Brian Madigan LL.B., Broker ~ 416-745-2300 RE/MAX West Realty Inc.

Brian Madigan LL.B., Broker ~ 416-745-2300 RE/MAX West Realty Inc.

Ontario Real Estate Source

By Brian Madigan LL.B.

I wish to confirm that my new contact information effective January 25, 2012 is:

Brian Madigan LL.B., Broker
RE/MAX West Realty Inc., Brokerage
96 Rexdale Boulevard
Toronto, Ontario
416-745-2300

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through RE/MAX West Realty Inc., Brokerage 416-745-2300.
www.OntarioRealEstateSource.com

Negotiating Real Estate Transactions over the Internet

Electronic Negotiating

Ontario Real Estate Source
By Brian Madigan LL.B.

It certainly seems that everyone would like to negotiate real estate transactions by email.

The only problem is that it doesn’t appear to be allowed.

There is a current difference in approach by OREA which drafted the new standard form Agreement of Purchase and Sale effective January 2012, and RECO.

The new standard form has incorporated emails into the “Notices” provision. They are given the same status as faxes.

The new clause permits Offers, Counter-offers, and Notices of Acceptance to be communicated by email. The provision goes on to include various notices and other documents.

The concern arises with the “negotiating of the agreement. Notices and other documents suitably can be exchanged through email. RECO accepts the latter but is concerned about the former and recommends that legal advice be obtained in a Registrar’s Bulletin.

Here’s the issue. The Statute of Frauds requires any agreement for the sale of land to be in writing. The Electronic Commerce Act enabled and permitted certain contracts to take place over the internet.

But, the problem is in the Act:

Section 31 (1) 4 of the ECA reads:

This Act does not apply to the following documents:

4. Documents, including agreements of purchase and sale, that create or transfer interest in land and require registration to be effective against third parties.

Clearly, it applies to Transfer/Deeds which are registered. Does it also apply to Agreements which are generally not registered. The wording in the Act certainly could have been better.

No changes have been made to the Act since it came into force in October 2000, so why adopt the OREA approach now. It’s risky and flies in the face of the RECO Bulletin.

I would recommend that you be cautious and follow the RECO approach until this matter is resolved. Let someone else take this to Court, or have the Legislature pass an amendment to the Act.

Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com

Supreme Court of Canada Affirms Municipality's Right to Set Tax Rates

Municipal Right to Tax Upheld by Supreme Court

Ontario Real Estate Source

By Brian Madigan LL.B.

A municipality has broad and wide latitude in assessing municipal taxes.
This follows a Supreme Court of Canada decision released on 20 January 2012 involving Catalyst Paper Corporation v. North Cowichan.

The company was a forest products company and major employer on Vancouver Island in the south east area. The appeal against taxes was based on what it felt was the disproportionate share of the overall tax burden of the entire municipality assessed against it. A municipality has the right to tax commercial, industrial and residential properties at different rates

While the Supreme Court of Canada upheld the municipality’s right to tax, and set the rates as it sees fit, it recognized the company’s right to:

1)     stay put and pay the tax, or
2)     close the mill and move.

Ultimately, the Court wants these types of decisions to be made at a local level without access to the court system.

As a matter of interest, in 2007 Catalyst paid 48% of all of the municipality’s taxes, and by 2011 that burden had been reduced to 37%.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com

Brian Madigan LL.B. ~ Continuing Education Real Estate Courses

Brian Madigan ~ Real Estate Courses

 

All the courses are 3 credit hours of Continuing Education.

 

Here is an updated outline in respect to each of the programs currently offered:

 

1)     Disclosure Laws and the Use of the Seller Property Information Statement

 

This program deals with the evolving law that applies to sellers and their obligations, the role of the agent and the increased obligations placed upon the agent under REBBA 2002.

 

Participants will understand how the law of torts and misrepresentation apply in the context of a contractual agreement

 

Emphasis is placed upon the legal liability of the agent and the reasonable steps that an agent can take to protect themselves from liability. A checklist for practice management is included to lessen the risks for the agent. Following the checklist provides documented evidence of meeting professional standards.

 

The law of disclosure is also viewed from the perspective of the buyer’s agent. Reference is made to the SPIS document currently in use, and about 30 leading Canadian cases on the law, including the most recent decision of the Ontario Court of Appeal.

 

Material 98 pages

Addendum 10 pages

PowerPoint 76 slides

 

2)     Agreement of Purchase and Sale : A Detailed Analysis

 

This program deals with the standard form agreement on a clause by clause, line by line and word by word basis.

 

This is the most important document that the agent uses, and consequently, every agent needs to know just exactly what the document means and intends. The practitioner must recognize the significance of changes and alterations to the standard form agreement. The agent needs to know what changes may be required to protect their clients’ best interests.

 

Each of the paragraphs are reviewed and explained in detail. The course material offers ease of reference to issues in the future.

 

Matters dealing with the proper witnessing and authentication of documents are covered.  The issue of the execution of the spousal consent is considered together with the increased obligations of the agent.

 

The contract is considered in the context of the law dealing with misrepresentations both in contract and tort law. The remedies available outside of contract and the imposition of liability upon the real estate practitioner are reviewed.

 

Emphasis is placed upon good practice management and the avoidance of liability.

 

Material 142 pages

PowerPoint 69 slides

                                 

3)     Competition Consent Agreement: Review and Opportunities

 

This program deals with the implications of the Consent Agreement (Competition Bureau and CREA), the agency conflict which led to the resolution, the law of agency as it applies to competition issues, RECO’s regulatory role, CREA’s guidance , the role and status of the consumer as a Client, Customer, or Contracting Party.

 

The program also covers statutory, regulatory and common law duties of registrants, the role of lawyers, special obligations owed to sellers and new opportunities that arise in the marketplace for practitioners. The emphasis in the program is placed upon “mere postings” and the relationship of the buyer’s representative to the owner and the mere poster.

 

Material 82 pages

PowerPoint 52 slides

 

4)      Law of Attachment: Chattels and Fixtures

 

This program is designed to ensure that the participants learn to distinguish between chattels and fixtures, and the legal principles that change a chattel into a fixture. The focus is real property law rather than the agreement of purchase and sale, which is largely irrelevant

 

The distinction is one of importance to municipal taxation and assessment, other taxing authorities, PPSA registrations, construction liens, and priorities in bankruptcy. The law has evolved over a period of centuries. Practitioners need to ensure that their clients are protected and not placed at risk.

 

Agents must know the steps in the “attachment” process, which has nothing to do with “nails, screws and glue”. The program will cover objective intention, sets, business assets, trade fixtures, and necessity. Agents will learn to avoid the risk of costly mistakes.

 

Material 78 pages

PowerPoint 60 slides

 

5)     Surveys, Boundaries and Adverse Possession

 

This program is essentially three separate programs all dealing with a similar theme.

 

Surveys: Participants will learn what is and what is not a survey, the four elements of a survey, survey types, and the steps in the survey process. Emphasis will be placed upon the ownership of property (the extent of title, distinguished from the chain of title), and limiting the agent’s liability through the use of a survey.

 

Boundaries:  The program will outline the boundaries to land: horizontal, vertical (up, down and sideways), air rights and airspace issues in the vertical plane, subsurface issues, mines, minerals and support, attachments by law (when chattels become fixtures), natural boundaries, water and watercourses, riparian rights, accretions, recessions, moveable boundaries, and water lots.

 

Adverse Possession: The program will focus upon the common law rules for unregistered rights of ownership, the nature of the required evidence to support both ownership and limiting rights, easements, and prescriptive rights of way. In addition, the history of title fraud and the response of the Torrens system, the application of the Registry Act and Land Titles Act will be reviewed. All topics will emphasize the limitation of the agent’s legal liability through proper disclosure and the adoption of professional standards.

 

Material  58 pages

PowerPoint 27 slides

 

6)     Family Law, Estate and Succession Planning

 

This program is divided into three topics.

 

Family Law: Marriage, divorce and the family, the two definitions of “spouse”, the division of assets and the support obligations upon marriage breakdown are explained. The Matrimonial Home and the special considerations which apply are emphasized. The common law, its definition and historical origins, common law marriages, co-habitation agreements, advising the unmarried couple, and resolving disputes are considered in the context of limiting the agent’s liability for risks.

 

Estate Planning: The program examines testate and intestate succession, the use of trusts for specific purposes, inter vivos property transfers, and the elimination of avoidable risks. The role and usage of Joint Tenancy is considered particularly the issues, risks and problems arising from recent case law.  Designated beneficiaries issues and problems, as well as the role of life insurance in an effective estate plan are reviewed.

 

Succession Planning: The program will review the choice of the Executor (Estate Trustee), and support professionals, Powers of Attorney, conflicts of interest, taxation upon death, deferral, and avoidance. In the business context, the role of the Business Broker will be reviewed as well as the particular problems with both first marriages and second marriages. Participants will also consider the real estate agent’s role in the estate and succession planning process.

 

Material 120 pages

PowerPoint 85 slides

 

Courses/ programs under development:

Real Estate and the Law of Torts

Risk Management and Practice for Real Estate Professionals

Environmental Liability ~ Risks and Solutions

Condominium Conversion Process

If you are interested in additional information please refer to
http://www.ontariorealestatesource.com/

Real Estate Disclosure ~ When in Doubt: FIND OUT

Disclosure: When in Doubt, FIND OUT

Ontario Real Estate Source

By Brian Madigan LL.B.

Real estate professionals must disclose "material facts". Just remember the regular mantra "disclose, disclose, disclose".

However, that obligation arises only after certain conditions are met. You have to be engaged to act and have advised your principal that you intend to make such disclosure. At this point, the seller could either have second thoughts about hiring you in the first place or decide that your listing should be cancelled or terminated.

You need to ensure that the seller appreciates that your obligation in respect to disclosure arises under the Real Estate and Business Brokers Act, 2002. The seller is not registered and is under no such obligation. The seller has the right to remain silent unless the common law provides otherwise.

The "information" is that of the seller. You are obliged to maintain the privacy of the seller.

So, the earlier mantra at step one, should be: "When in doubt: Find Out!"   *

Then, once you are on board acting for the seller, you can then say "disclose, disclose, disclose".

* this particular phrase was authored by Bruno Galluzzo of Royal LePage Innovators

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Due Diligence Verification in Real Estate Listings

The “Due Diligence” Verification

Ontario Real Estate Source

By Brian Madigan LL.B.

Real estate professionals are obligated to conduct their own due diligence when taking a listing. That is part of their “professional responsibility”.

They owe that obligation to their clients, themselves and the public.

Here is an excerpt from the RECORD a publication of the Real Estate Council of Ontario (RECO), the governing body, on this very same point, made in its Fall 2011 issue:

“Verifying statements and facts when listing a property

What would happen in a situation where your listing boasted “hardwood under carpets” only to have the buyers find laminate or a buyer who thought the purchase of his or her home included a water heater only to find out it is a leased unit?

“As a registrant you have a legal obligation to make inquiries, investigate and ensure that the information you are providing in a listing is accurate.

It’s not enough to take the information a seller gives you at face value,” advises Registrar Allan Johnston.

There are a number of sections in both the Real Estate and Business Brokers Act 2002 (REBBA 2002) and the Code of Ethics that can be applied to a situation where a registrant has not fulfilled these obligations. Section 37 of the Code of Ethics prohibits registrants from knowingly making inaccurate representations, while Section 38 requires registrants to use their best efforts to prevent error, misrepresentation, fraud or unethical practice.

Section 37 of REBBA 2002 also prohibits registrants from making false, misleading or deceptive statements in published materials.

Depending on the nature of the circumstances, Sections 20 and 21 of the Code of Ethics which relate to seller property information statements and material facts may also apply.

So how can you ensure that you’re doing your due diligence? “Put yourself in the position of a prospective buyer and ask all of the questions you would want to know about the property,” adds Johnston.

Based on frequent inquires and complaints made to RECO, here are some tips to help ensure you’re fulfilling your professional obligations.

• Take measurements yourself, including calculating total square footage. Don’t rely on a builder’s plan, homeowner’s measurements, a previous listing, or tax assessment to be accurate.

• Ask sellers to provide a copy of a tax assessment role.

• If there is any question of road/shore allowances, ask the seller to provide a  survey or documents from the municipality verifying any allowances.

• Double check whether heating and cooling systems and water heaters are leased, rented or owned. Make sure you and the sellers understand the differences between a rental agreement and a lease agreement and the associated obligations.

• When highlighting new or upgraded features such as roofs, windows, doors, HVAC systems etc., make sure to verify the date of installation and the material that distinguishes them as an upgrade.

• When advertising a wood floor under carpet, make sure to check that there is indeed a wood floor. Understand and differentiate between hardwood, engineered wood and laminate flooring.”

Comment

Many real estate sales representatives will often say that if the seller lies to them, there is nothing they can do.

But, is that the law?

Do they have any additional responsibilities to others? First, this IS a regulated industry! RECO is charged with the responsibility of ensuring that the public interest is protected. That means ensuring the those who are registered meet certain professional standards.

So, while the seller may try to lie, cheat or deceive the public, the sales representative is there to make sure that they don’t.

That offers protection to the public, and instils overall confidence in the system. Lying and cheating sellers will just have to go another route. They won’t be able to thwart the system and use a registered real estate representative for their own purposes.

They can go the “FSBO” route (for sale by owner). There’s a discount in that market, despite what some home sellers believe, and it is based upon the fact that you can’t have the premium that would be attached to a “listed” property.

A listed property has more value, since a qualified, registered professional has already conducted their own “due diligence”. And, naturally, the property has passed the “smell test”*.

So, if you are a real estate professional, be sure to do your job carefully, in order to protect:

1)     your client,
2)     the public, and
3)     yourself.

* note: smell in the context of “smell test”, means no fraud, no lies, no deceit and no suspicion; it does not mean smell in the sense of noxious odours.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

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