Important of Inspections on Real Estate Purchases

Date: 08 Jul, 2014

As the senior real estate lawyer at Dale Streiman Law LLP, I advise our clients on their purchases to retain a licensed home inspector, both for residential real estate purchases and for commercial real estate purchases. This is important to review the structural integrity of the building, whether there are any discoverable latent or other defects including roof, structure, heating and air conditioning, plumbing, drain, electrical and other systems. There have been many issues with lack of insulation, with mould present from water leakage and it may be possible but not guaranteed to find such issues with various infra-red cameras and other equipment by a qualified inspector. Some of these defects may not be detectable unless removal of drywall and other wall coverings are completed. However, in this day and age of illegal substances being present in residential homes, and the warranties that realtors insert that such building/home does not contain any such illegal substances, a qualified home inspector will examine the home to determine if the home was ever used or abused as a “marijuana grow operation” house. This is not such a rare discovery but there are tell-tale signs of such illegal operation in such a home being available to such qualified inspector.

For country and rural purchases, the following are required and if the home inspector does not have such qualifications, then our clients are urged to retain the proper inspection or engineering companies:

l. Water purification to ensure that the water is potable – such sample must be taken independently and not supplied by the Seller to avoid the sample not being from the home being purchased and such sample should be taken to the local city, township health department for examination and certificate issued or if the purchaser/client wishes to perform an independent laboratory for analysis and to obtain a certificate.

2. Well Driller’s Certification; this should be obtained to ensure that there is sufficient flow rate of the water to the home/buildings. The above will depend if this is a drilled as opposed to a dug well and there are ultra violet systems attached to the water delivery system to purify the water to the building. This must be checked as to its condition and warranty obtained.

3. Septic Tank Inspection: If possible, the original septic use permit approved by the city, town or township’s health or building department should be obtained and title insurance being placed on behalf of the purchaser(s) will over insure any issue with non-compliance(s) or work order(s) from such health and/or building departments. Notwithstanding the above, I still recommend a pump out of any septic tank, and discussion and report with the company servicing the septic system at that time and in the past as to the fitness of the system, and if there have been or are present any defects in the system. This will avoid any later lawsuit against the vendor for damages if such system is found to be defective.

4. Wood burning fireplace or other supply of heat, propane, oil: All such systems must be checked and wood burning fireplaces can be a fire hazard if chimney is unlined.

Any warranties by the seller of the property may not be enforced in court if the transaction closes and any defects that were discoverable by any inspection were found later. Caveat emptor maxim i.e. buyer beware may apply to bar any suit against the seller for defects and damages.

These issues must be reviewed if they arise with the solicitor acting at Dale Streiman Law LLP.

Buying Your First Home

Date: 07 Mar, 2014

Despite the economic doom and gloom in the rest of the economy, the real estate market in Peel Region is alive and well. Realtors and mortgage professionals report of an upswing in activity. The combination of historically low interest rates and plentiful inventory of quality resale homes at slightly depressed prices has enticed many buyers off the sidelines and into the market. Many of these buyers are first time home buyers. Both the Federal and Provincial levels of government have tried to encourage the purchase of homes by first time homebuyers, by introducing the Home Buyers Tax Credit (allowing a maximum tax credit of $750 for qualifying individuals) and providing a $2,000 land transfer tax credit for first time home buyers of resale property.

If you have decided to purchase your first home, the process can seem daunting. Here is an outline for you with the simple steps you need to take to make for a smooth and easy buying process.

Step 1- Find out how much of a mortgage you can afford

The first step in the process is determining your budget. While there are many tools on the internet and elsewhere, the best and safest way to determine your house price budget is to consult a mortgage professional. Most of the major banks now have mobile mortgage specialists, who will come to your home to process the paperwork to qualify you for a mortgage. While home appointments are convenient, the mobile mortgage specialist can only talk about the products and services available by that particular bank. On the other hand, using the services of a mortgage broker allows you to shop for the best rates and terms from a number of different lenders. Many mortgage brokers deal with 30-40 lenders, rather than one. Many people shy away from using mortgage brokers assuming that they are more expensive than going directly to a bank or are only for people with poor credit. Both of these assumptions are untrue. Many of the banks give discounts to mortgage brokers that may not be available at a branch. Moreover, mortgage brokers are generally paid their fees by the lenders directly, resulting in no out of pocket cost to you for using their services. Whether you want to deal directly with a bank or use a mortgage broker, always try to get a referral to a mortgage professional from someone who has used that professional in the past as you want to be sure that the level of service they provide will be to your satisfaction.

Step 2- Hire a Realtor

Now you have your approval and budget from the bank. It’s time to go shopping for a home. The best way to do this is to hire a realtor who is familiar and works extensively in the area you wish to live. The realtor will know the homes that will meet all your needs, whether its access to schools, parks, shopping or recreation. The realtor will also know what homes are a good value and which ones are not. The most important thing to do is to hire your own realtor. Never use the services of a realtor who is also acting for the seller of a home as you want your realtor to only be concerned with your needs and not have to balance the needs of the sellers as well. Once again, get a referral to a realtor and interview several realtors before deciding on the one you wish to hire. Be wary of realtors who offer deep discounts on their commissions as you may not get the level of service you expect.

Step 3- Find the Home and Make an Offer>

So, you’ve got your budget, you’ve hired your realtor and now you found the home you wish to purchase and make an offer. Now what? Your realtor will recommend the price and the terms of the offer to purchase the home. If your offer is accepted, you will have to give a deposit to the seller in an agreed upon amount within twenty-four hours of mutual acceptance of the offer. Once the deposit is given, if there are conditions in the offer, each of the parties will take whatever steps they need to satisfy the conditions contained in the offer for their respective benefit. Once all conditions are satisfied, the offer then becomes firm and binding on both parties. Your realtor will prepare all the paperwork necessary in this respect.

Step 4- Hire a Lawyer

You’ve now got a firm and binding agreement to buy the home. Now, you will need a lawyer. The lawyer will in most cases be acting for you and the lender. The lawyer’s job is to check title and other issues related to the purchase of the property and advise you on any issues that may arise and complete the transaction on your behalf. How do you find a lawyer? The best way to find a lawyer is by referral from someone you trust who has experience with the lawyer. Retaining a lawyer who will charge you the least amount may not necessarily result in getting the service level you expect or want. Shop around, interview several lawyers and then decide which one to hire. Ask lots of questions of the prospective lawyers such as hours of service, years of experience in residential real estate, the portion of the practice devoted to residential real estate, prices and fees charged, availability of free parking and whether they will give you a written quote for the services to be provided. You can also call the Law Society of Upper Canada’s Lawyers Referral Service. They will refer you to a lawyer in your area for free who will give you a free 30 minute free consultation.

Step 5- The Closing

As the date for completion of the transaction approaches, your lawyer will contact you to set up an appointment to sign the documents for the transaction and require you to bring in the funds necessary to pay the lawyer’s fees and charges and to pay the balance of the purchase price of the home. Often this takes place several days prior to the actual date of closing. You will be asked by your lawyer to bring in either certified funds or a bank draft of the funds required to complete the transaction. If your bank is one that does not have branches, like ING Bank or President’s Choice Financial, it will take several business days to prepare a bank draft or certified cheque, so let your lawyer know this well in advance of the closing so that they can provide you with the closing figures in sufficient time for you to get your certified cheque from your bank.

Step 6- The Day of Closing

Now that the papers are signed, the day of closing has arrived. The process to close a transaction involves each of the seller and buyer delivering the closing documents and funds or keys (if you are the seller) to the other party’s lawyer. Make sure that you are available throughout the day by cell phone or otherwise so that your lawyer can contact you with any questions they may have or information they need.

For more information on the buying and selling process, visit our website at www.dalestreimanlaw.com. Dale, Streiman Law LLP has also put together a comprehensive DVD outlining the most common issues that may arise during a real estate transaction including:

[list type=”decimal”]

  • An overview of the process of buying and selling residential real estate
  • The myths about mortgage brokers and how they help clients save thousands of dollars in interest on their mortgages
  • What is title insurance and how does it help you
  • Family law issues related to buying a home
  • Home inspections and why you need one before buying a home.

[/list]

This DVD has a retail value of $19.99. Contact Elliott Dale for your complimentary copy.

By: Elliott Dale
Elliott-Dale

Interesting disputes occur when the wording in Real Estate Agreements of Purchase and Sale for properties are not clear and such wording is ambiguous.

Date: 07 Mar, 2014

This occurs when chattels and fixtures are either included or excluded. For example there have been legal cases where the wording that built in cupboards, bookcases or other such items were included but in fact were not attached to the premises, did not form the requisite definition of fixtures but were chattels, and if that is the case and the offer calls for all existing fixtures, and no specific inclusion or exclusion for these built in furniture shelving or other items, then the Seller has full right to remove. The realtors acting for both sides must be careful in stating on any listing or any Offer what is included or excluded. This includes such items as hot water tanks which are usually rentals and to be assumed by the Purchasers and such hot water tank providers who leases this piece of equipment are Enbridge or Reliant Home Services, and notification to such providers should be given by the Sellers and the Buyers should inquire whether such tank is a rental or in the rare case, if such tank is owned by the Seller. There are other instances of removal of vegetation, trees, and other landscaping that should be noted in the offer if included in the sale price. For any disputes, the Clients are urged to deal with their realtor and failing resolution, deal with the lawyer handling the file at our DS law firm.

By: Elliott Dale
Elliott-Dale

For clients of Dale

Date: 07 Mar, 2014

For clients of Dale, Streiman Law LLP, in our Real Estate Department, we are faced with issues involving purchases with houses that had been in the past insulated with Urea Formaldehyde Foam Insulation (UFFI). This product installation in houses for insulation purposes was considered dangerous to the homeowner’s health but the installation ended in the early l970’s and most experts have now opined that the dissipation of the material from this type of insulation to this date does not impact on the homeowner’s health. Unfortunately, in most Real Estate forms of Offers, there is a warranty that the home has never been insulated with this UFFI insulation and of course if the home was purchased later than the l970’s, normally the homeowner would not have personal knowledge if such home ever was so insulated with UFFI.

More importantly in today’s purchase and refinance climate, a necessity is to have the home inspected by a qualified home inspector and/or engineer and existence of two of the current products or conditions in the home are mould and asbestos or verticuite as being perilous to the home occupant’s health. These items should be addressed and if necessary, removed by the Seller or the Buyer may not satisfy or waive the condition for inspection, thereby ending the purchase transaction. Such offers would be conditional upon a home inspection with terms satisfactory to the Buyer.

In summary, if you are a seller, do not sign any Seller’s disclosure statement since many representations made by sellers if not know or if such representations turn out to be not true can be the subject of a lawsuit. Secondly, if you are a buyer, then insist on completing inspections, get warranties on all items in the house, the equipment, chattels and fixtures and condition of the home and if swimming pool etc. warranties as to that these pieces of equipment are in good working order.

Elliott Dale, senior partner at Dale, Streiman Law LLP would be pleased to act and meet with any clients that have concerns in these type and any other real estate transactions.

Determining Mental Capacity to Make a Will: Can a Person with Dementia Change their Will?

Date: 07 Mar, 2014

Mental capacity is a very important topic when the validity of a will is called into question. There is no exact science to determining when a person is capable of making legally binding decisions, especially as it relates to their estate. Due diligence is required to ensure that the testator (person making the will) understands exactly what they are doing. With Canadians living longer than ever, questions relating to mental capacity, specifically for seniors with dementia, are on the rise.

There is a presumption in Canada that a person who has attained the age of majority can make a valid will. This presumption is rebuttable where there is evidence of suspicious circumstances that warranted further investigation. This can be anything that raises a suspicion in the preparation of the will, the capacity of the testator or a suggestion of coercion or fraud. Once this suspicion is raised, the onus shifts to the party seeking to enforce the will to establish that it was validly made. In terms of mental capacity, it is important to keep in mind that capacity is a legal definition and there is no set scientific standard that applies.

The recent BC Supreme Court decision in Moore v Drummond illustrates how the law evaluates a person’s mental capacity to make a will. Ms. Drummond died in 2011 at the age of 98. A year earlier, she made a new will that gave her entire estate to her neighbors of 40 years. Prior to this, she had a will drawn up in 1994 that left her estate to her son. However, her relationship with her son was tense and deteriorated over the years. Upon her death, the son claimed that the new will of 2011 should be excluded. In support of his claim he pointed to a medical opinion that was drawn up a week prior to Ms. Drummond changing her will. The report said she was incapable of making decisions regarding legal or financial affairs. The opinion was drawn up for the Public Guardian and Trustee of BC (PGT) using their standard form. The court also heard evidence that Ms. Drummond was suffering from dementia at the time. This raised suspicion that the will may be invalid on capacity grounds. Despite this evidence, the BC Supreme Court held that the will of 2011 was valid and that Ms. Drummond had the legal capacity to create a will at that time. The PGT report was insufficient evidence because it was drawn up specifically for PGT using a standard form. It was not a comprehensive medical opinion that addressed Ms. Drummond’s ability to create a will. Furthermore, at the time the will was made, her lawyer drafting the will took special steps to ensure that Ms. Drummond had capacity. The lawyer spent additional time with Ms. Drummond where they engaged her in conversation to evaluate her mental abilities. She was also able to fully remember the will and its dispositions more than 5 weeks later. This showed that she had sufficient capacity at the time the will was made and that she truly did intend to exclude her son from her will.

This case clearly shows that mental capacity to create a will does not mean perfect mental capacity. Diminished capacity raises a suspicion that the will is invalid, but the court can resolve this suspicion and declare the will to be valid. This is especially true when a lawyer drafting the will takes steps to ensure that the testator has the required mental ability to make a will. A medical opinion is not determinative in resolving issues involving legal capacity. They are informative and can be used to help make a legal evaluation. An experience lawyer will take specific steps to determine legal capacity and ensure that a will is validly drafted.

The lawyers at Dale Streiman Law LLP have over three decades of experience solving wills and estates issues. If you have a question about a will or the mental capacity to create a will, contact Dale Streiman Law LLP and meet with our legal professionals to discuss your legal issues.

Real Estate Newsletter

Date: 06 Mar, 2014

Why you need to use a lawyer for Real Estate Purchases and Sales:

I often meet with clients to discuss representing them in their purchase and/or the sale of their residences or even commercial properties.

Condominiums: Such real estate may include a condominium sale which has many issues such as financial status of the condominium corporation, the reserve fund that is required under the provincial legislation of the Ontario Condominium Act and rules and regulations with respect to pets and type of automobiles that may be permitted to park on the designated parking spots, if in a garage in the case of a high rise condominium or in or outside of a garage in a townhouse condominium development. There are a myriad of issues to discuss and the first order of business if I am acting for a Purchaser of such condominium property is to obtain and review the Status Certificate which sets out the Declaration, Bylaws, Rules/Regulations, Financial statements and insurance and other issues.

Then on such purchases as in regular purchase of freehold property, i.e. detached, semi-detached houses, we have to review with the client the layout of the property and in freehold, obtain and review a survey to ensure that the fences are located on the property line, that there are no encroachments or easements that were not disclosed in the Agreement of Purchase and Sale which should have been reviewed in the first instance before such Offer or Agreement is signed. At such time the realtor should have recommended a home inspector and report should have been given with requisite conditional period for approval of such inspection report, financing and solicitor’s approval conditions, if any, should have been waived if the Purchaser were satisfied with the responses and information given for compliance with such conditions.

Manner of Taking Title may be taken in the case of husband and wife, as joint tenants, and that is the normal and usual way of being registered on title so that in the event of death of one of the co-owners, the surviving titled owner will automatically obtain title subject to a survivorship application being registered on the title to the property after the death of the co-owner, In such case and in every real estate transaction, our firm recommends that the client(s) consider preparation of a Last Will and Testament and under the l995 Substitute Decisions Act of Ontario, Powers of Attorney for Property so that the Ontario Government does not assume control of the client’s property in event of his/her disability and also a Power of Attorney for Personal Care and Health including the living will clause for non-rescussitation. These can be discussed at any time. The other manner of holding title is in percentages i.e. tenants in common as opposed to joint ownership with right of survivorship and such undivided interest can be devised or left to family/spouse under a Last Will and Testament.

There are creditor issues and issues under the Family Law Act to discuss with the client. If one spouse is at risk to being sued now or in the future by any creditors either existing at present or in the future, it is recommended to take title in the spouse/partner who is not at such risk but it is prudent to review with your mortgage lender or mortgage broker if that will be permitted and for parties with less than 20% down and CMHC insurance fee is required, the taking of title in one party’s name may not be permitted. Family Law issues: If you are married, the property is the family residence under the Family Law Act and subject to exceptions among others, e.g. if source of funds derived from resources or sale of another property, then this will be a family asset to be divided equally. If the parties buying are common law spouses, then a cohabitation agreement under the Family Law Act deemed a domestic contract, or if married, a Marriage Contract is recommended and one of the Family Law specialists at Dale, Streiman Law LLP (DS) can assist with an interview and instructions can be received and options considered.

Financing: It is important to deal with your financial institution or broker and obtain financing on a purchase with either a variable rate mortgage, fixed rate, with a line of credit or as many banks and other lending institutions offer, a combination of the two. If the sale of the client’s property is later than the purchase, a bridge loan is to be obtained from a bank or other lending institution. These issues are to be reviewed at the early stage of retainer of the real estate specialist at Dale, Streiman Law LLP and estimate for costs for the purchase and other issues will be given. Our Website sets out various estimates for fees and disbursements and you may feel free to discuss same with the real estate practitioners at DS.

For Sales, the client should attend and deliver all documents in his/her possession, the existing transfer/deed, tax bill if not paid through the first mortgagee, house insurance, utility bills, contact and names, addresses of any mortgage to be discharged and it is important at the early stage of retainer of DS’s real estate practitioners to determine if the client is to be charged any penalty and discharge processing fees on the sale and discharge of any existing mortgages. Discharge penalties can usually be 3 months interest penalty or interest rate differential, whichever is the greater. There are techniques that DS has managed to advise clients on how to reduce such mortgage prepayment penalties and waive any discharge processing fees, bridge loan costs and appraisal processing fees. Please feel free to consult one of our practitioners and clerks who would be able to assist you in your questions on any of the above issues raised above.

To be a client of Dale, Streiman Law LLP is to be an educated client not just in this area of law but we at Dale, Streiman Law LLP wish to be helpful in many other areas with 6 lawyers and one associate lawyer able to provide services including litigation area and with a special emphasis on family law. This latter reference includes rights of spouses in business and shared family assets.

We would be pleased to receive any comments and meet with any prospective clients to educate such clients in any of the above areas of law.