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

Did you read Schedule B?

 

Schedule B.jpg

Someone asked why photos of the home they had purchased were still posted on-line and Joseph Richer, the Registrar of RECO, answered as follows: “once ownership of the home has been transferred to you — the new owner — a seller’s representative can’t make any reference to the property in advertising without your written consent. That includes posting photos of the home on their website or anywhere else.”

Mr. Richer went on to add that “before publishing an ad that contains the selling price, closing date or other details about the deal, a sales representative needs to obtain written consent from both you and the seller, regardless of who owns the property at the time of the advertisement.”

Have you given written consent to the listing brokerage to advertise these details of your agreement?  Look through your agreement for the listing brokerage’s Schedule B.

Most brokerages include clauses in a schedule to cover under what terms interest will be payable on your deposit. Other items are also included. I like to include a limit of one hour on any revisits and agreement that the deposit will be a bank draft. Sometimes there are clauses where the Buyer and Seller both agree that they have not received any professional advice from either brokerage like legal, engineering or environmental advice.

But there is a troublesome clause that I always adjust for my buyers, and that’s this one:

“In accordance with the Privacy Act (PIPEDA), the Buyers and Sellers hereby agree to allow the Listing Brokerage and their Representatives to distribute information pertaining to the sale of the property in future marketing material upon this Agreement becoming firm and binding. Such information may include the price but shall not include the names or personal information about the Buyer or Seller.”

There is no end date in this clause so I always add “until completion only” which gives permission to advertise the sale details until the closing date only.  It makes sense that a Listing brokerage will want to be able to advertise that they successfully sold the house and that usually includes the price or some sort of identifying information about the price – like 102% of asking or $50,000 over asking.  If this is not acceptable to you as a Buyer, ask your representative to get rid of the entire clause.

Be warned that changes to this clause shouldn’t negatively affect you in a multiple offer situation because this won’t affect the Seller’s bottom line, but this will depend on how the change is explained to the Seller.    Click the link below to read the article.

See Toronto Star Article here

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

 

 

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.

 

 

10 Ways to Make your Home More Saleable

A little bit of elbow grease will go a long way to getting the best possible price for your home.

  1. Get rid of clutter. Throw out or file stacks of newspapers and magazines.  Pack away most of your small decorative items.  Store out-of-season clothing to make closets seem roomier.  Clean out the garage.
  2. Wash your windows and screens to let more light into the interior.
  3. Keep everything extra clean. Wash fingerprints from light switch plates.  Mop and wax floors.  Clean the stove and refrigerator.  A clean house makes a better first impression and convinces buyers that the home has been well cared for.
  4. Get rid of smells. Clean carpeting and drapes to eliminate cooking odours, smoke, and pet smells.  Open the windows.
  5. Put higher wattage bulbs in light sockets to make rooms seem brighter, especially basements and other dark rooms. Replace any burnt-out bulbs.
  6. Make minor repairs that can create a bad impression. Small problems such as sticky doors, torn screens, cracked caulking, or a dripping faucet may seem trivial, but they’ll give buyers the impression that the house isn’t well maintained.
  7. Tidy your yard. Cut the grass, rake the leaves, trim the bushes, and edge the walks.  Put a pot or two of bright flowers near the entryway.  In winter, clear the snow, showing how easy it is to keep the snow cleared at this house.
  8. Patch holes in your driveway and reapply sealant, if applicable.
  9. Clean your gutters.
  10. Polish your front doorknob and door numbers.

Heather Belsito, Broker

Stonemill Realty Inc., Brokerage

905-847-5900 (office)  heatherbelsito@gmail.com

http://www.patbelsito.com

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