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Archive for July, 2018

Gov’t policies eroding Canadian household sentiment – report

The latest Housing and Mortgage Market in Canada report by Mortgage Professionals Canada revealed that stricter government measures are pushing consumers towards a more negative outlook for housing and real estate nationwide.

In particular, the study pointed at increasing interest rates and tighter mortgage qualification requirements as the main factors eroding Canadian consumers’ sentiments, despite many respondents still indicating a belief that real estate remains a good investment.

“We are still seeing a high level of desire in home-buying, especially among young people aged 25-34,” MPC president and CEO Paul Taylor said. “Whether they will be able to make that purchase may be an entirely different matter.”

“We support a stress test, albeit at a reduced rate of 0.75%, as it is a useful tool to test a borrower’s ability to make future payments,” Taylor added.

“However, the cumulative impact of rising rates, a 2% or greater stress test, provincial government rules in Ontario and British Columbia, and further lending restrictions are negatively supressing housing activity not just in Toronto and Vancouver, but throughout the country.”

The report stated that federal policies which would lead to a decline in housing prices will trigger a reduction in home equity, thus further wearing down consumer confidence and leading to shrinking spending, slower economic growth, and reduced jobs creation.

Such a price correction is “one of the most dangerous things that can happen to the Canadian economy,” MPC warned.

“While we would normally expect falling prices to generate an increase in demand in the housing market, we have seen historically that this can actually reduce demand,” MPC chief economist Will Dunning said.

He added that the resulting chain reaction would be an especially hazardous outcome.

“Significant price drops put into question the reliability of the market as a whole, causing prospective buyers to fear that values will fall further.

by Ephraim Vecina

July 29, 2018

REP Magazine

5 things to remember when the deal doesn’t close

When deals don’t close, it is important for real estate agents and brokerages to gather the correct information to understand the rights of all parties. Let’s see what happens in the following situations:

  1. The buyer can’t close because their financing fell through.

 In this situation, it is best to determine if you can negotiate an extension, to see if the buyer can resolve their situation in a timely manner. This may involve paying an additional deposit plus interest on the closing balance in order to get the seller to agree. If no extension is possible, then the seller could notify the buyer that as a result of the breach of contract by the buyer, they will be re-selling the property and will be suing the buyer for the deposit and any deficiency if they sell for a lower amount. For example, the original sale price was $300,000, with a $5,000 deposit. The buyer doesn’t close and the seller re-sells the property for $280,000. In this situation, the seller could sue the buyer for the $20,000 shortfall. Even if the seller resold the property for a profit, they could still sue the buyer for the $5,000 deposit.

 2. What if the buyer and seller sign a mutual release in the above situation, directing the listing brokerage to return the deposit to the buyer? If a mutual release is signed, the seller can no longer sue the buyer. The listing brokerage must return the deposit to the buyer, as directed.

3. What if the deal did not close because there was a problem on title or there was a tenant on the property who would not vacate before closing, in violation of the agreement? In this situation, the seller would likely not be able to sue the buyer. However, the listing brokerage may have a claim for commission against the seller and as such, should be careful before signing any mutual release.

 4. As for the listing brokerage, what should they obtain when a deal does not close before re-listing any property for sale? Due to the fact that they may not know the reasons why the deal did not close, they should wait for either a mutual release, or a written direction from the seller’s lawyer that since the buyer has breached the contract, the owner can go ahead and re-list the property for sale.

 5.  Are the listing and buyer brokerages required to sign the mutual release? There is no legal    requirement for a brokerage to sign the mutual release that is between the buyer and the seller. However, even if the release is not signed by the brokerages, the listing brokerage must still follow the written direction of the buyer and seller about releasing any deposit in their possession. If a brokerage has a concern as to whether they may have a legal claim for commission and are thus hesitant to sign any mutual release on this basis, then they should obtain legal advice before proceeding further.

By Mark Weisleder

Mark Weisleder is a Partner, author and speaker at the law firm Real Estate LLP. Contact him at

CMHC wants more robust income verification

The CMHC wants the Canadian Revenue Agency to provide more robust verification of incomes stated on mortgage applications.

The call comes following an investigation by the CMHC into the correlation between incomes stated on mortgage applications and those reported to the CRA.

It now wants the tax agency to take a “more direct and formal role” in verifying incomes according to documents obtained by Reuters.

Some other countries including the US and UK have systems where the tax agency does provide lenders with verification of mortgage applicants’ incomes and the CMHC believes this would cut potential incidents of mortgage fraud, which can have a serious impact on the economy, especially if there is another financial crisis.

The CRA told Reuters that it is looking into ways that it can respond to CMHC’s concerns and provide lenders with income verification.

While the majority of Canadians are honest on their applications, a recent study by Equifax found that 13% think it’s ok to lie on a mortgage application and 16% believe mortgage fraud to be a “victimless crime”.

The study of mortgages originated between 2013 and 2016 found a 52% spike in suspicious mortgages, mostly in the highest priced housing markets.

23 Jul 2018

by Steve Randall

REP Magazine

Majority of Canadians blame foreigners for price spikes – CMHC

According to the latest Housing Market Insight report released last week by the Canada Mortgage and Housing Corporation (CMHC), a significant fraction of buyers in the most hotly contested housing markets believe that foreigners have a major impact in driving up home prices.

Over two-thirds (68%) of those polled in Vancouver pinned the blame for elevated housing sale prices on foreign entities, while the figure was nearly half (48%) in Toronto and 42% in Montreal.

Canadians are not looking at just ownership as the only way that foreigners are influencing the country’s housing markets, CMHC stated. This also included “the influence of capital in driving up home prices,” pointing at speculation as a crucial element in the dynamic.

 “In Vancouver, the influence of investors is perceived to be stronger than supply constraints and demand side factors,” while in Toronto, “the perceived influence of investors is more in line with supply constraints and demand side factors.”

However, numbers from Statistics Canada showed that the proportion of foreign home owners (across all property types) is 4.8% in Vancouver and 3.4% in Toronto – and the CMHC argued that this, more than anything, emphasizes the report’s observation that it is mainly perception rather than objective reality that drives Canadians to blame foreigners.

“The results in the home buyer motivation survey cannot be compared directly with the results in the survey on non-resident owners,” the report concluded. “What is striking is the significant gap between perceptions of the public and available data, so much so that the perception of non-resident ownership takes centre stage when discussing the drivers of price growth.”

Article by Ephraim Vecina, Real Estate Magazine, July 4, 2018


Teranet-National Bank HPI confirms what we thought


July 13, 2018

Home prices across Canada have shown some gains but a measure of price movement shows stabilization rather than real increases.

The Teranet-National Bank Home Price Index was up 0.9% in June compared to the previous month and is 2.87% above June 2017, however that was the smallest annual rise since 2013.

“June’s rise in the index, impressive at first sight, was in fact weak for
this time of the year. Indeed, if the Index were purged from seasonal patterns, it would have been about flat over the last three months,” the report says.

The HPI tracks home prices against a base level of 100 in June 2005 and currently sits at 223.82, meaning a rise of more than 123% over the past 13 years.

The hottest, coolest markets

The HPI surveys 11 markets and 10 of them showed price increases in June compared to May.

Ottawa-Gatineau (2.0%), Hamilton (1.8%), Edmonton (1.5%), Victoria (1.3%), Toronto (1.2%) and Halifax (1.0%) posted the largest increases, although the Toronto gain was the smallest for June in 10 years and the Vancouver rise was the fourth smallest for June since 2001.

The condo segment is far outpacing gains for other home types in Toronto and Vancouver on an annualized basis.

“Condo prices have risen at a fast clip since the beginning of the year in Toronto and Vancouver (after seasonal adjustment, 7.8% and 16.3% annualized respectively), while prices for other types of dwellings held their ground. The resiliency of prices for the latter category of dwellings is indeed reassuring in view of higher interest rates and stricter mortgage qualification rules (B20) that dampen demand for the most expensive categories of dwellings,” the report says.

Article by Steve Randall of REP magazine

The sad story of a $109,000 flower box

It all began in a large project of condominium garden homes in Ottawa…

Ms.B. owns one of the homes in the project. She became involved in a dispute with the condominium corporation over three issues: the size of her parking space, the pruning of a Tamarac pine tree’s branches that hung over her unit, and a flower box on the outside of her home.

The flower box did not comply with the corporation’s rules and the board ordered it removed in 2015. The removal fee was $763 and the corporation registered a lien against her unit to recover the costs.

In one of seven subsequent written court decisions, the judge wrote that “the litigation spun wildly out of control almost from the outset.”

The owner commenced a Superior Court application to discharge the lien, and a small claims court action for damages against the corporation, its directors and its property manager. She appealed or attempted to appeal from virtually every interim and final decision made against her. She was unsuccessful in all of them.

In 2016, she was ordered to undergo a capacity assessment to assess her mental ability to conduct the litigation, but she failed to comply with the order.

Along the way, Ms.B. filed volumes of material with the courts, some of it many hundreds of pages long. She also sued the corporation’s lawyers and filed unsuccessful Law Society complaints against them.

That lawsuit, and the small claims court action, were dismissed, with the judge ruling that the claim against the lawyers was “frivolous, vexatious and an abuse of process of the court.”

Last August, the condominium asked the court to declare her a “vexatious litigant,” based on the fact that she had breached or failed to comply with numerous court orders and had initiated multiple proceedings against the condominium, its officers and directors, its property managers and all the lawyers acting in the case. Justice Liza Sheard ultimately delivered the vexatious litigant decision that then prevented Ms.B. from initiating or continuing any court proceeding against the condominium corporation or any of its directors, employees or agents.

This past March, Sheard released her decision on court costs, noting that Ms.B. acted unreasonably throughout the litigation, and this contributed to the high costs of the condominium corporation.

Ms.B. was ordered to pay costs of $109,925, with $85,000 of that amount to be secured by a lien on the condominium unit in priority to the first mortgage of Laurentian Bank of Canada. The bank could have paid the flower box lien to protect its interest, but failed to do so, and as a result, much of the corporation’s costs were recoverable ahead of the mortgage.

All of this arising out of a $763 lien over a flower box.

Several lessons emerge from this case.

  • Litigation against a condominium corporation can be very expensive to a unit owner.
  • Disputes with a condominium are better resolved through mediation, not the court.
  • Knowing the corporation’s rules and abiding by them is always a good idea.

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, phone 416-364-9366 or fax 416-364-3818.


British real estate disruptor heads to Canada

July 3, 2018

A real estate brokerage firm which has already launched in the UK, Australia and the US, is coming to Canada.

Purple Bricks has agreed to acquire the commission-free networks DuProprio and Comfree (DPCF) for C$51 million with the deal expected to close this week.

The British firm was founded in 2014 and combines technology and local real estate experts to offer what is calls the next-generation real estate brokerage.

Global CEO Michael Bruce says there are similarities between the firm and DPCF.

“DPCF has developed a strong presence in Canada by delivering a flat-fee, cost-effective, professional real estate service challenging the conventional agency market. Their model of bringing a range of service packages and support, with access to expertise from coaches to legal professionals, is proving highly attractive to the Canadian public, and has aspects in common with the Purplebricks model and ethos in the U.K., Australia and the U.S.”

Acquisition will enable growth for Canadian team


DPCF operates the DuProprio brand in Quebec where it claims a 20.1% market share while its ComFree brand in the rest of Canada has a 2% share in Ontario and 2.3% in Western Canada.
It currently employs 400 people in offices in Québec, Montreal, Hamilton, Winnipeg, and Edmonton. It was acquired by Yellow Pages Digital & Media Solutions Limited in July 2015
“We admire Purplebricks for what they have achieved across three continents in just four years,” said Marco Dodier, President and CEO of DuProprio. “We share the team’s ambition and desire to offer consumers a new and better way to buy and sell property. To have their support, expertise and financial backing will help propel DPCF to even greater heights and allow us to replicate our success in Québec across the rest of Canada.”
by Steve Randall, Real Estate Professional magazine