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What to do if you made an offer on a house and the home gets damaged

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What happens if damage occurs to a house after you’ve made your offer to buy it?

Should you find the home is not in the same condition as when you made your offer, tell your salesperson, who can deal directly with the seller’s rep. Also, talk to a lawyer who is insured to practise real estate law.

In Ontario, a standard Agreement of Purchase and Sale includes a clause that makes the seller liable for damages that occur between signing the deal and closing it. The clause is commonly referred to as a risk allocation clause.

You would be well advised to get an estimate for the repair costs and the time it will take to fix everything, and ask your salesperson to co-ordinate with the seller’s agent. Your lawyer will want information about the seller’s insurance policy and to review the APS.

You might be wondering if the damage means you can back out of purchasing the home. That depends upon the extent of the damage. If it is substantial — for instance, there was a fire, and the house burns to the ground — the buyer has a choice to make. They may elect to cancel the transaction and get their deposit returned, or they could choose to go forward with the deal and receive money from the seller’s insurance policy, though these options would have to be considered and discussed by all the parties and the insurer.

If the damage isn’t all that substantial (bearing in mind the distinction between substantial and not-so substantial isn’t always clear-cut), the seller or their insurance provider are still on the hook for repairs, and it may not be reasonable for the buyer to back out of the transaction. Your real estate lawyer will be able to advise you on how to proceed.

Remember: the seller’s insurance policy on the home terminates the day you take possession, so if you discover any problems after you move in, you’ll have to discuss next steps with your lawyer.

There’s an old saying that an ounce of prevention is worth a pound of cure. Whenever you buy a home, I strongly recommend bringing your real estate salesperson with you for a personal inspection of the property shortly before it changes ownership, and never treating it as a casual walk-through. A pre-closing visit is the buyer’s last opportunity to ensure the home is in the same condition as when they made their offer, and the seller has fulfilled any conditions mentioned in the APS.

Pre-closing visits are negotiable, so if you feel that additional visits might be necessary, you could ask your salesperson to insert a clause into your offer.

If you have a question for Joe about the home buying or selling process, please email askjoe@reco.on.ca.

Joe Richer is registrar of the Real Estate Council of Ontario (RECO) and contributor for the Star. Follow him on Twitter: @RECOhelps

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Victoria real estate agent disciplined for false advertising, encouraging cash deal to avoid taxes

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A Victoria real estate agent is facing $9,000 in fines and a 60-day licence suspension after breaking several professional rules during the sale of her father’s half-million-dollar property, according to a decision by the Real Estate Council of B.C. 

Whitney Garside’s missteps — outlined this week in a disciplinary decision posted on the council’s website — included falsely advertising the property as being almost twice its actual size and advising the buyer they could avoid the property transfer tax if they paid cash directly to the seller.

The property on Burnett Road in Victoria was being sold in 2016 by the real estate agent’s father. That relationship was disclosed and isn’t among the reasons she has been disciplined.

According to the disciplinary consent order, Garside told the buyer — whose name is redacted — that by paying $42,000 cash on the side, the value of the property could be reduced to avoid paying the property transfer tax.

That cash arrangement was not shared with Garside’s brokerage, Re/Max Camosun, a failure that contravened the Real Estate Services Act.

The council also ruled that she “failed to act honestly and with reasonable care and skill” when she advised the buyer the property transfer tax could be avoided by paying cash directly to the seller. 

The council’s discipline committee also found that Garside committed professional misconduct when she failed to recommend the seller and buyer seek independent legal advice, specifically regarding the property transfer tax and the cash agreement.

Another issue the council considered professional misconduct involved the size of the property in question.

The council ruled that Garside published false and misleading advertising and failed to act with reasonable care and skill when the property was advertised as 8,712 square feet, when in fact a portion of the lot belonged to the Ministry of Transportation, and the actual size was just 4,711 square feet.

The discipline committee ordered Garside’s licence be suspended for 60 days, which will be completed Jan. 3, 2021.

She has also been ordered to complete real estate ethics and remedial classes at her own expense.

Garside was also fined $7,500 as a disciplinary penalty and $1,500 in enforcement expenses.

She agreed to waive her right to appeal the council’s discipline committee’s decision in September.

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Frisco apartment community sells to Canadian investor

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A Canada-based investor has purchased a Frisco apartment community as part of a larger Texas deal.

The 330-unit Satori Frisco apartments opened last year on Research Road in Frisco.

BSR Real Estate Investment Trust bought the four-story rental community that was built by Atlanta-based Davis Development.

Satori Frisco was more than 90% leased at the time of sale. The property includes a two-story fitness center, a car care center, a dog park and a resort-style swimming pool.

The Frisco property sold along with Houston’s Vale luxury apartments in a deal valued at $129 million.

“BSR recently exited the smaller Beaumont and Longview, Texas, markets and also sold noncore properties in other markets,” John Bailey, BSR’s chief executive officer, said in a statement. “We are now using our strong liquidity position to invest in Vale and Satori Frisco, modern communities in core growth markets with the amenities our residents desire.”

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House prices on Prince Edward Island continue steady climb

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Residential real estate prices on Prince Edward Island continue to climb at a rate higher than the national average, according to the latest report from a national organization. 

The Canadian Real Estate Association released monthly figures for November 2020 on Tuesday.

They show that the average price for a resale home on P.E.I. is about 21 per cent higher than it was a year earlier. 

Only Quebec had a bigger year-over-year increase, at about 23 per cent. Overall across Canada, prices were up 13.8 per cent year over year in the ninth month of the COVID-19 pandemic.

“For the fifth straight month, year-over-year sales activity was up in almost all Canadian housing markets compared to the same month in 2019,” the report noted.

“Meanwhile, an ongoing shortage of supply of homes available for purchase across most of Ontario, Quebec and the Maritime provinces means sellers there hold the upper hand in sales negotiations.”

That lack of houses coming onto the market compared to the demand means that in those provinces, there is “increased competition among buyers for listings and … fertile ground for price gains.”

There have been anecdotal reports for months that Prince Edward Island’s low rate of COVID-19 infection and looser rules around social activities have been encouraging people to buy homes on the Island. 

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