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Real Estate Transactions and the Current Flooding Crisis

The flood situation in Southern Alberta continues to affect the day-to-day lives of citizens in communities across the region. Our thoughts at AREA are with those who have suffered losses, those who are still displaced from their homes, and those who are just returning home to begin the long clean-up and a hopeful return to ‘normal’.

As a result of these difficult circumstances and in an aim to provide resources to members that can serve as a guide for you and your clients, AREA has compiled a number of tips that may prove useful to you.

Purchase Contract: Buyer's and Seller's Obligations

  • Buyers and Sellers must contact their lawyer if they have any questions about their legal obligations under an existing purchase contract, e.g. what to do if a property is to close but is not in substantially the same condition as it was last seen?
  • Sellers are obligated to provide insurance coverage until the purchase price is paid.
  • Both parties may need to find alternative accommodation until damages can be remediated once health and safety issues are addressed.
  • Discussion of time frames may happen on a transaction-specific basis. Contact your lawyer to discuss your options. Past AREAHub Monthly articles on Tenancy at Will and Condition of Property at Inspection may contain helpful information for you.
  • For transferring of insurance and/or government rehabilitation dollars from seller to buyer. 

Seller's Representative: What to Do

Firm sales contracts that were signed or any conditional sales where the conditions were waived in writing are still binding on the parties to the contract. In extreme instances the contract may be terminated by the Common Law.

  • Contact your client to:
    • Determine the extent of any damages;
    • Discuss what steps are necessary to complete the sale; and
    • Confirm if they are prepared to take the necessary action to complete the sale.
  • Contact the Buyer's Representative to let them know about the condition of the property and what your clients are prepared to do to ensure that the property is restored to the condition at the time of the sale.
  • Advise the Seller to contact their lawyer for any legal information they require to determine their legal obligations and their course of action with respect to closing the sale.
  • Advise the Seller to contact their insurance company regarding any possible claims.
  • Refer your clients to section 5.1 of the purchase contract, which notes that, “Risk of loss or damage to the Property shall lie with the Seller...” and remind clients to extend insurance coverage if they have already cancelled, based on the revised anticipated closing date.

Buyer's Representative: What to Do

  • After speaking with the Seller's Representative, contact your client and let them know what the state of the property is and let them know what the Seller is prepared to do to ensure that the property is restored to the condition it was in prior to the flooding disaster.
  • Once you have provided your client the information, advise them to consider and consult with a lawyer and then advise you how they wish to proceed.
  • If either party to the contract have reservations about closing the sale, refer them to their respective legal counsel and disclose the situation to the REALTOR® on the other side of the transaction immediately.

Continuing to Write a Deal on Flood-Impacted Property

Clients may be inclined to proceed with buying or selling an impacted flood property.

  • Consult with a lawyer on what contract language should be included for your specific transaction that captures the remedial work to be done and associated cost and who is responsible.
  • Confirm with the lender if they will fund a mortgage given the property condition and agreed upon remedial work obligations.
  • Ensure the timelines captured in the contract are conducive given the agreed upon remedial work and obligations.
  • If eligible for any disaster recovery funding or if insurance coverage applies, be sure to discuss and include the necessary details and obligations.

Land Titles Update

*Update: The Land Titles Calgary office has re-opened effective Wednesday, June 26th. Due to the hard work of the Edmonton office, there does not appear to be a delay in registrations.

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The Edmonton Downtown arena, or simply a new Edmonton arena, is the name being used for a new multi-use indoor arena in Edmonton.  Once completed, it will replace Rexall Place as the home of the NHL's Edmonton Oilers. The arena will be located at the block between 101 and 105 Streets and 104 and 105 Avenues.

 

 

 

The arena was initially estimated to cost $480 million. The city of Edmonton was to pay $125 million, the Katz Group was to contribute $100 million, and $125 million was to come from a user-paid facility fee.

 

All in, $601 million. That breaks down as:

  • Arena construction, $480 million
  • Winter Garden pedestrian bridge across 104th Avenue, $53 million
  • Arena land, $25 million
  • Community rink attached to arena, $21 million
  • Pedestrian corridor through the arena, $15 million
  • Link to MacEwan LRT station, $7 million

The remaining money was expected to come from the province or federal agencies.  Estimated cost then increased substantially during latest round of discussions.

 

A new agreement was reached on January 23, 2013 between the two parties on moving forward with the arena. Construction of the new arena is due to break ground in the summer of 2013.

 

The arena is estimated to increase the value of real estate within a 1-mile (1.6 km) radius by tens of millions of dollars according to University of Alberta economist Brad Humphreys. It is expected that it will be a driver in revitalizing many of the inner city neighborhoods.

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If you have purchased or are contemplating purchasing a new home from a builder, you may be told that the purchase price of the home includes GST. Although this sounds simple enough, there are a couple of matters you should be aware of.

 

Firstly, the purchase of a new home attracts the full Goods and Services Tax (GST), which presently is 5%. Individuals that purchase or build a new home may be eligible to offset a portion of the GST by applying for a new home housing rebate from the federal government.  The new home housing rebate is equal to 36% of the GST, but the total amount of GST cannot exceed $6,300. The amount of the rebate is progressively reduced where the price of the new home is $350,000 to the point where there is no rebate available where the purchase price exceeds $450,000. To be eligible for the new home housing rebate, you must meet the following conditions:

 

  •  the unit is a single-unit residential complex
  •  you purchase the land and unit from a builder in a single transaction
  •  ownership is transferred to you after the construction is completed
  •  you or an immediate family member are the first occupant and it is used as a primary place of residence.

 

The application must be submitted within two years after the date on which ownership was transferred to you and only one application may be submitted for each home.

 

The rebate covers all GST paid in relation to the home, including the initial GST paid to the builder, and all GST paid for subsequent improvements to the property within the two-year time period, including driveways, landscaping and fencing.

 

When the GST and the new home housing rebate were first introduced, most builders established their price and the purchaser was obligated to pay the full GST at the time of closing. The purchaser then would be eligible to apply, in due course, for the rebate by submitting the necessary application form to Revenue Canada.

 

Since most purchasers qualify for the new home housing rebate, over time builders began to market their property as a “GST included price”. Today most building contracts or agreements for new homes are based upon a GST included price, with the new home housing rebate being assigned to the builder. In essence, the agreement provides that the purchase price includes the non-rebateable portion of the GST and the rebateable portion of the GST (the new home housing rebate) is assigned or transferred to the builder as additional consideration and as part of the transaction. The result is that the purchase price is a net GST price. For most purchasers the only concern is the end price. What most don’t realize is that, in assigning the new home housing rebate to the builder, they are forfeiting any opportunity to recover any portion of the GST on any subsequent improvements made to the property over the two-year time period. This may be somewhat academic, depending on the purchase price of the home, since the amount of new home housing rebate progressively declines, as noted earlier.

 

Most of the contracts also provide that if the purchaser is ineligible for the new home housing rebate (for example, if it is not used as a primary residence but as rental property), then you will be obligated to pay the builder the rebateable  portion of the GST over and above the original GST included purchase price. In the case of a new home purchased for rental purposes, the federal government offers a new home housing rental rebate, which is equivalent to the new home housing rebate, except that under the current legislation the rebate cannot be assigned to the builder. In that situation, the purchaser must pay the full amount of the GST and, once the deal is concluded, then he can apply for the rebate.

 

NOTE:  Usually, the total Purchase Price indicated on your Purchase Agreement will include the net G.S.T – that is, your base purchase price, plus the full G.S.T. payable, less an amount equivalent to any applicable G.S.T. rebate.  However, your Purchase Agreement may say you have to pay the G.S.T. in addition to the total Purchase Price show on the Purchase Agreement.


If you receive a credit for the G.S.T New Housing Rebate on your Purchase Price,  you will have to assign the G.S.T New Housing  Rebate to your Builder.  This means your Builder will apply for the Rebate and you will not be able to.


 If you do not qualify for the G.S.T New Housing Rebate, you must pay the full G.S.T payable to your Builder even if the Purchase Price indicated on the Purchase Agreement shows a credit for the Rebate.

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During the process of buying or selling a home, you often learn about recommended or required repairs and upgrades.  Of course, the first thing you as a homeowners want to know is, "How much will that cost?"

Check out the below cost guide, which provides estimated cost ranges for repair and/or replacement of the major systems and components in a home. This information can help you make informed decisions when they're considering home repairs or improvements, and is especially valued by homeowners before their property is listed.

 

FLOORS

 

Hardwood Floor Refinish

$2-$5 / sq. ft

Carpet-clean

$100 / room

Ceramic Tile

$5-$10 / sq. ft

 

 

KITCHEN

 

Renovation

$7,500

Counter-laminate

$40 / lin. ft

Kitchen counter-marble

$75 / lin. ft

 

 

SECURITY SYSTEM

 

Alarm System

$2,500

Alarm Monitoring

$30 / month

 

 

DECK

 

Pressure Treated

$15-$25 /sq. ft

Custom Designed & Built

$50-$75 / sq. ft.

 

 

WINDOWS

 

Skylight

$750 and up

Thermal Glass (existing frame)

$30 / sq. ft.

 

 

These estimates reflect the average basic costs for supplies and installation of building materials in United States and Canada. Costs may vary depending on regions, upgrades, complexity, and disposal fees.

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The Summer Village of Seba Beach is located 85 km (53 miles) west of Edmonton, just off of highway 16. Known for its reputation for summer fun, it has become a popular destination for both summer residences and year long recreational property enthusiasts.

 

Activities ramp up over the month of May and stay in high gear through September. Feature events include an annual Regatta every August long weekend when visitors and residents meet together for a local parade, foot races, fireworks, dances, a beach volleyball tournament and more!

 

For those who love the outdoors, Seba Beach is located right on Wabamun Lake which boasts a large population of northern pike, whitefish and yellow perch. The Edmonton Yacht Club considers Seba Beach home, and members enjoy the sun-filled days sailing across the expansive Wabamun lake.

 

Great Investment Opportunity:  10.8 Sub-Dividable Lake View Acres. Click Here to View!

 

The Summer Village of Seba Beach has much to offer to visitors and residents alike!

 

  • Lake front community
  • Friendly people and a tight knit community
  • Natural setting
  • Snow removal
  • Sanitation pickup weekly
  • Fire Protection
  • Law Enforcement
  • Kindergarten thru grade nine school
  • 1.5km of maintained beach
  • Fishing year round
  • Mini golf
  • Driving Range
  • Golf - 1km
  • Camping
  • Curling
  • Active Seniors Group
  • Museum
  • August long weekend Regatta
  • Farmer's Market - May thru Sept
  • Library with public internet access
  • General Store
  • Post Office

 

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Experts expect smartphones to overtake personal computers.

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Smartphones are steadily becoming commonplace devices for everyone from professionals to busy moms. Users of these devices now instinctively turn to their phones for tasks that previously they would only have accomplished on a computer, over the phone or in person.

These tasks include surfing the Web, obtaining driving directions, connecting via social media, and even shopping.
In the United States, 87.4 million people own smartphones. And, in 2012, smartphone sales are expected to top sales of personal computers. As smartphones allow people to connect with businesses in new and exciting ways, businesses in turn need to become savvier about going mobile.

For example, a small home health care provider recently utilized smartphones to expand to 400 patients across four major counties  in Utah. Its employees previously struggled to keep up with all the paperwork and regulatory requirements, so the company decided to go completely mobile, equipping its entire staff with Microsoft Windows Phones. This allowed the staff to visit patients and instantly update their condition and treatments.
For small businesses, embracing the smartphone age is becoming crucial for success. Here are some easy ways small businesses can go mobile in 2012:

* Invest in smartphones - Transitioning from a flip phone to a smartphone makes it much easier to run a business on the go. Providing easy access to email, calendar information and the Internet, smartphones increase productivity and can provide peace of mind while out of the office. Today, smartphones are more affordable than in the past, so now is a perfect time to take advantage of their capabilities.

* Consider industry-specific devices - Numerous mobile technologies, from smartphone applications to tablets, have been created with specific industries in mind. For example, rugged tablets that can withstand the elements are available for those in the construction industry and tablets created for the health care industry can be sterilized between patient visits to avoid contamination.

* Make websites mobile-compatible - In an era in which most consumers first go to the Internet to find local service providers, it’s crucial that small businesses have a polished and informative online presence that’s friendly for mobile consumption. Even for business owners who aren’t tech-savvy, starting a website is feasible. A quick Internet search will reveal numerous free or low-cost website templates. You might also choose to work with a Web developer to ensure your business’s website is smartphone-friendly.

* Get social - Popular social media platforms like Facebook and Twitter make it simple to connect with customers in a casual, but also personal, manner and also embrace the mobile population that frequents these sites on smartphones. Consider leveraging one or more of these platforms to further establish your business’s online presence and create positive buzz around new offerings and special deals and promotions.

For more ideas on how to easily boost your business with mobile technology, visit www.microsoftbusinesshub.com.
 
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One of the questions I am frequently asked is, "What can I do to avoid probate?
It's an interesting question because more often than not, people really don't
understand what probate is all about. They just know that it is something you
want to avoid.

 

What is Probate?


Probate is an administrative procedure the Court uses to authenticate a
document that purports to be the last will of a deceased person. When the Gou
issues a grant of probate, what it is really doing is telling the world that the
document in question is in fact the last will of the deceased and that persons ar
entitled to rely upon the authenticity of the document.

Probate gives comfort to the individuals who act as executors by confirming the
validity of the wJlI. It would be devastating for an executor to learn after
distributing the assets of an estate according to what he or she thought was the
last will of the deceased only to find out that, in fact, another will had been mad,
leaving the assets to a different group of people.

Probate also gives comfort to those people-like banks and financial advisors-
who hold assets for the deceased. Only through probate can they be assured
that the person asking for the deceased's money is in fact the executor appoinn
by the deceased. Asset holders are not keen on paying over money without
some level of assurance that they are paying money over to the right person.
Probate gives that assurance.

 

The Costs of Probate?


The costs of probate are less than most people think. Alberta has by far the
lowest probate fees in the country with the maximum fee being a mere $400.
Other Canadian jurisdictions impose a probate tax on the gross value of the
estate. British Columbia, for example, charges a probate tax of 1.4 on estate
with a gross value over $50,000. Probate taxes in those jurisdictions can quick
add up. It is not surprising that in those jurisdictions, estate planners employ
measures to avoid costly probate fees. Probate fee considerations simply don'i
apply in Alberta.


Is Probate Necessary?


Whether an executor wishes to obtain probate for their own comfort and
protection is a decision for the executor to make. The estate lawyer can help th
executor make this decision. Often, however, the decision is beyond the contro
of the executor. If the deceased owned land, for example, at the time of his or
her death and the land was not jointly registered, the Land Titles Office will
require the executor to obtain a grant of probate before dealing with the lands.
Similarly, if the deceased owned investments at the time of his or her death, mo
investment dealers require probate as a condition of turning over the funds to th
executor.

 

Probate may not be needed in cases where the estate of the deceased person i
quite simple and does not include land. In some circumstances, asset holders
may waive their right to probate. This can occur, for example, when the survivir
spouse is the sale beneficiary of the estate and is well known to the person who
holds the assets. When this occurs, the asset holder may seek protection by
other means, such as taking an indemnity from the surviving spouse.

 

Probate - Nothing to Fear in Alberta


For Albertans, probate is not something that needs to be feared. As noted, the
maximum probate fee in Alberta is $400. The tools used to avoid probate-
especially intergenerational joint property ownership-carry with them the
potential for adverse consequences and should only be used after careful
consideration of the risks involved.

 

 

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Edmonton, September 5, 2012: We're heading toward autumn and the Edmonton rental market shows no sign of falling.

In August the average rent in Edmonton was $1192. That's up almost a hundred dollars compared to July.

Averages in all regions of Edmonton are on the rise! South East and South West had the strongest average increases while Central Edmonton was the region which saw the highest interest from renters.      

Average Rental Price for Edmonton & Area: $1192

To View the Full Report - Click Below!

http://www.rentersonline.com/rental-stats/

 

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It’s a Good Time to Become a Landlord


With vacancy rates moving lower across the Edmonton region, fewer landlords are offering incentives to lure new tenants and reduce turnovers - 25% of landlords offered incentives last October compared to 10% this year. This represents the lowest level since October 2008. Even though rents increased in the past year, affordability increased as well, since renter income grew at a faster rate than rents.

Apartment vacancy rates across Greater Edmonton decreased in 2011 thanks to improved demand associated with the growing economy and further reductions are expected in the coming year as the economy continues to expand. Supply of new rental units will not keep pace with the expected rise in demand by the end of 2012. Improving employment, particularly among the younger age groups, will encourage more newcomers to the region. Rental rates will continue to rise in the months ahead. A typical two-bedroom unit will rent for close to $1,060 by the fall of 2012.

 

Tips for Landlords:


When you are looking at renting your Edmonton rental listings, selecting a tenant is critical. The first meeting or telephone conversation with your prospective tenant is the beginning of the screening process and critical. If they are viewing the Edmonton rental property – are they on time? Are they smartly dressed? What kind of car are they driving? Do they wipe their feet before entering the property? Small details matter. When you question them about such things as employment, references or rental history are they happy to provide the answers? If both parties are keen to proceed with the let, you will need to put things in writing. There are a lot of rentals in Edmonton for tenants to choose from, as there are tenants so take your time.


Tenancy Application

It is strongly advised that as a first step you get any prospective tenants to complete a full application form. This needs to include: identity evidence, income and credit history, past accommodation and full employment details, references and other details, such as: any children, pets, car owner, smoker or non-smoker, the intended number of people living in the rental. The application should also specify the length and type of the lease, the basic terms and the rent and deposit required. The application should also inform the tenant that credit checks and references checks will be made in accordance with applicable law.

 

Reference Check

Don’t ever be tempted to not check the prospective tenant’s credit or identity history, and do references before deciding to enter into any tenancy agreement. Consider asking for a guarantor if you are not 100% sure. All these steps are much easier than having to evict a problem tenant. However ‘nice’ your prospective tenants seem don’t be lulled into taking chances – your screening process is your insurance.


Tenancy Agreement

When you decide to let your property your new tenant will need to sign a Tenancy Agreement. This can be drawn up by anyone (and some landlords prefer to have it checked over by a solicitor) – the signing should be witnessed by an independent witness. This should be accompanied by a full inventory and statement of condition of the rental property.

 

Rent Edmonton – What makes a Top Tenant?

  •  makes rental payments on time
  •  complies with the conditions of the tenancy agreement or lease
  •  causes no damage to the property
  •  keeps the property clean and tidy – rubbish is properly disposed of and any garden area is    maintained, such as cutting the grass
  •  noise levels are kept to a minimum
  •  notifies the landlord about any repairs, before any further damage occurs
  •  allows any necessary access for servicing or maintenance
  •  gives plenty of advance notice when vacating the property

 

There are fewer and fewer rentals available these days and there are lots of tenants to choose from. But Landlords should still be patient to screen tenants for their Edmonton rental listings. Every landlord needs there rentals in Edmonton filled, but follow these steps to find your perfect tenant.

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On January 17, 2011, Jim Flaherty, our federal  Minister of Finance announced changes to the Canadian Mortgage and Housing Corporation (CMHC) underwriting rules for high-ratio mortgage insurance. The changes were designed to slow the rate at which Canadians are borrowing and to further stabilize the Canadian housing market. Today’s post explains what policies have been changed, offers insights into how the housing market and consumers will be affected, and makes the case that some minor short-term pain will ultimately lead to a greater long-term gain.

 

Let’s start with the mechanics of what happened. CMHC is a crown corporation that provides creditor default insurance to lenders when they make mortgage loans with down payments of 20% or less than the value of the subject property (commonly referred to as high-ratio mortgages). Our Bank Act requires that all chartered banks insure their high-ratio loans, and since CMHC is by far the largest insurer in the market, changes to CMHC’s policies are effectively changes to Canada’s high-ratio insurance market as a whole (at least for now, but more on that later). When CMHC alters its lending guidelines, the impact can be felt by tens of thousands of potential borrowers and existing homeowners across every market in the country. That’s why every real-estate-related business was paying attention when the announcement was made. We’ve got a lot riding on this.

 

The first change reduced the maximum allowable amortization period for insured high-ratio mortgages from 35 years to 30 years, effective March 18, 2011. (Put another way, this means that the longest you can take to pay back your high-ratio mortgage loan is now 30 years.) In real numbers, the change from 35 years to 30 years means an additional payment of about $100/month on a $300,000 mortgage at a 4% interest rate. For borrowers who are stretching to buy their dream home, that extra $100 can be the difference between passing or failing a lender’s income tests. In so far as this change reduces the number of potential buyers in the market, there could be a negative short-term impact on house prices, but I don’t think it will be significant. Here’s why:

 

While it is estimated that as many as 30% of all mortgages in 2010 came with 35-year amortizations, not all of the borrowers who chose this option actually needed the extra 5 years of amortization in order to qualify. Many of them, particularly first-time home buyers, chose this option simply because it was the lowest monthly payment available. In fact, a recent CAAMP report based on 85,000 insured mortgages that funded in 2010 found that only 2% of this group would not have been able to qualify using a 30-year amortization period. Based on that, I think that fears of this change causing a significant drop in house prices are overblown.

 

The second change reduced the maximum loan-to-value allowed on high-ratio refinance transactions from 90% to 85%, also effective on March 18, 2011. (In simple terms, this means that if you want to refinance your current mortgage, the most you can borrow is 85% of the current value of your property). Here, the government is trying to pre-empt a refinancing binge where low interest rates cause people to use their homes as ATM machines, which was commonplace in the U.S. during their housing bubble. The more equity a home owner has in their property, the bigger their buffer if house prices fall (and by extension, the safer the lender’s loan and the tax-payer’s money that guarantees it through CMHC).  

 

The main criticism of this change is that it reduces a consumer’s ability to use low-interest-cost mortgage financing to pay out high-interest-cost unsecured debt. “After all”, say many in my business, ”if the banks weren’t passing out credit cards like candy we wouldn’t have a debt problem to deal with in the first place.” Fair enough, and you’ll get no argument from me that the banks always seem to come out on top when changes like this are made. But when mortgage rates are as low as 2.25% and credit card interest rates are still at 19%+, it’s hard to argue that mortgage lending doesn’t have the potential to do far more damage to our overall economy if we get it wrong. Hopefully Mr. Flaherty will address the credit card issue separately, and at the very least, if mortgage refinancings are no longer a concern, maybe now he’ll talk to the banks about better disclosure on the mortgage prepayment penalties they charge (as he promised to do in this year’s spring budget).    

 

On a side note, now that mortgage refinancing for renovations on existing homes will be limited to 85% of a property’s value, and given that CMHC will insure loans for up to 95% of a property’s value on  purchase transactions, will more people decide to change houses instead of renovate? In relative terms, purchasing will certainly give you more bang for your down-payment buck.

 

The last change the federal government made was to stop providing insurance on home-equity lines-of-credit (HELOCs), effective April 18, 2011. While HELOCs are always limited to less than 80% of the value of a property, CMHC was insuring large pools of low-ratio loans that included them as part of a separate program called “portfolio insurance”. In this case, a lender pools a bunch of low-ratio loans together, and then pays CMHC a small fee (.5%) to blanket insure the whole group. While customers don’t even know this is happening, it’s important because if the loans are CMHC insured they can be securitized into the Canada Mortgage Bond program, which is the cheapest source of capital for lenders. Without this securitization, lenders who don’t have access to balance sheet financing will no longer be able to offer HELOCs, and with much less competition, those that remain (chartered banks) may decide to charge a higher rate of interest. HELOCs are riskier than standard mortgages: lenders have no control over how these loans are used, the payments are interest only, and the customer can re-borrow up to the approved limit at any time.

 

Over the short-term, there may also be some benefits. Mark Carney has been pleading with the federal government to address rising Canadian debt levels so he doesn’t have to raise interest rates prematurely. Now he has one less thing to worry about. The market knew something was afoot, and clarity about the actual changes eliminates the growing uncertainty. Besides, this is the third year in a row that CMHC has tweaked its rules and they haven’t chopped off any arms yet. Of course, there is always a problem with prevention in the political realm. If it works, it can take a long time before you start hearing the applause.

 

David Larock

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Edmonton

 

Calgary

 

Saskatoon

 

Winnipeg

 

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TITLE INSURANCE – WHAT IS IT , DO I NEED IT?


Within the last 10 years, a new insurance product has arrived in Alberta.  It is commonly referred to as title insurance.

 

What is title insurance? This product was never available before so what has changed?  What does title insurance provide that cannot more adequately be provided by a Real Property Report (RPR)?

 

Title insurance has been a popular product throughout the United States for many years.  The three major title insurance companies providing insurance in Alberta all have a parent company in the USA.  These companies first started Canadian operations in Ontario.

 

Both the USA and eastern Canada operate a different Land Titles registration and transfer system then we have here in Alberta.  We are fortunate in Alberta to have a government-guaranteed Land Titles system commonly referred to as the TORRENS system.  Throughout the rest of North America, when you get a Title, you can never be completely sure that it discloses everything.  For example, there could be an unregistered mortgage or unregistered transfer that may impair your title.  In Alberta, “what you see is what you get” and the government guarantees this.

 

Previously, title insurance primarily covered the issues covered by the Torrens system.  Eventually, companies became innovative and expanded their coverage, so their insurance had applicability here in Alberta.  Over the years they have continually added new items to their coverage.  Now, their product offers substantial benefits at a very reasonable one-time cost.

 

Some of the issues title insurance covers is as follows:

  • It covers the gap between submission and registration.  A couple of years ago when registration was taking 5 weeks or more, you could never be sure when you submitted your documents as to other registrations in the stream that may affect your title.  Title insurance will step in to deal with this.
  • It will cover deficiencies that would not show on a Real Property Report such as unregistered utility easements or builders liens or matters that would be shown by non-Land Titles searches such as deficient corporate status.  It will cover hidden deficiencies such as underground storage tanks or underground septic tanks.    Coverage is also provided for unknown special assessments on condominiums. 
  • Title insurance covers issues that would have been shown on a Real Property Report if one had been obtained.  Use of this product can avoid the need to obtain a Real Property Report.  It also covers internal non-compliance issues that would never be shown on a Real Property Report such as lack of building permits or failure to meet building code on renovations such as a basement development.

Even where there are known defects, title insurance will often underwrite these issues.  This could include a fence in the wrong location or a deck that is too big for the property.

 

Most of this coverage continues after the closing date.  Perhaps the most important coverage that continues after the closing date and during the entire time the property is owned is against forgery, fraud, duress, incompetency, incapacity, or impersonation. 

 

Title insurance is an insurance product.  As such, it does not fix a problem.  It provides insurance or indemnity coverage.  In other words, the title insurer has no obligation to do anything until a problem actually arises.  When this happens, they have the choice to pay damages rather than actually fix the problem.  Problems can be deferred or masked instead of fixed. 

 

Deferring or masking problems can come back to haunt all parties at a later date.  For example, when a seller, who accepted title insurance when they bought, sells and the buyer does not accept title insurance they may be forced to solve the problem.  Obtaining Encroachment Agreements, especially where fences or other structures encroach onto municipal land can be quite costly.  Likewise, applying for and obtaining development and building permits can be time consuming and expensive.  If a buyer insists on this solution, the seller may be forced to undertake an expensive remedy and may look to the realtor and lawyer who helped them originally purchase the property for some redress.  Accordingly, it is doubly important to ensure a purchaser understands the extent and impact of title insurance coverage and the fact that it does not apply when they sell the property.  By simply insisting that any new buyer obtain title insurance rather than relying on an RPR, they will continue to defer any issues.

 

Overall title insurance is a valuable addition to the real estate marketplace in Alberta.  The coverage for future fraud for the entire ownership of the property by payment of a one-time premium is enough justification to purchase title insurance on every real estate purchase.  In some cases, title insurance is the only way to effectively close a real estate deal.

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Have you ever wondered how the other half lives, well here is a list of the 5 most expensive homes currently for sale in the Edmonton area. 

 

$3,000,000

 

$3,200,000

 

$3280,000

 

$3,599,000

 

$3,900,000

 

Just in case those don't quite do it for you, check out this one below! 

 

$15,000,000  WOW!

 

 

 


 

 

 

 

 

 

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Data is deemed reliable but is not guaranteed accurate by the REALTORS® Association of Edmonton.