Typically, after the transaction closes the purchaser will move into the home and will find the fixtures and chattels in order, but in some cases the purchaser may find that seller has removed, replaced damaged fixtures and or chattels. This column offers several measures that can reduce such risks so that there are no surprises after closing.

One of the most effective methods by which the purchaser can ensure that the chattels have not been removed or replaced and that there has been no damage to property, is to insist on a final inspection of the property just prior to closing. By instructing your realtor to insert the appropriate clause into the Agreement, the purchaser obtains the right to visit the property prior to closing. If during this visit, the purchaser discovers that an item has been removed, replaced or damaged, he or she should immediately seek with its lawyer prior to closing. This will give the lawyer an opportunity to hopefully resolve the issue prior to the closing date and to avoid nasty surprises after closing.

Another way for the purchaser to effectively prevent post-closing disputes is to clearly specify the items that are included in the Agreement by inserting the serial numbers. By specifying pertinent items in this manner, the seller will be reluctant to replace or remove any items prior to closing and the purchaser will have the peace of mind knowing that they are getting exactly what the paid  for.

Even the most careful purchaser faces the risk of dealing with an unscrupulous seller. The purchaser should attempt to reduce the risks associated with this type of seller by adopting the measures discussed in this column. If, however the purchaser moves into the home only to discover that an item is missing or damaged, they should immediately contact their real estate agent and lawyer. Oftentimes, the seller may have mistakenly removed an item and will return it promptly when contacted. If the seller refuses to do so, the purchaser will need to commence a lawsuit and go to court to sue seller for damages for the return of the item. Problems of this kind are rare, but taking adequate cautions can go a long way avoiding nasty surprises after closing.

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Whether you buy or sell property, there will be an adjustment for property taxes between the buyer and seller. This column will explain how payment of property taxes is addressed by your lawyer in different real estate transactions.

I will first address the most common scenario – that is when you purchase or sell a resale property. Whether you are buying or selling, a document called a statement of adjustments will be prepared by the seller’s lawyer. This document will adjust for the property tax payment between the buyer and seller to the date of closing. If the seller has prepaid the property taxes beyond the closing date, the seller will receive a credit for the amount of its overpayment on the statement of adjustments. Similarly, if the seller has underpaid, the buyer will receive an appropriate credit on the statement of adjustments.   In addition, the seller will provide the buyer on the closing date with a signed undertaking which states that the seller will pay all property taxes in accordance with the statement of adjustments.  A tax certificate obtained by your lawyer will confirm whether or not taxes are actually paid up to date, or whether there are any unpaid taxes.  In lieu of a tax certificate, if you have instructed your lawyer to arrange for a title insurance policy for you, you will have insurance coverage for any tax arrears arising from the seller’s period of ownership.

If you are buying a newly constructed condominium or house, the process will be different as the municipality assesses the land value of the property and will first issue a land tax bill to the builder. Typically, the builder will pay the land tax bill for the property for the calendar year of the closing and will receive a credit on the closing date for the buyer’s share of the land taxes from the closing date until the end of the calendar year. At the time of closing, however, the municipality will not have assessed the value of the building or house portion of the property.  This may not occur until one to two years after the closing date.  Once the taxes for the building or house portion have been assessed, the municipality will issue a supplementary tax bill which will be mailed to the property address.  The buyer will be responsible for payment of the supplementary tax bill.  Sometimes, however, the builder will estimate the supplementary taxes for the calendar year of the closing and will take a credit on the closing date for the buyer’s share of the supplementary taxes, even though the supplementary taxes have not yet been assessed or billed.  In such circumstances, the buyer, once it receives the supplementary tax bill should send such a bill to the builder for reimbursement. As with resale properties, if you have instructed your lawyer to obtain a title insurance policy on your behalf, you will have insurance coverage for any tax assessments or re-assessments arising from the builder’s period of ownership, if the builder does not pay its share of the taxes.

Adjusting for property taxes between the parties is just one of the functions that your lawyer will perform on your behalf.

SIX THINGS TO KNOW ABOUT REAL ESTATE DEPOSITS

When you make an offer on a house you have to put down a deposit. Here are some things to keep in mind.

Here are some answers to common questions about deposits when you are buying a house.

When must a deposit be paid?

In Ontario, the standard real estate contract gives the buyer two choices; you can pay the deposit immediately when you make an offer, or you can agree to pay it within twenty four hours after the seller accepts it. Most buyers prefer the second option. If you are in a bidding war, you will be encouraged to come up with the deposit immediately, to show good faith to the seller.

Can the buyer get out of a deal by refusing to pay the deposit?

No. Once the deal is accepted, you can’t change your mind. If you do, the seller can sell the property again and if he gets less money than you were going to pay the seller can sue you for the difference, plus legal fees.

What happens if the deposit is paid late?

The seller has the right to cancel the deal. This is because all time limits matter in a real estate contract and if you are late, even by a few minutes, the seller can try and cancel. I have seen this happen many times, especially when the seller knows that there is another buyer out there who will pay more money. If you need more time to come up with your deposit, say so in your offer.

How much should a buyer pay as a deposit?

This is a tough question, and will largely depend on where your home is located. In Toronto , deposits are now usually up to 5 per cent of the sale price. In Brampton, it is closer to 2 per cent. In some areas of Ontario, deposits can be as little as a few hundred dollars.

Why does the deposit go to the seller’s real estate agent and not the seller?

If the seller goes bankrupt or disappears with the deposit, the buyer is not protected. When the deposit is held by the real estate brokerage, it is in trust and is also protected by insurance so even if the brokerage goes bankrupt, the buyer can get their money back.

If the buyer is unhappy with their home inspection, can the seller refuse to return the deposit?

This happens more than you think. A deposit cannot be released unless both the buyer and seller agree. If a seller believes the buyer did not act in good faith in trying to satisfy their condition, whether it is a home inspection, financing or a condominium status certificate review, they can refuse to release the deposit. This means it stays in the broker’s trust account until a judge decides who gets it, which can take years. As a precaution, buyers should consider making two deposits in their offer, a small one of say one per cent when the offer is accepted, and a second larger deposit once the condition is satisfied.

Understand the rules about deposits before you sign any real estate contract. It is expensive to change your mind later.

Retrieved from: www.thestar.com/business/personal_finance

TIGHT MARKET CONDITIONS PROMPT STRONG PRICE GROWTH

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The process of buying a home can be intimidating and overwhelming. Homebuyers must face a multitude of major decisions, many of which are made more difficult by the use of complex legal terms. The term “easement” is common and is found in many Agreements of Purchase and Sale.  This column will explain the meaning of this term.

An easement is defined as a right in property belonging to someone else which benefits land owned by the person who has the easement. Easements come in many forms.  The following are some examples of some common easements. Firstly, there is the easement to re-enter. Prior to developing a subdivision, a developer must pave the streets, install hydro and gas lines, water mains and storm sewers, and construct curbs and sidewalks. Once these and other services have been set up for the individual lots in the subdivision, the lots are sold to a builder. Until the builder sells the lots and the municipality assumes responsibility for the subdivision, the developer has an ongoing obligation to maintain these services and make repairs when necessary. The developer must also finalize drainage and grading for the subdivision. Once the lot has been sold to the builder, however, the developer cannot legally enter onto the property without the consent of the owner. The solution to this problem is for the developer to reserve an easement to re-enter each lot until the municipality assumes responsibility for the subdivision. An easement in the form of a right of re-entry is common to new homes.

Another form of easement common to new homes is the maintenance easement. This type of easement is an outgrowth of the increasing price of land. With more housing taking the form of space-conscious semi-detached and row houses, it is becoming increasingly difficult for homeowners to have access to the exterior of their properties in order to clean the eaves, wash the windows, paint the dwelling and perform general maintenance. The solution to this problem is a maintenance easement.

In the case of a maintenance easement, an owner is granted access over part of the property adjoining their home and their neighbour’s home in order to repair and maintain his or her own home. For example, assume that Mark owns Parts 1 and 2 on a plan and that Jeff owns Parts 3 and 4. If part 2 is subject to a maintenance easement in favor of Jeff’s property, Jeff can enter part 2 to repair his own home without being considered a trespasser. Similarly, if part 3 is subject to a maintenance easement in favor of Mark’s property, Mark can enter part 3 without Jeff interfering. As such, the maintenance easement is a practical solution to allow homeowners to legally enter onto another property for a legitimate purpose.

Another easement common to many properties is a utility or telephone easement.  For example, there can be a Bell United States easement.  Where such easements exist, Bell United States typically has an easement over the rear four feet of a property. The purpose of this easement is to allow Bell to enter onto the lands to maintain and repair underground telephone lines. If anything is built on the lands over which the easement exists, Bell may require that the structure be relocated or removed to allow Bell representatives to gain access to repair the telephone lines.

The Agreement of Purchase and Sale will often require that you accept title to the property subject to minor easements for the supply of utility lines, telephone services and sanitary sewers. These easements should not materially affect the use of the property.

If you are buying a freehold property, your title or ownership may be subject to an easement.  This can be verified by a search of the title to the property or by reviewing the survey, if available.

It is important to understand the meaning and importance of an easement. An experienced real estate lawyer can always help in this regard.

CLOSE YOUR HOME PURCHASE ON A WEDNESDAY

As the spring housing market heats up, it’s a busy time for closing deals. The price you pay is very important, but you also have to think carefully about your closing date, so that everything goes smoothly.

Here are seven things to remember:

Any day but Friday: The last Friday of a month is typically the busiest day in most real estate law offices, especially in the summer. This mean many deals won’t be able to close until late in the day. Worse, if the deal has to be extended, you don’t get keys until the following Monday, or maybe Tuesday if it is over a long weekend.

Wednesday is good: If there are delays, it is much easier to manage a one-day extension than an extension over a weekend.

When sellers must move: You should be out of your home by 3 p.m. on closing day. Most real estate contracts stipulate that sellers must turn over possession as soon as the deal is registered electronically. Usually — assuming it is not the last Friday of the month — that happens by 2 to 3 p.m. Vacant possession must be given to the buyer at that time.

Try to close early: If you are buying and selling in the same time period, close two days early and get bridge financing. You will close your deal without pressure and have a few days to move in while you wait until your sale closes. This will also make it much easier to negotiate an extension, if you have to, as you will not be dependent on the money from your sale to close your purchase.

Clean up after yourself: You must turn the house over in broom-swept condition, which means no garbage. Buyers should make a final visit two days before closing to make sure the seller is properly cleaning up.

When to move: Buyers should not plan to move in until late in the day or the day after closing, to avoid paying extra to movers if things get backed up or the deal has to be extended.

Do an inspection: Even if you are not moving in that day, buyers should check the condition of the home on the day of closing, to make sure that nothing has been broken or damaged. The seller typically guarantees everything will be working on the closing date, not afterwards, so find out right away if you need to make a claim about anything after closing.

By doing your homework before choosing a closing date, you should be able to avoid pitfalls later.

Retrieved from: www.thestar.com/business/personal_finance

GTA REALTORS® REPORT LATEST MID-MONTH RESALE HOUSING STATISTICS

Toronto , April 17, 2014 — Toronto Real Estate Board President Dianne Usher announced that the spring market started off on a strong note in the Greater Toronto Area, with a 10.8 per cent year-over-year sales increase reported by Greater Toronto REALTORS® during the first two weeks of April.  Sales through the Toronto MLS system over this period amounted to 4,541 units.

“The robust increase in sales speaks to the fact that home ownership remains affordable in the GTA.  The majority of home buyers purchase a home using a mortgage.  A household earning the average income in the GTA can comfortably afford a mortgage on an average priced home,” said Ms. Usher.

“While the persistent listings shortage in the GTA, coupled with strong demand, has led to a brisk pace of price growth, very low advertised mortgage rates have gone a long way to mitigating the effect of upward trending home prices,” continued Ms. Usher.

The average selling price for April mid-month sales was $583,697, representing an annual increase of 11 per cent.  This increase was due to both tight market conditions and a change in the mix of homes sold.  At month-end, the MLS® HPI benchmark price will provide more insight into price growth attributable solely to the change in market conditions.

“The overall average price increase was driven by single-detached, semi-detached and townhouse sales in the City of Toronto .  There was a substantial increase in higher-end home sales this year compared to last,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“This time last year, many would-be home buyers and sellers were still on the sidelines due to changes in federal mortgage lending guidelines, including those guideline changes that removed the government guarantee on mortgage insurance on home sales over one million dollars.  However, many of these households have subsequently adjusted to the lending guideline changes and have recently purchased a home,” continued Mercer.

Retrieved from: https://www.Toronto realestateboard.com

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