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I am regularly surprised at how frequently a land survey is viewed as unnecessary when it could be considered the single most important document in a real estate transaction.
A survey was the focus of a court decision released last month. It all started in April 2017, when Mr. and Mrs. S. listed their home for sale for $649,900. Located in Brampton, the house sits on an irregular lot. The 120-foot-long lot has a frontage of 71.12 feet narrowing to 44.93 feet at the rear.
The MLS listing noted the frontage and depth, but did not disclose the rear measurement. A more detailed document available on the propertyline.ca subscription website disclosed that the property narrows at the back.
At the time of the listing, the real estate market was very active and the owners received eight competing offers.
Mr. and Mrs. A. visited the property with their own agent and submitted a conditional offer to buy the house for $805,000. The owners signed it back at $850,000, removing the conditions, and the buyers agreed.
The frontage and depth were properly filled in on the buyers’ offer — on a Toronto Real Estate Board form that does not include spaces to indicate irregular dimensions. There was no disclosure that the rear measurement was smaller than the front. The offer required the sellers to provide a land survey, but only if one was “available.” The sellers did not have one.
Two mistakes were made at this point. A survey showing the correct size and shape of the lot was, in fact, available online at protectyourboundaries.ca for $298, plus tax. But neither agent checked to see if a survey was available before the offer was prepared.
As well, the agents failed to download an inexpensive copy of the subdivision plan showing the dimensions of all the lots.
Sometime before closing, the buyer obtained a copy of the survey from the city. He later claimed he would never have offered $850,000 had he known about the irregular shape of the property.
The deal did not close. After the real estate market experienced a sharp downturn in the summer of 2017, the owners were only able to sell the property for $746,000.
The owners sued the buyers for damages for breach of contract, and the buyers sued the sellers for the return of their $25,000 deposit, claiming the agreement was rescinded due to a misrepresentation in the size of the lot.
Earlier this year, both parties appeared before Justice James Stribopoulos in Brampton. Each side applied for summary judgment without a trial.
The judge found no evidence of misrepresentation and ruled that the buyers decided to walk away, breaching the contract. Judgment was granted in favour of the sellers for the $114,140 difference between the two sale prices, plus interest, costs and other damages. The $25,000 deposit was to be released and credited against the award.
The lessons from this case: Always describe the lot dimensions accurately in the purchase agreement. And always get a survey.
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 firstname.lastname@example.org, phone 416-364-9366 or fax 416-364-3818.
An Australian owned comparison website company has officially launched in Canada with a new local headquarters in Toronto.
Finder offers comparisons across several financial products and has already secured partnerships with AMEX, TD Bank, BMO, Fairstone and Mogo, as well as with leading retailers The Bay, Walmart and Zara.
It plans to add more partners in the coming year, focusing on those in the mortgage, insurance, and digital banking industries.
“The comparison market in Canada is less established than in countries like the United States and the United Kingdom, and we think there’s a huge opportunity to help Canadians make better financial decisions,” said co-founder Fred Schebesta.
He said Canadians are already using the service at Finder.com/ca, driven by a desire to save money.
“Canadians owe a combined $2.16 trillion in debt and households are only putting 14.9% of their disposable income toward principal and interest payments. That’s almost on par with the peak debt servicing levels we saw in 2007 in the lead up to the global financial crisis.”
The firm’s new Canadian headquarters are near Liberty Village in Toronto with six employees so far.
The comparison website attracts more than 10 million visitors globally and is the most visited site of its kind in Australia. With a planned investment in the global business of AU$100 million, it aims to become the world’s leading financial comparison website.
by Steve Randal
13 Nov 2019
Making some simple energy upgrades to older buildings could have a huge impact on carbon missions according to a new report.
Looking specifically at older apartment buildings in British Columbia, FortisBC says that measures such as new boiler systems, and energy-efficient taps, faucets and showerheads, go a long way to making these homes sustainable.
Based on an estimation of more than 11,000 older apartment buildings across the province, the report calculates that carbon emissions could be slashed by 200,000 tonnes annually, the equivalent of taking 43,000 gasoline-powered cars off the road.
"Rental apartments are so important in our communities, and our early research showed almost 80 per cent of apartments in B.C. were built more than 35 years ago to lower efficiency standards than exist today," said Danielle Wensink, director of conservation and energy management, FortisBC. "Lowering energy use in these buildings is critical. Building owners already face so many maintenance concerns that we worked to simplify what can be a complex and overwhelming process."
FortisBC says that these older buildings provide affordable homes but building owners and investors are pressured by their utility and maintenance costs, community infrastructure and emissions.
But simple upgrades can, for example, reduce domestic hot water energy use by an average of about 12 per cent per year.
FortisBC’s Rental Apartment Program launched in 2015 and enables building owners to benefit from energy-saving measures at no cost.
"The results so far are substantial, and have proved very beneficial for participating owners, especially those who are investing in further upgrades," said Wensink.
LandlordBC, which represents more than 3,300 owners and managers of rental housing in B.C., is a strong proponent of energy efficiency in rental buildings with their members and understands that support is a key element.
"Building owners who invest in energy-saving upgrades show a real commitment to keeping these important rental buildings on the market and operating them more sustainably," said David Hutniak, chief executive officer, LandlordBC. "Support like this is critical given the significant cost pressures building owners face, and it pays off for tenants, owners and communities by making these homes more comfortable and sustainable, more affordable to operate and less impactful on community water systems."
by Steve Randall
13 Nov 2019
Around 800,000 households across Canada set aside more than 50% of their incomes on rental fees, a recent analysis by the BC Non-Profit Housing Association has found.
Overspending has increasingly become a feature in the Canadian housing market rather than a bug, with the advent of easy credit. Approximately 1.8 million households nationwide are also dedicating more than 30% of their incomes on housing expenses.
“Paying too much for rent has become the new normal,” association CEO Jill Atkey said in an interview with Global News. “That takes a real toll on health, on time and quality of life.”
Additional data from the Credit Counselling Society indicated that this spending is a major driver of anxiety, especially considering the pressures of inflation and rising costs of living.
One out of three Canadians admitted that their debt loads have increased since last year, and that they are spending more than their net income. Fully 43% are forced to live paycheque to paycheque, while 83% indicated anxiety over growing daily living costs.
“Canadians continue to rely on their credit cards or lines of credit to supplement costs of living,” CCS president Scott Hannah said. “If the economy continues to slow amidst trade tensions and other factors, Canadians need to prepare now for a potential recession in the future.”
During Q2 2019, Canada’s average household debt ratio dropped to 177.1% of disposable income, slightly lower than the previous quarter’s reading of 177.6%. Canadians are also shouldering a debt load of an average of $30,000 each – far above the $12,000 level just 20 years ago.
by Ephraim Vecina
23 Oct 2019
The Canadian labour market remains strong despite concerns over a global slowdown.
The latest data from Statistics Canada shows 54,000 jobs were added in September as full-time roles increased. Employment increased by 111,000 in the third quarter (0.6%).
On an annual basis, employment grew by 2.4%, adding 456,000 jobs, while total hours worked were up 1.3%.
The unemployment rate was down 0.2 percentage points to 5.5%.
Ontario (41,000) and Nova Scotia (3,200) both posted increases in jobs in September while the other provinces held steady. Men and women of core working age (25-54 years) were the drivers of the overall increase.
There were more self-employed Canadians and more workers in the public sector, health care and social assistance, and accommodation and food services. But there were fewer working in information, culture and recreation, and in natural resources.
Adjusted to US concepts, the unemployment rate in Canada was 4.4% in September, compared with 3.5% in the United States. Compared with 12 months earlier, the unemployment rate declined by 0.4 percentage points in Canada and 0.2 percentage points in the United States.
by Steve Randall
15 Oct 2019
A real estate investment fund believes it has the future of housing for renters in markets with sky high home prices.
Investment firm DTZ Investors and co-living developer The Collective have launched their fund to raise around C$1 billion (£650m) for multiple projects in London, UK.
The fund hopes that the co-living niche will become mainstream as more single people seek affordable options; the developments will offer small rooms or apartments with shared amenities and target young professionals.
While the actual space provided may be smaller than a typical studio or one bedroom apartment, the burgeoning sector offers something more important to these tenants than space.
“We are very focused on the quality of the space we design, and by sharing, you get access to so much more,” The Collective’s CEO Reza Merchant told Bloomberg. “The company runs events designed to combat loneliness and bring people together, while its buildings have amenities ranging from cinemas, libraries, spas and, in the case of the Collective’s Canary Wharf site, a rooftop swimming pool.”
He added that while financial return is important, the business also wants to have a social impact.
by Steve Randall
15 Oct 2019
In its attempts to solve the housing affordability crisis, the Canadian government has preferred to take steps in improving consumer access to currently available housing.
Indeed, most of the steps pledged by this election’s candidates are focused on adjusting mortgage terms and further penalizing wealthy foreign buyers – pledges that a significant proportion of would-be buyers have lauded.
However, a new analysis by the International Monetary Fund has argued that affordability can be truly achieved only through the construction of a much greater number of homes.
“Even well-meaning policies that aim to improve housing affordability by increasing households’ capacity to borrow may unintentionally raise house prices—ultimately resulting in homebuyers having to borrow more and leading to higher household debt,” the IMF stated.
In particular, governments at all levels should work towards speeding up the delivery of development-ready land, and streamlining the permits/re-zoning approval process.
Canadian authorities should also ensure that construction projects are not delayed, and provide incentives for the development of more purpose-built rentals
Most importantly, Ottawa should consider “re-evaluating rent control policies to improve the supply of rental properties and give households more dwelling choices.”
These steps are potentially more effective in the long run, because stronger purchasing power does nothing to address the fact that there are not enough homes to begin with.
“So, any increase in households’ ability to borrow will increase demand for housing, increase house prices, and ultimately make houses less affordable than they otherwise would have been.”
Said phenomenon has become especially apparent in Toronto and Vancouver.
“Homebuyers have been able to borrow more money over time due to rising incomes and a significant decline of mortgage interest rates over the past two decades. As a result, increases in borrowing capacity have been quickly reflected in higher house prices,” the IMF explained. “Overall, this has contributed to a rise in the size of down payments as a share of income and a push towards higher loan-to-value ratios.”
by Ephraim Vecina
09 Oct 2019
From January to September, Canada saw its largest infusion of new employees for that nine-month period since 2002, with the addition of 358,100 jobs during that time frame.
Last month accounted for 54,000 of these new jobs, while the national unemployment rate plummeted to a near-record low of 5.5%.
September’s increase considerably paced earlier expert predictions of just 7,500 new jobs and a flat unemployment rate in September.
CIBC World Markets Inc. chief economist Avery Shenfeld argued that this shows the Canadian economy’s insulation against the worst effects of global trade turmoil.
“Canada’s labour market seems to have been vaccinated against the global economic flu going around,” Shenfeld wrote in an investor note last week, as quoted by Bloomberg.
The September employment growth accompanied a 4.3% annual increase in hourly wages, exceeding the 3.7% growth observed in August. Total hours worked also went up by 1.3% year-over-year last month, slightly up from the 1.2% in August.
In its mid-September report, the Canadian Real Estate Association adjusted its home sales projections upward due to the influence of lower rates for longer-term mortgages.
For 2019, overall Canadian home sales will likely recover to 482,000 units, growing by 5% from the five-year low registered last year. This was 19,000 transactions greater than CREA’s previous forecast, although it’s still considerably below the annual record of nearly 540,000 set in 2016.
For 2020, the CREA predicted 7.5% growth, up to 518,100 units sold. While a bit lower than expected, much of this will be due to “a weak start to 2019 rather than a significant change in sales trends out to the end of next year.”
by Ephraim Vecina
16 Oct 2019
The year ahead is set to be a broadly positive one for the Canadian real estate industry but there is some concern about government policy changes, housing affordability and technology disruption.
A new report from PwC Canada and the Urban Land Institute shows that developers, investors, lenders and other leading experts are cautiously optimistic about 2020.
They see the best bets for next year in so-called “beds and sheds” – mid-priced apartments, transit-orientated development, and warehousing and fulfillment centres.
For the residential sector, respondents noted the rise of alternative lenders in response to the mortgage stress test, leading to higher risk for both the market and consumers.
"There is a better way to achieve a responsible use of land that addresses affordability concerns, and it's not from current attempts, like the stress test, to temper demand," says Richard Joy, Executive Director, Urban Land Institute (ULI) Toronto. "We need innovative solutions for supply constraints and city building issues. I expect the real estate industry will be waiting to see how future developments will be impacted after Canadians go to the polls in October."
Respondents are also concerned about supply for the residential sector and cited construction costs and the approval process among the issues for 2020. They want government to do more.
"Governments must recognize that increased supply can help address the affordability issue and be willing to embrace innovative ways of unlocking a supply-constrained market," says Frank Magliocco, National Real Estate Leader, PwC Canada.
For the commercial sector, the shift in both working and shopping trends are changing real estate requirements but there is opportunity among the disruption.
"The rise of e-commerce doesn't necessarily mean the end of the brick-and-mortar presence, and in fact retail remains an important solution to last-mile delivery," adds Magliocco. As online shopping continues to grow in Canada, the need for dedicated space for deliveries, including cold storage for food deliveries, is an emerging trend in the multifamily residential sector.
Overall, the top five markets to watch in 2020 are: Vancouver, Toronto, Montreal, Ottawa and Halifax.
Proptech investment record
The report forecasts that investment in property technology – including that which is focused on lending and construction – will soar to a record high of $6.3 billion by the end of 2019.
"Digitization, including the rising use of the Internet of Things-enabled sensors in buildings has created an added layer of vulnerability for many real estate players," adds Magliocco.
by Steve Randall
Sept 20, 2019
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Up to a million Canadians would struggle to cope with a 1 per cent rise in interest rates with 700,000 at risk from even a 0.25 per cent rise
A leading measure of Canadian home prices posted a gain in August but reflected the weakness in some key markets.
The Teranet-National Bank National Composite House Price Index was up 0.4% compared to the previous month, continuing the trend of gains below the 21-year average for each month in the last three (which is 0.7% for August).
However, had the index been seasonally adjusted, it would have seen a slight increase, reversing a trend seen in the previous three months and suggesting an end to an underlying downtrend after correction.
The overall index reading of 227.51 means a 0.6% gain year-over-year, which is small but significant as the first acceleration in 9 months.
Vancouver posted a 13th month without an increase in its HPI with a 0.8% drop in August. Edmonton (−0.1%) and Quebec City (−0.4%) also posted declines, the latter reversing after three monthly gains.
On a positive note, home sales in August were up 55% from March in Vancouver, where market conditions went from “favorable to buyers” to “balanced” (right chart). Over that period, home sales rose 19% in Calgary and 12% in Edmonton. These improvements, if sustained, will sooner or later help limit home-price deflation in this region.
There were HPI gains for Victoria 0.2%, Calgary 0.6%, Hamilton 0.7%, Winnipeg 0.7%, Toronto 0.8%, Montreal 1.1%, Ottawa-Gatineau 1.7% and Halifax 1.8%.
by Steve Randall
20 Sep 2019