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What follows is a list of the top issues that stood out in the summer of 2012.
Some examples of clauses that are commonly used which can create problems include:
“Vendor will provide a survey.”
This is assuming the vendor has the original survey to provide. If not, the purchaser can insist on one being obtained at a cost of approximately $600 to $900 for a simple residential survey. The requirement to obtain could delay the closing date.
“The seller agrees to provide, at the seller’s own expense, a copy of an existing survey of the property showing the current location of all structures, buildings, fences, improvements, easements, rights-of-way, and encroachments affecting the property. The seller will further deliver, on completion, a declaration confirming that there have been no additions to the structures, buildings, fences, and improvements on the property since the date of this survey.”
Unless survey was recently obtained by the current owner, the existing survey likely would not show all improvements and/or additions such as decks, pools or property fences. Including the language “at the vendor’s/seller’s expense” can be misleading when the vendor did not intend to provide anything beyond what was already in their possession.
“The seller agrees, at his own expense, to provide a legible copy of a survey for the property.”
Seems innocent enough. Legible means all numbers can be read. Not so easy when it is a photocopy of a photocopy. By saying at own expense you have included a willingness to spend money to obtain. This often results in a request to obtain a new copy, which can be done through Land Survey Records Inc. that maintains an online site where you can obtain an existing survey at an approximate cost of $150. The website where this information can be obtained is www.landsurveyrecords.com.
Examples of safe clauses that can be inserted in an offer to purchase a residential property are:
“Attached to this agreement is a copy of the information available that depicts the property boundaries.”
“Immediately upon acceptance, the vendor will provide any relevant documents in their possession that depicts the property boundaries on the property, including but not limited to, a survey if one is available.”
2. Condo common fee
Be sure to update this as the budget is passed or even better add language like $200 or as adjusted pursuant to the status certificate. Be aware of special assessments. A status certificate is only $100 and should be obtained when you are listing to avoid any surprises.
A common issue which is set out in the status certificate is if any items have been replaced by the owners without proper consent or even with consent now become the responsibility of the owner and no longer part of the common expenses. Watch for owners having replaced windows and/or doors.
Avoid a shortsale by investigating title and finances when listing. At the land registry department in Barrie it costs $8 to pull parcel registry (this is the typical cost). Obtain the relevant instruments, which cost 50 cents per page. This would include the deed to ensure title is correct, and confirm owners named on title, any mortgages or other liens registered. Do executions search against all owners’ names for $11 each. This search is based on the municipality where the property is located and will identify any claims that will be required to be released prior to the property being sold. The sooner this information is known the easier it is to rectify.
4. Fixtures and chattels
To avoid any problems spell it out. An example I encountered was there was a dishwasher removed and the seller’s lawyer told me it was a large appliance that needed to be listed and not a fixture. The result was the old removed dishwasher was dumped on my client’s front lawn in response to my letters. Grey areas are big screen televisions and barbecues hooked to propane from the building.
5. Alarm systems
Two times this summer the alarm system was removed when it should not have been because it is clearly a fixture. When on contract, as both these were, should be listed as a rental item. When in doubt insert under rentals and insert after “if applicable.”
6. Power of attorney
Be aware that lenders are very cautious about allowing the purchaser to use a power of attorney. Some say no way. Some say OK if you have been a customer with an account at the branch for a year or some other time limit. Some allow it to be used to sign up and obtain the mortgage but not allowed for closing. The power of attorney will need to be provided with the agreement and actually registered prior to the closing. If anyone is signing using a power of attorney that should be clearly noted by inserting after the name of the person signing “as Attorney for (insert name here).”
If the house to be inspected is 20 years or older you should ensure that the home inspector retained is qualified with identifying vermiculite insulation. I have had three properties where this was an issue this summer. First you need to have a home inspector that will investigate for this. Once it has been identified in the property the home inspector can either follow the protocol provided by the lab or you can retain a consultant. An advantage of home inspector taking and submitting the sample is the cost. A disadvantage is the home inspector will not have the expertise to read the report or recommend how to resolve the problem. A rough cost estimate for removal and reinstatement for an attic of a 1,200 square foot home is $8,000 to $10,000. It is important to note that if it is in a location that is not the living area, Health Canada recommends not disturbing it and there is no requirement for removal. Once it is known it is something that would be considered a “material fact” in my opinion it is required to be disclosed. If the vermiculate is in the living area it should be removed and the removal in a living area is more expensive to remove as well as to reinstate.