Are you a Landlord or a Tenant looking for information? Check out this site

I attended a Continuing Legal Education session this week on Real Property Law and one of the presenters was the newly named “Chief Residential Tenancies Officer.” I must admit that I had no idea that the Office of the Rentalsman had been recently renamed as the Residential Tenancies Tribunal. The website for this tribunal has lots of information that can be helpful if you are  a tenant or a residential landlord. What is especially helpful are the various forms and resources, which include Form 6 –  Standard Form Residential Lease. I highly recommend that both landlords and tenants spend some time navigating this site and taking advantage of the many resources contained within the site. Here is a link to the site: https://www.snb.ca/RTT-TLL/E/RTT-TLL_E.asp

 

 

5 tips for home buyers prior to closing!

In the 1986 movie, the Money Pit, a young couple move into a home that is terribly dilapidated. While falling down stairways and leaking bathtubs in this movie are enjoyable for comedic value, no one enjoys these things when they happen to you!

A home is the single largest purchase most people will ever make. Therefore, it is important to take the time to investigate your purchase prior to closing and not be pressured by lawyers, real estate agents or family members. Also, you should be careful not to fall in love with a home (too much) prior to proper inspection. You may be excited about your new home, but if you choose to waive your inspection, miss defects, or close on an “as is where is basis,” disaster may follow. For example, in Anderson v. Lawrence, 2013 NBQB 21, Justice Morrison of the Court of Queen’s Bench of New Brunswick heard the home purchasers’ claim against the vendors’ for negligent and fraudulent misrepresentation. The purchasers suffered serious water damage in their basement and the ceilings in the main floor of the house caused by a leaky roof.

The purchasers had viewed the property prior to purchase and saw water in the basement and detected a musty smell, but were assured by the vendors and a real estate agent that the problems had been solved. There were also issues with the septic system. Finally, the purchasers received 17 acres of land rather than 34 acres, as the vendors represented.

The Court in Anderson, supra held that the vendors both negligently and fraudulently misrepresented the water leakage and the size of the land. As a result, the Court ordered the plaintiffs were entitled to $24,339.49 for costs of repairs and $13,070 for the value of the missing 17 acres of land in addition to interest and legal costs.

This case is a helpful lesson to purchasers of homes to be extremely critical before committing to a purchase. It’s easy to end up with your own version of a money pit! Here are some helpful tips to assist you with the purchase of your home:

1. Hire a licensed property inspector. The cost ranges from $200-$500, but will be worth every penny if your inspector finds issues that you may not be able to see with your own eyes;

2. Use checklists to evaluate the condition of the home. Here is a link to a helpful checklist that you may wish to use to evaluate the condition of the home. As stated in the checklist, it should not be relied upon nor be a replacement for a certified home inspection. We make no representations or warranties about the accuracy of the information either, but believe it is a helpful starting point;

3. Attend the inspection with your licensed inspector. Make sure you attend the home with your inspector and ask lots of questions;

4. Read the inspection report carefully and discuss with you inspector, legal counsel and real estate agent;

5. Research the inspector. Not all inspectors are created equally. Take the time to ask potential inspectors questions about  their experience, qualifications, costs, etc.

Not all Title Insurance Policies are Created Equally: lender’s title policy vs. owner’s title policy

You are buying your first home and you have signed so many documents your hand is getting sore. You likely have signed a mortgage, the mortgage covenants, discussed title to the property with your lawyer, arranged for fire insurance; maybe you talked about zoning requirements (depending on your plans for the property); arranged for your down payment on the home; Not to mention that you have been dealing with the logistics of moving—renting a van, picking up pizza and soft drinks to lure your friends in to helping you out; You have been so busy that you probably do not even remember the (likely very brief) conversation you had with your lawyer about title insurance. There can be serious consequences of not being aware of the difference between a Lender’s vs. and Owner’s title insurance policies. What is more concerning is the differences are not easily identified by title insurance companies and require a thorough reading by the counsel and the policy holder.

Here are some basic differences between the two types of title insurance policies:

1. Lender’s policy

A lender’s title insurance policy is usually required by your mortgage company when you purchase a home if you do not have a building location survey. Whereas a survey can  be thousands of dollars, a typical title insurance policy usually costs between $1-200 per policy. This makes title insurance an alluring option for home purchasers rather than spending thousands of dollars when you have already made the (likely) single biggest investment of your lifetime!

Here are some key facts about the lender’s policy:

  • Also known as “loan” policy
  • Lender requires lender’s policy before financing purchase;
  • Only covers the lender’s interests in the property;
  • Types of risks covered:
    • Fraud (signing wrong name on mortgage, etc.);
    • Legal fees in defence of title (ownership issues);
    • Issues regarding priority (other mortgages or judgements registered ahead of bank’s mortgage);
    • Gap coverage (if mortgage not registered on title for a period of time after closing);

2. Owner’s Policy

An owner’s title insurance policy can provide protection against the losses listed in the policy. Some examples could be:

  • someone else owns an interest in your title
  • existing liens against the title
  • violations of municipal zoning by-laws
  • encroachments onto an adjoining property (other than fences and boundary walls)
  • setback violations
  • realty tax arrears
  • outstanding municipal utility charges, provided such charges form a lien on title
  • existing work orders
  • lack of legal access to the property
  • unmarketability of the land due to adverse matters that would have been revealed by an up-to-date survey / RPR/ Building Location Certificate

3. Some helpful links

If the difference between the two types of title insurance policies is still not clear, here are some links that may assist you in further understanding the differences:

 

 

 

Tip of the Week! Budget early for costs related to property purchases

The Real Property Transfer Tax Act requires purchasers of property to pay a one-time tax upon purchase of a property in New Brunswick. On April 1, 2016, the real property transfer tax increased from 0.5 per cent to one percent of the assessed value of a property or the actual purchase price, whichever is higher. This can result in significant increases in closing costs for purchasing a home. For example, transfer taxes on a home purchased for $150,00o would have been $750.00 prior to April 1, 2016. After this date, the transfer taxes would be double at $1,500.  In addition to other closing costs (registration fees, title searches, etc), disbursements related to property purchases can feel unpredictable and overwhelming if you are purchasing a property for the first time.

TIP: Budget early for costs related to property purchases and take the time prior to committing to a purchase to speak with your lawyer about possible costs! This can help you avoid unnecessary stress leading up to what is likely the single most expensive investment most people will make–your home!