Sunday, January 29, 2012

Brian Madigan LL.B. 416-745-2300 ~ Real Estate Credit Courses

If you are a real estate professional who requires credit courses, you may wish to attend one of my programs.

18 credits available in total.

All you require to renew is the RECO update.

If you need assistance, then please give me a call.

Brian Madigan LL.B. (Broker)
RE/Max West Realty Inc. (Brokerage)
(416) 745-2300 (tel)
(416) 745-1952 (fax) (web) (blog)

Wednesday, January 25, 2012

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
Brian Madigan LL.B. Broker
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

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.

Sunday, January 22, 2012

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

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

Supreme Court of Canada
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

Friday, January 13, 2012

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

Thursday, January 12, 2012

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

Sunday, January 8, 2012

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.”


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

Friday, January 6, 2012

TREB Predictions for 2012

Toronto City Hall

TREB Review of 2011 and Predictions for 2012

Ontario Real Estate Source

By Brian Madigan LL.B.

The Toronto Real Estate Board just released its most recent Marketwatch, on 5 January 2012.

In essence, it says:

2011 was up 8%

2012 will be up 4%

Now, the prediction for 2012 is all guesswork. Everyone would agree with that. And, rarely would anyone be held responsible for a bad prediction.

But, let’s look at the 8% increase in 2011. It certainly doesn’t work on the January to December numbers. That would be 4.02%. So, if you want a better number, you had better use a different calculation. Have a look at the TREB report in full (below) and note the explanation for the 8%. That only works if you take all of the 2011 numbers, average them, and compare that to the similar average number for 2010.

What is the actual increase (my calculations) if you start with $411,931 at the start of 2010 and end with $451,436 at the end of 2011? It works out to 10.46%. Divide it in two (without annual compounding) and that’s 5.23% per year over that last two years.
Here’s the TREB report:

"Second-Best Year on Record for Sales

Toronto, January 5, 2012— Greater Toronto REALTORS® reported 4,718 transactions through the Toronto MLS® system in December 2011. The December result capped off the second-best year on record under the current Toronto Real Estate Board (TREB) boundaries. Total sales for 2011 amounted to 89,347 – up four per cent in comparison to 2010.

“Low borrowing costs kept Buyers confident in their ability to comfortably cover their mortgage payments along with other major housing costs,” said TREB President Richard Silver.

“If Buyers had not been constrained by a shortage of listings over the past 12 months, we would have been flirting with a new sales record in the Greater Toronto Area,” added Silver.

The average selling price in December was $451,436 – up four per cent compared to December 2010. For all of 2011, the average selling price was $465,412, an increase of eight per cent in comparison to the average of $431,276 in 2010.

“Months of inventory remained below the pre-recession norm in 2011. Very tight market conditions meant substantial competition between Buyers and strong upward pressure on selling prices,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“TREB’s baseline forecast for 2012 is for an average price of $485,000, representing a more moderate four per cent annual rate of price growth. This baseline view is subject to a heightened degree of risk given the uncertain global economic outlook,” continued Mercer."


Look at the numbers and follow the trends. Prices in the GTA are increasing at about 5% per annum, year after year, and that appears to be continuing.

The ORES Real Estate Index documents that level of return over the last 7 years. Historical data also supports 5% returns in real estate over the longer term.

So, this year’s prediction by TREB at 4%, seems both conservative and realistic.

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

Toronto Market Drops 7.02% in 2011

down market
Toronto Market Drops 7.02% in 2011

Ontario Real Estate Source

By Brian Madigan LL.B.

That should be some good news for the doomsayers!

Has the Toronto market finally succumbed to the worldwide decline in housing prices?
Let’s have a closer look.

The average price paid for a single family home in the GTA was $433,946 at the end of December 2010. So, that was also the starting value on the 1st of January.

The market rose and reached a peak of $485,520 by the end of May. It then declined to $451,436 by December.

When we do some calculations, there was a decrease from May to December (peak to the end of the year) of 7.02%. That occurred in 2011, so technically saying “Toronto Market Drops 7.02% in* 2011” is correct. It did take place in that calendar year, but clearly not the entire year. Headlines can be somewhat deceiving.

There is some value with a “year over year” view. That would take the end of December 2010 and compare it to the end of December 2011. That would show an increase of 4.03%.

Then, you could look to just the calendar year, which would show the same result, being 4.03%, because January 1st starts out with the December number.

This article is not intended to offer any explanation about the market or its direction whatsoever, just to point out that with the same facts, you can express a positive or negative opinion, depending of course upon your bias.

Be careful what you read; it can be dangerous!

* note the emphasis placed upon the word "in"

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

Thursday, January 5, 2012

ORES Real Estate Index for December 2011


ORES Real Estate Index for December 2011

 Ontario Real Estate Source

By Brian Madigan LL.B.

Here is the "ORES REAL ESTATE INDEX" which tracks the average resale prices of single family homes and condominiums in the Greater Toronto Area (GTA). It also tracks certain benchmark comparisons such as the price of oil and gold, as well as the Consumer Price Index

In addition, the stock market indices for Toronto, and the three largest US markets are also compared.

For ease of comparison, everything we look at is worth 100 points on the Index as of
1 January 2005
. That time period compares favourably with the five year average used as a standard benchmark comparison in the mutual fund industry.

As of 31 December 2011, here is the Index representing average prices with the November 30th, October 31st, September 30th, and August 31st, numbers appearing in brackets for comparison:

Real Estate

139.70…..(148.67)…..(147.97)…..(144.01)...(139.77).....GTA single family

Other market comparisons

357.92…..(408.18)…..(402.57)…..(378.73)…..(423.96) (per ounce)
224.82…..(228.30)…..(211.99)…..(186.24)…..(198.52).....oil (per barrel)
129.89…..(132.60)…..(133.12)…..(126.29)…..(158.73).....TSX index
139.70…..(148.67)…..(147.97)…..(144.01)…..(139.77).....ORES sgl family
114.81…..(114.72)…..(114.53)…..(114.25)…..(115.96).....CPI index
126.32…..(127.05)…..(130.16)…..(117.12)…..(125.07).....NASDAQ index
116.49…..(114.83)…..(113.97)…..(104.04)…..(110.71)......Dow Jones index
106.46…..(105.56)…..(106.10)…..(95.78)……(103.18)......S&P Index

Using the Index

Just a quick note on reading the information. Have a look at the ORES Index for Real Estate (single family homes). As of the end of December, the index stood at 139.70. That's a 39.70% increase in 84 months. That means the increase is 0.472% monthly, or it could also be expressed as 5.67% annually. The performance here is shown without annual compounding for the sake of simplicity. It is noteworthy that the annual percentage was 7.01% as at the end of October. Both numbers were calculated using

Observations (on the Index)

As we use index, there are several notable comments:

· Commodity prices are just commodity prices
· There is no other "extra return" for commodities
· The same is true for the CPI
· The CPI is a benchmark to see whether you are keeping pace with inflation, that number is 114.81; increases have been modest and inflation appears to be under control; this is significant.
· For a realistic performance goal, you should aim for CPI plus 3.5% annually
· Stocks provide dividends in cash or extra stock. This return is additional to that shown in the stock market indices
· The stock market Indexes only measure the survivors. So, in 2009, both GM and Chrysler would have been dropped due to the bankruptcies
· If you held GM and Chrysler, you lost everything, but two new companies moved in to replace them in the Indexes
· Real estate offers a return in terms of occupancy. You can rent out the property and receive income, or occupy the property and enjoy it yourself

Comparative Observations Using the New Index

· Gold overall is still the best performer, reaching 357.92, decreasing this past month by 12.6%; a major decline since its August peak at 423.96
· Oil was the most volatile, (it dropped in half over our measurement period), also declining this past month
· Real estate was the most stable, with solid predictable returns at about 5.67% annually
· Our own stock market posted reasonable gains, but still falls behind single family homes over the measurement period, however, don't forget that the TSX is still well off its highs and is substantially resource based
· All three US stock market indicators now show positive numbers, and may truly be a better overall indication of the true state of the North American economy. The Dow matches inflation, the S&P is now measurably under the Nasdaq which is starting to track our own TSX


For steady, predictable, measured gains pick real estate. It's a solid performer with lower risk (less volatility) and generally moving in a positive direction.

And remember, when it comes to real estate, it's never "wiped out" completely, like GM or Chrysler stock. So, unless you're sitting on the edge of a tsunami, you'll still own something when the storm is over.

For a benchmark of success, there's 1,000 years of history to point to a rate of return in real estate being about the equivalent of 5% per annum, simple interest (non-compounded). That means that real estate doubles in value every 20 years. There are a lot of companies (now bankrupt, including CanWest Global, and many US Banks) that would have been happy with that return.

The present rate of return although high by historical standards appears to be sustainable in sought after locations like the GTA. At the moment, over our measurement period we are looking at a 0.67% annual premium over the benchmark 5%.

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
1 January 2005 as the starting point.

The other statistics are reported in a similar fashion for the ease of comparison.

Wednesday, January 4, 2012

Who are CLIENTS in Real Estate Transactions?


Clients ~ An Easy to Understand Concept

Ontario Real Estate Source

By Brian Madigan LL.B.

While it may be difficult to understand the “customer” status relationship, no one seems to have difficulty with “clients”.

The concept of a client is simple and straightforward. It is the usual name of the principal in an agency relationship.

Many professionals deal with agency and represent clients, including lawyers, doctors, engineers, architects, barristers, solicitors, notaries public, conveyancers, paralegals, attorneys, accountants, consultants etc.

In just about all cases, the principal is referred to as the “client”. There is one notable exception, and that is doctors, whose principals are known as “patients”.

It is also easy to figure out that the highest duties are owed to the client or patient. You don’t have to know specifically what they are, but just about everyone knows inherently that clients stand in first place. That’s as good as you get. It is very basic and very fundamental.

And, of course, it’s the common law.

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

The Difficult Task of Explaining Customers

Customers ~ Who are they?

Ontario Real Estate Source

By Brian Madigan LL.B.

No one outside the real estate industry seems to know the difference between clients and customers.

In fact, once explained, most seem to think it is absurd, and to say the least a little unfair, and perhaps a “ruse” by the real estate industry.

Recently, I have found myself pointing out the fine distinction between clients and customers, agency and non-agency relationships.

Sophisticated consumers including lawyers, doctors, architects and teachers have found the matter puzzling.

I suppose it won’t be too long before someone takes issue with the entire concept.

For that matter, lawyers, doctors and architects all act as agents, so the matter of agency law is not alien to them. But, many express surprise that real estate professionals, generically known as agents in many jurisdictions may not be “agents” at all.

I have to admit, this is indeed one of the most difficult concepts to explain. Once, I have that one down, I’ll move on to the “trinity”.

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

Toronto Condo Market in 2012

Toronto City Hall
What’s Happening ~ Toronto Condo Market 2012

Ontario Real Estate Source

By Brian Madigan LL.B

Although the world is filled with pessimists and a lot of them see the Toronto condo market going bust, the facts and the figures don’t seem to support that conclusion.

There are two major driving forces behind the most active condo market in the world:

1)     net new immigration, and
2)     low interest rates.

Condo developers are just reacting to the demand. A lot of people are moving into the GTA each year, actually upwards of 100,000. They have to live somewhere!

Affordability is relatively attractive, so they are buying.

The condo lifestyle is becoming more popular. It works for several different groups:

·        New and first-time homebuyers
·        Trade up Buyers
·        Empty nesters
·        Investors
·        Out of town buyers

Each of these different and rather diversified groups will find a developer catering to their needs.

Prices of condos have kept pace with single family homes. Both have increased over the last few years at about 7% per annum. Compare that to the stock market or the return on bonds or bank accounts.

Newspapers often sponsor articles that spell the doom for the condo market but the fact of the matter is that other than a “hunch”, they don’t have any other supporting facts. The real facts seem to suggest otherwise. The Toronto condo market will be hot well into 2012.

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

Tuesday, January 3, 2012

Financial Resolutions for Individuals

Financial Resolutions for Individuals

Ontario Real Estate Source

By Brian Madigan LL.B.

This is the time of the year for Resolutions.

I received a some resolutions from a friend and colleague, Mr. David Predovich an Investment Advisor with TD Waterhouse at the Mississauga offices. Naturally, these are Financial Resolutions. David can be contacted through TD Waterhouse at:


So, here’s the start, and it’s all good basic advice:

“The New Year is a time when we often reflect on the changes we need to make and create resolutions to help guide us. If you are looking for a financial-related goal, perhaps one of your commitments could be to update your estate plan. Here are some components to consider when conducting this review:

Update Your Will — A review of your Will will ensure that it is reflective of your current situation, especially if you have had significant changes in your circumstances. Make sure that you are still comfortable with your choice of estate trustee(s) and that the instructions for the distribution of your assets to the beneficiaries of your Will are reflective of your current wishes.

Don’t forget to let your trustee(s) know where the signed copy of your Will is kept for safekeeping and where they can find the contact information of your lawyer.”


This article raises five important points.

1) Up-to-date Will

Many people simply sign a Will, and because “contemplating death” is a rather unpleasant task, just leave it. Once it’s done, it’s done. But, that approach can certainly be worse than having no Will at all.

Consider Bob’s case. He was married to Harriet, divorced and has joint custody of his three year old daughter. He has now taken up residence with Marge, who has two children from a prior marriage.

His Will was signed at the time of his divorce, but his situation has changed abruptly and his intentions may not be carried out. If he marries Marge, his Will is revoked and he has no Will at all.

So, as unpleasant as it may be, this IS the time for Bob to head off to the lawyer’s office and up date his Will. Then, when he marries Marge, it will be time for him to go back and sign a new one.

2) Estate Trustee

Bob appointed Harriet as his Estate Trustee. He though that he would be dead, so Harriet would be fine, since he was leaving everything to Harriet in trust for his three year old daughter, Ruby.

Let’s rethink this situation. There is now a clear conflict if Marge is to receive anything. Perhaps Bob has someone who would be more suitable?

3) Distribution Instructions

This is the part that everyone thinks about when they contemplate signing a Will. Does it still make sense?

Now that Bob lives with Marge, should Marge receive something? And, what about her two children, now that they have become partly dependent upon Bob for support?

4) Will Location

There is really not much point to having a Will, if absolutely no one knows where it is. Or, by the time it’s actually found, your estate has been long since administered.

So, tell someone! Tell a few people. Don’t keep this a secret. Mention it to those who have a vested interest in finding it.

5) Lawyer Contact Information      

You should indicate the name of the lawyer who acted for you concerning the preparation of the Will. That lawyer may have retained the original.

Or, perhaps that lawyer knew where you intended to place it.

Do you have a safety deposit box? Is it in your name alone? Should someone else have access?

Assuming that you have no place whatsoever to place this document, it can be filed in safekeeping with the Surrogate Court. This is not a common practice but it can work for some people.

And, don’t forget, there should be copies. The disposition should not really come as a surprise to anyone. The time to offer an explanation if there would be any “hard-feelings” would be now, while you’re still alive. Explain it, and have the participants accept it, rather than be concerned about your decisions for the remainder of their lives. That’s most unfair.

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

The Real Value of Title Insurance

title insurance

The Real Value of Title Insurance

Ontario Real Estate Source

By Brian Madigan LL.B.

I thought that it might be wise to comment on the value of a title insurance policy.

In this case, Poplawski v. McGrimmon (2009), Anna Poplawski purchased a title insurance policy from Stewart Title. There were serious defects in the property.

The basement flooded and there were septic and well issues, and issues with framing, the roof and the foundation.

Possibly, if full searches had been done, these issue might have been discovered. But, they weren’t. And, that was in part the purpose of the title insurance policy. Save money on the searches and buy title insurance instead.

In this case, Stewart Title paid out the full amount of the title policy, namely $340,000 and initiated the lawsuit for recovery of its losses. It has the right to subrogate, that is, the right to sue in the name of the insured if it pays under the policy.

Here is a brief summary about title insurance made the Master MacLeod in Motions Court:

“Title Insurance
[8]          Title insurance has become increasingly common in Ontario over the past decade or so.
It is now increasingly a standard feature in residential purchases. 
It is marketed as covering both title defects and “off title” searches traditionally completed by lawyers on a real estate purchase.
By purchasing title insurance it may be possible to avoid the cost of a survey or various searches and to in effect “paper over” certain defects. 
I am simplifying of course and the particular coverage in any given case will depend on the wording of the policy in question, the options or endorsements purchased and other factors. 
In any event, this was a Stewart Title “Gold” policy in which both the plaintiff and the lender, First Line Trust, were insured parties. 
Structural problems with the buildings or other improvements on the property are not of course problems with title to the land and the provisions of the policy that are engaged are those that deal with the “off title” searches.
[9]          Title insurance does not cover physical defects in the building as such.
Largely the insurance coverage protects the marketability of the property from defects that would have been revealed by proper searches.
The policy in question does cover “adverse circumstances” that would have been revealed by “a local authority search of the land at the policy date”.
The policy also provides protection from regulatory action such as municipal work orders or demolition orders as a result of defects in the improvements on the property that existed prior to closing. 
It is not necessary to be more precise for present purposes.
The important point is that title insurance is available only indirectly to fund repairs or reconstruction and only under circumstances in which the policy is engaged. 
[10]      Apparently on discovery it was revealed that Stewart Title has advanced the entire face amount of the policy of $340,000.00 to First Line Trust.
Since this is equivalent to the purchase price paid for the property, it would appear this has fully retired the mortgage. 
Even if the house is worthless, the plaintiffs now have the land free and clear of the mortgage debt. 
The claim is for almost double the purchase price and includes consequential damages so the plaintiffs are arguably not made whole by the insurance proceeds. 
More importantly the plaintiffs do not concede that any part of this payment should be a credit against either damages for breach of contract or in tort. 
The important point is that the title insurer has paid out the policy, receipt of those funds has been disclosed, and the insurer is exercising its rights of subrogation.”
If you ever thought of not having title insurance, this case should convince you otherwise. How would the purchaser be able to sustain such a major loss, let alone finance the lawsuit for recovery of compensation?

In addition, the plaintiff in the lawsuit may be able to recover for other losses that were over and above what was covered under the insurance policy.

And, remember, this policy only cost a few hundred dollars!

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