Real Estate Today

Abandoned Gas Wells and the Environment

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When an Abandoned Gas Well is Discovered?

The home purchased had an additional back piece of vacant land attached to the property. On viewing the home before buying, the buyer did not inspect the back parcel.  On searching title, the buyer’s lawyer obtained a copy of an old survey that indicated an abandoned oil well on a corner of the attached back parcel. With its discovery, the buyer inspected the back parcel found the well, visible from the surface and took a picture. He noted the smell of gas in and around the well. 

Disclosure of a Gas Well Should be Made

He was somewhat upset as he felt the gas well’s existence should have been disclosed. He discussed his concern with both his lawyer and real estate agent. His lawyer asked for a price reduction through the seller’s lawyer and some three days later still hadn’t received a response. The buyer now turned to his brokerage. He wanted the property but also wanted some resolution. Recognizing this as a problem, brokerage did some research and made some of the following discoveries.

According to the Niagara Peninsula Conservation Authority,

  • “An abandoned oil and gas well on your property is a hazard to the environment and your health and safety.”
  • They can also be obstacles to new development and “can be a financial liability to the landowner.”
  • So it’s important to report and plug abandoned wells.

Information from the Ministry of Natural Resources

We learned that the Ministry of Natural Resources and Forestry has what’s called the Abandoned Works Program to help “Ontarians properly plug wells on their property.”  They will:

  • Establish as to whether a well qualifies for the program,
  • Rank the well according to its “risk to public safety and potential for environmental damage to determine when it should be plugged…,
  • “Arrange for a certified well contractor to plug the well.’ 

If there is no gas well operator to be found, the landowner is responsible for plugging the well. In our search, we thought we located the well in the Oil, Gas & Salt Resources Library and reported our findings to the Ministry. As they could not find it in their database, they recommended the buyer hire a consultant. Apparently unlicensed and abandoned gas wells, not properly decommissioned, abound in southwestern Ontario.

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Cost to Plug the Well

The cost of plugging a well can range from as little as $2,500 to thousands. In one reported case the landowner ended up being on the hook for $20,000. By now some days had gone by and the closing date was fast approaching. The buyer hired a contractor who estimated a cost of $28,500 to properly plug the well. Armed with this quote, the parties negotiated a reduction in purchase price of $25,000, with the buyer agreeing to take responsibility to plug the well after closing.

More Pre-Listing Research by REALTORS Needed

This should have been disclosed before the buyer made an offer. Luckily it was discovered before the deal closed. REALTORS would be wise to walk the property prior to listing and have the seller fill out the “OREA Property Information Checklist" to uproot any required disclosures.

Why It Is Better To Buy Now Rather Than Later

Buy Now Or Later

It’s More Important Than Ever:

As you know, the internet can be a great source of information. Some buyers though are too anxious to start looking at homes without confirming what they can afford with a lender. And with today’s mortgage stress test, the need for a buyer to confirm their mortgage affordability is more critical than ever before.

Don’t Assume Affordability:

In one such case, a young couple assumed they could afford their desired price range in spite of the salesperson’s encouragement to obtain a pre-approval. So they viewed some ten homes and signed a purchase agreement conditional on obtaining a mortgage and a home inspection.

Stress Test Failure:

After meeting with their lender they were told they did not qualify for the price of the home they were buying. Though they did qualify based on the current mortgage rate, they failed the stress test. Such an occurrence affects about 18% of prospective buyers today. They would have to reduce their expectations by about $30,000 to buy or increase their downpayment.

Other Possible Measures by the Salesperson:

As well, the salesperson, against his better judgment, was influenced by their confidence, enthusiasm and motivation to buy. He also did not want to lose them as a client. He might have taken one more step though and suggested that, though he cannot pre-approve them, he can certainly run through the same exercise a lender uses to find out what buyers can qualify for based on their income and debts.

Opting to Wait and Improve Downpayment:

The couple was initially upset with the bank but mostly at themselves. They felt the salesperson had done a good job and admitted they should have followed his advice before proceeding. Because of their let down, they decided to put a hold on buying. They did not want to reduce their expectations on the home they wanted. They wanted to save a larger downpayment, about $20,000 more, which they determined would take about two years at a savings of $10,000 per year.

Why it is Better to Buy Now:

Yet buying a lower-priced home today might turn out to be the better strategy, and here’s why: According to the latest statistics, the average house price across Canada has risen by about 6.2% per year for the last 20 years. As an example, barring a downturn and if things remain equal, a $300,000 house today would potentially be worth around $338,000 in two years.

How Equity Can Increase:

If the buyers purchased a home at a lower price today of $270,000 to qualify, after their downpayment of $30,000 they would have a mortgage of $247,440 with CMHC insurance of 3.10% added. Given the 6.2% average annual increase, this home might be worth about $304,500 in two years. That’s a potential gain of $34,500. As well, if they paid down the mortgage by the $10,000 per year they planned to save, their equity would increase again by $32,738.

Their Total Equity:

They would then have the following equity: the original $30,000 down, the capital gain of $34,500, plus an additional $32,738 from reducing the mortgage principal. That’s a total of $97,238 allowing them to buy a better home in two years. It’s worth pursuing.

National Average Price Up 6.2% Per Year Since 1997

House Prices Up

In July 2018, the Mortgage Professionals Canada released their Report on Housing and Mortgage Market in Canada” authored by their Chief Economist, Mr. Will Dunning.

The following is a small but important indication of what is in the report.

1.     Adjusting the Purchase Price:

The report points out that 18% of buyers who could actually afford the home purchase of their choice would fail the stress test. It’s estimated these buyers would have to adjust their purchase by an average of $28, 750. They would also need to increase the amount of down payment. This affects about 120,000 buyers per year.

2.     Number of Resale’s:

To date this year, national resale home activity is down 12.5% compared to last year and 16.5% versus 2016. For the Niagara Region, the overall number of sales in resale homes is down by an average of 21% year-to-date to June 30, 2018.

3.     Average House Prices:

Since 1997 (2 decades) the national average price of resale homes has increased by 6.2% per year from $155,000 in 1997 to $510,000 in 2017.  To date for 2018, the average price of homes in Niagara varies from a low of $334,000 in Welland to a high of $755,000 in Niagara-on-the-Lake. The overall average lies at $471,000. The increase in average price to the end of June is up 1.7% compared to last year. Yet this varies: some cities are indicating an increase, others a decrease from last year.

4.     The Home Ownership Rate:

 In Canada the home ownership rate was at 67.8% in 2016 according to Census Canada. This is down from 69% in 2011. The report attributes this to first-time buyers taking longer to buy. Yet with the additional challenge of the stress test, Mr. Dunning expects that “will fall further during the 2016 to 2021 Census period, with the burden being borne, once again, disproportionately by young adults.”

5.     Sources of Down Between 2015 to 2018:

  • As the main source, 85% of down payments come from personal savings.
  • Another 39% derives from gifts from parents and other family members.
  • 25% is sourced from loans from parents and other family members.
  • Loans for a down payment sit at 43%.
  • From an employer, loans are at 8%.
  • Withdrawal from RRSPs through the Home Buyers Plan: 38%.
  • And finally down payments from other sources stands at 6%.

The total down payments are made up of a combination of any number of the sources mentioned above. The most prevalent source, personal savings accounts for about 50% of the total down payment for first time buyers.

During the 1990’s the average down payment for first-time purchases was about 22%. Between 2014 and 2017, the average has been 26%.

Repairs and Upgrades: How Much Will They Cost?

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During the process of buying or selling a home, your clients often learn about recommended or required repairs and upgrades. This can happen as a result of the home inspection as well as your expert knowledge of your market and comparable homes. Of course, the first thing homeowners want to know is, “How much will that cost?”

Pillar to Post is pleased to offer our popular Residential Construction and Remodeling Estimates cost guide, which provides estimated cost ranges for repair and/ or replacement of the major systems and components in a home. It also includes general guidelines for the life expectancies of those systems.

Request complimentary copies of the cost guide from your local Pillar To Post Home Inspector or download it at pillartopost.com/costguide.

 

Curious as to which upgrades will increase your home's value the most?  Which upgrades will get you the best return on investment?  Contact Barbara or Ashley today for the answers with their free, no obligation consultations.

Absorption Rate and Months of Inventory - June 2018

The DOM (Days on Market) indicates the market time of homes that have sold. It’s not necessarily reflective of a home’s actual market time though. In a number of cases and as a marketing tactic, when a home’s list price is reduced, the salesperson will relist the home to have it show up on MLS as a new listing. This distorts a home’s DOM: it may have sold within 30 days from the new listing date but could have been on the market for any number of days prior.

The Absorption Rate and Months of Inventory

The Absorption Rate helps resolve any distortion in the DOM. It indicates the following:

  •  How many homes are absorbed (or sold) in the market on a monthly basis within a given period, say 6 months,
  • How many months it will take to sell the current listing inventory,
  • How the seller might position their listing to improve its marketability.

Positioning the Listing:

So, for example, if a seller wants to sell in one month and the months of inventory is 3, the seller would need to position the home in front of the market by pricing it more aggressively than its competition. This helps the seller to set realistic expectations and improve a reasonable buyer’s perception of value.

The following chart shows the absorption rate or average number of sales per month and the months needed to sell existing inventory.

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Buyers Want to Know Up Front Not After

There are a number of searches a lawyer may carry out when working for a buyer on a real estate purchase.

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There was a time when lawyers, by way of a requisition letter, would make inquiries to the municipality concerning the property to discover any issues affecting the property. Clause 10 of the standard Agreement of Purchase even speaks to the Buyer being allowed to satisfy himself that there are not outstanding work orders or deficiency notices affecting the property, a responsibility that was carried out by the lawyer.

Resolution of Certain Issues by Title Insurance

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Though some still do make a requisition to the municipality, many don’t since Title Insurance came into prominence some years ago. It saves the buyer the additional cost of requisitioning the city. As well, if an issue is discovered after closing Title Insurance would attempt to resolve it depending on what it is.

Yet Buyers Prefer to Know Up Front

In our experience Buyers want to know of any issues up front, or at least before they close and take possession of the property. That’s why the preprinted portion of the Offer to Purchase has certain provisions or built-in conditions. An issue discovered after closing tends to upset Buyers.

Here is an Example of a Municipal Drain Bill

Recently we received a call from one of our buyers who purchased his rural property in the fall of 2016. He was quite upset at having received a bill from the municipality for $2,635. It was noted as a “Drainage Maintenance Billing”. Under provincial legislation a Municipal Drain is part of a municipality’s infrastructure. The cost of repair and maintenance on the drain is “assessed to the lands within the watershed of the municipal drain; in other words to the affected property owners. The maintenance was performed between January 2010 and December 2016 and all land owners were notified.

The Previous Owner Was Notified but….

When the municipality notified all affected owners, the property was still owned by the seller yet the issue was not disclosed. This could easily happen as he seller could have forgotten about the notification. Further, the city letter went on to say that if the amount due was not paid it would be added to the property taxes. Upset, the Buyer felt that he should have been told at the time of buying and felt his lawyer should have discovered the matter. What’s more, in talking to the municipality, the buyer was informed that had a requisition been made, the matter would have been disclosed. This only frustrated the buyer more. We suggested enquiring with their Title Insurance Company to see if they would cover the cost of the billing.

Title Insurance: First No and then Yes

On contacting a representative of the Insurance company, the request was initially denied. The representative disagreed with the decision and went to bat for the buyer. The Title Insurance company reversed its decision and approved the payment. A happy ending but a requisition to the city before closing would have brought the matter to light.

Mandatory Lease Agreement in Ontario

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As directed by the Rental Fairness Act 2017, the Ministry of Municipal Affairs and Housing created the mandatory residential lease with 5 reasons in mind:

  1. To use “easy to understand language to help
  2. Landlords and tenants understand their rights and responsibilities,”
  3. To reduce illegal provisions,
  4. To reduce misunderstandings caused by verbal agreements, and
  5. To reduce dispute resolutions with the Landlord and Tenant Board.

The Act also introduced additional protections.  Here are some highlights.

Landlord’s Personal Use: Due to abuse of the Landlord’s own use provision, the landlord must give 60 days’ notice before the end of the tenancy, and pay the tenant one month’s rent as a penalty. Alternatively the landlord can offer another unit acceptable to the tenant.

What if a buyer requires a rental unit? The payment penalty of one-month’s rent is not required in this case, but the property cannot have more than 3 unit rental. Once an offer becomes unconditional, and notice to terminate is given to the tenant, the landlord can apply to the Landlord Tenant Board to affect the termination. The Buyer must sign an affidavit stating that they or a member of their immediate family will occupy the unit on closing, and be required to attend any court hearing to confirm.

Added Statement in Agreement of Purchase and Sale: In the notice of termination clause in the Offer, it should additionally state that the buyer intends to occupy the property for at least one year and to indemnify the seller for any damages suffered because the buyer did not move in. This is important because there are a number of penalties that can be imposed, as well as an administrative fine of up to $25,000.

You Can Add Additional Clauses to the Agreement.

As the lease agreement states, “An additional term cannot take away a right or responsibility under the Residential Tenancies Act, 2006. Any conflicting term will be void and not binding.

Smoking

In the lease, the landlord and tenant can agree to allow or prohibit smoking in the unit and on the landlord’s property. Even if smoking is allowed, the landlord can apply to the Board if it substantially interferes with “reasonable enjoyment of the landlord or other tenants, causes undue damage, impairs safety, or substantially interferes with another lawful right, privilege or interest of the landlord.”

What About Marijuana?

 “Landlords will be able to spell out a ban on smoking marijuana in rental units for new leases post-legalization — the same as they do for tobacco use,” this according to a Toronto Star article dated January 22, 2018 by Peter Goffin of the Canadian Press.

Author and Lawyer, Mark Weisleader, recommends a number of additional terms to include with the Lease Agreement. In it, he recommends a No Smoking/Marijuana Clause to disallow smoking of any kind including marijuana, as well as prohibiting the growth of cannabis in a unit.

The mandatory agreement does not apply to month-to-month rentals and lease agreements prior to April 30, 2018.

 

Canada Revenue Agency (CRA) Cracks Down on Real Estate

Tax Avoidance on Real Estate over $636 Million

To crack down on non-compliance on real estate transactions, the Canada Revenue Agency reviewed 30,000 files over the past 3 years in Ontario and B.C. They found $592.6 million in additional taxes resulting in over $43.7 million in penalties. The CRA news release dated May 17, 2018 also said, “Specifically in 2017-2018, the CRA assessed $102.6 million more in additional taxes than in 2016-2017. Penalties increased by $19.2 million from one year to the next.”

To uncover tax avoidance on real estate deals, CRA collaborates with provinces, territories and municipalities and continues to improve on tools to combat non-compliance.  One legal tool to uncover taxes and GST/HST on assignment sales is their unnamed persons requirement.

So What is the “Unnamed Person Requirement?” 

New homes, rental properties and substantially renovated properties are subject to HST. So Builders and Developers are required to remit the HST on selling, renting a new unit for the first time or on personally moving into one of the properties. Under the “unnamed persons requirement” issued to developers and builders, CRA can obtain the identity of any buyer who is not reporting properly for income tax and HST purposes.

As well, purchasers of new homes can apply for a new home HST rebate provided the home is used for their primary residence. In many cases, as the builder includes the HST in the price of the home and pays it on behalf of the buyer, the builder also applies for the rebate as it is taken off the price to benefit the buyer. If the buyer is not going to use the property as their primary residence, the rebate does not apply and must be paid to the builder on closing. This HST rebate provision can also get abused by some buyers.

Flipping Property

On flipping property, any profit must be reported as business income and not as capital gain. Buyers also cannot avoid compliance by pretending to use the property as their non-taxable primary residence.

CRA is also looking closely at “pre-construction assignment sales” in which a condo or home is sold to another buyer before completion of the home or unit. 

Re-assessments and Gross Negligence  

Failure to properly report can result in re-assessment of taxes owing and arrears interest. For “gross negligence” a penalty of 50% of the tax avoided would be imposed.  A Financial Post article dated May 25-18, by Jamie Golombek, CPA, mentions a case that involved a real estate salesperson and her granddaughter. In 2006, the salesperson purchased Unit 6 and the granddaughter purchases Unit 5. The deals both closed in June 2010 and were resold by the next month. No income relating to the condos was reported with their individual 2010 tax returns. CRA reassessed and established that the buyers failed to report business gain of $103,206 on Unit 6 and $106,025 on Unit 5. They failed to further report their profits and so CRA charged both with gross negligence. 

In court, after hearing arguments, the salesperson grandmother was found guilty of gross negligence. The granddaughter a 21-year old was relieved of gross negligence as she relied on her grandmother and father, both real estate agents, to tell her if reporting her income was necessary.

How Landscaping Increases Property Value

by Josh Fredman

If you want to make an investment that adds value to your home, consider landscaping, which covers practically everything on your property other than the house itself. Landscaping upgrades can involve things like patios and decks, flowerbeds, barbecue pits, watering systems and plants of all sorts. As you enter into a landscaping project, you have plenty of choices about what kinds of upgrades to make.

Economics

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It doesn’t take much to understand the economics of increasing property value through landscaping upgrades. A well-placed, properly sized tree, for example, can provide visual enjoyment simply by looking pretty. It can also smell good and sound peaceful in the breeze. It can shield your home from summer heat. It can provide recreation for your kids, or support for a hammock. A good tree provides pleasure and utility, and these things translate to increased property value. The same idea applies to all landscaping: If a given improvement offers something that prospective buyers want, then your property value will rise.  Also, as the tree grows, the value of replacing the tree grows as well.  Thus buyers will value larger and more established  trees and shrubs higher than those newly planted.

Quantifying Value

Though experts agree that landscaping improvements usually raise a property’s value, it can be extremely difficult to predict exactly what kind of gains a specific homeowner will see in her individual circumstances. Thornton Landscape president Rick Doesburg uses 15 percent as a ballpark figure when advising clients, but he stresses that estimates vary by home and notes that the lasting effect of landscaping requires ongoing maintenance. Virginia Tech horticulturist Alex Niemiera arrived at a similar figure -- 12.7 percent -- in his research. In extreme cases, property values can more than double, and they can actually decrease if the landscaping contains undesired features that the local market doesn’t support.

Costs

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When considering the property value increase of a landscaping upgrade at your home, you must take into consideration the cost of actually installing the new landscaping, as well as the cost of continually maintaining it. If your primary intent is to increase your home’s value rather than derive added enjoyment from your yard, treat these costs as investments and make them cost-effective. Professional landscapers can discuss the options with you. For example, perennials and bulbs can add color and style to your property all year long. Other cost-effective improvements include aesthetically pleasing architectural improvements, such as stone walkways and terracing that require little or no maintenance.

Other Considerations

Landscaping upgrades have a number of variables that go into the property value equation, some of which you cannot control. For example, according to Mark Henry of Clemson University, the quality of landscaping on your neighbors’ lots also affects your home’s value. Even the general quality of landscaping in your whole neighborhood has an impact. If one of your adjacent neighbors has a particularly bad yard, you might want to talk with him to see if he would be willing to make any improvements.

Another important factor to consider is the contractors who do your landscaping upgrades. Many companies vie for this kind of business, and choosing the right contractor can make a lot of difference. Find a contractor with whom you are comfortable, who is honest and patient, and who can show you a good track record. Lastly, pay attention to the details. Michigan State University horticulturist Bridget Behe notes that a subtle, small change, such as curving the edges of your flowerbeds, by itself can increase your home value by 1 percent.

No Deposit Can Equal No Deal

Three Ways to Submit a Deposit

An agreement of purchase and sale provides for a deposit to be submitted by the buyer. The agreement makes following three options available:

  1. “Herewith” or at the time of presenting the offer;
  2. “Upon acceptance”, defined as 24 hours from acceptance in the preprinted portion of the agreement, and
  3. “As otherwise provided.” This allows the parties to agree to a longer period to deliver the deposit, and can be a better choice for out of town buyers.  

It Should be an Amount the Buyer Doesn’t Want to Lose

Regardless of how it’s submitted, a deposit secures the agreement in a number of ways. The buyer has “skin in the game”, money he stands to lose if he doesn’t follow through with his promises under the contract. To that end the deposit should be meaningful. That is, it needs to be an amount that the buyer would not want to lose. It commits the buyer to act in good faith in striving to meet any conditions (such as obtaining mortgage financing, a home inspection for instance) and to complete the purchase.

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What Happens When No Deposit is delivered?

The purchase agreement clearly states that “time is of the essence.” So meeting any obligation under the contract has to be adhered to within the time period stated, including delivery of the deposit. Otherwise the seller can take the view that the offer has been repudiated, hence the buyer is in breach of contract.

So What Can the Seller do?

The seller can choose from two courses of action:

  1. Write a letter to the buyer stating that if the deposit is not received within say twenty-four hours from the date the letter was communicated, the seller will declare the contract terminated.
  2. The seller can also pronounce the offer null and void immediately after the time for receiving the deposit expires.

When There’s More than one Buyer

The issue becomes even more important when other interested buyers are waiting in the wings. As an example, recently a second offer for more money was accepted by the seller as a back-up offer, conditional on the seller being released from the first offer. The first buyer not only failed to deliver their deposit within the twenty-four hours stated, the seller still had not received it by the end of the fourth day. On day five, and due to the breach, the seller declared the first offer null and void.

Releases Not Necessary But a Precaution

The seller’s lawyer agreed with the seller’s decision and felt any challenge by the rejected buyer would be an assured win for the seller. Yet to avoid such a possibility, the lawyer asked for signed releases if possible. The buyer signed releases without a problem and likely to his benefit as well. If he were to legally challenge the seller’s repudiation of the offer, the seller could still be awarded the deposit in spite of the fact that the seller did not receive it or lose any money.    

Downpayment Sources for First Time Buyers

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How can first time buyers afford to buy a home today?

With the recent rise of home prices first-time buyers need more down payment than ever before. They have also had to grapple with:

  • The increased costs of mortgage insurance as provided by CMHC plus other default insurers and
  • he stress test imposed on insured mortgages by the government in fall of 2016.

Findings to Answer the Question

A most convincing answer to the question comes from a recent survey by the Mortgage Professionals of Canada authored by their economist William Dunning.

  • Before 1990 the average downpayment for first time buyers was 21% and 66% had down payments of less than 20%.
  • Between 1990 and 2013, that average down payment hovered between 21% and 22%. The percentage of first time buyers with less than 20% down ranged from 56% to 62%.
  • In the most recent buying cycle, between 2014 through 2017, the average down payment increased to 26%, and the percentage of first time buyers with less than 20% dropped to 42%.

Under the National Housing Act, any purchase with a down payment of less than 20% requires mortgage insurance which varies in cost depending on the percentage down. A down payment of 5% to 10% attracts the highest premium of 4% which is applied to the mortgage. On a $300,000 mortgage $12,000 would be added and the mortgage payment is based on $312,000 total.

The cost of mortgage insurance has increased as follows for 5% to 10% down: until May 31, 2015: 3.15%, as of June 1, 2015: 3.60%, and as of March 17, 2017: 4.00%.

Benefits of Increasing Down Payment

Finding sources to increase down payments can avoid the cost of mortgage insurance. In turn, it decreases the loan amount giving the buyer a better chance of passing the stress test which, as of January 1, 2018, is being applied to most mortgage amounts. Currently it has been reported that some 20% of mortgage applicants are unable to obtain the mortgage applied for due to failing the stress test.

More than One Source for Down Payment

In the latest buying cycle (2014 -2017), most first time buyers used an average of 2.2 sources of funds for their down payment. Only about 47% used one source.

Where Down Payments Came From

The following gives how much of the down payments came from various sources. Though buyers rely on any number of sources, parents have played a greater role in assisting with down payments through loans and gifts.

The most important source continues to be personal savings at 52%. Loans from financial institutions are next highest at 21%; family gifts at 10%; family loans at 5%; and 9% from RRSP/Home Buyers Plans.   

Thanks to William Dunning for this report.

New Mandatory Rental Agreement in Ontario

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The agreement will have to be used by most private rentals

Back in April of 2017 the Ontario Government introduced the Ontario Fair Housing Plan. One of their intentions was to create a standard residential rental lease agreement.

This agreement is now available and will become mandatory for use by April 30th. This standard lease template, therefore, will have to be used for all new leases, by “landlords of most private residential rental units – from individual landlords to property management companies.” The following is just a smattering of what the form encompasses.

The Purpose of Having a Standard Lease

According to the Ministry of Housing website, the purpose of having a standard residential lease/rental agreement for all of Ontario is fourfold:

  1. “Easy to understand language to help
  2. “Landlords & renters understand their rights & responsibilities,
  3. “Reduce illegal terms in leases and misunderstandings caused by verbal tenancy agreements,
  4. “Reduce the need for Landlord and Tenant Board hearings to resolve disputes.”

Applies to Most Rental Situations

The lease does not apply to care homes such as retirement homes, mobile home parks and land lease communities. Most social and supportive housing exempt from the Residential Tenancies Act are also excluded. Example: public housing with rent geared to income. The ministry is planning to create different and standard lease agreements for these special groups.

The lease is mandatory and does apply to single and semi-detached houses, apartment buildings, condominiums and secondary units such as basement apartments.

Some Aspects of the Form

Of course the form spells out the names of the parties, the term of the tenancy and identifies the rental unit. It also allows for a description of vehicle parking spaces. The agreement must spell out what specific services are included (i.e. air conditioning, additional storage space), and who pays for electricity heat and water.

As well, it specifies that the tenant does not have to move out at the end of the term, staying on as a monthly tenant.

On ending a tenancy, the tenant has to give at least 60-days notice.

  • With a fixed term tenancy the “notice cannot be effective before the last day of the fixed term.
  • With a monthly tenancy the “notice must be effective on the last day of a rental period.”
  • In situations of sexual or domestic violence, the tenant can give 28 days’ notice at any time regardless of a fixed term tenancy.  

For condo units, the landlord must provide and the tenant must agree to abide by the declaration, by-laws and rules.

A Comprehensive Document: Of the 14 pages, the agreement itself is 8 pages and the appendix is 6; quite extensive. We’re hoping everybody reads the important general explanations in the appendix. Go to: http://www.mah.gov.on.ca/Page18704.aspx for your copy.

Niagara Region Residential Sales Prices Statistics for February, 2018

Residential Sales & Average Sale Prices YTD

For the Niagara Region: 01-Jan-2018 to 28-Feb-2018 vs. Same Time Last Year*

Sales and average prices are a measure of the last month only.

   
  
   
   
  
    
  
   Normal 
   0 
   
   
   
   
   false 
   false 
   false 
   
   EN-CA 
   X-NONE 
   X-NONE 
   
    
    
    
    
    
    
    
    
    
   
   
   
    
    
    
    
    
    
    
    
    
    
    
    
    
  
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
  
   
 
 /* Style Definitions */
 table.MsoNormalTable
	{mso-style-name:"Table Normal";
	mso-tstyle-rowband-size:0;
	mso-tstyle-colband-size:0;
	mso-style-noshow:yes;
	mso-style-priority:99;
	mso-style-parent:"";
	mso-padding-alt:0cm 5.4pt 0cm 5.4pt;
	mso-para-margin:0cm;
	mso-para-margin-bottom:.0001pt;
	mso-pagination:widow-orphan;
	text-autospace:ideograph-other;
	font-size:10.0pt;
	font-family:"Times New Roman","serif";}
 
    Unit sales :    
  
   
   
  
    
  
   Normal 
   0 
   
   
   
   
   false 
   false 
   false 
   
   EN-CA 
   X-NONE 
   X-NONE 
   
    
    
    
    
    
    
    
    
    
   
   
   
    
    
    
    
    
    
    
    
    
    
    
    
    
  
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
  
   
 
 /* Style Definitions */
 table.MsoNormalTable
	{mso-style-name:"Table Normal";
	mso-tstyle-rowband-size:0;
	mso-tstyle-colband-size:0;
	mso-style-noshow:yes;
	mso-style-priority:99;
	mso-style-parent:"";
	mso-padding-alt:0cm 5.4pt 0cm 5.4pt;
	mso-para-margin:0cm;
	mso-para-margin-bottom:.0001pt;
	mso-pagination:widow-orphan;
	text-autospace:ideograph-other;
	font-size:10.0pt;
	font-family:"Times New Roman","serif";}
 
 Up 5% in Grimsby and even in West Lincoln   Unit Sales Are Down in other areas :   
  
   
   
  
    
  
   Normal 
   0 
   
   
   
   
   false 
   false 
   false 
   
   EN-CA 
   X-NONE 
   X-NONE 
   
    
    
    
    
    
    
    
    
    
   
   
   
    
    
    
    
    
    
    
    
    
    
    
    
    
  
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
  
   
 
 /* Style Definitions */
 table.MsoNormalTable
	{mso-style-name:"Table Normal";
	mso-tstyle-rowband-size:0;
	mso-tstyle-colband-size:0;
	mso-style-noshow:yes;
	mso-style-priority:99;
	mso-style-parent:"";
	mso-padding-alt:0cm 5.4pt 0cm 5.4pt;
	mso-para-margin:0cm;
	mso-para-margin-bottom:.0001pt;
	mso-pagination:widow-orphan;
	text-autospace:ideograph-other;
	font-size:10.0pt;
	font-family:"Times New Roman","serif";}
 
 Fort Erie (-31%), Fonthill/Pelham (-44%), Niagara Falls (-25%), Niagara-on-the-Lake (-45%), Port Colborne/Wainfleet (-31%), St. Catharines (-20%), Thorold (-42%), and Welland (-26%).  *The above stats are based in whole or in part on MLS® System data owned by the Association covering January 1, 2018 to February 28, 2018 vs. January 1, 2017 to February 28, 2017.

Unit salesUp 5% in Grimsby and even in West Lincoln

Unit Sales Are Down in other areas: Fort Erie (-31%), Fonthill/Pelham (-44%), Niagara Falls (-25%), Niagara-on-the-Lake (-45%), Port Colborne/Wainfleet (-31%), St. Catharines (-20%), Thorold (-42%), and Welland (-26%).

*The above stats are based in whole or in part on MLS® System data owned by the Association covering January 1, 2018 to February 28, 2018 vs. January 1, 2017 to February 28, 2017.

New Rules Affect Mortgage Renewal

Are you one of over 1 million Canadians who will renew your mortgage in 2018? If so, you have reason for concern.

mortgage stress test 600x.jpg

Few People Are Aware of the Stress Test

As of January 1, 2018 the Stress Test has been introduced and must be implemented for all new mortgage approvals. Interestingly, it’s stunning how many people know little or nothing about the stress test. More often than not, when the phrase “stress test” is mentioned, the reaction is, “what’s that?” As of January 1st, anyone applying for a mortgage would have to undergo the stress test in the following manner.

Example of the Stress Test:

  • You might be looking at a contract interest rate of about 3% today;
  • At 3%, let’s say you will qualify for the mortgage you want.
  • To be approved, however, you must be stress-tested at the current qualifying rate of 5.14% or your contract rate of 3% plus 2% whichever is greater.
  • In this instance you would have to qualify at 5.14%.
  • The stress test might cause you to fail and so your mortgage application would be denied.

Renewals Don’t Have to be Stress-Tested, But...

You do not have to be stress-tested if you are renewing your mortgage with your current lender if that mortgagee is federally regulated by The Office of the Superintendent of Financial Institutions (OSFI).

...Transferring Requires a Stress Test

For a number of reasons, but mostly because of negotiating a better rate, you may want to transfer your mortgage to a different lender and, if that lender is federally regulated, you must undergo the stress test; that is, qualify at the greater of the qualifying rate or the contract rate plus 2% as mentioned. If you were to fail the stress test, you would be forced to stay with your current lender. Will Dunning, Chief Economist for Mortgage Professionals of Canada, says that this could put you “in a disadvantageous situation for negotiating” a new interest rate. Dunning estimates that “as many as 200,000 Canadians who renew mortgages will fail the stress test, and this may limit their ability to negotiate the lowest possible interest rates.”

Lenders Not Required To Stress Test Are Encouraged To Do So

Provincially regulated lenders, such as Credit Unions, are not required to perform stress tests. They are, nevertheless, encouraged to do so.

In a recent application a senior wanted to borrow an additional $25,000 against her home, valued at $300,000, to purchase a new car. This would increase her registered line of credit from $50,000 to $75,000. She has no other debts and an excellent credit rating of 790. On her income, however, she failed the stress applied by her bank. She then went to a Credit Union who also stress-tested her. A debt of $75,000 against a $300,000 home gives her a very low loan-to-value ratio of 25%. Yet the mortgage was denied. There has got to be something wrong with this.