Squeezing in.

The City of Vancouver reported to have issued 350 Laneway permits in 2012, that is a big increase from the average of 146 from 2009-2011!

Laneway houses are one of the many ways homewowners help pay for their mortgages. With the new mortgage rules limiting what many young people can qualify for, having a secondary source of income as part of your property, whether through laneway houses or secondary suites, is a consideration of many homebuyers and home owners. Homeowners  can build the laneway house and rent it out until their family grows and needs the extra space. Many families are opting to share land, with one generation in the laneway house and the other inhabiting the main house. Laneway houses aren't costly to build ($200,000 to $300,000+), though the process can be long and quite involved.  Laneway houses are only permitted to be built on RS-1 or RS-5 Zoning.

Bill de Mooy

If a house deal falls apart because the buyer can’t close and the seller then sells the property to someone else for more, who gets the deposit?
Here’s what can happen:

In early September 2003, Shankar Iyer and Bala Ramachandran agreed to pay $289,000 for a new home from Pleasant Developments Inc. They accompanied their offer with a $10,000 deposit and the builder accepted it on September 16.

The buyers got cold feet and the next day changed their mind, asking for the return of the deposit.

The builder refused to return it and resold the house for $700 less than the original deal, but kept the deposit. The couple sued in Small Claims Court for the return of the deposit. When it came to the hearing, the question for the court was whether the builder could keep it all.

The judge decided the builder could only keep $700 — the amount by which the sale was reduced — and was ordered to give the balance of $9,300 to the buyer.

The builder appealed. Three years later, Judge Brown of the Ontario Superior Court of Justice decided the builder could keep the entire deposit, even though he did not suffer any loss.

He quoted the law on the subject as follows:
“Even in the case where the seller re-sells at a purchase price that is high enough to compensate for any loss from the first sale, the seller may nevertheless retain the deposit.”

What this means is that, where it is the buyer’s fault that a deal does not close, the seller can keep the deposit. There is an exception to this rule if the amount of the deposit is out of all proportion to the losses suffered. In those cases, the loss of the deposit may be considered a penalty and then it will not be paid to the seller and will be returned to the buyer.

The buyers tried to argue that the loss of the $10,000 was out of all proportion to the losses suffered by the seller. The judge noted that the deposit paid was only 3.6 per cent of the purchase price.

In my opinion, the deposit would have to be greater than 10 per cent of the purchase price in order for the buyer to recover it if the seller suffered little or no damages.

Here are the lessons:
1.Understand your rights are before you sign a real estate contract and make a deposit.
2.If you are a buyer, understand that once an agreement is signed and accepted, you cannot simply change your mind, even one day later.
3.If a buyer defaults on their obligations, then not only can the seller sue for any damages, they can in most cases sue for the deposit, even if they have suffered no damages at all.
4.If a matter goes to court, any deposit will remain in the real estate brokerage trust account until the parties sign a mutual release or the matter is decided by a court, which in this case, took more than 2 years.

This story is written by Mark Weisleder, a Toronto real estate lawyer in www.moneyville.ca

As part of a home sale, many buyers ask for repairs to be done before the deal closes. But if the details are not set out clearly, there can be serious consequences.

Here’s why. In August, 2003 Janet Morrow agreed to buy a house in Kawartha Lakes for $174,000, with a closing date of October 31. The contract was later amended, with the seller agreeing to ensure the oil tank was working properly, certain pipes were properly installed and repairs were made to the roof, garage and drainage system.

They were to be done by Oct. 1.

Morrow visited the house with her inspector on October 14 and the inspector concluded that some of the repairs weren’t done. Morrow said if the outstanding items weren’t fixed, she would not close the deal.

The seller offered her $1,000 off the purchase price to close, which she refused and the deal fell apart. The seller ended up selling to someone else for $128,000, some $46,000 less than Morrow’s offer. He sued her for that amount.

Two years later, in October 2005, Judge Brown of the Ontario Superior Court of Justice decided that Morrow had no right to refuse to close, because the seller had made most of the repairs she had requested and offered cash for those outstanding. She was ordered to pay the $46,000.

Morrow had claimed it would be expensive to complete the work, but offered no proof of those costs. The seller argued the house was for the most part what she agreed to buy. The Judge agreed with the seller.

Here are some things you can conclude from this case: When a deal is conditional on the buyer being satisfied with something like a home inspection, if the buyer is not satisfied, they can usually get out of the deal. But if a seller undertakes to do something like minor repairs and they are not done, the buyer is entitled to reasonable compensation to complete the work, but cannot refuse to close.

Frequently, buyers find problems during a home inspection and negotiate with the seller to have the defects fixed before closing. I get nervous when I see these clauses because it can come down to who decides whether something was completed in a professional manner or not? Or who is going to decide how much it will cost to fix the problem if it is not completed?

My advice is to try and figure out what it should cost to fix using estimates from contractors and then reduce the price by that amount. Let the buyer deal with it after closing. If you are going to insist on the seller fixing it, then also make it clear in advance that if the buyer is not satisfied with the work, then a preset amount will be held back on closing, until the problem is solved.

Buyers should never assume they have a right to refuse to close any deal just because there are some damages to the property or repairs that were not done properly. Both buyers and sellers should get professional and legal advice, preferably before signing any contract or amendment, dealing with any repair obligations or issues.

Story by

Mark Weisleder is a Toronto real estate lawyer.

Housing Market Update (January 2013)

Watch BCREA Chief Economist Cameron Muir discuss the December 2012 statistics:

"Copyright British Columbia Real Estate Association. Reprinted with permission."

Bill de Mooy

Vancouver East, Fraser

The real estate agent told me that the seller does not want to sell to a builder but to someone who wants to live in the home.  

It's basic.  A "teeny, tiny home, on Teeny Tiny Lot, for Teeny Tiny Price" the comments say.    It has a basement but it's basically a recreation area.  Good sized lot for the area 33' x 108' with lane access.

List price $699,000 as of Jan 19, 2013.

Want more information on homes like this?  Just call.

Bill de Mooy

604-274-2222

Vancouver East, Fraser

It's always a pleasant surprise to see the work of professionals.  In this home, that I saw over the weekend, was renovated under the influence of an architect I'm told.  Though modest in appearance from the street, the inside and backyard could appear in a 'Better Homes & Gardens'.  

Meant for a person or couple without children, I feel this could provide a very nice alternative to a condo or townhouse.

No basement. There is, however, a 10 x 10 heated & insulated "shed" in the backyard suitable for a hobby room or office. 

To learn more about this and other homes in East Vancouver, just call.

List Price $799,000 as of Jan 19, 2013 

Bill de Mooy

604-274-2222

HomeGain.com presented the following cost/benefit analysis for 2012 along with Realtor recommendations. 

Mind you, often by doing 1 (Clean & de-clutter) and 8 (paint interior walls), 2 (Lighten & brighten) is a result.

Locally, you can have a home stager provide a consultation.  Usually a hour or two, it's a couple of hundred dollars well spent.  What to de-clutter, colour schemes, further services or complete service.  You choose from a portfolio of assistance.  

It's a proven fact.  That people living in the same surroundings don't notice things they daily experience.  Fresh, skilled eyes can do so much. 

Home stagers, de-clutterers, decorators I know of.  Speak to any or all of them. 

• Suze McCart of www.SuzeInteriors.ca 
• 604-733-5015
• susan@suzeinteriors.ca
   
• Joanne MacKay of www.OceanBreezeStaging.com
• 778-575-5589
• joanne@oceanbreezestaging.com
   
• Reenie Riley 
• 604-788-4066
• r_riley@telus.net