Archive for April, 2013

Kijiji moves to charge some landlords

Thursday, April 25th, 2013

Vernon Clement Jones
Other

“We wanted to reach out to you today to let you know of some changes that will be taking place on Kijiji; specifically, starting April 24, the Apartment & Condos for Rent category will become a pay-per-insertion category,” writes the leading online classifieds in a message to users earlier this month.  “We understand this may come as a surprise to some of our regular posters and to help alleviate the impact, we have put into place the following measures.”

Essentially, all users will now be limited to three active ads live on Kijiji at any one time in order to avoid attracting charges.

Those posting three or more ads in that apartment/condo rental category now face a fee of $29.99 per ad, although Kijiji is pointing to monthly subscription packages that will allow landlords and their property managers to drop ads directly from their websites without having to manually post.

That may be cold comfort for many property investors now accustomed to filling their vacancies without the expense of either managers or paid classifieds such as Viewit.ca.

Along with Craigslist, that home-grown alternative is likely to benefit from the Kijiji move, especially as it relates to property management firms that have more than 9 units. Viewit.ca says it can now boast of being “considerably less expensive” for that niche group.

Still, Kijiji continues to be the go-to site for a growing number of Canadian renters, something it may be betting on.

“More than 3 million Canadians use Kijiji Real Estate each month,” reads a Kijiji statement. “We’ve heard some incredible success stories from our users who have found or rented properties through Kijiji.”

A seller’s agent, must disclose all known material latent defects

Thursday, April 25th, 2013

Real Estate Council of BC
Other

At common law, a seller, and correspondingly, a seller’s agent, must disclose all known material latent defects. A latent defect is one that is not visible upon ordinary inspection, but which materially affects the property’s use or value. On the other hand, a patent defect is one that is readily visible and/or obvious upon ordinary inspection. A patent defect may also materially affect the property’s use or value.

Section 5-13 of the Council Rules requires disclosure of known material latent defects and that section defines a material latent defect as follows:

Material latent defect means a latent defect that cannot be discerned through a reasonable inspection of the property, including any of the following:

  1. a defect that renders the real estate
    1. dangerous or potentially dangerous to the occupants,
    2. unfit for habitation, or
    3. unfit for the purpose for which a party is acquiring it, if
      1. the party has made this purpose known to the licensee, or
      2. the licensee has otherwise become aware of this purpose;
  2. a defect that would involve great expense to remedy;
  3. a circumstance that affects the real estate in respect of which a local government or other local authority has given a notice to the client or the licensee, indicating that the circumstance must or should be remedied;
  4. a lack of appropriate municipal building and other permits respecting the real estate.

Further, section 5-8 of the Council Rules requires that disclosure to be in writing and separate from any agreement under which real estate services are provided and separate from any agreement giving effect to a trade in real estate. A licensee is not required to disclose a known material latent defect to a buyer if the seller has already disclosed all known material latent defects, in writing, to the buyer. For example, disclosing the material latent defect on the Property Disclosure Statement (PDS) may satisfy the requirements of the Council Rules.

Timing of the disclosure is critical. Written disclosure of all known material latent defects must be provided to the buyer before there is an accepted offer. This applies whether the PDS, or some other document, is to be used to disclose these defects. A licensee acting for the seller must ensure that the written disclosure of the material latent defect was provided to the buyer prior to the acceptance of the offer by the seller. Licensees should include the following clause in the Contract of Purchase and Sale whenever a material latent defect is disclosed.

Disclosure of Material Latent Defect Clause
The buyer acknowledges having received separate written disclosure of a material latent defect relating to (general reference to issue).

Licensees must keep in mind that trading services includes offering real estate for rent or lease. As a result, written disclosure of a material latent defect is required regardless of whether the real estate is offered for sale or for rent or lease.

Section 5-13 of the Council Rules also provides that if the client instructs the licensee not to disclose the material latent defect, the licensee must refuse to provide further trading services to the client in respect of the trade in real estate.

Disclosure of Illegal Activities

If real estate was used for the production of illegal substances, such as growing marijuana or as a methamphetamine laboratory, a material latent defect may exist since, if the property has not been properly restored, it may contain toxic hazards that cannot be discovered on a reasonable examination of the property.

The Council recommends that the following clause be used by buyers to confirm that the property has not been used to grow or manufacture illegal substances:

No Growth or Manufacture of Illegal Substances Clause
The Seller represents and warrants that during the time the Seller has owned the property, the use of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and that to the best of the Seller’s knowledge and belief, the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances. This warranty shall survive and not merge on the completion of this transaction.

If, however, the property has been used to grow or manufacture illegal substances, in addition to making the disclosure in writing to the buyer in a manner separate from the Contract of Purchase and Sale, the Council recommends that the following clause be used:

Growth or Manufacture of Illegal Substances Clause
The Buyer acknowledges that the use of the property and the buildings and structures thereon may have been for the growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises, and the Buyer accepts the property and the buildings and structures thereon in their present state, and in an ‘‘as is’’ condition.

NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being presented.

Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including marijuana growing operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

Sale of New or Used Manufactured Homes

Thursday, April 25th, 2013

Real Estate Council of BC
Other

Licensees should take the appropriate steps to determine if the property they are listing is a manufactured home, and, if so, that the manufactured home has a valid CSA sticker as required under section 21 of the Electrical Safety Regulation of the BC Safety Standards Act. Licensees cannot offer for sale a manufactured home that does not have a valid CSA sticker, or in the case of an electrical alteration, a silver label.

21 (1) Subject to subsections (3) and (4), a person must not use electrical equipment in British Columbia, or offer for sale, sell, display or otherwise dispose of electrical equipment for use in British Columbia, unless the electrical equipment displays a label or mark as follows:

  1. a certification mark;
  2. a label or mark of a certification agency that is acceptable to the appropriate provincial safety manager to certify electrical equipment for a specific installation;
  3. an approval mark issued under section 10 of the Act; (silver label)
  4. in the case of used manufactured homes, used factory-built structures and used recreational vehicles, a label supplied by the appropriate provincial safety manager.

Licensees should not confuse CSA stickers with Manufactured Home Registration (MHR) stickers. Typically, both stickers can be found on the electrical panel; however, the CSA sticker can also be found near the front door of the manufactured home, whereas the MHR sticker is generally found on the front left corner of the manufactured home. The MHR number is registered by the manufacturer and its purpose is for identification (it is the equivalent to an automobile being issued a VIN number); it is not an indication that the manufactured home is CSA approved.

Licensees should be aware that, when manufactured homes are sold with land, owners can apply to be exempt under section 21 of the Manufactured Home Act from the registration requirement with the Mobile Home Registry (this does not exempt the mobile home from the requirements under section 21 as noted above for a valid CSA sticker). Reasons for this exemption are provided for in section 5 of the Manufactured Home Regulation as follows:

5 (1) For the purposes of section 21 of the Act, the registrar may exempt a manufactured home from the operation of the Act or any provision of it if

  1. the manufactured home is located on and intended to be attached to land, each lessor-owner or other secured party with a security interest in the manufactured home who registered a financing statement in the personal property registry under the Personal Property Security Act using the registration number assigned under the Act consents to the exemption application and
    1. at least one registered owner of the manufactured home is registered in the land title office as an owner of the fee simple interest in the land, or
    2. at least one registered owner of the manufactured home is registered in the land title office as a tenant pursuant to a lease for a term of not less than 3 years,
  2. the manufactured home is no longer capable of being used for residential accommodation, or
  3. the circumstances are such that the registrar considers it practicable to exempt the home from the operation of some or all of the provisions of the Act for a specified period of time.

When a manufactured home is exempt from registration, it may be difficult for a licensee to ascertain whether the home is actually a manufactured home. Licensees should look at the BC Assessment roll report which, in the legal description, should indicate a MHR number, specifically if the owner used the exempt manufactured home to qualify for a CMHC-insured mortgage of the land and premises. The MHR number is numeric and will not contain any letters.

Licensees are alerted to be aware of “dummy numbers” that are issued by BC Assessment. These numbers do not mean that the manufactured home has been de-registered. In the absence of an MHR number being provided by the Manufactured Home Registry, BC Assessment issues these numbers when they are assessing properties and observe a manufactured home on the land. These “dummy numbers” are indicated by an alphanumeric entry beginning with an A, B or Z, and are a good indication that the manufactured home in question was likely built prior to April 1, 1978 and has remained on the property since that date. As such, the manufactured home has likely never been registered with the Manufactured Home Registry and may not meet CSA standards.

Licensees may wish to avail themselves to the following resources:

 

Countryside Estates 7428 Evans Road Chilliwack, 27 townhomes

Thursday, April 25th, 2013

Other

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Harmony at 8288 Granville Ave., Richmond, 119 homes in a 16-storey building

Thursday, April 25th, 2013

Other

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First Time buyers confident for good reason

Thursday, April 25th, 2013

Other

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Depressed Vancouver hotel market pushes diversification

Thursday, April 25th, 2013

Glen Korstrom
Van. Courier

Vancouver‘s real-estate market for hotels is so weak that companies holding the properties are diversifying to other real estate asset classes to build stability.

Vancouver‘s Mayfair Properties Ltd. is currently increasing its stock of non-hotel properties.

The diversification follows a year when Vancouver hotel property values rose but were a laggard among Canadian cities, according to Colliers International’s 2013 Canadian Hotel Investment Report.

Mayfair’s largest division is its Mayfair Hotels and Resorts, which owns 12 B.C. hotels, including seven in downtown Vancouver, such as:

- the Best Western at 718 Drake Street;

- the Landis Hotel and Suites at 1200 Hornby Street; and

- the Viva Suites Downtown Vancouver at 1311 Howe Street.

Mayfair expects to finalize a deal soon to buy two Vancouver residential towers. Last year it developed a small residential building in North Vancouver and bought four residential towers in Burnaby that have a total of 518 units.

The company also recently built a mini-storage building and owns a small office building.

“No one in their right mind would develop new stand-alone hotels right now,” said Mayfair vice-president Zack Bhatia. “Land is going for $200 per square foot in downtown Vancouver. By the time you do the construction costs, you could buy existing hotels cheaper.”

But hotels are not on the market, because owners are unable to get what they believe is full value for their properties, say industry insiders such as Coast Hotels and Resorts president Robert Pratt.

Pratt said the Vancouver hotel market is sluggish both operationally and in terms of real estate values. His company’s 2013 convention business is below its target and last year’s sales.

That has hurt cash flow and reduced the properties’ value for buyers.

“When we sell properties, we do it based on trailing cash flow,” he said. “Owners are not going to want to sell their hotels based on the 12-months trialling [cash flow] that we have seen.”

Bhatia agreed.

“There [are] no hotels on the market because whatever is on the market gets scooped up very fast,” he said. “People know that they won’t get the value by selling now, so they’re just holding on.”

© Copyright (c) Vancouver Courier

Lighting up lowers resale value of homes

Thursday, April 18th, 2013

Eighty-eight per cent of realtors say it is harder to sell smokers’ homes

Glen Korstrom
Van. Courier

Homeowners who smoke may be paying more for their fix than they realize.

Smoking in the home can reduce the resale value of properties by as much as 29 per cent, according to a study released April 16 and sponsored by Pfizer Canada, which makes products to help people quit smoking.

The study focused on Ontario, but Vancouver realtors say attitudes toward homes where there has been smoking are the same in this province.

“Your smell is your strongest emotional sense,” said Royal LePage City Centre realtor Blair Smith. “Even if you can’t identify what the odour is, if there’s objectionable odour, it reacts to the core.”

He said that earlier in the day he spoke with a client who was coming from Regina to look at one of his listings.

“She said, ‘Before I book the ticket, I wanted to ask if there were smokers or pets in the home,’” Smith said.

“So for her, it wasn’t just a matter of whether it would lower the value of the home. She didn’t want to buy the home if there were smokers or pets.”

The Pfizer survey estimated that 15 per cent of homes have at least one regular smoker.

The survey included interviews with 401 realtors, of whom 88 per cent said it is more difficult to sell a home where owners have smoked. More than half of respondents (56 per cent) said most buyers are less likely to buy a home where people have smoked, and 27 per cent went further and said most buyers are actually unwilling to buy a home where people have smoked.

© Copyright (c) Vancouver Courier

Condo rentals surge as sales fall

Thursday, April 18th, 2013

Vernon Clement Jones
Other

Greater Toronto Area Realtors reported a 13 per cent rise in the number of condominium apartments rented through the MLS system in the first quarter, even as actual sales fell compared to the same year-ago period.

Demand for rental condominium apartments remained strong during the first quarter of the year,” said Toronto Real Estate Board President Ann Hannah. “People looking for higher end rental accommodation, including those who have temporarily put their decision to purchase on hold, were likely driving rental activity during the first three months of the year.

That could well be.

While there were 4,277 condominium apartments rented in the first three months of 2013, the sale of 4,133 condominium apartments sold over the same period represents a 17 per cent drop, year over year.

The increasing demand for condo rentals is accruing to the benefit of many investors.

The average monthly rent for one-bedroom condominium apartments in the first quarter was $1,597 – up by almost four per cent compared to Q1 2012. The average two-bedroom condominium apartment rent was up by slightly more than one per cent over the same period to $2,114.

“The rental market has remained quite tight over the last year,” says Jason Mercer, TREB’s senior manager of market analysis. “Competition between renters has been strong enough to drive increases in average rents. However, growth in the number of units listed outstripped growth in the number of rental transactions in the first quarter, suggesting that renters benefitted from more choice.”

Inevitably, that means that the current landlord’s market may start to swing to renters as fewer condo sales are made.

“If this trend continues, the pace of rent growth could moderate,” says Mercer.

Bank of Canada Interest Rate Announcement

Wednesday, April 17th, 2013

Other

The Bank of Canada kept its target overnight rate at 1 per cent this morning. In the statement accompanying the decision, the Bank forecast that the Canadian economy will gain momentum through the year following a weak second half in 2012, but slow growth through the first half of this year will limit real GDP growth to just 1.5 per cent in 2013 before rising to 2.8 in 2014. The Bank’s revised forecast means that the economy is now projected to return to full capacity in mid-2015, rather than in 2014 as previously predicted. A more persistent output gap will keep downward pressure on inflation, which is now expected to gradually rise to the 2 per cent target rate by mid-2015. The Bank continued to sound a much more dovish note on future rate increases, noting that the considerable policy stimulus currently in place will likely remain appropriate for “a period of time, after which some modest withdrawal will likely be required.”

With an expanding output gap and inflation trending well below its 2 per cent target, it is natural to ask if the next move by the Bank of Canada is a rate cut rather than the rate hike that almost all economists have penciled into their forecasts. However, unless the economy deteriorates much more or inflation trends much lower, the Bank is unlikely to lower interest rates since doing so would run counter to a year of loudly exhorting households to cut back on debt. Instead, the Bank will likely continue to use forward guidance about the need, or lack thereof, for future rate hikes in order to influence long-term rates and the Canadian dollar lower. The combined of effect of which should provide continued stimulus to the Canadian economy.