Archive for November, 2014
OTTAWA, November 24, 2014 — Results from Canada Mortgage and Housing Corporation’s (CMHC) House Price Analysis and Assessment (HPAA) framework were released today indicating that overall, housing markets in Canada remain broadly consistent with underlying demographic and economic factors such as employment and interest rates. Nevertheless, a modest amount of overvaluation is observed, meaning that house prices are slightly higher than what the underlying factors would suggest.
“CMHC is committed to expanding the availability of information about Canada’s housing markets. This knowledge will ultimately contribute to a stronger housing finance system,” said Evan Siddall, President and Chief Executive Officer of CMHC. “The HPAA adds to CMHC’s efforts to identify, and where appropriate, fill significant data and information gaps.”
The HPAA is a comprehensive framework that is designed to assess housing market conditions by taking into consideration the economic, financial and demographic drivers of housing markets. The use of multiple indicators of housing conditions, which incorporate various data sources and prices measures, provides a robust picture of overall housing market conditions. The results released today include those for the national market as well as 8 Census Metropolitan Areas (CMAs) — Vancouver, Calgary, Edmonton, Toronto, Ottawa, Montreal, Québec and Halifax.
“At the national level, other than a modest amount of overvaluation, we do not detect the presence of other risk factors such as overheating, price acceleration, and overbuilding,” said Bob Dugan, CMHC’s Chief Economist. “Risk of overvaluation is most evident in Montreal and Quebec, but the trend is improving. A modest risk of overvaluation is also present in Toronto, Calgary and Halifax. Across the 8 CMAs examined, there is no overheating or acceleration.”
“There is however a cautionary note with respect to overbuilding in Toronto and Montreal. The number of units under construction is elevated in these centres. This could develop into overbuilding if these units are completed but not sold. To mitigate this risk, builders will need to hit the appropriate balance in channeling new demand between units that are currently under construction but not sold and units that are in the planning stage,” noted Mr. Dugan.
Additional information and results for the 8 CMAs are available in the attached backgrounder. As well, the full text of this article is available in a special edition of Housing Now — Canada Edition.
The buyer notices that the oven is not working when they do their final home visit, two days before closing. Can the buyer refuse to close or hold back money to repair the oven? These are just some of the questions that I receive from anxious buyers during the course of a home purchase.
Here are five key lessons to remember:
1. The buyer cannot refuse to close a real estate deal if an appliance is not working, or if there are minor damages on the property, unless the contract says so. What the standard real estate contract says is that the buyer can only refuse to close if there has been substantial damage to the property before closing. This would cover a house burning down or a major flood before closing, but would not cover a cracked window or appliance that is not working.
2. The buyer or the buyer’s lawyer is also not permitted to decide on their own to hold back money to complete any repairs, unless the contract says so. In my experience, sellers rarely agree to any clause in an agreement that permits a buyer to hold back money, for example, to make sure that the seller has completed any required repairs before closing. The problem is that in practice, buyers will typically say that they are not satisfied with the repairs and the holdback money cannot be released to anyone.
3. Here is my advice to settle repair or damage issues: get an estimate for the damage and then have your lawyer send it to the seller lawyer, offering to just settle the matter by the seller either fixing the problem before closing or the seller providing a credit equal to the estimate and the buyer fixes it themselves after closing. I am usually able to work this out with seller lawyers before closing. Unfortunately, if there is no settlement, there is no automatic right to hold back money and the buyer will be required to sue the seller in Small Claims Court after closing to get their money back. This is not a good solution for anyone, because of the time it takes to go to court to resolve this. Be reasonable and solve your problem.
4. What if the oven breaks down two days after closing? Unfortunately, the way the contract is written, the buyer does not get an extended warranty. The seller will typically only warrant that appliances and home systems will be working on closing, not after closing. Make sure that even if you are not moving in until a few days after closing that you go to your home immediately after closing and check to make sure that everything is working properly. If anything is not working or there is a damage, have your lawyer immediately contact the seller lawyer the next day about your issue. Also consider buying after sale insurance protection to cover your home systems and appliances. Canadian Home Shield is a company that offers this type of protection at a reasonable price.
5. Little things matter. If your seller is removing a chandelier, make sure they are required to replace it with a standard light fixture so you do not walk into a dark home on closing. If your seller is removing a TV bracket from the wall, make sure that they are required to fill in any holes that are created. Make sure you are to be given two full sets of keys, FOBs if a condominium, garage door openers and mail box keys. If the agreement is silent, the seller may only get you one set and it is costly to obtain a duplicate set, in most cases.
When you understand the rules about chattels and fixtures and properly protect yourself, you should be able to minimize any problems that arise after closing.
If you have any stories to share about chattels and fixtures, or just need some advice, please contact me at firstname.lastname@example.org.
Mark Weisleder, Real Estate Lawyer, Author and Speaker.
Being a successful residential landlord in Ontario is not easy. Here are six important tips to remember:
1. Properly qualify your tenants in advance. Ask for proof of income and call the references that are provided. Check their credit. Interview them where they live. Check them out on social media. If you have any concerns, remember that if the tenant offers to prepay rent in advance, even for a full year, it is now legal in Ontario to accept it. However, you must be careful in wording your clause so that it is not challenged later.
2. Treat your tenants with respect. Remember that they are looking after your investment and helping you pay down your mortgage. Consider a Christmas present as a sign of appreciation or a gift card if the rent is paid on a timely basis. You will notice you’re your tenants will take better care of your property.
3. If your tenant has a change of life situation, such as a divorce or loss of job and has problems paying the rent, do not rush to start eviction proceedings, which typically end badly for everyone. Meet in person with the tenant and consider offering 1-2 months free rent if they leave early or offer to pay their moving costs if they will move quickly to a friend or relative’s home. Also indicate that you will not report this non-payment to any credit bureau. By approaching the matter this way, you have an excellent chance of making a deal with your tenant quickly, without any damage being done to your property.
4. If you have two tenants who are both paying rent but not getting along with each other, be careful about taking sides. See if you can encourage both of them to seek the assistance of a third party mediator to resolve the problem.
5. Visit your property at least two times a year to inspect its condition. Landlords can enter a rental unit to view the state of repair, as long as 24 hours’ written notice is given and the visit takes place between 8 am to 8 pm. However, you cannot abuse this privilege by coming once a week, or even once a month. A good time to do this may be when you check the smoke detectors to see if any batteries need replacing. Tenants have an obligation to repair any damage that they or their guests cause to the unit. By checking your unit on a regular basis, you can make sure that it is being properly maintained at all times.
6. Make sure you are using an up to date lease agreement. If there are errors in your lease agreement, it could cause you difficulty later during any eviction proceeding. By following these tips, you can enjoy the benefits of real estate ownership, without the aggravation.
If you have any stories to share being a landlord, or just need some advice, please contact me at email@example.com.
Even though the Halloween season has been and gone, it is a good time to remind buyers how they can avoid mistakes when buying a home that will lead to nightmares later. Here are seven ways to prepare so that you don’t have a horror story to share
1. Make sure your lender has done their appraisal of your home
Just because you are pre-approved for financing, it does not mean you will get your money on closing. There are always more lender conditions to satisfy, whether it is income verification, proof of down payment and a satisfactory appraisal of your home, to make sure you didn’t overpay. Make sure you satisfy all requirements before you waive any finance condition. I have seen many cases where lenders have refused to advance money on the closing date because of incomplete information or problems with the home’s appraisal. This can cause delays in closing, extra moving expenses and in worst case scenarios, a default in the deal where the buyer forfeits their deposit.
2. Visit the neighbourhood on foot
No seller will tell you about a neighbour from hell or problems with other homes on the street. They may also not disclose problems with their own homes or whether there had been a suicide or murder on the property. When you are doing your home inspection, have someone talk to your potential new neighbours and ask them directly if they saw any repair trucks at the home you are interested in, and whether there may be some strange people living nearby. It also helps to work with a real estate agent who is familiar with that neighbourhood as well, to avoid any surprises after closing.
3. Choose a home inspector carefully
The home inspection is a critical part of the process, so do your research. Make sure the company is registered before retaining them. The Ontario Association of Home Inspectors is a self-regulating body that defines qualifications for home inspectors, and grants the designation RHI, or Registered Home Inspector, to qualified practitioners in Ontario. Most inspection firms have a limitation of liability clause, which states that if they miss something that costs you money, they are not responsible. Ask the inspection company if they have ever been sued by a buyer. Also ask them whether they carry insurance in case they do get sued. Remember that home inspectors cannot see behind walls. In older homes especially, it is worth considering paying extra to check for moisture behind the walls, termites and drainage issues.
4. Go to City Hall
Visit your local building department and find out if any new developments are planned. New development may increase property values but also increase traffic. Check to see how many owners have applied for minor variances, to either build homes or additions that are larger than the by-law permits. This gives an indication of the future direction of this neighbourhood.
5. Include everything you expect to receive on closing
There is no such thing as too much detail. Insert clearly everything you expect to receive on closing, including window coverings, drapes, mirrors, closet organizers, TV brackets, garage door openers and even 2 sets of keys and FOBs in a condominium. If the seller wants to remove the chandelier, make sure they install a cheaper fixture before closing, so you do not enter a dark house when you move in.
6. Basement apartments must be legal
If the home contains a basement apartment and the income is important to you, make sure that it legally complies with zoning and the fire code by-laws. If it doesn’t, then all it takes is one complaint from a neighbour and you may be forced to spend thousands of dollars to make it comply after you buy.
7. Check about your insurance premium early
Find an insurance agent right away and if possible, check what it will cost to obtain insurance as soon as you sign your agreement and before you waive any conditions. An insurance agent can check the history of claims in the neighbourhood and can let you know about claims for sewage back-ups or vandalism. If it has old knob and tube wiring, or the place used to be a grow house, you will have difficulty arranging insurance. This is important information that any buyer should have before deciding to waive their conditions and complete the deal.
By following these steps, you can avoid horrors after closing.
Please click here to read an article from the National Post where I was quoted on similar items.
If you have any stories to share about problems after closing, or just need some advice, please contact me at firstname.lastname@example.org.
Thanks to Real Estate Lawyer Mark Weisleder, as ever, for his timely advice. Robert.