Professional Management of the Twitter Account

Twitter Account – Professional or Personal?

Ontario Real Estate Source

By Brian Madigan LL.B.

Issues concerning ownership, use, and operation of a Twitter account have arisen in the case of PhoneDog v. Noah Kravitz.

The novel issue is the crossover between personal and professional interests.Kravitz was employed by PhoneDog to blog about competitive mobile phone products. Kravitz tweeted about his blog and about football, food, the arts and other sports. His professional  phone blog became more popular.

When he left PhoneDog, naturally he had to leave his blog behind. But, what about the Twitter account?  There were 17,000 followers!

So, really it should be easy to separate. However, that needs to be determined at the outset.

If the individual is responsible for a company blog then any supporting social media should belong to the company as well. If, none, then agree on that too!

Professional Social Media

• Make this specific. Ensure that the company is the owner.
• Agree that supporting social media belongs to the company too.
• Have the account in the company’s name.
• Have supporting media in the company’s name too.
• Ensure that the access codes, passwords and the like are all made available to the company.

The company’s IT Officer should have all this information.

Ownership of the blogs, Linkedin, Facebook and Twitter accounts should be made quite clear: they are owned by the company.

If the employee or other delegate opens such accounts then they are doing so by and on behalf of the company. In effect, they are performing these tasks "in trust" for the company. The use and operation of the sites are distinguished from their ownership.

There should be a company social media protocol policy.

All employees, delegates, and independent contractors associated with the company should agree to adhere and abide by the terms of this protocol as issued and updated.

Personal Social Media

Personal is, of course, just that “personal”. Family and friends, sometimes extended family, longer term friends and acquaintances, and neighbours etc.

Personal use can be extended to “friendship” on a personal basis with companies for the provision of personal benefits.

However, this is clearly not “business marketing”. So, Facebook is really a “personal friend” site. Linkedin is intended to be more “professional”. Business marketing on Facebook requires the use of a “Fan Page”, but it’s already integral to Linkedin. When it comes to Twitter, and the 140 character limit, the issues and differentiation between personal and professional are most unclear. But, this would not be the case if matters were clearly set out in a contract.

Professional Social Media

Many independent contractors in various businesses, like real estate agents, have websites, blogs, and social media accounts. If they are licenced and supervised by a brokerage, then their brokerage has a vested interest in their marketing venues. They are considered to be advertising and must comply with any advertising guidelines set out by the regulating authority.

In Ontario, that would be the Real Estate Council of Ontario (RECO). However, there should also be advertising guidelines issued by the brokerage and the brand name franchisor concerning the use of trademarks etc.

Compliance is a requirement, but who is going to monitor this issue on a daily basis?

These issues suggest in effect that the individual should indicate which social media sites he may be engaged in, and disclose whether such sites are personal or professional.

Also, there needs to be a fundamental presumption about the engagement, either:

·        They are all professional, unless agreed otherwise, or
·        They are all personal, unless agreed otherwise

It would seem to me that a brokerage would prefer the latter since that would place the onus of disclosure clearly upon the real estate professional.

Once, the brokerage is aware of a “professional” engagement, then the brokerage has the responsibility, duty and obligation to monitor compliance. You will appreciate that there is a cost to the brokerage associated with that fact.

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

Twitter Account Controversy ~ Ownership and Control

 

Who owns the Twitter Account – Employer or Employee?

Ontario Real Estate Source

By Brian Madigan LL.B.

In a recent case, PhoneDog v. Noah Kravitz, the issue of Twitter account ownership will soon arise.

The case is interesting because it presents a novel issue and that is the crossover between personal and professional interests.

This is what happened according to CNN sources:

Kravitz joined PhoneDog and was employed, in part, to blog about competitive products. The site became increasingly more popular as Kravitz began to tweet about his articles and reviews. On his Twitter account he threw in other topics that were not just mobile phone specs and comparisons. He talked about football, food, the arts and other sports. That made his phone blog more popular. Soon he had 17,000 followers on his twitter account. He left the company and initially was allowed to take the Twitter account with him. When he set it up in the first place he used his own personal information for registration.

With 17,000 followers, PhoneDog now wants the Kravitz’s Twitter account, or alternatively to be paid $2.50 for each follower per month for the 8 month period after he left the company.

This case will have some implications for the real estate industry, since most sales staff are employees from the perspective of the Real Estate and Business Brokers Act, 2002, (Ontario), but independent contractors for the purposes of other legislation.

Do they have websites, blogs, Facebook, Linkedin, Twitter, Google Plus and other social media sites? If so, what is the arrangement and the protocol for participation? Is the brokerage responsible for what they say? Can the brokerage be sued for comments made? Obviously, they are personally responsible, but if the brokerage is responsible for supervision, then should the brokerage see and screen the material in advance?

At this stage, it’s probably too early to tell, but the fact of the matter is that each brokerage should set up its own protocol concerning the use of social media in addition to its policies on websites and blogs.

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

Unfair Business Practices in Ontario

Consumer Protection ~ Unfair Business Practices (Real Estate)

By Brian Madigan LL.B.

The Business Practices Act was a very good piece of legislation, but not too many people knew about it, so last year the Ontario Government replaced it with the Consumer Protection Act.

When it comes to real estate there are some important provisions. While the conveyance of real estate is exempt from the Act, advertising, the conveyance of chattels and agreements with realtors are all affected.

No one is allowed to engage in an "unfair practice" with a consumer, and specifically it is an unfair practice for a person to make a false, misleading or deceptive representation. These will include the following:

1. A representation that the goods or services have sponsorship, approval, performance characteristics, accessories, uses, ingredients, benefits or qualities they do not have.

2. A representation that the person who is to supply the goods or services has sponsorship, approval, status, affiliation or connection the person does not have.

3. A representation that the goods or services are of a particular standard, quality, grade, style or model, if they are not.

4. A representation that the goods are new, or unused, if they are not or are reconditioned or reclaimed, but the reasonable use of goods to enable the person to service, prepare, test and deliver the goods does not result in the goods being deemed to be used for the purposes of this paragraph.

5. A representation that the goods have been used to an extent that is materially different from the fact.

6. A representation that the goods or services are available for a reason that does not exist.

7. A representation that the goods or services have been supplied in accordance with a previous representation, if they have not.

8. A representation that the goods or services or any part of them are available or can be delivered or performed when the person making the representation knows or ought to know they are not available or cannot be delivered or performed.

9. A representation that the goods or services or any part of them will be available or can be delivered or performed by a specified time when the person making the representation knows or ought to know they will not be available or cannot be delivered or performed by the specified time.

10. A representation that a service, part, replacement or repair is needed or advisable, if it is not.

11. A representation that a specific price advantage exists, if it does not.

12. A representation that misrepresents the authority of a salesperson, representative, employee or agent to negotiate the final terms of the agreement.

13. A representation that the transaction involves or does not involve rights, remedies or obligations if the representation is false, misleading or deceptive.

14. A representation using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use or failure deceives or tends to deceive.

15. A representation that misrepresents the purpose or intent of any solicitation of or any communication with a consumer.

16. A representation that misrepresents the purpose of any charge or proposed charge.

17. A representation that misrepresents or exaggerates the benefits that are likely to flow to a consumer if the consumer helps a person obtain new or potential customers. (s. 14 (2))


It is also an unfair practice to make an unconscionable representation, and there are some "rules" which will help determine if this is the case.

A Court may take into that the person making the representation or the person's employer or principal knows or ought to know,

(a) that the consumer is not reasonably able to protect his or her interests because of disability, ignorance, illiteracy, inability to understand the language of an agreement or similar factors;

(b) that the price grossly exceeds the price at which similar goods or services are readily available to like consumers;

(c) that the consumer is unable to receive a substantial benefit from the subject-matter of the representation;

(d) that there is no reasonable probability of payment of the obligation in full by the consumer;

(e) that the consumer transaction is excessively one-sided in favour of someone other than the consumer;

(f) that the terms of the consumer transaction are so adverse to the consumer as to be inequitable;

(g) that a statement of opinion is misleading and the consumer is likely to rely on it to his or her detriment; or

(h) that the consumer is being subjected to undue pressure to enter into a consumer transaction. (s.15(2))

Section 18 provides that "any agreement, whether written, oral or implied, entered into by a consumer after or while a person has engaged in an unfair practice may be rescinded by the consumer and the consumer is entitled to any remedy that is available in law, including damages." These common law remedies are available in addition to the opportunity to report the matter to the Director and have the dispute investigated and resolved under the Act. The Director has been given rather broad powers by the legislation.

And further, "each person who engaged in an unfair practice is liable jointly and severally with the person who entered into the agreement with the consumer for any amount to which the consumer is entitled under this section." So, this means that the particular salesperson is responsible as well as the company.

Although, the actual "conveyance" of real property is not subjecty to the provisions of the Act, the matter of advertising is specifically noted as an included matter.

Under section 109 of the Act, "if the Director believes on reasonable grounds that any person is making a false, misleading or deceptive representation in respect of any consumer transaction in an advertisement, circular, pamphlet or material published by any means, the Director may order the person to cease making the representation; and further order the person to retract the representation or publish a correction of equal prominence to the original publication".

This section applies to any representations involving residential real property. If the purchaser cannot be described as a "consumer", then the Act will not apply. So, commercial transactions are not affected. Houses, and vacation properties are included. There is a real grey area when it comes to farms. Large commercial operating farms would not be included, but a hobby farm might.

You will recall earlier that both principals and agents were jointly and severally responsible. This means that a vendor who provides false and misleading information to his realtor is jointly and severally responsible to the purchaser.

All in all, the Consumer Protection Act should be quite helpful to purchasers and consumers in Ontario.

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, or you would like a free market evaluation of your home in Erin Mills, Credit Mills, Credit Woodlands, Sheridan Homelands, Sawmill Valley, Bridlepath, Pheasant Run, Sherwood Forrest or Mississauga Heights, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

The Business Broker under REBBA, 2002

By Brian Madigan LL.B.

A business broker is regulated in Ontario under the same legislation that applies to real estate agents, namely the Real Estate and Business Brokers Act.

In fact, under the Act a business is considered to be real estate.

There is considerably more negotiating when it comes to buying and selling a business than an ordinary real estate transaction, and it requires specialized expertise.

For a business broker to undertake the task of representing either the buyer or the seller, there are some additional considerations that are over and above the routine real estate deal:

~Employees
Knowledge of employment laws (Employment Standards)
Knowledge of the common law of wrongful dismissal
Key employee agreements
Knowledge of collective agreements
Management agreements
Training agreements
Consulting and Supervisory agreements
Non-Competition agreements

~Business Asset Contracts
Equipment and machinery leases
Equipment and machinery pledge agreements

~Business Financing
Pledges of assets
Pledges of receivables
Fixed and floating charges

~Taxes
Income tax implications (deferred and unpaid taxes)
GST implications
PST implications

~Occupancy
The lease, (if rented premises) the right to remain
Chattels and fixtures that are part of the business
Termination rights

~Key Contracts
Intellectual property
Maintenance agreements
Client and customer contracts

~Insurance
General liability insurance
Environmental liability insurance
Property insurance
Vehicle insurance
Business Interruption insurance
Key-Man insurance
Buy-Sell agreement insurance

The above list is far from exhaustive. It is simply to illustrate that there are a number of new issues and considerations when a business is being bought or sold beyond the usual deal.

A business broker must know what is truly for sale. Will the employees stay with the company? Who should pay them during the transition period? Are there any guarantees on the equipment. Can it be sold? If it is to be sold, can the financing be assumed?

A business broker must understand and appreciate the financial statements concerning the operation. What if the profits fall short? What happens if a key employee or large customer leaves?

And, don't forget about the taxes? The purchaser doesn't want to assume the vendor's tax liability. Should an asset purchase or share purchase be used? This varies from deal to deal. There is no standard rule of thumb.

Some businesses are successful because they have good employees, others are successful because they have good systems, good technology, or a strong customer base. The business broker should determine whether the whole is worth more than the sum of the parts. If not, maybe the business can be broken down and sold piece by piece?

Unless these solid assets of the business are transferred, the business will not likely be successful in the hands of a new owner. The business broker, first needs to determine the true value of the transferable business. Then, negotiations must take place with key employees, landlords, financial institutions and customers to ensure that they will be onside with the proposed transaction. It is only then, that an appropriate value might be established. The business broker unlike the ordinary real estate agent should be creating value at this point in the relationship.

Another interesting variation is the role of a business broker in a transaction. Usually, there is just one broker. Frequently, both parties will have the same agent. This occurs much more frequently in the sale of businesses than in ordinary real estate transactions.

So, what is the role? The Real Estate and Business Brokers Act sets out two separate and distinct roles. The buyer or seller can either be a customer or a client of the broker. The broker owes the common law duties of "fair and honest dealing to customers". For clients, the broker owes certain special duties including the common law fiduciary duties and the statutory duties set forth in the Act.

The broker must act in the best interest of the client. That's fine as long as only one party is a client. But, if both are clients, it's impossible to place both of them first on every issue. There is an inherent conflict of interest that cannot be resolved! And, no amount of disclosure can solve it.

The solution adopted in some jurisdictions in the United States is transactional brokerage. It is a concept that is permitted, but not well-known in Ontario. Here, the broker is truly a broker in the common law sense of the term. The broker is not an agent but rather an "intermediary". This reduces the potential liability for the broker. The broker works the deal, and attempts to negotiate a successful resolution. Both parties have their own independent legal, accounting and financial advice, so they are not alone, but they are not relying upon the broker. The role might also be compared with that of an arbitrator or mediator in union-management collective bargaining negotiations. Frequently, there is a far more successful outcome with someone in this type of role.

So, next time you want to buy or sell a business, consider an experienced and qualified business broker. And, maybe you want an "intermediary" rather than an "agent".

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, or you would like a free market evaluation of your home in Erin Mills, Credit Mills, Credit Woodlands, Sheridan Homelands, Sawmill Valley, Bridlepath, Pheasant Run, Sherwood Forrest or Mississauga Heights, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Customer Disclosure Duties under REBBA 2002

What is the Disclosure Obligation to Customers in Ontario?

Ontario Real Estate Source

By Brian Madigan LL.B.

Under the Real Estate and Business Brokers Act, 2002, a registrant is charged with certain responsibilities.

Customers are entitled to ”services” and their agents must act with competency, knowledge, skill and judgment.

This is the obligation to clients under the Code of Ethics:

Material facts

21. (2)  A broker or salesperson who has a customer in respect of the acquisition or disposition of a particular interest in real estate shall, at the earliest practicable opportunity, disclose to the customer the material facts relating to the acquisition or disposition that are known by or ought to be known by the broker or salesperson.  

         

Material Facts are actually a defined term under the Code:

“material fact” means, with respect to the acquisition or disposition of an interest in real estate, a fact that would affect a reasonable person’s decision to acquire or dispose of the interest;       

It is difficult to appreciate the context without appreciating the definition of a trade in real estate in the Act:

trade” includes a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for purchase and sale, exchange, option, lease, rental or otherwise and any offer or attempt to list real estate for the purpose of such a disposition, acquisition or transaction, and any act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of any disposition, acquisition, transaction, offer or attempt, and the verb “trade” has a corresponding meaning;

So, this basically means that the agent must:

1)     at the earliest practicable opportunity,

2)     disclose to the customer,

3)     the known material facts, and

4)     the material facts which are unknown, but ought to be known.

Naturally, it would be wise from a risk management perspective that the agent recorded this information in some way, and was able to retrieve it later if required.

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

Distributing the Proceeds of Sale

Priorities Upon Sale (Mortgage, Lien, Execution)

Ontario Real Estate Source

By Brian Madigan LL.B.

What happens when there is a mortgage, construction lien and execution against the property? How does the money get distributed?

Let’s consider the simple straightforward case.

Here, the property is worth $300,000, and the buyer secures a first mortgage of $250,000.

The deal closes and the money is advanced.

Subsequently, the buyer defaults upon his credit card to the extent of $10,000 and a judgment is obtained.

The homeowner decides to sell and hires a contractor for $25,000 to effect some improvements, repairs and renovations to the property. The work is completed but the homeowner never pays.

So, the basic question is “who gets the money”. Basically, to some extent “priority of registration prevails”:

1)     the first mortgage was fully advanced, and it secures the number #1 position for the principal plus the interest to the date it is paid. 

2)     The construction lien comes in second. The proceeds upon the sale are considered in part to be repayment on account of the work done and the corresponding increase in value.

3)     The Judgment assuming it was registered as an execution comes in third position.

That is what happens 99% of the time, since that is the usual scenario.

If all the money was not advanced under the mortgage, then that would affect the mortgagee’s priority. Assuming only $200,000 was advanced, then it would have priority only for the $200,000 and not the other $50,000. It still has that money.

There may be more than one lien. Some of the liens fall under the general contractor. It works like a pyramid here, with the lien claimant at the bottom having priority over the General contractor.

Executions creditors share on a pro rata basis in respect to the amount of their claims. So, if there was one execution for $10,000 and another for $20,000, they would share 1/3, 2/3 out of the amount leftover.

If there is a shortfall they would share in the shortfall based upon the same ratio.

Any excess would be paid to the homeowner. And, any deficiency would remain the obligation of the homeowner.

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 905-796-8888www.OntarioRealEstateSource.com

Resurgence in Toronto Real Estate Market During September 2011

Resurgence in Toronto Real Estate Market

Ontario Real Estate Source

By Brian Madigan LL.B.

You might wonder what is happening to the real estate market in Toronto and the GTA.
Here are the latest figures released by the Toronto Real Estate Board.

Month        Sales           Average Price

January        4,208           $425,903

February      6,074           $452,967

March          9,009           $455,886

April            8,783           $476,637

May             9,785           $485,436

June             9,976           $474,365

July             7,711           $458,966

August         7,384           $451,310

September   7,658           $465,369

So far, everything is quite predictable. The market rose and peaked in May with a high average price for the year at $485,436. Then it declined until August and started an upward course once again.

If trends continue like they have over the last decade the average price in October will approximate the May number. Usually, the two peaks, being in the Spring and Fall markets are about equal.

There was a significant deviation from this usual trend in October 2009 with the world stock market crisis and loss of confidence in financial institutions.

This October offers challenging market concerns with Greece on the brink of disaster and the Toronto Stock market (TSX) slipping officially into bear market status.

The resurgence in the Toronto real estate market in September was evident and predictable, but there may be some uncertainty going forward. This represents opportunity for both sellers and buyers.

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

Common Law Agency Duties and the Mississauga Inquiry

Agency Duties at Common Law (Mississauga Inquiry)

Ontario Real Estate Source

By Brian Madigan LL.B.

The Mississauga Judicial Inquiry into the conduct of the Mayor Hazel McCallion released its report on 3 October 2011.

The Commissioner, Mr. Justice Cunningham concluded that the mayor had both a real and apparent conflict of interest in the dealings with a hotel real estate development in which her son had an equity interest.

There was some saving grace in that the Commissioner found no breach under the Municipal Conflict of Interest Act. Mr. Justice Cunningham went on to make recommendations concerning that Act to the Province. The Commissioner would like to see the Act strengthened and broadened.

Nevertheless, the inquiry focussed upon the obligations at common law. While the Act only deals with specific pecuniary interests, the common law deals with non-pecuniary interests as well. It may also extend to the interests of close family members and not merely the elected official themselves.

In L’Abbe v. Blind River (1904), the High Court of Ontario stated:

“There may be a direct monetary interest, or an interest capable of being measured pecuniarily, and in such case that a bias exists is presumed. But there may also be substantial interest other than pecuniary, and then the question arises, on all the circumstances, as to whether there is a real likelihood of bias - a reasonable probability that the interested person is likely to be biased with regard to the matter at hand.”

A conflict of interest may be real or apparent.

There are three prerequisites for a real conflict of interest:

1)     the existence of a private interest,
2)     that is known to the public office holder,
3)     that has a nexus with his or her public duties and responsibilities that is sufficient to influence those duties and responsibilities.

An apparent conflict of interest arises when a reasonably well-informed person, could reasonably conclude, as a result of surrounding circumstances, that the public official must have known about the connection of his or her involvement with the matter of private interest.

Agency Obligations at Common Law

The law of agency developed thousands of years ago and eventually found its way into the common law in England. There are some fundamental and basic principles which include the obligation of the agent to offer to the principal:

1) disclosure,

2) competence,

3) obedience,

4) accounting,

5) confidentiality, and

6) loyalty.

1) Disclosure. The agent is under an obligation to keep the principal informed and to disclose any material and relevant matters to the principal.

2) Competence. The agent is under an obligation to be competent in his profession, and to inform the principal that there are matters beyond the agent’s expertise.

3) Obedience. The agent is subservient to the interests of the principal. The agent is to follow the reasonable and lawful directions of the principal, carrying out the principal’s instructions. The agent is to act in the principal’s best interests and not his own.

4) Accounting. The agent is to account for monies received and disbursed. Payments of any kind or nature, direct or indirect are all for the benefit of the principal. Funds are received as a fiduciary, and are to be disclosed and remitted in full to the principal. The agent is the intermediary between the principal and third parties. The agent is not a third party contractor but rather the person who brings the principal and third parties into a contractual relationship.

5) Confidentiality. The agent is to maintain the privacy of the principal and matters that are of a private nature are to remain in confidence. Information provided to an agent is received in a fiduciary capacity and is not to be disclosed without authorization by the principal.

6) Loyalty. An agent is to offer loyalty to the principal. Once engaged in a fiduciary capacity, the agent must place the interests of the principal above his own, must not entertain the interest of others, including himself above that of his principal.

Each of these duties are separate and distinct obligations and vary somewhat in their application and interpretation depending on the nature of the agent’s profession and the actual agency agreement.

Common agency arrangements today include attorneys, trustees, solicitors, barristers, doctors, accountants, financial agents and real estate agents. However, they also apply to those politicians who hold public office. And, the same common law fiduciary agency duties apply to them as well.

You can easily appreciate how the common law duty in respect to “conflict of interest” grew out of loyalty, disclosure, obedience and accounting.  All those in an agency relationship are subject to the common law. These are important matters and should not be discounted.

Statutory obligations are in addition to the fundamental common law duties. The mayor has noted her compliance with the statute but failed to appreciate the underlying obligations at common law.

Professionals in the real estate industry would be well-advised to adhere to those principles in addition to their statutory requirements.

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

Leslie Log House in Mississauga

Leslie Log House in Mississauga

Ontario Real Estate Source

By Brian Madigan LL.B.

There is now a new museum in Mississauga. You probably already know about Benares and the Bradley House. The Leslie Log House is the third museum in Mississauga,

There is an advantage here, since it houses the Streetsville Historical Society.

The building is open to the public Wednesday and Saturday afternoons. Drop in for a quick tour. Admission is free.

The house is quite historical in nature having been constructed in 1826 on Mississauga Road north of Derry. It was moved to its present location at 4415 Mississauga Road
 (between Burnhamthorpe and Eglinton) in 1994.

The main room can be rented through the city of Mississauga for special functions. In boardroom format, it seats about 12 and in classroom format it can host about 20.

It is located on city property backing onto the Credit river valley and has access to walking trails.

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

Mortgage Acceleration Clause

What is an Acceleration Clause?

Ontario Real Estate Source

By Brian Madigan LL.B., Broker

This is a clause in a mortgage which triggers the obligation to repay the entire principal sum outstanding in advance of the time that it is otherwise due.

Consider a borrower who pays $1,200 per month on his $135,000 mortgage. The mortgage runs for five years. If he breaches an important covenant contained in the mortgage like for example failing to provide insurance, the entire $135,000 is due and owing, even if it is just year one in the mortgage.

Some breaches are considered substantial enough to “accelerate” the principal.

This is an option available to the mortgagee (lender). But, in cases, where the rate of interest is high the borrower may wish to have the mortgagee activate this clause which provides the opportunity to pay earlier.

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

The Toronto Office Market is Shrinking

The Shrinking Office Market in Downtown Toronto

Ontario Real Estate Source

By Brian Madigan LL.B.

Employers appear to be moving out of the downtown core. It seems unusual but small companies are moving into the downtown core and large companies are moving out.
Many properties originally zoned for "office space" have be rezoned for a combination of "commercial and residential".

Two good examples would be Trump Tower on Bay Street and the Shangli-La Hotel on  University Avenue
.

While Toronto has traditionally been home to the financial services sector, this is one industry that seems to be "on the move".

The banks are relocating to the "905", being the suburbs around Toronto.

A primary example would be the Royal Bank which has relocated about 8,000 jobs to its new location on Financial Drive in Mississauga.

While head offices remain in the downtown core, major departments have fled to the suburbs. If this trend continues, then inevitably there will be a shortage of prime office space downtown. In 1980, 63% of office space was downtown Toronto, now it has declined to 54%.

The prospects do not appear to be high in terms of a current reversal in this trend, so wee see the conversion to residential condominium development. And, pretty soon, the prime properties could be all gone.

So, here's an opportunity: buy out the entire condo, rent it out, then when the office market turns convert it to office space. 

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

The Meaning of "Aborption Rate" in Real Estate

What Does “Absorption Rate” Mean?

Ontario Real Estate Source

By Brian Madigan LL.B.       

This is the rate at which homes are being sold on a monthly basis.

It is based on a particular market area. Assume that there are 2,400 homes listed for sale in a particular market. And, we know that 200 homes are sold every month. That means basically that we have a 12 month supply of inventory.

The rate is calculated as 200/2,400, or 1/12^th, or expressed as a decimal .0833.

There are some areas which calculate the relationship somewhat differently. They take current listings at 2,400/200 being the number of current sales. The result is 12, meaning that we have 12 months of inventory.

No matter what, and however you seek to compare the two numbers,  it will still take 12 months to get rid of the present inventory.

This is a key factor used by real estate developers when they decide to build a condominium or new subdivision.

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

Should Condo Property Managers be Regulated?

Should Condo Property Managers be Regulated?  ~ $ 20 million Fraud

Ontario Real Estate Source                                 

By Brian Madigan LL.B.

The question following a $20 million fraud of at least 7 condominium corporations is whether or not the Ontario Government should take steps to regulate property managers.

Manzoor Khan as the principal of Channel Property Management is alleged to have defrauded lenders and condominiums out of millions by falsely registering mortgages against the titles.

The essential reason is that the board of directors in many residential condominiums are simple, average, unsophisticated homeowners who may have the time to devote to the board but don’t have the necessary qualifications, education or experience for the position.

Retail and commercial owners can fend for themselves. It is the smaller, lower end condo corporation which is vulnerable. As the building gets older and the residents age and lack new sources of income, they become more and more vulnerable to rogue property managers.

I should, of course, point out that there is not a growing trend of rogue property managers, but I suppose one is enough, based upon the damage that one person can do.

It can have a severe impact when millions of dollars are pledged in a series of fraudulent transactions against a condominium.

In one case, a condo unit was purchased for $152,000 but can’t be sold for $70,000 just a few months later. In some cases, it is the working poor who suffer. Many families have immigrated and are often dependent upon a single wage earner in a low end position. There’s not much room left for saving. Others have second and third jobs, and they are the lucky ones, while others on welfare have no other source of income and may eventually face eviction.

If the industry were regulated:

1)     training and education would be provided,

2)     a code of ethics would be followed,

3)     mandatory spot audits would operate as a deterrent, and

4)     basic insurance would be mandatory.

In this case, with respect to insurance I’m referring to bonding the individuals involved with money and having insurance to back up fraud and defalcation.

So, who pays? The condo corporation of the lenders! They were probably both negligent in the handling of the situation. It sounds more like tort liability than contract.
So, who gets paid? Obviously, the lawyers and the auditors!

As a society, we have failed to protect some of our most vulnerable. We have encouraged them to buy, but we have not provided the basic tools to allow them to protect themselves. The condos that were victimized were not the high end expensive downtown condos owned by lawyers, doctors, stock brokers and the like. They were the lower end, poorer condos catering to the working class new Canadians. What a great way to invest in your new country!

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

Be careful About Condo Fraud in Toronto and the GTA

Is it Safe to Buy a Condo ~ $ 20 million Fraud

Ontario Real Estate Source

By Brian Madigan LL.B.

Channel Property Management operated in Toronto for years under Manzoor Khan of Brampton, Ontario.

Channel specialized in condominium management and gained the confidence in many cases of immigrants who identified with him from his native Bangladesh , where he has now returned.

It appears that Manzoor looked after about 15 residential condominium buildings.

While it does not really seem that sophisticated, here is what he did:

1)     Manzoor had his employees pose as senior officers of the condominium corporation,

2)    As President and Secretary, they could issue certified copies of the by-laws of the company,

3)    They certified a new banking by-law and/or borrowing by-law authorizing certain loans to be negotiated,

4)    The proceeds of the loans were placed in bank accounts over which Manzoor Khan had signing authority,

5)    The total borrowed appears to be about $20 million and such loans are secured against about 7 properties.

The arrangement is simple enough. The fraud is clear and the man has fled the country.

But, are the owners of the residential condominiums at risk? They might be!

The lenders are innocent and the homeowners are innocent. Both were duped by the same person. Hopefully, they all had insurance bonds as against Manzoor and his company. If they did, then they will be compensated.

This may not be just the fault of the lender. At the outset, it will be necessary to determine whether the board of directors might be liable. There may be directors and officers liability insurance. That would be helpful too.

However, the fundamental question for the courts is going to be whether these mortgages were valid.

This is an extremely costly undertaking. And, it could be that one or more of the residential condominium corporations do not have insurance and is therefore at risk of liability.

In the meantime, if you were a purchaser about to close a deal, you would want a very large holdback and if you were looking for a condo to purchase, you would probably avoid these buildings until the issues are resolved.

With all this uncertainty, homeowners will just have to put their lives on hold. And, this could go on for years!

Make sure you see and understand the financial statements of the condominium before you buy. Ask yourself whether the property manager is reputable and whether the board members are sophisticated. Get professional assistance right from the beginning.

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