Insights into Organized Real Estate in Canada

What is an MLS (Multiple LIsting Service)

Origin

According to the U.S. National Association of Realtors:

In the late 1800s, real estate brokers regularly gathered at the offices of their local associations to share information about properties they were trying to sell. to organized real estate: Help me sell my inventory....

Purpose and benefits

The primary purpose of an MLS is to provide a facility to publish a “unilateral offer of compensation” by a listing broker, to other broker participants in that MLS. In other words, the commission rate...

Canada

In Canada, the national MLS® is a cooperative system for the 98,000+ REALTOR® members of the Canadian Real Estate Association (CREA), working through Canada's 101 real estate boards and 11...

Who are the Real Estate Regulatory Agencies in Canada

Alberta

Real Estate Council of Alberta (RECA)

4954 Richard Road SW, Suite 350 Calgary, Alberta T3E 6L1

Calgary, AB T3E 6L1 Canada

Phone: (403) 228-2954

Fax: (403) 228-3065

British Columbia

Real Estate Council of British Columbia (RECBC)

Suite 900 – 750 West Pender Street Vancouver, British Columbia V6C 2T8

Vancouver, BC V6C 2T8 Canada

Phone: (604) 683-9664

Fax: (604) 683-9017

Manitoba

Manitoba Securities Commission

Real Estate Division

500 – 400 St. Mary Avenue

Winnipeg, MB R3C 4K5 Canada

Phone: 204-945- 2562

Fax: 204/948-4627

New Brunswick

New Brunswick Real Estate Association

22 Durelle Street, Unit #1 Fredericton, NB E3C 1N8

Fredericton, NB E3C 1N8 Canada

Phone: 506/459-8055

Fax: 506/459-8057

Newfoundland & Labrador

Government of Newfoundland & Labrador

Financial Services Regulation Division

P.O. Box 8700 St. John's, NL A1B 4J6

St. John's, NL A1B 4J6 Canada

Phone: 709/729-2595

Fax: 709/729-3205

Northwest Territories

Northwest Territories Municipal & Community Affairs

Box 1320 Yellowknife NT X1A 2L9

Canada

Nova Scotia

Nova Scotia Real Estate Commission

7 Scarfe Court, Suite 200 Dartmouth, NS B3B 1W4

Dartmouth, NS B3B 1W4 Canada

Phone: (902) 468-3511

Fax: (902) 468-1016

Ontario

Real Estate Council of Ontario (RECO)

3300 Bloor Street West Suite 1200, West Tower Toronto, Ontario M8X 2X2

Toronto, ON M8X 2X9 Canada

Phone: 416/207-4800

Fax: 416/207-4820

Prince Edward Island

PEI Real Estate Association

Island Information Service P.O. Box 2000 Charlottetown, PE Canada C1A 7N8

Canada

Québec

Association des Courtiers et Agents Immobiliers du Quebec

4905, Lapiniere Boulevard, Suite 2200 Brossard Quebec, j4z 0G2

Brossard, Québec J4Z 3P2 Canada

Phone: (450) 676-4800

Fax: (450) 676-7801

Saskatchewan

Saskatchewan Real Estate Commission

237 Robin Crescent Saskatoon, Saskatchewan S7L 6M8

Saskatoon, Saskatchewan S7L 6M8 Canada

Phone: 306/374-5233

Fax: 306/373-2295

Yukon Territory

Department of Community Services

Government of Yukon Box 2703 Whitehorse, Yukon Y1A 2C6

Canada

Rights & Responsibilities Corner

HOME INSPECTIONS

What is it?

A home inspection is an examination of a property’s condition. It is an on-site in-person visual inspection of the major elements and systems of a home as observed at the time of inspection.

A home inspector typically examines such things as the foundation, roof , attic, plumbing and electrical systems, HVAC, insulation, drainage, structural integrity, and more.

The report will normally indicate whether something is unsafe, whether anything needs to be repaired or replaced (now or in the near future), or if there is evidence of any past problems.

Why you should buyers, sellers and agents care?

A home inspection on a resale home helps make for a smooth transaction by allowing buyers and sellers to determine the condition of the home and thereby make informed decisions

A seller may use an inspection to help determine their property’s value.

The buyer after receiving the inspection report has several options. They may decide to ask the seller to make certain repairs, simply accept any defects, ask the seller to adjust the price, or they may simply walk away from the deal and not buy the home.

Top Things to Ask When Selecting an Inspector

Qualifications – Since the home inspection industry is unregulated anyone can claim to be a home inspector. So find someone with accreditation, training and experience in the industry.

Experience – Ask how many years they have been in business. You want someone who will be around if you need to follow up later with questions. Make sure their experience is with inspections and not simply general construction experience.

Expertise – Ask them about the experience they have inspecting the type of home that you are considering.

References – Someone with lots of experience in the industry should be able to give more than a handful.

Insurance – Always ask if they have insurance.

What’s included? – Keep in mind that the inspector may not be able to access certain areas of the home or see everything. Check to see whether the inspector will get onto the roofs and into attics and crawl spaces. Will the inspector check for safety recalls on appliances, etc. Ask to see a sample report.  An inspector does not give a pass or fail grade or provide warranties or guarantees on a home’s condition. The inspector doesn’t  assess if the home meets zoning and building codes.

Cost – Home inspection fees may typically range from $350 to $600 or more depending on the size, condition and complexity of the home.

Can I come along? – Be present during the inspection so that you can ask questions and see any issues first hand.

Now What?

There is no such thing as a perfect property.  Every building will have at least some minor concern but here are probably the worst things that could come up. These will be the hardest and most costly to remedy.

1.Foundation issues (i.e. structural weakness) 2.Mold 3.Water damage 4.Problems with the Roof 5.Furnace issues 6.Vermin An old electrical system (i.e. “knob and tube” style electrical) To search for a local home inspector go to our resources page here

INSURANCE

Home & property insurance

This type of insurance covers the building and its contents in the event of such things as fire, theft, vandalism and so forth. Mortgage lenders often insist on fire insurance coverage at least equal to the loan amount or the building’s value. Personal liability coverage is also important to include for protection should someone sue you for injury or damages. Review your policy yearly to make sure proper coverage.  You don’t want to be under-insured.

Mortgage insurance

High-ratio mortgages (greater than 75% of the property value) must be insured against default by either the CMHC or by a private insurer such as G.E. Capital. Many people also get life and disability insurance which will pay off their mortgage in the event of death or a disability that prevents them from working.

Title insurance

This covers losses related to issues that prevent you from having clear ownership of the property such as liens (i.e. if the previous owner had unpaid property taxes), encroachment (i.e. a structure has to be removed because it is partially on your neighbour’s property), errors in surveys and public records, and so on. Title insurance isn’t mandatory but it can comes in handy. Title insurance allows your lawyer to close the sale of the property even if title registration is delayed.  Identity theft is another thing that title insurance can help with. It protects against title fraud, such as when a criminal uses stolen or forged documents to transfer your home’s title into their name then obtain a mortgage and disappear with the money.  Title insurance coverage may also protect you in case your lawyer makes an error while handling the real estate transaction.

Special insurance policies are also available for condo unit owners.

To search for a local insurance broker go to our resources page here

Legal

Title Search

Hiring a good lawyer early in the home-buying process can help you avoid risks and save you time and  money.

You will need a lawyer as soon as possible once an offer has been accepted but you might wish to have someone even earlier in the process so you can have them look over a proposed agreement of purchase and sale and answer any questions you might have.

In the real estate buying and selling process the main role of a lawyer is to do searches to ensure a  home is free and clear of any liens or encumbrances.

The lawyer pays fees to various government departments (Land Registry Offices) to do these searches and passes these costs (known as disbursements) on to you.

Utilities and Taxes

Prior to closing, your lawyers will advise the local municipal tax department and utilities such as water, hydro and gas of the change of ownership at the closing date. The lawyer will have the utilities read the meters at the close date as well so that adjustments for taxes and utilities paid can be made.

Building, Zoning and Survey

The lawyer enquiry with the Municipal Building Department to determine if the home and any structures on the property complies with zoning by-laws. If there are any inspections or work orders pending the lawyer will notify the buyer of that too. The lawyer will provide you a survey of your property showing the exact location of all structures in relation to the lot lines.

Condominium Status Certificate

For condo purchases the lawyer will obtain and study the Condo Status Certificate to ensure there is proper insurance, an adequate amount of reserve fund money (to be used for repairs and maintenance of common elements), whether there are any lawsuits against the condo corporation; and the situation with regards to condo fees.

What information do does the lawyer need to close the purchase?

1.Agreement of Purchase and Sale 2.Name of the Mortgage Lender 3.Photo Identification 4.Date of Birth of all purchasers. 5.Address for Service –if other than the property (i.e if the property is being purchased as an investment property) 6.Title particulars (i.e. if there is more than one purchaser then the purchasers need to instruct the lawyer whether the title will be taken as joint title or tenant-in-common) 7.Property Insurance 8.Closing Funds

To search for a local lawyer go to our resources page here

Mortgages

What is it?

A mortgage is a loan you get to pay for a property. Many people dream of owning a home, but the high cost usually requires them to obtain a mortgage to make this dream a reality. But be careful. The building and land is becomes collateral for the loan, meaning that if you don't make your payments, the lender can possession of your new home to cover your missed payments.

Mortgage Terminology

The principal is the amount you borrow to purchase the home and interest is charged on this amount.Because mortgage loans are usually for a significant amount of money they are usually financed over around fifteen to twenty-five years. This is called the loan's term. The total is divided into equal payments over the loan term using a process called amortization. Early on your payments mostly go toward paying the interestbut with time it eventually begins to go more towards the principal.

How Much Can You Borrow?

Lenders typically use two guidelines to determine how much you can afford to pay:

1. The Gross Debt Service (GDS) ratio says that your monthly housing costs should not be more than 32% of your gross monthly income. Housing costs include such things as principal, interest, taxes and heating expenses. For condo purchases, 50% of the condo fees are added into the calculation.

2. The Total Debt Service (TDS) ratio says that your total monthly debt payments should not be more than 40% of your gross monthly income. This includes housing costs and other debts including car loans or leases, credit card payments, and so forth.

To search for a local mortgage broker go to our resources page here

Legal

Title Search

Hiring a good lawyer early in the home-buying process can help you avoid risks and save you time and  money.

You will need a lawyer as soon as possible once an offer has been accepted but you might wish to have someone even earlier in the process so you can have them look over a proposed agreement of purchase and sale and answer any questions you might have.

In the real estate buying and selling process the main role of a lawyer is to do searches to ensure a  home is free and clear of any liens or encumbrances.

The lawyer pays fees to various government departments (Land Registry Offices) to do these searches and passes these costs (known as disbursements) on to you.

Utilities and Taxes

Prior to closing, your lawyers will advise the local municipal tax department and utilities such as water, hydro and gas of the change of ownership at the closing date. The lawyer will have the utilities read the meters at the close date as well so that adjustments for taxes and utilities paid can be made.

Building, Zoning and Survey

The lawyer enquiry with the Municipal Building Department to determine if the home and any structures on the property complies with zoning by-laws. If there are any inspections or work orders pending the lawyer will notify the buyer of that too. The lawyer will provide you a survey of your property showing the exact location of all structures in relation to the lot lines.

Condominium Status Certificate

For condo purchases the lawyer will obtain and study the Condo Status Certificate to ensure there is proper insurance, an adequate amount of reserve fund money (to be used for repairs and maintenance of common elements), whether there are any lawsuits against the condo corporation; and the situation with regards to condo fees.

What information do does the lawyer need to close the purchase?

1.Agreement of Purchase and Sale 2.Name of the Mortgage Lender 3.Photo Identification 4.Date of Birth of all purchasers. 5.Address for Service –if other than the property (i.e if the property is being purchased as an investment property) 6.Title particulars (i.e. if there is more than one purchaser then the purchasers need to instruct the lawyer whether the title will be taken as joint title or tenant-in-common) 7.Property Insurance 8.Closing Funds

To search for a local lawyer go to our resources page here

Mortgage Regulators and Associations

Mortgage Associations

The links below will open a new window with the corresponding website.

Associations

CANADIAN PROPERTY LAW

What Are Property Rights?

The popular notion of property as something owned, encourages the idea of property rights as absolute. However, property in the legal sense is more accurately regarded as the combination of the legal rights of individuals with respect to objects, and the obligations owed them by others and guaranteed and protected by government. Property is either classified as private property owned by one or more individuals, or public property owned by government.

Property law is also classified under common law as real or personal. Real property (or realty) is land, any buildings on that land, any mineral rights under the land, and anything that is attached to the land or buildings that can be considered permanent. Personal property (sometimes known as chattels) includes any property that is not real property. The difference between real and personal property comes from early English law, under which property was considered “real” if the courts could restore to the dispossessed owner the thing itself, rather than simply awarding damages as compensation for its loss.

Origin and Development

Property law, for all of Canada’s common law provinces, originated in England. The laws were established at various time — in Nova Scotia and (what later became) New Brunswick in 1758, Prince Edward Island in 1763, Upper Canada (Ontario) in 1792, Newfoundland in 1832, British Columbia in 1858 and the North-West (later the three Prairie provinces) in 1870.

The Constitution Act, 1867, gave legislative power over property and civil rights to the provinces. Thus general property law, including succession law and matrimonial property law (see Family Law), may only be enacted by the provincial legislatures. However, certain kinds of property (such as bills of exchange and promissory notes, patents, copyrights and interest for the use of money) are within federal jurisdiction. Parliament may incidentally affect property rights through legislation regulating interprovincial or international trade and commerce, through its power of taxation and through its power of expropriation. Nevertheless, general property law is the preserve of the provincial legislatures.

The development of property law has generally been gradual and unspectacular. In the latter part of the 19th century, Canadian provinces and territories enacted statutes that permitted married women to hold property separate from their husbands. Prior to this time, on marriage a woman’s personal property was vested in her husband. Separate property for a married woman permitted the matrimonial home to be held in joint tenancy and during the 20th century this became popular.

Evolution of Fairness

In the 19th century, the succession law of real property became the same as that for personal property. The rule of primogeniture — inheritance by the eldest son — gave way, where there was no will, to a sharing of land among the spouse and children in the same way that personal property could be shared. In 1910 Alberta and Saskatchewan, following the example of New Zealand, became the first provinces to enact legislation restricting the power to leave property by will (respectively, the Act Respecting the Rights of Married Women in the Estate of their Deceased Husbands, and the Act to Amend the Devolution of Estates Act). Gradually, all the common-law provinces enacted legislation, called testators’ family maintenance or dependants’ relief legislation, that empowered a judge to set aside a will if the maker of the will had failed to provide adequate maintenance for a spouse or other dependants.

In 1975, in the Murdoch Case, the Supreme Court of Canada held that an Alberta rancher’s wife whose marriage had broken down was not entitled to a share in the ranch, which was registered in the husband’s name, even though she had worked hard to make the ranch a success. The unfairness of the law, graphically illustrated by this case, resulted in a profound change in matrimonial property laws throughout the common-law provinces in the 10 years following the decision. Provincial legislation now permits a judge to order a division of property after a marriage has broken down to achieve fairness between spouses no matter who owns the assets.

There has also been a corresponding response by the courts, and property law concepts have been modified to achieve fairer results. In the 1978 Rathwell case in Saskatchewan, the Supreme Court of Canada, in order to prevent unjust enrichment by the title-holding husband, resorted to the constructive trust as a remedial device to prevent unjust enrichment occurring from the contributions made to the acquisition of assets by the wife. In 1980 in Pettkus v Becker, the same concepts leading to an equal division of assets were applied between an unmarried man and woman who had been living together for approximately 20 years, where the contribution of the woman enabled the man to acquire assets.

Deeds and Land-Titles

he property laws of the common-law provinces are generally similar, but one area in which the real property law does differ is in the system of recording the ownership of land. In the Atlantic provinces and in southern Ontario, there is a deed registration system and in the four western provinces and in northern Ontario there is a land titles or Torrens system. Under the deed registration system, individuals establish ownership to land derivatively through their predecessors in title. Theoretically, to establish ownership they should trace the title to the original grant of the land from the Crown. In southern Ontario, it is necessary now to show a good root of title dating back 40 years.

Under the land-titles system or Torrens system, named after Sir Robert Richard Torrens who developed the system in South Australia, the state registers all lands within its jurisdiction by listing who owns them and who has claims against them. Under this system, prospective purchasers need only be concerned with who the register says is the owner and not with whether there is a good root of title.

Changing Property Types

Types of property reflect the economic and social aspects of society. Industrialization introduced new forms of property rights in factories and machines. The growth of joint-stock companies, the forerunners of modern corporations, created new property rights in the form of bonds and shares. Recently the nature of property rights has been transformed by the tendency of modern governments to draw in revenue and power and to pour forth money, benefits, services, contracts, franchises and licences.

This government largesse may replace the traditional forms of wealth and new rules will be required to protect individuals from arbitrary government action. It has been suggested that property should no longer be defined solely as the right to exclude all others from the use or benefit of something, but should also comprehend the right not to be excluded from the use or benefit of the achievements of the whole society.

Charter Rights

While the Canadian Charter of Rights and Freedoms does not expressly protect property rights, such rights are created and are therefore protected by both common law and by statute law — although both can be changed by legislation. Any constitutional guarantee should recognize that property is a social institution that must be constantly remolded.

A great jurist has warned that an absolute right of property would result in the dissolution of society. The importance of this warning can be best illustrated by considering a person who buys a gun. The property rights this person acquires in the gun cannot extend to permission to use the gun in any way. Similarly, landowners should not be permitted to pollute the air and water because this would lessen the enjoyment and property values of adjacent owners, and because of the moral obligation to pass on to succeeding generations a habitable planet. Property rights may therefore be modified to respond to new threats to the environment. There is no preordained harmony between private rights and public welfare; society will always face the dilemma of how to combine the efficient use of resources with effective regulation in the interests of all.

Quebec

In the widest sense, the law of property in Quebec comprises the principles regulating the ways in which all kinds of property may be disposed of and acquired — all the mechanisms and transactions by which property circulates. In a narrower sense, Quebec property law is concerned with defining what constitutes property. In fact, anything with a financial value can be defined as property, and such a definition would embrace any right that is assessable in monetary terms, and not merely rights in things (“real rights”) or indeed those things themselves. Traditionally, however, property law is limited to the realm of real rights.

Quebec property law is firmly rooted in the French Civil Law tradition and derives, therefore, from Roman law. Anglo-American common law has had little influence on its institutions (except for the mechanism of the trust and a number of security devices). Quebec law, like French law, has historically attached the greatest importance to land and rights in land as objects of wealth. Indeed, feudal landholding (the Seigneurial System) was only abolished in Quebec in 1854, a necessary reform before the civil law itself could be codified in a modern way (1866). Land in Quebec, whether once held in seigneurial tenure under the French regime or granted by the Crown (since 1763), is now in all cases held by individuals in a “free” tenure, ie, it is held independently of the Crown as absolutely as possible.

The Quebec Civil Code contains the fundamental principles of property law applicable to private persons. Since 1866 it has been supplemented by much ancillary legislation regulating new forms of property (such as hydraulic power) and controlling the use of property in view of contemporary concerns (such as environmental hazards and cultural heritage). The Code nonetheless enshrines two fundamental tenets of Quebec property law: the right of private property (private ownership of lands and goods) and the free circulation of such property. The Code itself regulates private property in this sense, whereas statutory legislation regulates Crown or public and municipal property to which special rules apply.

Quebec civil law views all types of property either as “immovable” (land and its appurtenances, and all rights in land) or as “movable” (physically movable objects as well as claims for money and performances under contracts and obligations in general). This distinction is the thread that runs throughout Quebec law and it is the basis for many of the different legal technicalities attached to various properties. For example, rights of all kinds in land are subject to official recording in the land titles registration system, whereas rights in movable property are not.

Rights in things (technically “real rights”) can be divided into three broad categories. Individuals may have either a right of ownership, ie, the right in their own property; a right in the thing belonging to another, ie, a right less than ownership but nonetheless composed of some of the prerogatives associated with ownership; or a right in the form of claim by a creditor to seize and sell a debtor’s property to satisfy an unpaid debt.

Ownership, the most complete real right, is the right of using, enjoying and disposing of things in the most absolute manner, provided no use is made of them contrary to law or regulation. Ownership is an “exclusive” or individual right and, as a concept, is unitary. Thus, the law discourages two or more persons from owning the same property jointly (with certain notable exceptions such as of condominiums and aspects of property relations between married persons). Nor does the civil law admit the distinction, known to the common law, of legal and equitable ownership — for example, property shared between a trustee and the beneficiary of a trust. And, because ownership is viewed as exclusive and individual, the general policy of the law is that rights less than ownership vested in other persons are normally limited in time, so that the full integrity of the prerogatives attaching to ownership itself is preserved.

The rights in the second category — rights in things of which someone else is the owner — carry some of the prerogatives of ownership but are less complete than the right of ownership. The right of “usufruct” is the right of possessing, using and enjoying the property (movable or immovable) of another, subject to the obligation of restoring the property (or sometimes its equivalent in money) at the end of the period of enjoyment. This scheme, or variations of it, is often encountered in estate planning.

“Emphyteusis” is the right, under a long-term lease of land belonging to another, whereby the lessee agrees to make improvements in return for the right to enjoy the land as owner for the period specified. It is used principally in connection with large urban development projects. “Real servitudes” are rights of various kinds linking two lands whereby one land (or landowner) is subject to specified obligations or services in favour of the other, such as rights of view or of passage or the obligation not to build a wall above a certain height.

In the third category of rights, a creditor may have a right over the property of his debtor enabling him to seize and sell the property, under the authority of the court, if the debtor is unable to pay his debt. The property subject to seizure by the creditor may previously have been transferred into the possession of the creditor or may have remained in the possession of the debtor. These various security devices in Quebec are known either as privileges — ie, rights attaching to the property of the debtor that have been created by law to secure a varied list of creditors’ claims; or as “hypothec,” the right of the creditor to seize and sell the immovable property (land, buildings) of his debtor made liable to secure the debt by contract. The hypothec is the civil law equivalent of the mortgage in common-law Canada.

It is not certain in Quebec law to what extent it may be open to private persons to create, under the principle of freedom of contract, real rights or rights of property other than those already laid down in the civil code or in ancillary legislation. The most commonly used property rights are now provided for in these sources.

Fraud Threat

In recent years there has been an outbreak of mortgage title fraud in which criminals either forge or fraudulently convey or mortgage properties posing as the rightfully registered owner. This has been particularly serious in Ontario, where the provincial government was forced to make legislative changes to protect hundreds of innocent property owners from losing their legal title through no fault of their own.

In 2005 the Ontario Court of Appeal ruled in Household Realty Corp. v. Liuthat a fraudulent transfer or mortgage was valid and enforceable once registered. In addition, a forged mortgage was valid because the lenders did not participate in the fraud. As a result, the title was considered impossible to annul, or “immediately indefeasible.” In a litany of Ontario cases, innocent property owners lost their title or were forced to comply with requirements of a mortgage they never applied for. The only recourse open to them was to apply for compensation to the Land Titles Assurance Fund that exists under the Ontario Land Titles Act.

Residential title insurance policies in Ontario provided the necessary coverage to property owners to protect against title fraud. But the insurers were forced to bear the costs of claims and were rarely compensated by the Land Titles Assurance Fund.

The Province responded by enacting the Ministry of Government Services Consumer Protection and Service Moderation Act, 2006, which amended sections of the act dealing with fraud. The amendments reversed the position taken in the courts in all previous cases by making it clear that fraudulent transfer or charge is invalid, or indefeasibility would be deferred. However, the subsequent transfer from an interim owner to an innocent purchaser would be indefeasible. As a result, purchasers should check property titles carefully.

In another action to protect innocent title holders, the Ontario Court of Appeal in the Lawrence v. Wright case overturned its previous position and ruled in 2007 that the finding in the Household case that fraudulent mortgages could not be voided was incorrect.

Finally, the Law Society of Upper Canada amended the Rules of Professional Conduct for Ontario lawyers. In cases where the lawyer acts for both purchaser and lender, he or she must provide both parties with all material information relevant to the transaction in writing. The Society suggested lawyers be on the lookout for things such as recent price escalation or recent transfers, even if not instructed to do so by the clients.