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Archive for August, 2018

Could a foreign government stake a claim on a Canadian property?

That’s a question a couple who entered a purchase agreement on a home in Georgian Bay didn’t want to an answer to. After searching for waterfront properties in the region, they thought they found their dream home until it transpired that the seller is wanted by the Federal Bureau of Investigation. In addition to a warrant being out for the seller’s arrest, the FBI intends to freeze his assets, including the Georgian Bay waterfront home.

The outstanding warrant only came to light after title insurers did their due diligence, says the buyers’ sales representative.

“We found the perfect waterfront property and they were going to do renovations,” said Sabrina Staunton of Royal LePage First Contact. “The lawyers tried to contact other title insurers and they all said no.”

The seller is accused of participating in embargoed trading to Iran, but as far as the buyers were concerned, they wanted no part of the deal and walked away. The seller is threatening to sue the buyer for breaking the agreement.

There is no precedent for a case like this, says real estate lawyer Bob Aaron.

“The question was what happens to the money if the money is paid over to the owner,” he said. “Can the FBI then seize the property itself and say this is the proceeds of crime? One of the issue is it’s the seized proceeds of crime. No title insurance company would touch it. If you can’t get title insurance, it means they’re worried about it too.

“Either the FBI, American government or even Canadian government could come along and say you don’t have title because the ownership of the seller was subject to claim by the American or Canadian government because it was bought with the proceeds of crime, therefore, the buyer doesn’t get a clean title.”

Aaron also notes that the seller won’t get very far suing the buyers because he’ll be arrested in court, even by Canadian authorities.

A home doesn’t necessarily need title insurance, but Staunton estimates as many as 95% of properties have it.

Nevertheless, it is essential.

“Title insurance covers you for any defects of ownership for the property, and covers you for number of other things, but in this case it mainly covers you for defects in ownership,” said Aaron. “If there’s a break in the chain of ownership, or if the seller didn’t pay off any creditors, or if there’s an outstanding claimant, like a spouse or estate somewhere lurking in the woods, it would protect the buyer from the claim. Even the widow of a former owner could say, ‘I have a piece of that property, I want to get paid out.’ What’s worrisome is if the title insurance companies won’t touch it, it’s a big red flag.”

by Neil Sharma

Staging your home – your photos or not?

While staging is a very beneficial part of real estate sales process, buyers and sellers should always clarify what use will be made of the photos.

When the sellers of a home hire a stager to help market and sell it, who owns the rights to the before and after photographs — the homeowners, the listing agent or the home stager? Can the photos be used without the owners’ permission?

Those were the questions posed to me by my clients when they saw before and after photos of their condominium used without their permission on the website of a popular local magazine.

Last month, their real estate agent hired a professional home stager to help sell their 545-square-foot, one-bedroom, one-bathroom condo in midtown Toronto.

In order to plan the staging, preliminary photos were taken showing the typical clutter of a small unit including the baby’s crib, change table, swing, boxes of baby food and diapers, their dog and other items in the unit. The owners fully expected that the pre-staging photos would never see the light of day and would be used only so the stager could plan furniture layouts, artwork and decor.

After the staging, the unit was sold for more than the asking price in just one day.

A few days later, my clients were shocked to see a number of the before and after photos on the magazine’s website, along with the street address of the building.

Almost immediately the article and photos appeared on a number of other websites.

Although the owners’ names were not used in the article, any real estate agent with access to the MLS system could have easily found out who they were.

The magazine article praised the stager’s skills and appeared critical of the owners’ design choices. It noted that the stager “was forced to use the sellers’ black couch,” and that she “swapped the oversized artwork for a peaceful ocean print.”

She also “added a ton of accessories to the space to channel some personality,” implying that this was something that the owners lacked. The kitchen, too, needed some “cleaning up.”

My clients were angry and upset at the violation of their privacy and asked me to intervene.

At their request, I sent emails to the magazine, the stager and the real estate agent demanding an explanation and an apology.

Within hours after receiving my email, the publisher of the magazine — to his credit — wrote to say that he was not aware that the photos were used without the permission of the homeowners. He added that the story was removed from their website as a gesture of goodwill.

The stager wrote to apologize and say that she was not aware that the couple had not given consent to the post being written.

The listing broker also wrote to apologize for the “very unfortunate occurrence.”

My client’s real estate agent — who listed the property — apologized to my clients in writing and by phone. She admitted that she and the stager often share photos with each other, and wrote that the stager had not provided the pre-staging photos to the magazine.

While staging is a very beneficial part of real estate sales process, the lesson to be learned from this true story is that buyers and sellers should always clarify what use will be made of the staging and pre-staging photos.

Bob Aaron is a 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.

Boomers slated to enter market en masse; here’s what they’ll buy

A new report from Royal LePage suggests the real estate market is going to get crowded in about five years’ time.

According to The Royal LePage Boomer Trends Survey, 1.4 million baby boomers are expected to buy and sell homes in the next half-decade. However, 9% of boomer parents don’t expect their children to move out before they turn 35—a number that nearly triples in B.C.—and 32% of home-buying boomers will likely opt for a condominium.

“One other thing that stood out in the report to me is 56% of baby boomers believe that where they live today, their local neighbourhood is unaffordable for them for retirement purposes,” said Royal LePage’s President and CEO Phil Soper. “Part of the trigger sending so many baby boomers back into the market is relocation. They’ve indicated that they will relocate from single-family homes to condominiums, to suburban neighbourhoods, and to recreational areas. They’re clearly saying ‘The place that I lived to earn a living and raise children is not the optimal place for semi-retirement or retirement as an empty nester.’”

If boomers do, indeed, flock to condominiums and to the suburbs over the coming years, expect that their interest will be reflected in price points.

“What it will probably do is put price pressure on condominiums and suburban areas with a recreational feel that are within a couple of hours of where they live today, which is within a couple of hours of big cities,” said Soper. “A significant portion wants to live within an hour of where they live today and the next largest group wants to live about two hours away.”

Royal LePage has previously studied what it calls peak millennials, who are between the ages of 25 and 30, and it reckons they’re one the largest demographical cohorts to enter the housing market in Canadian history. Coupled with boomers, there should be no shortage of activity in the real estate market over the next decade.

“We are starting to see the millennials enter the market in a big way. The last few years they’ve been a factor to the point that they are the largest buying demographic now in transactional terms. One of the other interesting pieces from the report, a significant number of baby boomer parents is going to be helping their kids in real estate. I’m a late boomer and I can tell you it was rare when I was in my 20s for parents to play a significant role in kids getting homes, but what we found in this study is 47% are going to subsidize their kids’ home purchases.”

by Neil Sharma

REP magazine

13 Aug 2018