Building in Oakville … Legally

I am very proud to be associated with two Registered builders in Ontario. The first one is our family business (Belsito Homes) and the second is affiliated with my brokerage (Stonemill Developments Inc.).  Both builders have zero conciliations and zero claims.

 

Being licensed and providing a Tarion Warranty isn’t optional. It’s the law! In Oakville, every legally built home has a Tarion enrolment number unless it was built by the homeowner, in which case there should be a Letter of Confirmation from Tarion (a new requirement for a building permit in Oakville).  Oakville is one of the following municipalities that is working with Tarion in a pilot project to help prevent illegal building. No Tarion enrolment or Letter of Confirmation = no building permit.

  • Barrie
  • Belleville
  • Collingwood
  • Greater Sudbury
  • Markham
  • Middlesex Centre
  • Midland
  • Newmarket
  • Niagara Falls
  • Oakville
  • Sarnia
  • Penetanguishene
  • Stratford

There are links to Tarion’s website below.

Builders who fail to register with Tarion can face legal action, resulting in possible convictions, heavy fines, and even jail sentences.

It’s not just the missing warranty that puts home buyers at risk. The Canada Revenue Agency will be looking for HST on a new build and there aren’t many ways to hide from the taxman, especially with easily traced documents on Real Estate Boards and Land Registry. CRA is currently targeting British Columbia’s illegal builders with audits and is hiring 85 extra staff to deal with the problem. It’s only a matter of time before the crackdown happens in Ontario. There’s a link to a CBC story about this below.

So it’s not the builder registration fee ($500) or the enrolment fee ($385 – $1,500) that the illegal builders are trying to save, it’s the underwriting and investigating that Tarion performs as part of the registration process AND it’s the 13% HST that they are trying to avoid paying along with income tax on the profit.  Being registered with Tarion would put these illegal Builders on the radar with CRA.

 

See links for more information below:

Requirements for Building Your Own Home

Building Your Own Home in Ontario FAQ

Letter of Confirmation Application Form

CBC’s story about CRA crackdown in BC20160512_094057

Advertisements

Nightmare Tenant Strikes Again

Her real name is Nina Willis but she used the name Nay Lancelot to apply to rent from two seniors in Toronto who are owed over $9,000.  The seniors checked her references and say that everything looked fine.  The references were probably provided by Nina.

I did a Google search for Nay Lancelot and all that came up were quotes from King Arthur.  When I added tenant, three hits to stories in the Star and Metro News came up but this would have been too late for the seniors.

If I was screening this tenant this would have been a huge red flag.  It is very rare that anyone is anonymous on social media these days.

I’m guessing there was no credit check.  Please, please do NOT rent to anyone without running them through some kind of a credit check. All kinds of alias names show up on these checks. If someone tries to provide their own credit report, just say no!

This is the 8th rental that Nina has been involved with.  She was convicted of fraud and was sentenced to 6 months in jail.  But she’s still at it.  Here’s the story:

Click here for Metro News Story

Click here to read my blog about being a Landlord Detective

 

 

Waterfalls are not far!

If you’re looking for an outdoor activity for March break, check out some of the local parks and hiking trails.  Pat and I wanted to hike somewhere different today.  We looked up the Waterfall hike in Ancaster and thought it would be fun. This is the link to the page:

http://www.waterfalls.hamilton.ca/default.asp?walk=2

We parked at the Inn and followed the trail as described on the site.  The first turn was a little bit confusing because there was a T intersection, but the “you are here” map at the site didn’t show a T.  But we met a nice couple who told us that the waterfalls were “that way”.  So we turned right and found Canterbury falls.  They’re not huge, but they’re quite nice.

We kept going and about 3.5 kms in we missed a turn and ended up going up some stairs. We were still on the Bruce trail – but we weren’t on the waterfall trail that we had planned.  At the top of the stairs there was a valley and deer!  There were probably 10 of them when we first discovered them and some left immediately and then some came back.  They were pretty curious about us.

We decided to check the GPS and see where we were.  The white blazes from the Bruce trail were nowhere to be found.  We could see roads and houses, so we weren’t lost, but we were no longer on the trail.

We backtracked and made it back to the car easily.  The missed turn was well worth it!

If you do this trail, be prepared for hills and some rugged terrain. It’s not as challenging as Yellow and Orange at Crawford and Nemo, but it was a lot of work.

Electronic Signatures

Yes they are legal. As of July 1, 2015, we can electronically sign agreements of purchase and sale in Ontario. Pat and I use Docusign. We load the document onto the site and add the people who will sign and add the markers where signatures and initials are required.

Docusign initial.jpg
Lovely, legible document.

We end up with a clear PDF file that has signature tracking. But then we forward this file to another party and that’s where we’re back to scanning or pictures with a phone and illegible agreements.  I wish using something like Docusign was mandatory but I don’t think that will happen.

Scanned paperclip
Signback using Scan genius – the clip is a nice touch.

Sometimes we get offers back where each page is its own JPG file or each of the twelve pages has such a dark background that you can’t make out any of the pre-printed text.  After all of the negotiation and finally coming to an agreement, we’ll end up not being able to see what we’ve agreed to. Wouldn’t it be better if the original offer was clear enough for everyone to read?

Really dark.jpg
We can barely read this clause.

 

The other benefit to using electronic signature software is accessibility for those who have any type of challenge with signing their name. There is a hosted signature option where I can bring my tablet to a client who feels self conscious because it takes so long for her to sign her signature on each page and give her the option of tapping the screen where she needs to sign.

Electronic signatures save trees!   People (young and old) don’t have printers and don’t want to print. Electronic signature software eliminates the need to print anything. There is a print button, but you don’t have to use it.

Some people are worried that electronic signatures mean that people won’t meet in person any more.  I sincerely hope that nobody is buying a home without seeing it (in person) with their Real Estate Broker or Sales Representative!

I don’t know that we will stop global warming with this option, but it is a step in the right direction.  We’ve got something that is accessible, convenient, environmentally friendly and it doesn’t cost our clients one cent!  There is a cost to the software and there is a hardware requirement if I’m going to bring a tablet to a client for signature, but I think my clients are worth the extra cost.

 

 

Shadow Flipping is not always a Bad thing.

Shadow flipping has been in the news recently with Agreements of Purchase and Sale being assigned to a new buyer two or even three times before closing.

This does happen in the GTA with some new home or condo purchases, but only if the builder’s original Agreement allows for it and several do not.  There’s a potential incremental HST cost to each purchaser and the rebate may be forfeited because the original purchaser who signed the builder’s Agreement and agreed that the home would be a principal residence will not be moving into the home.  It’s very confusing for buyers and sellers and their Realtors.  Pat and I took a course about this topic that was taught by a local Real Estate lawyer and the consensus at the end of the course was that the tax calculations were too complicated and we should all stay away from assignments of new builds.

But, an assignment isn’t always bad. It can be used when something happens and the original buyer cannot close the transaction.

We had a case where the buyers had two dogs.  The condo they purchased only allowed one dog.  We all missed it.  We asked about the pets policy at the concierge desk but not at the management office.  The lawyer was the buyer’s lawyer who did their wills and did not have real estate experience so he missed this vital part of the status certificate.  So when the buyers asked, afterJase Belsito waiving the status certificate review condition and firming up the purchase, how they should register their dogs, they were told they could only move one dog in.  They were heartbroken.  We suggested that we help them get someone to take over their agreement of purchase and sale.

Rather than list the unit for sale on MLS, which would cost the buyers commission, we helped them write an ad on one of the free sites.  We showed the condo during a revisit (with the Seller’s blessing because he knew what had happened), and helped the non-real estate lawyer with the assignment agreement.  I actually sent the sample agreement that we used in class.  The original purchase didn’t register on title, but the assignment did.  This saved the original buyer from having to pay land transfer tax.  The purchase price was the same so capital gains tax was not an issue.

The takeaway from this story is that assignments are sometimes necessary and more importantly, be wary of pet restrictions in condos.  Disclaimer:  The dog in the photo is Jase Belsito and is not the dog from the story.

 

 

Protect Yourself from Illegal Building

In Ontario, every new home builder must be registered with Tarion.  In order to be registered with Tarion, a builder must complete a net worth statement and demonstrate adequate construction knowledge.  He may even have to write a test and be able to show Tarion officials a building plan and an agreement of purchase and sale.  The cost to enrol in Tarion is $300 a year, but the approval process can take a little time.  And if the builder is new, he’ll have to put a deposit down for each build so that Tarion has some recourse if something goes wrong.  And then every year, the builder has to renew with Tarion which means filling out another net worth statement and paying another $300 and waiting for approval.  Becoming a registered builder is not expensive and is a simple enough process as long as you know what you’re doing. Why then are so many new homes not under Tarion warranty?

One reason may be that the builder could not possibly become registered because he does not understand the process.  You should definitely stay away from any home offered by that builder.

But what if the builder is just trying to avoid the HST?  If you’re buying a new home with no Tarion warranty, you can assume that the builder/seller will NOT be paying HST.  The seller may have built the home for himself or a family member and may be under the impression that HST is not applicable.  This may be true, but if not, it’s a costly mistake and as a buyer, it is vitally important that you protect yourself from any future HST liability.  The best way to protect yourself is to surround yourself with knowledgeable professionals.  Start with a real estate professional who understands that this is a complex issue and add a real estate lawyer with tax knowledge or a lawyer who knows when to call in a tax lawyer.  Sellers of new homes may also want to consider consulting an accounting professional with a tax speciality because both Capital gains and HST may be applicable.

Here’s a link to a Toronto Star article from 2012 which outlines how a buyer became a builder and liable for the tax when she sold the home she purchased.

http://aaron.ca/columns/2012-09-15.htm

Heather Belsito, Broker

Stonemill Realty Inc., Brokerage

905-847-5900 (office)  heatherbelsito@gmail.com   http://www.patbelsito.com