Toronto Real Estate – Resale Homes Jump another 10% in July

Toronto Real Estate – Average Price of Detached Home climbs to $880,433

Despite many market analysts saying that the sky is falling in Toronto’s real estate market – it showed no sign of slowing down in July.  As noted in the recent CBC article by Susan Pigg:

” Toronto’s hot real estate market showed no signs of slowing down in July, as the number of home resales surged 10 per cent from the same month a year earlier.”

According to the Toronto Real Estate Board  9,198 homes were bought and sold in the GTA in July, making it the second best July sales result on record.  

“Sales were up strongly for most major home types and market conditions actually tightened, with sales growth outpacing listings growth. The result was average price growth well above the rate of inflation,” said board president Paul Etherington

Toronto Real Estate Prices - Climbing

The average sales price was up 7.5 per cent to $550,700, with the biggest increase occurring in the average selling price of.detached houses.

  • Detached homes have  increased 11% year-over-year to an average of $880,433.  
  • Condominium prices in Toronto increased 4.7 %to $379,000. 

The MLS home price index, which measures the rate at which housing prices change over time by tracking price changes in “typical” homes, showed similar strength. In the Greater Toronto Area, the composite resale home changed hands for $513,400, up 7.9 per cent from a year earlier.   

What do you think — Is this a housing bubble about to pop, or just a new reality?  There are no easy answers, and certainly there are people who vehemently believe both sides of the coin. 

Challenges of Selling a Stigmatized Property – Buyer Beware Calgary murder home’s MLS listing

What is a stigmatized property?

A stigmatized property is a place that buyers or tenants may shun for example because it was the location of a crime, or a property which may be haunted.

Currently, only Quebec is the only place in Canada where disclosure laws oblige a seller to reveal a past murder.  In the United States most states require sellers to disclose a suicide or murder that occurred on the property within the past three years. stigmatized property

Selling a Stigmatized Property.

Recently, a home was put on the market in Calgary.  This wouldn’t be much of a story, except, this home happens to be the site of a stabbing spree in April 15th where five students died.  The listing itself makes no mention of the murder.

The MLS listing states the following:

“The location of this property could not be better and it awaits your personal touch to turn it into something GREAT!” 

“With ample space inside, while located on a MASSIVE lot in a great community, this property has tons of potential for the right person/investor.

“It has a few updates, but needs some work to turn it into the gem it can be.

“It possesses the AMAZING basics you cannot add on later: location, great structure, huge corner lot and big beautiful trees. Complete with 4 bedrooms, this property has all the right bones for you and your family.”

The memorials for the five murdered students are still on the property. In case you are interested, the house which is located in the Brentwood area of Calgary was listed for $489,000.00.

However, this stigma can affect property values?  I would say yes, however, if you didn’t know about it, and paid full “value”, you could be in for a shock when you try to sell down the road.

The onus is on purchasers to ask the right question.  Caveat Emptor or buyer beware applies.  While the sellers have no obligation to volunteer the information, they are not permitted to lie when asked a direct question.  Asking the right questions becomes very important.  Keep in mind, that the agent themselves may not know that the property may be stigmatized.

Neighbours on the other hand can be a great tool when trying to find out information about a property.

Do you think that sellers should have to disclose if a murder or suicide occurred on the property or whether the property is haunted?

Selling your home? Be careful what you say.

When Selling Your Home, be careful what you say about the property.

What you say, can in fact hurt you.  If you are selling a home, be mindful of what you say/write about the property. 

Here is an example of what can happen.

In September 2009, The defendant, Hussain Al-Saffar (“Hussain”),  purchased a property for $439,000.00 in Toronto, Ontario.  When Hussain purchased the property, the basement was unfinished and was sold to him “as is”. 

Hussain obtained the relevant permits and hired contractors to extensively renovate the property,

Of importance to this case, the basement was completely finished, including drywall and carpeting, with the exception of the furnace room area where the interior foundation wall remained exposed and visible. Included in the description of the attributes of the Property were words that the house was “gutted to the bare bone(s)”, which became the focal point of this case.

Although Hussain oversaw the renovations, he never in fact lived in the Property.  Hussain subsequently put the house on the market.

The plaintiffs, Clare Angela Mauro and Anne Delores Mauro (“Mauro’s”),  signed an agreement of purchase and sale to purchase the property from Hussain on or around August 18, 2010 in the amount of $658,000.00. The Mauro’s had an inspection performed on the property.  The report alerted the plaintiffs to potential leakage problems with the basement, including that it was unpredictable and should be monitored. The closing took place September 3, 2010. Agreement of Purchase and Sale

Almost immediately after closing, the Mauro’s smelled must and dampness.   No further investigation was done behind the drywall because  they did not want  to do any unnecessary damage to the finishes of the basement.

On year after closing, there was a major flood.  Most of the costs incurred to repair the damage were covered by insurance.  When renovating the damage, it was discovered that the  north foundation wall leaked water into the basement. In addition, they found cracks in the mortar between the cinder blocks, including one crack that appeared to have been crudely plugged with a piece of wood to stop the flow of water.

The Mauro’s claimed Hussain must have known about it if he gutted the basement to the bare bones, as he claimed. Hussain claimed that he had not seen any leaks and did not notice the piece of wood because he did not strip the basement walls to the cinder blocks, but rather just insulated and dry walled the area in front of the existing plaster.

The Decision:

This case Mauro v. Al-Saffar was heard at the Toronto Small Claims Court.  The plaintiffs claimed $8,659.00 for damages in repairing a leaky basement wall, including damp proofing, treatment for mold, and content removal and replacement in the property purchased from the defendants, in addition to $1,000.00 in punitive damages. 

Deputy Judge Prattas found that even though Hussain did not know the problem existed with the basement walls, he was still responsible to pay.   Deputy Judge Prattas:

Since the defendant testified that he went only to the plaster, which I have accepted, then the defendant’s statements in the MLS Sheet and Sales Brochure were under the circumstances of this case untrue and inaccurate; they were made carelessly and negligently and misled the plaintiffs as to the true condition of the Property and more particularly the basement.  In my view the plaintiffs were misled into believing that they were getting a basement which did not have a latent defect with water leakage potential.

However, because of the warnings of the home inspector, the Mauro’s should assume part of the risk, since they chose not to do any further inspections. 

Deputy Judge Prattas found Hussain 50% liable for the damages, or $4,329.50. No punitive damages were awarded. 

What does this mean?

Typically, A seller is not liable for any defect that they had no knowledge of. if a seller does not know about a problem with the property.

What distinguished this case, was the fact that Hussain had made representations (although carelessly untrue and inaccurate) that the purchasers relied on. 

For more information about patent and latent defects, and what must be disclosed to potential purchasers click here. 

What can be learned is that you should always be careful and truthful about what you say about the property. 

 

The Real Estate Contract Must be Valid to be Enforceable

Ensure that your Real Estate Contracts are Valid

An Agreements of Purchase and Sale, like any other contract, requires a proper offer, and acceptance. 

What are the requirements of basic contract law?

This question takes me back to my first year of law school.  In order for there to be a valid contract, three things are required.

  1. Offersign here
  2. Acceptance
  3. Consideration

This holds true, regardless of whether the contract was sent via email, or fax. 

To further complicate things, according to the Statute of Frauds, R.S.O. 1990, Chapter S. 19, all real estate contracts must be in writing.  While in many circumstances verbal contracts can be enforced, a contract of real estate must be in writing. 

How can this affect your real estate transaction?

The January 8, 2014 decision of Pilon v. Rosu by Deputy Judge Sebastian Winny at the Ontario Small Claims Court depicts what can happen when an offer is not properly accepted, even due to an innocent error or omission. 

This case shows what can go wrong when important things are missing from the contract.

Facts of The Case:

The Plaintiffs in this case, Mr. and Ms. Pilou (the “purchasers”) put an offer of $400,000 with a closing date of November 16, 2011 on the home of the Defendants Mr. and Ms. Rosu (the “sellers”).  The sellers signed back the offer amending the purchase price to $420,000 and the closing date to December 16, 2011 to accommodate a tenant that resided at the property.  It was scanned and emailed to the purchasers. However, Ms. Rosu failed to sign page 4 of 6 (the signature page). 

The purchasers did not accept the sellers’ counter offer, and signed the Agreement of Purchase and Sale back with a counter offer of $420,000, leaving the December 16th closing date unchanged. 

The sellers’ real estate agent then told the purchaser’s real estate agent that the sellers accepted the price change, and emailed the offer to the purchaser’s agent by email.  However, the sellers did not initial the price change on page 1 of the offer and the signature page was still missing Ms. Rosu’s signature.

The purchasers thought they had a contract for the purchase of their intended new home from the sellers.  The sellers in turn also believed there was a deal albeit at a different price. 

Prior to closing the sellers asked the purchasers to extend the closing date, as they could not give vacant possession becayse the tenant remained in the property.  Consent was refused. 

The purchasers were forced to find temporary accommodations due to the fact that the purchase did not close as scheduled.  They sued the sellers for $17,082.80 for various wasted expenses and the return of their deposit. 

Was there a Valid and Enforceable Contract?

After reviewing the facts of the case and hearing the testimony of the parties involved, Deputy Judge Winny held that because no valid contract was formed, the purchasers cannot sue for the failure to close. 

“For a legally-binding contract to be formed, an offer must be accepted.  But also, the acceptance must be communicated to the offeror.  If a party executes an agreement which simply then remains in the possession of that party’s agent and is not transmitted to the offeror, there has been no communication of acceptance and contract formation has not occurred”.

What this means is that verbal confirmation of acceptance is not enough.  It has to be in writing.  In this particular circumstance, because the last change was not initialled by the sellers, the contract was cancelled. 

The purchasers’ claim was dismissed, and it was ordered that the deposit be returned to the purchasers.  However, Depute Justice Winny did say that had the contract been valid, he would have awarded them $13,002.02 for damages as a result of not closing on time, moving costs, storage, legal fees, renting alternative accommodations and mental distress. 

Conclusion:

 Real estate contracts are complicated documents, and the outcome of mistakes can be quite costly.  Always make sure you review that the important terms of the contract are initialled, particularly the price, closing date and that the Agreement of Purchase and Sale is signed.  It is equally important when sending any documents either by email or fax to ensure that all pages were sent. 

In Real Estate Transactions – If it isn’t in writing – it doesn’t exist!

We recommend that you have a lawyer review the Agreement of Purchase and Sale to ensure that your rights are protected. Contact us to review your Agreement of Purchase and Sale.

Should you sell your house before you buy a new one?

Buy First or Sell FirstCollateral v. Standard Charge Mortgage

Which option is best for you?

This question has stumped homeowners for quite a long time.  There are risks involved in both scenarios.  It’s a choice many homeowners have to make when they decide that they want to move.   

Is it best to begin by selling your existing home or to begin with buying a new home?

If you purchase something first, then the clock begins ticking on selling your current home.  Particularly, if you need the money from the sale of your home to close on the home you just purchased.  What if you cannot close in time?  What if the offers are lower than you anticipated? What if you cannot come up with the funds to close?  If necessary, can you carry the cost of both homes? 

If you sell first, but the clock begins ticking on purchasing a new home.  What if you cannot find something that suits your needs in your price range.  What if you cannot find anything in the neighborhood you were looking for?    What if you are out bid in bidding wars?

Traditionally, experts have recommended that you sell your home first, then begin looking for a new home.  However, with today’s booming housing market, many experts are now recommending that people buy first knowing that they will have no difficulties selling their homes. 

There are drawbacks to both selling first or buying first but the decision is very much based on your view of the market and your personality. 

If you are a picky purchaser, you may want to consider buying first.  However, be warned, this is the riskier of the two propositions.  Remember, that while bridge financing is an option, it can sometimes be difficult to obtain, and you will have to have a commitment from a buyer in order to qualify.  Ultimately, it may come down to reducing the price of your home in order to sell it. 

 If you choose to sell first, be prepared to rent, or come up with temporary living options in the event that the timing does not work out according to plan.  Better to wait for the house of your dreams, than to buy the wrong house. 

Regardless of which option is best for you, it is best to err on the side of caution and get a closing date as far out as possible.  This increases your odds of being able to complete both the sale of your home and the purchase of your new home. 

Ultimately, it comes down to your view of the market., your financial situatin, and what you feel most comfortable doing.   If you want to buy first, you have to be confident that you can sell.

Visit Us On TwitterVisit Us On FacebookVisit Us On Google PlusCheck Our Feed