Whitby Real Estate: January 2015

Wednesday 21 January 2015

Buying a Bank owned Property in Ontario: Things to know

When a residential property is for sale and the seller is shown to be a bank, this usually indicates that the owner could not make their mortgage payments and the lender is selling the property to recover the mortgage amount owing. If you are considering making an offer on one of these homes, here are 5 things you need to know:

The process that most lenders will follow in Ontario is Power of Sale, and not Foreclosure. The main reason is that a Power of Sale can be completed much faster than a Foreclosure. Powers of Sale can be completed generally in 3-4 months, while the Foreclosure process will typically take up to a year to complete. Banks also prefer this method as it permits them to get bad loans off their books quickly and if there is any shortfall, they can immediately sue the original borrower for the deficiency.
Lenders are supposed to try and get fair market value for the property that is sold, so it is not automatic that you will be able to buy the property at a substantial discount. Use a professional buyer agent to make sure you know what this property is worth before making any offer.
The lender will usually contain special clauses in this contract that will be important to any buyer. For example, all appliances will be sold on an "as is" basis, with no warranty, meaning you are out of luck if the appliances are not working when you close. No warranty will be given regarding the room sizes or even the lot size for the property. If there is a tenant on the property, no guarantees are given about the length of any lease or how much the tenant may be paying in rent. If HST is payable, for example if the property had a business running in it before the lender took over, or if it had been substantially renovated, then this extra HST has to be paid by the buyer on closing. Finally, if the original owner comes up with the money before closing to pay off the mortgage, then the deal is over.
In order to deal with the above clauses, buyers should make sure that any purchase is conditional upon a detailed home inspection condition so that everything can be verified, including the condition of the home, the room and lot sizes, and whether there was any business, such as a day care, operating in the home before closing. This could involve discussions with the neighbours as well as well as any tenant that the buyer will be assuming after closing. Regarding the lot size, ask the bank's real estate agent if the bank has any survey relating to the property and if not, check at www.landsurveyrecords.com or www.protectyourboundaries.ca as there are over 1.5 million surveys available for purchase through these websites to assist you when the boundaries are not certain.
Buyers should attempt to close the deal quickly, once they have satisfied themselves as to all conditions, to avoid having the original owners come back and pay off the mortgage before closing, thus ending the deal.

When you understand what is involved in buying a home from the bank, you should not have any unwelcome surprises either before or after closing.

Story provided by Mark Weisleder BA., LLB

Research, professional knowledge and advice make for good decision-making. Knowledge is power and helps the buyer make the best decisions possible for his family. So it’s important to find the right agent that has experience with power-of-sale properties. Contact me today! I will be working for you every step of the way to make sure that you get what you want.

Randy Miller

Broker of Record
Royal Heritage Realty Ltd.

Offices in Pickering and in Whitby

905-430-1800
randy@randymiller.ca
http://whitbybrooklinhomes.com

Thursday 15 January 2015

Be Careful What You Sign: Disclosure and Latent Defect

I found an article by Christopher Seepe on REMonline.com that might interest you:

"On the issue of disclosure and latent defects, an Ontario Small Claims Court judge recently awarded a ruling in favour of a buyer who alleged that the seller had not disclosed a defect that had repeatedly occurred over many years prior to the seller selling the property.

The buyer purchased a three-storey 40-year-old apartment building in Durham Region in April 2011 from the seller. In January 2014, tenants reported substantial deterioration of in-suite walls. Water had entered into the plaster walls and swelled like boils.

The buyer also found several areas of uncharacteristic white stains on the external brick walls. As water moves through brick, it can pick up salt that is not bound as part of the brick. The salty water that evaporates at the brick’s surface leaves behind a white flakey-looking deposit called efflorescence.

Specialists determined that the cause was condensation forming between the walls, a problem common with buildings built before vapour barriers were mandated in the building code. The buyer then learned from a long-term tenant that the wall problems were a regularly recurring event. The tenant swore an affidavit that was admitted into evidence in the trial.

The Agreement of Purchase and Sale (APS) included a clause, “The seller states that, to the best of the seller’s knowledge and belief, there is no known damage to the basement, roof, or elsewhere in or on the property caused by water seepage or flooding.”

The Ontario Limitations Act (2002) generally states caveat emptor – “buyer beware.” A buyer can only file a claim of defect within two years from the date of purchase, with generally no recourse after that. However, the act differentiates between two types of defects:

A “patent” defect is one that can be discovered by observation (“obviousness”) or inspection using generally accepted industry-standard practices.

A “latent” defect is one that is present but is not obvious, visible, apparent or actualized and can’t be discovered by industry-standard inspection practices.

A seller has no obligation to disclose a defect that is obvious, such as a clearly-visible water-soaked crack in a foundation wall. The buyer must also be able to prove that the seller knew about the latent defect. If the defect is proved to have existed prior to selling the property but the seller didn’t know about it (perhaps the defect didn’t appear while the seller owned the property), then the seller can’t be held liable, even innocently.

In the trial discussed above, the tenant’s affidavit strengthened the buyer’s case. The judge determined the seller knew, or ought to have known, that there was recurring water damage caused by an untreated defect in the property. The judge stated he “sympathized with the defendant” but the defendant clearly breached the “no water damage” clause in the fully-executed APS.

The small claims court can’t award punitive damages, and “betterment” costs are excluded – that is, repairs that improved the property. For example, if the original roof was 10 years old with a 20-year life expectancy, the court might rule that the buyer received a betterment of 10 years and then award only half the new roof’s cost. The buyer was also not permitted to recover personal expenses related to attending meetings, overseeing repairs and travel. Presumably this is because the value of one’s time is highly subjective and would inevitably be contested. It could also be a source of considerable abuse in inflating costs.

There are several cases in law regarding the responsibility of disclosure and latent defects: McGrath v. MacLean (1979), Krawchuck v. Scherbak (2011) and Dennis v. Gray (2011).

In Krawchuck v. Scherbak, the real estate agent was found to be 50 per cent at fault for their lack of diligence in reconciling misleading statements made by their client, failing to inform their client of the implications of their false statements and failing to bring these issues to the attention of the purchaser.
In a decision released in May 2014, a deputy Judge of the Barrie (Ontario) Small Claims Court said in his judgement that a seller must disclose to the buyer anything they know about a defect that has caused any loss of use or enjoyment of a meaningful part of the premises.

Since the case of McLean v. MacGrath, and in light of Dennis v. Gray, the principle of caveat emptor appears to be either becoming more specifically defined or more exceptions are occurring. The evolving principle appears to be that if a seller properly discloses an actual or perceived defect in a property, then this should protect them from the risk of litigation and the accusation that the seller didn’t comply with their duty to disclose. Perhaps this will mean the seller has to provide a price discount or perhaps it will lead to sellers pricing their properties as they should have been in the first place. Either way, it’ll still likely be less expensive that settling a court action."

Purchasing or selling real estate is a complex process and every element of the transaction is best handled by an experienced professional. Don’t take chances, go with proven results and experience. With 25 years of full-time local service in Whitby, Brooklin, Ajax, Pickering, Oshawa, Courtice and Bowmanville, I can make your purchase or selling worry-free. Contact me today or visit my website!

Randy Miller

Broker of Record
Royal Heritage Realty Ltd., Brokerage
905-430-1800
randy@randymiller.ca
http://whitbybrooklinhomes.com

Thursday 8 January 2015

How Is The Market? - Housing Market News

January, 2015. Greater Toronto Area Realtors® reported 92,867 residential sales through the TorontoMLS system in 2014, including 4,446 in December. The calendar year 2014 sales result represented a 6.7 per cent increase over the 2013 sales figure of 87,049 and was just short of the record set in 2007.

According to Toronto Real Estate Board President Paul Etherington, GTA households realize that home purchases have been a quality long-term investment. While home prices certainly increased substantially in 2014, the purchase of an average priced home remained affordable, in terms of the average household's ability to comfortably cover their monthly mortgage payments.

The average selling price continued to grow on a year-over-year basis in calendar year 2014, with an 8.4 per cent increase over calendar year 2013 to $566,726. This included a seven per cent increase in the December 2014 average selling price to $556,602. Throughout 2014, annual increases in the average selling price and the MLS® HPI Composite Benchmark were consistently reported on a monthly basis for most market segments, from detached homes through to condominium apartments.

Jason Mercer, TREB’s Director of Market Analysis, said the reason for the strong price growth in 2014 was the constrained supply of listings. Especially for singles, semis and town houses. This resulted in more competition between buyers and more aggressive offers.

Record High Sales And Average Prices For 2014 in Durham Region

Durham Region Association of REALTORS® President Sandra O’Donohue reported 10,841 residential sales through the MLS® System in 2014, including 478 in December. The 2014 sales result represents a 5.1 per cent increase compared to 10,312 sales in 2013.

Along with a record high number of sales, the average selling price for 2014 also set a record for Durham Region. In 2013 the average selling price was $357,529, while the average selling price for the calendar year 2014 reached $391,692, an increase of 9.6 per cent.

This is also a result of high demand for homes coupled with a shortage of listings. O’Donohue said that the 2014 sales figures show the importance of home ownership for Durham households.

If you are looking for a house in Durham Region or are already a homeowner and wish to move to a new house in Pickering, Ajax, Whitby, Brooklin, Oshawa, Courtice or Bowmanville, please contact me for more information.

Having sold real estate in Whitby and the Durham Region for over 20 years, I can help you with both - the buying and selling process.

Randy Miller

Broker of Record
Royal Heritage Realty Ltd., Brokerage
905-430-1800
randy@randymiller.ca
http://whitbybrooklinhomes.com