real estate title tells a story

When Bill Verutis bought his home on Thompson Road East in Waterford, Ontario a few years ago, he received a unique gift from his real estate agent, Penny Plunkett. It was a history of the property going back to the original deed granted on behalf of King George III in 1802 to the first owner Paul Averill.

Plunkett is also a title searcher and member of the Ontario Genealogical Society. She used both of these resources to create a list of owners going back to 1802 along with some of the more interesting family biographies.

“Properties can be purchased, but their history is inherited,” Plunkett says. “I try to give clients the whole picture when they buy real estate.”

Averill built the first saw mill in the area. He sold the property to the Sovereen families in 1804 who owned the property until 1843. The mill was burned during the War of 1812 by the forces of American General Duncan McArthur. Morris Sovereen developed a substantial milling business in Waterford and was one of the founders of the village of Waterford in 1826.

Robert Hamilton, a successful settler in Queenston, lent the first mortgage on the Thompson Road property. According the web site, “few men in Upper Canada had the affluence of Robert Hamilton, Queenston’s most prominent and illustrious citizen. Judge, politician and entrepreneur, this “Scotch pedlar’ lived the lifestyle of a gentleman, entertaining at his magnificent home overlooking the Niagara River.”

Hamilton’s son George was a successful businessman and amassed huge real estate holdings. He served as a Captain with the Niagara Light Dragoons in the War of 1812 and in 1815 bought 257 acres of land in what is now the east end of the city of Hamilton. The family name became the city’s name.

The Thompson Road property changed hands several times and in Dec. 1866 was sold to William McMichael who was the owner when the Dominion of Canada was proclaimed in July 1, 1867.

You can search title using the computerized records at the land registry office in your county or at some Service Ontario locations. Use your existing deed to find the legal description so that you can start your search. If you give your address to the Ministry staff, they should be able to assist you.

It then costs $8 to find the first page of your search and to go back further in time, each additional page costs $1 each. You should then have access to a microfilm machine with an index to assist in your search. If you are interested in any deed that was registered on the property, you can order a copy of the document for fifty cents a page. You reach the beginning when you get back to the Crown Patent, which is typically between 1795-1803.

You can get help from staff at the registry offices, but there is an excellent resource that can be purchased from the Ontario Genealogical Society called: History of your Home for $9.95, from the Society website.

A home isn’t just an investment. It is a place where a family history is born. One of my parents’ proudest moments after arriving in Canada after the Second World War, was the day they purchased their first home in Toronto. It brought me a great sense of warmth and satisfaction when I took my own children to the home I grew up in, which my parents owned for 35 years.
In my law practice, I am privileged to act for people buying their first home in Ontario, starting their own family history in this great country. It’s something to think about as we celebrate Canada Day.