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Important Points Important Points

Important Points - PowerPoint Presentation

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Important Points - PPT Presentation

When deposit is made A receipt of funds has to be issued Receipt of funds must be kept for five years It must be deposited into Real Estate Trust Account within 5 business days within 24 hours if more than 10000 ID: 528763

important points offer title points important title offer buyer agreement clause seller property case house landlord seal condition insurance closing written responsible

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Slide1

Important PointsSlide2

When deposit is made

A receipt of funds has to be issuedReceipt of funds must be kept for five yearsIt must be deposited into Real Estate Trust Account within 5 business days; within 24 hours if more than $10,000Must be reported to FINTRAC in 15 days if cashInterest on deposit in trust accountInterest collected must be disclosed to depositorBuyer can claim interest if they provide SIN number to brokerageStandard clause in Agreement says no interest but a clause to the contrary in Schedule A/B can supersede pre-printed clause

IMPORTANT POINTSSlide3

Deposit is not required

A Seal means offer made irrevocably is bindingThere is consideration without the deposit since the person is giving property in exchange for moneyDeposit shows good faith and seriousnessDeposit may be release if:Mutual release – absolves liabilities and obligations of both parties under the contractCourt orderIMPORTANT POINTSSlide4

Brokerages may have multiple trust accounts

Trust accounts are protected from creditors / not affected by bankruptcyCommission trust account not necessary but if brokerage does not have trust account then RECO’s Commission Protection Insurance (CPI) will not cover our commissionLatest time to check buyer ID is prior to making offer, and latest time to check seller ID is prior to accepting offerIMPORTANT POINTSSlide5

Person who accepts the offer could be either buyer or seller depending on who makes the offer that is accepted

This person must sign communication of acceptanceSpousal consent is required if you sell a matrimonial home or family property and the name of one of the spouses is not on the titleSpousal consent is not required if you are buying a house or selling a house and there is a pre-martial contract or for properties other than a designated matrimonial home if there is oneIMPORTANT POINTSSlide6

If there is no seal, there must be another form of consideration or else there is no legally binding contract

Property transactions always have consideration so such contracts are valid without sealConsideration is an essential part of a contractContracts without consideration are only enforceable if they have a seal and the party using the seal understands what the seal isA lawyer who witnesses a person signing under the seal must explain significance of the sealIMPORTANT POINTSSlide7

As per the representation agreement, Clients owe brokerages the following two duties:

Indemnification Remuneration (commission)In order to go into a minimum bid auction, you should ask your lawyer to do both a title and non-title search (best answer) or ask the mortgagee to appraise/inspect property and approve mortgage (second best answer)IMPORTANT POINTSSlide8

A grow house is not a stigma but an environmental concern

Tell tale signs of grow houses include holes in the roof and electrical distribution panel tamperingWritten disclosure required if you know it is a grow house – through SPIS and/or faxed disclosure form/Schedule AIf you want to buy a house and make a legal basement in it, you should make sure it is lawful to create a basement before making an offer, or put a condition in Schedule A sending a conditional offer that depends on approval of basement being a legal basementIMPORTANT POINTSSlide9

Buyer’s lawyer does the title search minimum 5 days before and maximum 30 days before closing date

Title search is done on the requisition dateIf issues are found with title, the buyer can:Avoid the contractThe clause says that the buyer/seller can remedy or get title insurance to rectify the issueThe buyer is responsible for getting fire insuranceIf issues are found after closing, title insurance may cover it

IMPORTANT POINTSSlide10

Is present use blank?

If you leave it blank, the pre-printed words “present use can be lawfully continued” will applyYou should ensure that zoning is not included in present useFor instance, R1 (commercial zoning) should only be the use, not the zoningFax numbers can only be put if there are two different brokerages presenting two different clients (not customers)You cannot put fax number for customers because this would imply existence of a client relationshipYou cannot put one in a multiple representation situation

IMPORTANT POINTSSlide11

The final copies are considered to be delivered when they are handed to the recipient directly; or if the notice provision is filled out, when you have electronic receipt (email confirmation etc.) or when you receive confirmation from the fax

Past consideration is no considerationIf you have a seal, consideration is not needed since the law accepts seals as considerationThe seal must be on the current contractIMPORTANT POINTSSlide12

An injunction is an order of a court preventing you from doing something

E.g. The court prevents you from selling cigarettes from your businessCopies of the Agreement of Purchase and Sale must be given at the earliest practicable opportunityCopies of the Agency Agreement must be given immediatelyHeritage properties have higher insurance and lower taxesIMPORTANT POINTSSlide13

Line Fences Act governs disputes related to fences

Fence Viewers = fence policeHousing choices limited to four types of units:DetachedDuplexTriplexFourplex

If there are more than four, it is viewed as a commercial in nature and not residential

IMPORTANT POINTSSlide14

6 elements in a condition precedent:

Who is to do it?Who is to pay for it?What is to be done?Within the time limit?What happens if it is not done?The condition may be waived

5

elements in a condition

subsequent:

What is to be done?

Who is to do it?

Who is to pay for it?

Within what time limit?

What happens if it is not done?

IMPORTANT POINTSSlide15

Amendments can be made to change a firm agreement as per the parole evidence rule if both buyer and seller agree to them

Parole evidence rule says contract/agreement cannot be changed unless done so in writingA verbal agreement or evidence outside the agreement will not change executed documentPart 3 of Building Code contains construction requirements for high-rise condo buildings (3+ storeys) and Part 9 for small buildings and housingIMPORTANT POINTSSlide16

Once lease term ends, lease becomes a monthly lease until the lease is terminated or a new lease is signed

This means that the landlord cannot ask for more than the first and last month’s rent; or ask for post-dated chequesThe tenant may still give more rent voluntarilyThe landlord must pay interest on the last month’s rentTenant can stay in the property until end of term of lease agreement even if landlord gives 60 day noticeIMPORTANT POINTSSlide17

There are three grounds for eviction:

Damage or disturbanceMisrepresentation of informationNon-payment of rentIf tenant wants to leave during fixed term tenancy, contract can be terminated if both parties agree, or assign the contract to a third-party with permission from the landlordIMPORTANT POINTSSlide18

Landlord’s right of entrance

24 hours written notice allows for showing between 8AM and 8PMNo written notice required if:Emergency situation arises (landlord may walk in any time in case an emergency situation exists)Tenant allows landlord to enter when asked at doorLandlord wishes to show property to a prospective buyer or tenant (between 8AM-8PM, if landlord has made reasonable effort to inform tenant and if either party has given reasonable notice to terminate lease or they have mutually agreed to do the same)IMPORTANT POINTSSlide19

You can keep pets on any leased property including condos, but the declaration/by-laws may place restrictions on the type of pets allowed

No-pet clauses are void unless they involve residential condominiums in which pet restrictions are both documented and enforced, and apply to everyoneIf other people are allowed pets, you may have a court caseIMPORTANT POINTSSlide20

If a fridge stops working at closing, the seller is responsible

If a fridge stops working after closing, the buyer is responsible unless the seller provided a warrantyOntario Water Act deals with well waterMinistry of Environment responsible for well water, including maintaining well records3 samples in 1-3 weeks requiredProvincial government maintains well water under Ontario Water Resources ActIMPORTANT POINTSSlide21

In case of multiple offers, the salesperson has responsibility to make full disclosure

Disclosure relates to number of offers but not their prices or other material factsContracts can be voided by minors but if the minor comes of age and does something that furthers the contract, they can no longer void itAvoid the following in advertising:Abbreviations since they confuse public (not illegal)Misrepresentations/incorrect info – may infringe Competition ActIMPORTANT POINTSSlide22

Gated communities are not popular in Ontario

Ministry of National Resources (MNR) responsible for building boathouses, docks and anything to do with the shorelineWood Energy Technology Transfer Inc. (WETT) inspector inspects wood stovesMental stigma = ghosts; physical stigma = UFFIIMPORTANT POINTSSlide23

As long as farmers are engaging in normal practices under The Farming and Food Production Protection Act (FFPPA), they are protected

In case of dual agency/multiple representation, the salesperson must give written disclosure prior to signing customer service agreement/representation agreementIn case of sub-agency (1 client and 1 customer), written consent from the parties is requiredIMPORTANT POINTSSlide24

Any commission earned must be disclosed to client

If commission received from both buyer and seller, written disclosure is requiredStatus Certificate details the financials of the condoA buyer or seller can request it and must pay for itIt cannot exceed $100 including taxesManagement office must provide status certificate within 10 days of requestIMPORTANT POINTSSlide25

Disputes between landlord and tenant go to the Landlord and Tenancy Board (also known as Ontario Rental Housing Tribunal)

Condo minimum reserve fund must be 10% of the budgeted expense for common expense contributionsIMPORTANT POINTSSlide26

Zoning normally allows 25% of dwelling to be used for home-based business (check by-laws)

Business equipment may not be stored outsideBusiness signs not allowed besides some exceptionsOnly permanent residents of house can be employees except in certain municipalities where 1-2 non-resident employees permittedSome kinds of businesses are restricted such as manufacturing, food preparation and repairsIMPORTANT POINTSSlide27

Negligence is the most common tort

Tort law aims to compensate victims for wrongs endured rather than punishing offendersMobile Homes are governed by the Residential Tenancies ActYou get leasehold interest in the land but own the mobile home itselfWhen selling mobile home, you can put a “For Sale” sign on a notice board or the home, but not on landIMPORTANT POINTSSlide28

Major difference between Form 100 (residential) and Form 500 (commercial) is that HST is normally included in residential, while it is in addition to commercial

If you see the name of one spouse is missing, read the scenario to gauge the kind of relationship it isYou need spousal consent if only one of the spouses is on the title, but if both are on the title, spousal consent is not requiredConsent only needed when selling, not buyingIMPORTANT POINTSSlide29

The Agreement of Purchase and Sale

Description (page 1) must contain city and regionLot dimensions must have only one unit (meters or feet, not both)Preprinted agreement contains “more or less” – in case there is a discrepancy, there is a lack of meeting of the minds or a genuine intentionDeposit column cannot be left blank – it must say herewith, upon acceptance or as otherwise describedIt should be stapled with the agreement or a copy must be faxed with the offer, and the cheque must be delivered immediatelyUpon acceptance = within 24 hours of acceptance

IMPORTANT POINTSSlide30

An irrevocable offer is the life of an offer – it is after this period that it dies

During the irrevocable period, the offer may not be changed, altered, recalled or revokedYou can stop the salesperson from presenting the offer, but once it has been presented, you cannot revoke it during the irrevocable periodChattels are personal moveable itemsSellers are not responsible for providing the survey unless they already have it or unless there is a clause requiring them to provide a survey in schedule A IMPORTANT POINTSSlide31

Documents and discharge are covered by title insurance, while surveys may not be required if covered by title insurance

If a house burns down before closing, they may back out of closing and walk away, or go through with closing and claim insurance from the sellerIf the house burns down after closing, the buyer is responsible since they own the propertyIMPORTANT POINTSSlide32

Residency clause makes sure that the seller is a resident of Canada or if they are a non-resident that they have paid all taxes on capital gain payable under non-residency provisions of the Income Tax Act

In case seller fails to pay taxes, the buyer is responsible for themThe buyer may protect themselves from it by asking their lawyer to hold fundsUFFI-PHD = physical stigma that is removed when UFFI is removedIt is a health hazard and requires written disclosurePre-printed clause says UFFI present and seller unawareClause must be inserted into schedule A disclosing that seller is aware of UFFI, which overrides preprinted clause

IMPORTANT POINTSSlide33

If there is no witness to the offer, it is null and void

If pay balance is missing “subject to adjustment” or “by bank draft or certified cheque” it is either poorly worded or not well writtenAssumed mortgage clause should say that the buyer agrees to assume the existing mortgage/charge held by the [bank name] for “approximately”Bank name and conditional upon approval could be missingIf it says condition cannot be waived, it is poorly wordedIMPORTANT POINTSSlide34

New mortgage clause is generally not less than or approximately

You should look out for Oklahoma situationIn this case, you should say NOT MORE THAN + written as a true condition precedent so that waiver is preventedIt should say NOT MORE THAN in case of an Oklahoma situationLiens, mortgages, spousal consent, encumbrances and restrictive covenants are all included in the title searchProperty taxes, easements, outstanding utility bills and zoning compliance are included in non-title searchIMPORTANT POINTSSlide35

Asbestos is found on pipe coverings and roof sheeting in older homes

Credit check must be included in the STB clause unless circumstances tell you that they have already checked it and are satisfiedPostponement clause is required when the first mortgage expires before second mortgage term beginsPrepayment clause is a right given to a mortgagor to pay all or part of the debt before maturity – it is subject to limitations such as pre-payment only on anniversary dateIMPORTANT POINTSSlide36

Escape clauses benefit both buyers and sellers

Property address must be mentioned for sale of buyer’s property escape clauseRadon gas is an odorless gas found in lower levels of a house such as basementsOil tanks are governed by the Technical Standards and Safety Authority (TSSA)IMPORTANT POINTSSlide37

Buyers may require a complete environmental audit to see overall environmental condition of a property before purchasing it

Lenders may also do the same before lendingAudits are done in three phases:Visual inspection – review of registry information, owner documents, ministry/department records – determines if any reasons exist that indicate environmental contaminationMore costly investigation – soil/water sampling, hazardous waste analysis – determines scope of environmental problems and remedial recommendationsDetailed remedial steps and costs associated with them

IMPORTANT POINTSSlide38

Title insurance covers:

Title fraudFuture losses due to:DefectsMinor encroachmentsEncumbrances / liensSome kinds of fraud that happen after closingExisting surveys

Fee simple owners are owners on title and can transfer their rights to others

IMPORTANT POINTSSlide39

Conditions precedent – must be waived or else the offer is null and void

Conditions subsequent – cannot be waived but can be terminated within the conditional periodTrue condition precedent – cannot be waived and must be fulfilled or else the offer is null and void (assuming mortgage, severance, soil testing)IMPORTANT POINTSSlide40

Title conveyance is the transfer of the title from one person to another person

The two condo planning steps are known as the draft plan and the final planConstruction code1-2 storey and lower – Code 9 of Ontario Building Code3 + storey – Code 3 of the Ontario Building CodeIMPORTANT POINTSSlide41

Construction loans have a 10% maximum holdback if the construction is not completed on time as per the Construction Liens Act

Drilled or bored wells are the most common kind of wellsIMPORTANT POINTS