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5 Things to know about square footage
Posted on Thu, 09 Apr 2015, 11:48:55 AM  in Home buying tips,  Home selling tips
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This is a great article regarding square footage from a great lawyer that I've heard speak many times.  Mark Weisleder is a lawyer, author & speaker with a ton of knowledge in the Real Estate market.  If your buying or selling a home, these are some great points. 
 
5 Things to know about square footage

 

I have received calls from buyers and real estate agents complaining about finding out that their home or condominium had less square footage than was represented on their original MLS® listing.

 


My immediate thought was "did the home shrink after closing?" In other words, if the square footage was really important to you, why didn't you measure it yourself before you bought the home?

Here are 5 lessons to remember about square footage:

1.    When you buy from builder plans, nothing is guaranteed

Some builders attach plans with square footage to their agreements, other don't. Even if the plan is attached, The Tarion Warranty Programme permits registered builders to make errors up to 2% and unfortunately, there are no penalties if the error exceeds 2%. While buyers can request a price adjustment if the error exceeds 2%, in my experience, most builders will not agree with this. In addition, there is confusion as to whether the measurements are just for interior living space or whether it goes to the exterior walls, and it may not account for pillars or other obstructions inside the unit.
So even if you are relying on builder plans when figuring out the square footage, there may be errors in them.

2.    Buyers may be able to sue if the difference is substantial

The case law has gone both ways as to whether a buyer can successfully sue if they find that the seller misrepresented the square footage and the difference was substantial, say over 10%. In some cases the listing brokerage was held responsible for not properly verifying the information. But it is not guaranteed.

3.    Will disclaimer clauses protect sellers and real estate salespeople

A disclaimer clause will likely protect a seller from liability, unless they knew the information was false and gave it out anyways. However, a real estate salesperson is required to do their due diligence. That does not mean that you can just copy the square footage from an expired listing. If you do not do any due diligence, you may still have violated the Real Estate Council of Ontario Code of Ethics, even with a disclaimer clause.

4.    If you are acting for the buyer, ask how the seller came up with the square footage

While buyer salesperson can normally rely on a listing salesperson to conduct due diligence, it is a good idea to always ask where the number for the square footage came from. Was it on plans, through MPAC or just from a prior MLS® listing when they bought in the first place? In addition, if you see a disclaimer clause, explain this to the buyer and consider having the property measured by the buyer themselves for verification.

5.    If you are not sure, just measure it yourself

It is easy to be fooled when it comes to square footage. Professional home stagers are experts at making rooms appear larger than they are by the furniture that is used. If you are acting for a seller, discuss with the seller the advantages of hiring a professional to verify the square footage before putting the home on the market. If you are acting for a buyer, ask them if the square footage is important to them, and if necessary, take the time to do some of the measurements with the buyer to make sure the area is close to what is being represented.

By asking the right questions both before listing and during the offer negotiations, there should be no complaints or claims about square footage after closing.

If you have any stories to share about the GTA housing market or just need some advice, please contact me at mark@realestatelawyers.ca 

 

Click here to view and/or print a PDF copy of this article
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Toronto is still HOT!!!
Posted on Fri, 28 Nov 2014, 03:05:17 PM  in Home buying tips,  Home selling tips
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Just listed 364 Glenholme Ave. in the Rogers and Dufferin area.  In just 2 days we have had over 20 showings and all the feedback has been tremendous.  People really do want to live in this great city of Toronto.  We really don't think there will be any slow down in the market these winter months.  Give Art and Jen a call for all your Real Estate needs, It's always a great time to Buy or Sell in Toronto.

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Flipping Condos in Toronto
Sunday, 11 November 2012, 09:21:13 PM
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A lot of people always ask Art & Jen "is there money in flipping condos?"  The answer is "YES" but you really need a good team behind you to protect you from all the legal issues.  We are always here to help you with all your Real Estate Needs. 

Below is a great article from  Mark Weisleder, a Toronto lawyer.  It pretty much tells you everything you need to know about flipping condos in Toronto.

______________________________________________________________________________________

Many buyers of new GTA condos looking to cash in on the hot real estate market by flipping their units before the buildings close face an unusual legal situation — the standard purchase and sale contracts don’t apply.

The final closing on the building may come months after people move in. In the meantime, you’re trying to sell something that you don’t legally own.

To deal with a growing issue, the Ontario Real Estate Association has developed a new form to make the process easier for everyone. It’s called an “assignment agreement” and here’s how it works:

Let’s say you bought a condo from builder’s plans three years ago for $300,000. It is now ready for occupancy, but closing is six months away. You’ve received an offer for $350,000 and want to sell now.

Since you don’t own the unit yet, you must sell your interest in the contract that you have with the builder. Your buyer will then be taking your place in the agreement with the builder.

Here are some issues:

Will the builder let you sell your agreement?

They don’t have to, but most builders will allow it and charge a fee. Make sure you get permission from the builder before advertising your unit for sale or signing any assignment agreement.

Is the land transfer tax based on $300,000 or $350,000?

The contract includes the total price the second buyer is paying. So that buyer will have to pay land transfer tax based on the price on $350,000. The original buyer will not have to pay any land transfer tax under this scenario.

However, the seller — i.e. the original buyer — will have to pay tax on the gain of $50,000.

Is the realtor’s commission based on $300,000 or $350,000?

The agent will expect to be paid on final price of $350,000. If you want to negotiate a different amount, make sure it is done before signing anything.

What happens to the deposits given to the builder?

The second buyer returns it to the seller. The agreement will provide options about how this is done. They can be returned in several ways: as soon as the assignment agreement is signed, on the date of occupancy, or just prior to the final closing.

Are there any HST issues?

The HST was probably included in the original builder agreement. Therefore, if the new buyer is not moving in, he or she may have to pay the HST to the builder on final closing and then apply for a rebate from the Canada Revenue Agency.

The seller may have to charge HST on any profit, for instance the $50,000 in the above example, as well as on any deposits that are being paid back, if he or she originally bought the unit as an investment and never intended to move in.

Buyers should take a look at the original purchase agreement to see whether there are any additional adjustments on closing. There are often hidden charges that can sometimes add thousands of dollars to the final sale price. Under the assignment agreement, the final buyer must pay all these costs, even if they are not aware of them. If, as the final buyer, you want to change that, then an extra clause must be added to the assignment agreement.

If you are thinking of buying an assignment, make sure to check with your lender first to make sure that they will approve this kind of deal with the final price.

By understanding all the issues around assignment agreements, buyers, sellers and real estate agents will be better prepared for what is becoming a more frequent transaction in the industry.

Mark Weisleder is a real estate lawyer. Contact Mark at mark@markweisleder.com

 

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Why Use a Greater Toronto Area Realtor!
Posted on Tue, 02 Oct 2012, 08:50:38 AM  in Home buying tips,  Home selling tips, etc.

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Mortgage Rule Changes
Posted on Tue, 25 Sep 2012, 09:35:00 AM  in Home buying tips
Mortgage Rule Changes

June 21, 2012 -- The Honourable Jim Flaherty, Minister of Finance, announced four measures for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent:

  1. Reduce the maximum amortization period to 25 years from 30 years.
  2. Lower the maximum amount Canadians can borrow when refinancing to 80 per cent from 85 per cent of the value of their homes.
  3. Fix the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent.
  4. Limit the availability of government-backed insured mortgages to homes with a purchase price of less than $1 million.

The new rules will take effect on July 9, 2012. 

For more detailed information, please visit www.fin.gc.ca

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Art & Jen.....Your Real Estate Professionals
Posted on Fri, 07 Sep 2012, 10:45:20 AM  in Home buying tips,  Home selling tips, etc.
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