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Archive for February, 2017

We can help with bad tenants

It would be a win, win, win if we could just clean out all the bad tenants for the landlords across our country.

Bad tenants can bring down neighbouring property values. You may be a landlord yourself or you may know wannabe landlords who have been frightened off because they heard too many stories about bad tenants.

As a landlord and former tenant myself, I have come up with a new concept that should be explored by Realtors and our boards.  A recent story about a tenant who stiffed the landlord for 18 months of rents compelled me to write this. Time and time again we see that the judicial system and landlord tenancy acts are broken. No landlord should have to be hung out to dry for 18 months like that.

What I am about to explain is simple. The proper terms to meet the legal issues can be addressed and amended but here goes. We need a bond (like a surety bond) in place by tenants. Where a tenant goes to a third party and pays an amount to get a triple AAA rating that he can take to a prospective landlord to show that they are in good standing. The tenant may pay a one-time fee to set up the initial bond and a small annual fee to the bond company to keep their records up to date. The purpose of the bond is to keep track of tenants, good or bad. To provide a fund where landlords can apply for any outstanding money due, over and above damages from bad tenants. It could replace or supplement the damage/security deposit needed up front by most landlords. Instead the tenant could pay in smaller installments, the last month’s rent.

So you get the drift of where I am going with this idea. A tenant must keep the property in the same state of repair that would be expected when the lease or term of rental runs out and if there are any issues, the co-operating landlord will inform the bond company. The landlord may seek compensation from a fund that would make repairs on behalf of the tenant. The tenant in the future would lose their triple AAA rating and would have to pay more to get another bond at a lower level, which would be disclosed to future landlords.

There would be educational access for landlords and tenants about how to properly assess normal wear and tear and how to rate tenants and how tenants may rate their landlords. Landlords could also be bonded and rated based on their contractual promises to tenants. This would help tenants, landlords and politicians, along with Realtors, establish accountability in this small business venture that up to now has been exploited time and time again by bad apples.

But to get a bond business like this up and going one would need the ears of the local, provincial and possibly federal level politicians. We need politicians to get on board to make the necessary legal changes to current acts about landlord tenancy. If organized real estate could get the ball rolling on this through their PAC, it would help everyone in the end. It would be an incentive for landlords to keep their units in good shape. Help increase property values. Help minimize habitual legal issues by bad apples. This is just an idea, a concept, something to bite into. I planted the seed, now you or some enterprising group can make it grow!

This article was written by Calgary Realtor Doug MacCallum and published in REM Online. Doug kindly gave us permission to reproduce it here. What do you think? Is this something that would work? Given that in Ontario landlords may not keep a damage deposit, it could be very welcome. I’d love to hear opinions from some landlords.

If you have any questions, call me at (613-238-2801). Doug can be reached at (403-949-3583) or email: dougmaccallum@remaxmountainview.net


Dangerous real-estate document a path to court

Since 1997, 94 court cases in Ontario have been pinned to the Seller Property Information Statement.

The Seller Property Information Statement (SPIS) continues to be the single most dangerous document in current use in the real estate market.

Since 1997, when the form first came into use, there have been 94 reported Ontario court cases centred on the document. Across the country, the total exceeds 250.

Many more have been settled or are unreported.

More than one judge has written that the SPIS presents a ripe ground for litigation.

In a 2007 decision in the case of Kauffman v. Gibson, Justice Gordon Killeen wrote, “It seems that, in the past 10 years or so . . . voluntary disclosure statements . . . have been adopted by real estate boards across Canada. Almost inevitably, they have given rise to litigation over their meaning and reach.”

The latest reported Ontario decision was released October 2015 and concerned a failed real estate transaction. In November, 2011, Gregory P. and Jennifer F. signed an agreement with Christian M. to buy his home in Embrun, Ont., for $420,000.

The property had been built on a discontinued landfill site. A condition in the agreement required the sellers to provide an SPIS.

One of the questions in the form asks: “Are you aware of possible environmental problems or soil contamination of any kind on the property or in the immediate area? e.g.: radon gas, toxic waste, underground gasoline or fuel tanks etc.”

The seller answered “unknown,” but did disclose that there were existing waste dumps, disposal sites or landfills in the immediate area. The buyers believed that the answer referred to a chemical disposal site being constructed in the town.

Two weeks before closing, the buyers’ lawyer informed them that part of the lot they were buying was sitting on top of a discontinued landfill site containing metal, glass, plastic and brick but no apparent environmental hazard. The buyers terminated the transaction.

Several months later, the seller sold the property for $330,000 and sued the original buyers for $100,000 in damages. The buyers counterclaimed for their $1,000 deposit and expenses of $6,500 related to the failed transaction.

In a detailed ruling, the judge  concluded that the seller, who knew about the landfill, was “at best reluctant to advise anyone” about it, and “at worst trying to conceal the fact.”

The judge dismissed the claim and decided that the buyers were entitled to terminate the contract and walk away from the transaction in the manner that they did.

He also awarded the buyers damages of $4,020 for their losses and return of their deposit. In a subsequent decision in December, the judge ordered the seller to pay $30,000 in court costs to the buyers.

The SPIS is complex, ambiguous, confusing and highly technical in parts. It is impossible to complete accurately without the help of a lawyer and home inspector. In fact, it’s so bad that the Ontario Real Estate Association developed another form in 2013 which attempts, unsuccessfully, to explain the SPIS to sellers.

Anybody using the SPIS form will more than likely need another specialist on their team — a good litigation lawyer. It’s a ticking time bomb.

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.