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Property Law

Lawyer, Jeffery Cormier, is a partner in the firm Key Murray Law located in Summerside, O'Leary, and Charlottetown, Prince Edward Island.

Money down the drain

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It is every buyer’s worst nightmare. They move in, belongings are unpacked, and then the basement floods, yet nothing had been disclosed by the previous owners about flooding.

Lawyer, Jeffery Cormier, is a partner in the firm Key Murray Law located in Summerside, O'Leary, and Charlottetown, Prince Edward Island.

What to do?

Does a seller have an obligation to tell a prospective buyer about any basement flooding? Yes.

Legal Definition: A “latent defect” is a fault in a property that could not have been discovered by a reasonably thorough inspection before the sale. Such faults must be disclosed by a seller to a purchaser.

Several years ago I read a reported case where the parties entered into an agreement of purchase and sale for a home. The sellers had provided the purchaser with a completed Property Condition Disclosure Statement (“Disclosure”) in which the sellers answered “No” to questions dealing with flooding and water problems.

 

Shortly before closing, water leaked into the basement through the window wells, flooding the basement. The sellers used fans to dry the carpet.

The sellers had not previously had any water problems in the basement, thought that the incident was an isolated event, and decided not to tell the purchasers because the sellers did not believe they were required to do so because the incident was not likely to occur again.
The sale closed. Three weeks later, the basement flooded again. The purchasers cleaned the mess and took steps to prevent further flooding. It was discovered that water accumulated in the backyard and ran into the window wells. The cost to clean up the mess and to fix the problem was almost $23,000. A neighbour told the purchasers about the water event that had occurred before closing.
The purchasers sued the sellers. The matter went to trial and then on to appeal. The Appeal Court found the sellers liable, concluding as follows:
(a) the sellers were obligated to tell the purchasers about the flood;
(b) the sellers had acted negligently by not disclosing the flood to the purchasers; and
(c) the purchasers could rely on the representations in the Disclosure that there had been no water problems or flooding, and the sellers could not, in this case, find refuge in the principle of “buyer beware”.
The sellers were ordered to pay $25,000 to the purchasers.
The case suggests that, in similar circumstances, an honestly held belief about the significance of a flood or other damage will not protect a seller from liability, particularly so in cases in which a Disclosure has been provided to the purchaser. Sellers should investigate the cause of the damage and disclose it to the purchaser.

Jeffery A. Cormier
Partner
902-436-4851
jeff.cormier@keymurraylaw.com

Legal information appearing in this article and elsewhere on Key Murray Law’s website is intended for informational purposes only and is not intended to substitute for or replace any legal or other professional advice. If you have specific concerns or a situation in which you require legal advice, you should consult directly with one of our lawyers.
Derek Bondt, Key Murray Law.

Considering an Offer on a Mortgage Sale?

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You may have seen advertisements in your local paper for a “Notice of Mortgage Sale” for property that is to be sold by public auction.

Derek Bondt, Key Murray Law.

Generally, this means that the property owner has defaulted on their mortgage payments

and the lender, usually a bank, exercises its powers under the mortgage to step in and sell the property to pay out the mortgage owing.

The auction will take place at a time and place, as advertised in the paper, usually at the Charlottetown or Summerside Courthouse, depending on where the property is located. As a potential purchaser, you would offer a bid at the auction. Normally, the lender will have what is called a “reserve bid” which is the minimum amount that the lender will accept to sell the property. This amount is not made public and it will depend on the offers received whether or not the reserve bid is met.

As with most property transactions, there are conditions with Mortgage Sales. These conditions will vary from one property to the next. Usually, the lender will sell the Property on an “as is where is” basis. This means that as a potential purchaser, if your bid is accepted, you will not be able to negotiate on the price, if for example there is a problem with the roof or the basement. It would be prudent to have a thorough home inspection as a condition of your offer to purchase the property. Unless you are willing to finance any major repairs or renovations yourself, the lender will not negotiate the purchase price, but you will at least be able to rely on the condition to walk away from the deal.

Furthermore, the lender is only selling their interest in the property.

This means that the lender will not make any guarantees as to the title or ownership of any appliances or fixtures on the property and they will not provide a bill of sale or adjust the price with respect to any fixtures or equipment.

Although it may seem like you are getting a “deal” on a Mortgage Sale, it is important to understand any and all risks with this type of purchase.

The lawyers at Key Murray Law working in the area of Property Law would be happy to answer any questions you may have regarding the purchase of a property by Mortgage Sale.

Derek I. Bondt
Article Clerk
derek.bondt@keymurraylaw.com
902-436-4489

Legal information appearing in this article and elsewhere on Key Murray Law’s website is intended for informational purposes only and is not intended to substitute for or replace any legal or other professional advice. If you have specific concerns or a situation in which you require legal advice, you should consult directly with one of our lawyers.
Lawyer Jeffery Cormier practices with Key Murray Law in Summerside, PEI.

Control of Land Holdings by Non Residents | Real Estate and Property Law

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There are various land control mechanisms in PEI that relate to the acquisition and control of property, by non-residents, in the province. Due to the size of the province and some historical land challenges, among other things, the acquisition and control of land by non-residents is regulated.

The Prince Edward Island Lands Protection Act

Regulates property rights in Prince Edward Island, and in particular for non-resident people and companies. The Act sets out three challenges that it intends to address being “(a) historical difficulties with absentee land owners, and the
consequent problems faced by the inhabitants of Prince Edward Island in governing their own affairs, both public and private; (b) the province’s small land area and comparatively high population density, unique among the provinces of Canada; and (c) the fragile nature of the province’s ecology, environment, and lands and the resultant need for the exercise of prudent, balanced, and steadfast stewardship to ensure the protection of the province’s ecology, environment, and lands.”

 

 

The particular nuances of the Act are beyond the scope of this column;

however, a common question asked by real estate agents and lawyers to those people who are not residents of PEI and who intend on purchasing land in PEI are whether the purchase will cause the non-resident person to hold in excess of 5 acres of land or to have shore frontage in excess of 165 feet. If one or both of these factors would be triggered, before the person can acquire the land, he or she must make an application to the Island Regulatory and Appeals Commission (IRAC) seeking approval to acquire the land.

The application must be accompanied by a fee and the turnaround time is approximately 6 weeks. IRAC makes a recommendation, with respect to the application, to Executive Council, who determine whether the application will be approved or denied. According to IRAC, some of the factors that they consider in determining whether to recommend approval or denial include, but are not limited to: “concentration of non-resident ownership in the community where the land is located, intended use and best use of the land, capability for agriculture, ecological value, land value, intention of purchaser to relocate to PEI, potential economic impact of the purchase, local significance of the property, and general land use in area.” Each application is considered upon its merits.

The Act has a number of exemptions and permutations contained within. One must ensure that the Act is fully complied with, failing which, there is potential for fines to be levied and other actions to be imposed.

Jeffery A. Cormier
Partner
Jeff.cormier@keymurraylaw.com
902-436-4851

Legal information appearing in this article and elsewhere on Key Murray Law’s website is intended for informational purposes only and is not intended to substitute for or replace any legal or other professional advice. If you have specific concerns or a situation in which you require legal advice, you should consult directly with one of our lawyers.
Derek Bondt, Key Murray Law.

Considering Condo Ownership?

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More and more people are looking to downsize their accommodations and stop worrying about home and yard maintenance. Condominiums (“condos”) can be an attractive option to many people and have gained popularity on Prince Edward Island. If you are thinking of purchasing a condo, you should be aware that condo ownership is quite different than other types of residential property ownership.

What am I buying?

As a condo owner you are essentially buying your own unit but you also share ownership of the land, building and common elements. The share of your ownership may depend on the size of your unit and the number of units in the condo property. For example, if there are ten condo units of equal size, each owner would share 10% ownership. This is an important factor to be aware of as you will share in the major renovations or repair costs that are not covered by a reserve fund, or are over budget, proportionally to your percentage of ownership.

You will also have access and use of the “common elements” of the condo property. These include the foyer/entrance of the condo building, the parking lot, hallways, etc. Essentially common elements are spaces within the condo property that are outside of the units.

The Management of a Condo Property

The management of a condo property is carried out by a condo corporation, which is comprised of a board of directors elected by the owners of the units. The board is responsible for calling meetings, presenting changes to the by-laws and organizing votes for any major changes, repairs or modifications to be made to the property. As an owner you will be able to participate by voting on any major changes to be made. Normally a property management company is also hired to coordinate the services the condo property requires, such as repairs, maintenance and other services.

What to review?

When purchasing a condo, you will want to ensure that the condo corporation has a healthy reserve fund, which is an amount of money that is held for repairs and maintenance for the units and the common elements.

You will want to review the condo declaration. This document includes information regarding the common expenses, the percentage of ownership allocated to each unit and a detailed description of the units and common elements.

You will also want to review the condo by-laws before purchasing. These are a set of rules that govern the condo units and common elements. These by-laws may include restrictions regarding parking, pets, noise level and can even include restrictions on certain aesthetics or outdoor fixtures such as satellite dishes.

Condo Fees

As a condo owner you will have a monthly “condo fee” or “maintenance fee”. Depending on the condo by-laws, your monthly condo fee will cover costs such as snow removal, landscaping and general upkeep of the common elements. A portion of these fees may also be held in a reserve fund for major repairs. Condo fees can vary depending on the number of units as well as the age and condition of the condo property. You will want to budget accordingly for these fees when considering purchasing a condo. You should also be aware that as expenses for repairs and services increase it is common for condo fees to increase accordingly.

Insurance

The condo corporation is responsible for obtaining and maintaining insurance on the units and the common elements. However, as a unit owner you would want to be sure that you have additional coverage for any personal property, personal liability within your unit and additions or alterations you have made within your unit.

Is a Condo Right for me?

Each home buyer is different and it will depend on your lifestyle, budget and housing needs to determine if a condo is right for you. There are certainly pros and cons to purchasing a condo and it is important to consider all aspects of condo ownership before purchasing.

The lawyers at Key Murray Law working in the area of Property Law would be happy to answer any questions you may have regarding the purchase or sale of a condominium property

Derek Bondt
Article Clerk
Derek.bondt@keymurraylaw.com
902-436-4489

Legal information appearing in this article and elsewhere on Key Murray Law’s website is intended for informational purposes only and is not intended to substitute for or replace any legal or other professional advice. If you have specific concerns or a situation in which you require legal advice, you should consult directly with one of our lawyers.
Lawyer Ryan MacDonald practices law with Key Murray Law, and works from his office in Charlottetown, Prince Edward Islands.

FIRST TIME HOME BUYERS – Recent changes offer advantages & disadvantages

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ryan-macdonald_400x400Earlier in October of 2016, the Federal Government of Canada announced several changes to mortgage legislation, with the most significant changes affecting first time homebuyers.


Under the new rules, and regardless of the amount of the deposit that a first time home buyer is putting down towards their purchase, all first time homebuyers will be subject to a “stress test” to see if they can qualify and be approved for a mortgage.

The “stress test” is designed to determine whether or not the home buyer could still afford to make their mortgage payments in the event of an increase in mortgage rates or a change in personal finances.  It is widely expected that these changes will result in some first time home buyers not being able to qualify for the type or amount of mortgage that they previously would have been offered.

While there have been many news stories, articles and opinions written about these particular changes, a recent legislative amendment made by the Provincial Government of Prince Edward Island has received much less publicity.

However, effective October 1, 2016, the Government of Prince Edward Island has removed the “cap” on the first time homebuyers transfer tax exemption. While there are several exemptions to paying transfer tax, in most cases involving the purchase and sale of real property in the province of Prince Edward Island, purchasers are required to pay a transfer tax to the Government calculated on the greater of one (1%) percent of the purchase price or the assessed value of the property being bought.

Prior to October 1, 2016, and for those who qualified as a first time home buyer, an exemption from having to pay transfer tax could be claimed, so long as the purchase price and the assessed value of the real property being purchased did not exceed $200,000.00. However, as of October 1, 2016, this “cap” of $200,000.00 has been removed, so that anyone who qualifies as a first time home buyer can claim the associated exemption and avoid having to pay the one (1%) percent transfer tax regardless of the purchase price or the assessed value of the property that they are buying. For a property valued at $300,000.00, this represents a savings of $3,000.00 to the first time home buyer.

If you would like more information on this new legislative exemption, would like to see if you qualify as a first time home buyer, or have any other questions or concerns about buying and selling property in Prince Edward Island, please do not hesitate to contact us at Key Murray Law.

Ryan MacDonald
Partner
ryan.macdonald@keymurraylaw.com
902.368.7825

Legal information appearing in this article and elsewhere on Key Murray Law’s website is intended for informational purposes only and is not intended to substitute for or replace any legal or other professional advice. If you have specific concerns or a situation in which you require legal advice, you should consult directly with one of our lawyers.