According to many real estate experts, the Canadian housing market is expected to stabilize in 2011 returning to more normal long-term growth patterns after a decade-long bull run.
The housing sector has avoided two extreme bubble-and-crash scenarios over the past three years when resale prices dropped sharply in 2008, then quickly rebounded as low mortgage rates and lower prices supported the turnaround.
Record low interest rates fuelled a home buying spree in 2009 that helped pull the Canadian economy out of recession and pushed home sales back to record levels. The market cooled rapidly over the summer of 2010 as the Bank of Canada began hiking interest rates, though recent data have indicated the market may be stabilizing.
In 2011, interest rates are expected to hike further as the economy improves. While still at historical lows, any hike in interest rates have big effects on mortgage rates. If interest rates are raised too quickly, this will further dampen real estate prices. On the other hand, if the government decides to lower the rates once again, as unlikely as this may seem, then home sales might surge slightly.
Government and institutional lending policies will also affect real estate prices. As banks and governmental policies become increasingly strict, more people will be turned down for mortgages. At the very least these potential home buyers will need to choose from more modest homes if their mortgage is declined.
In 2011, Canada will experience an overall decline of 0.9% in home prices. Not all provinces will feel the effects of fluctuating real estate prices equally. Some provinces will have a more profound move in housing prices than others.
While real estate prices might remain fairly stable, buying activity is expected to slow down significantly. The Canadian Real Estate Association expects a 7.3% decline in home sales. This means that homeowners in a panic to sell may have to drop their prices substantially in order to liquidate. Others may need to wait longer than in previous years to sell.
The drop-off in home sales comes from an anticipated slowing of economic growth along with a reduction in consumer spending. Less free floating capital means fewer large purchases. Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011.
March 13, 2011
January 18, 2011
Federal Government changes to Mortgage Guidelines
January 17, 2011
Fixtures, Chattels and Flat Panel TVs
Recent dramatic price reductions in the cost of plasma, LCD and LED televisions have resulted in flat panel TVs becoming some of the most popular electronic devices. Today you would be hard pressed to find a household without one or more flat panel televisions and at least one of these will likely be mounted in an elevated position on a wall by means of a mounting bracket.
The question that arises is how should flat panel televisions be dealt with in a real estate transaction?
For reasons that will be discussed in greater detail in this article, if you have your hearts set on removing a mounted television when you move out, then you’d better be listing this item as a “fixture” not remaining with the property. On the other hand, if you want that wall mounted television and bracket, then, as the buyer, in the offer to purchase you should be specifying these items as a “chattel” to remain with the property on closing. Anything else, and in particular remaining silent about this item in the contract, is likely to give rise to disappointment and hurt feelings on possession day.
Relevant provisions in the standard form contract
A number of years ago AREA’s standard form contracts introduced the plain language terms “attached” and “unattached” goods to replace “fixture” and “chattel”. The key provision in the Residential Real Estate Purchase Contract that deals with this issue is paragraph 1.1 which states that:
“The Property is the Land, Buildings, Attached Goods (unless excluded) and included Unattached Goods located at (municipal address):.................”
If clauses 1.3 and 1.4 are left blank, then the contract includes everything that is attached to the property and excludes (the seller is entitled to remove) everything that is detached from the property. Clauses 1.3 and 1.4 are provided to enable the parties to deviate from the default provision. Most commonly one will find standard kitchen appliances listed in clause 1.3 (unattached goods to be included) as “stove, fridge and dishwasher”. This is problematic because failing to be specific in terms of the make, model and colour of the appliances can lead to substitutions of appliances by sellers prior to possession day. Such substitutions are difficult to prove and therefore remedy. Clause 1.4 (attached goods to be excluded) is used less frequently, but might indicate “the heirloom dining room chandelier” as being an attached good that the seller intends to remove from the property on closing.
Clearly the key to completing these clauses correctly is an understanding of what constitutes “attached” and “unattached” goods.
The Common Law
All available court precedents that have addressed this issue have done it in the context of “fixtures” and “chattels” rather than the new terminology. I expect, however, that the same analysis would apply. The clearest rules that I could find were set out in a British Columbia decision (Royal Bank of Canada v. Maple Ridge Farmers Market Ltd. S.C.B.C. 1995, No. A950858) as follows:
1. Any item which is unattached to the property, except by its own weight, and can be removed without damage to ... (the premises) that will need repair, is a chattel.
2. Any item which is plugged in and can be removed without any damage or alteration is a chattel.
3. Any item which is attached even minimally (i.e., it cannot simply be unplugged) is a fixture. For example, if an item requires the removal of screws, nails, bolts, detachment of plumbing, or the cutting and capping of hardwire, it will be a fixture.
4. If a piece of equipment is attached to a structure, a part of which could be removed but which would be useless without the attached part, then the entire piece of equipment is a fixture.
The foregoing makes it clear that any appliance which is simply plugged into an electrical outlet but otherwise stands on its own is a chattel (unattached good) but the moment that the appliance is screwed or glued or otherwise attached to a cabinet or wall it becomes a fixture (attached good). It also makes it clear that if a part of an appliance can be removed (such as attachments to a vacuflow or remote controls for a garage door opener) but would be useless without both parts, then all of the parts are considered to be a fixture.
Analysis
Where does the foregoing leave us with respect to common appliances and the flat panel TV?
Stove: could be an attached or unattached good depending on whether it is free standing and only plugged into an electrical outlet, or built in or wired directly into the electrical system.
Cook top: will usually be wired directly into the electrical system or gas line, and as a result is an attached good.
Refrigerator: can be either free standing or built in or, potentially, directly tied into a water line if it has a water cooling or ice making feature and, as a result, could be either a chattel or a fixture.
Dishwasher: needs to be connected to the water supply and may be wired directly to the electrical lines (rather than plugged in) and, in addition, will likely have some screws attaching it to the cabinets, and, as a result, will be an attached good.
Microwave oven: can either be a free standing chattel (if it is simply standing on a ledge) or a built-in fixture (if it has venting grills attached to both the appliance and the cabinets).
Garbage compactor: unless there are some screws to hold it in place, will usually be a free-standing appliance.
Washer and Dryer: may be either attached or unattached goods depending on the nature of the connection of the water lines to the washer and the exhaust vent from the dryer.
Garage door opener: is always a fixture as the motor is bolted to the ceiling of the garage and connected to the garage door. The remote controls are an integral part of the whole as they are useless without the motor.
Ceiling fan: is always an attached good as it will be screwed to the ceiling or the electrical box.
Vacuflow system: is always a fixture due to the motor being attached to the wall and the system pipes, and the attachments are an integral part of the whole.
Wall-Mounted Panel Television: First of all, there is no question that the mounting bracket is an attached good as it will be screwed directly into the wall. However, the television itself is more problematic. Unlike the power head of a vacuflow system, the television could be removed from the bracket and still function and be useful on its own. However, rarely will a wall-mounted television simply hang on a bracket by its own weight. Usually there will be some degree of attachment to the bracket by screws, bolts or safety pins. This would make it appear to be more of an attached rather than an unattached good.
Conclusion
In order to avoid misunderstandings and problems on possession day, where doubt exists about any goods being attached or unattached, it is best to list such goods in either 1.3 or 1.4 depending on what the intention of the parties may be. Frankly, even where there is no doubt at all about an item being a “fixture”, there is no harm in a buyer including it under clause 1.3 in order to avoid a misunderstanding on closing.
courtesy of Lubos K. Pesta
The question that arises is how should flat panel televisions be dealt with in a real estate transaction?
For reasons that will be discussed in greater detail in this article, if you have your hearts set on removing a mounted television when you move out, then you’d better be listing this item as a “fixture” not remaining with the property. On the other hand, if you want that wall mounted television and bracket, then, as the buyer, in the offer to purchase you should be specifying these items as a “chattel” to remain with the property on closing. Anything else, and in particular remaining silent about this item in the contract, is likely to give rise to disappointment and hurt feelings on possession day.
Relevant provisions in the standard form contract
A number of years ago AREA’s standard form contracts introduced the plain language terms “attached” and “unattached” goods to replace “fixture” and “chattel”. The key provision in the Residential Real Estate Purchase Contract that deals with this issue is paragraph 1.1 which states that:
“The Property is the Land, Buildings, Attached Goods (unless excluded) and included Unattached Goods located at (municipal address):.................”
If clauses 1.3 and 1.4 are left blank, then the contract includes everything that is attached to the property and excludes (the seller is entitled to remove) everything that is detached from the property. Clauses 1.3 and 1.4 are provided to enable the parties to deviate from the default provision. Most commonly one will find standard kitchen appliances listed in clause 1.3 (unattached goods to be included) as “stove, fridge and dishwasher”. This is problematic because failing to be specific in terms of the make, model and colour of the appliances can lead to substitutions of appliances by sellers prior to possession day. Such substitutions are difficult to prove and therefore remedy. Clause 1.4 (attached goods to be excluded) is used less frequently, but might indicate “the heirloom dining room chandelier” as being an attached good that the seller intends to remove from the property on closing.
Clearly the key to completing these clauses correctly is an understanding of what constitutes “attached” and “unattached” goods.
The Common Law
All available court precedents that have addressed this issue have done it in the context of “fixtures” and “chattels” rather than the new terminology. I expect, however, that the same analysis would apply. The clearest rules that I could find were set out in a British Columbia decision (Royal Bank of Canada v. Maple Ridge Farmers Market Ltd. S.C.B.C. 1995, No. A950858) as follows:
1. Any item which is unattached to the property, except by its own weight, and can be removed without damage to ... (the premises) that will need repair, is a chattel.
2. Any item which is plugged in and can be removed without any damage or alteration is a chattel.
3. Any item which is attached even minimally (i.e., it cannot simply be unplugged) is a fixture. For example, if an item requires the removal of screws, nails, bolts, detachment of plumbing, or the cutting and capping of hardwire, it will be a fixture.
4. If a piece of equipment is attached to a structure, a part of which could be removed but which would be useless without the attached part, then the entire piece of equipment is a fixture.
The foregoing makes it clear that any appliance which is simply plugged into an electrical outlet but otherwise stands on its own is a chattel (unattached good) but the moment that the appliance is screwed or glued or otherwise attached to a cabinet or wall it becomes a fixture (attached good). It also makes it clear that if a part of an appliance can be removed (such as attachments to a vacuflow or remote controls for a garage door opener) but would be useless without both parts, then all of the parts are considered to be a fixture.
Analysis
Where does the foregoing leave us with respect to common appliances and the flat panel TV?
Stove: could be an attached or unattached good depending on whether it is free standing and only plugged into an electrical outlet, or built in or wired directly into the electrical system.
Cook top: will usually be wired directly into the electrical system or gas line, and as a result is an attached good.
Refrigerator: can be either free standing or built in or, potentially, directly tied into a water line if it has a water cooling or ice making feature and, as a result, could be either a chattel or a fixture.
Dishwasher: needs to be connected to the water supply and may be wired directly to the electrical lines (rather than plugged in) and, in addition, will likely have some screws attaching it to the cabinets, and, as a result, will be an attached good.
Microwave oven: can either be a free standing chattel (if it is simply standing on a ledge) or a built-in fixture (if it has venting grills attached to both the appliance and the cabinets).
Garbage compactor: unless there are some screws to hold it in place, will usually be a free-standing appliance.
Washer and Dryer: may be either attached or unattached goods depending on the nature of the connection of the water lines to the washer and the exhaust vent from the dryer.
Garage door opener: is always a fixture as the motor is bolted to the ceiling of the garage and connected to the garage door. The remote controls are an integral part of the whole as they are useless without the motor.
Ceiling fan: is always an attached good as it will be screwed to the ceiling or the electrical box.
Vacuflow system: is always a fixture due to the motor being attached to the wall and the system pipes, and the attachments are an integral part of the whole.
Wall-Mounted Panel Television: First of all, there is no question that the mounting bracket is an attached good as it will be screwed directly into the wall. However, the television itself is more problematic. Unlike the power head of a vacuflow system, the television could be removed from the bracket and still function and be useful on its own. However, rarely will a wall-mounted television simply hang on a bracket by its own weight. Usually there will be some degree of attachment to the bracket by screws, bolts or safety pins. This would make it appear to be more of an attached rather than an unattached good.
Conclusion
In order to avoid misunderstandings and problems on possession day, where doubt exists about any goods being attached or unattached, it is best to list such goods in either 1.3 or 1.4 depending on what the intention of the parties may be. Frankly, even where there is no doubt at all about an item being a “fixture”, there is no harm in a buyer including it under clause 1.3 in order to avoid a misunderstanding on closing.
courtesy of Lubos K. Pesta
December 3, 2010
7 Ways To Improve Efficiency in The Workplace
As we start to get into the colder and darker winter months most Canadian companies will find it increasingly more difficult to keep your team motivated and efficient. Here are some tips that managers and employers can do every day to keep their employees motivated.
2. In instances where there is lots of time being wasted doing things that must not be done, such as browsing the Internet, take away the risks. such as, you have a presentation to finish but you keep discovering yourself browsing online. Instead of doing that, get down to the park to work. There is no Internet and you can get the project done.
3. Tackle the hardest tasks first. That way, there is no worry about procrastinating with them and instead, they are done and taken care of leaving more time for the necessary tasks.
4. There will be days when there just isn't enough time. What must be done? increase efficiency by focusing on the most necessary things. Keep in mind the Pareto principle that 80 percent of the value of any event will come from the 20 percent effort that's put towards it. Concentrate on that 20 percent.
5. Stay organised and get rid of clutter. Cluttered spaces often means cluttered minds. It will hold you back from achieving your unsurpassable purpose.
6. Offer rewards to those who accomplish the purpose. These do not have to be big things but they must be something that they wish. such as, if a team is working on a big project, offer to take them to lunch if it's completed prior.
7. Use resources. If the team has the necessary resources on hand to finish the task, they are more likely to be able to do just that. Encourage them to do this to increase their efficiency.
These are several tips that you can incorporate into the day to day tasks to accomplish your purpose. Ultimately, by increasing the ability to perform the task at the best level will enhance the ability of the workers to do well in the long term as well as the short term. That means benefits for everyone.
Good luck.
November 1, 2010
Calgary Buyers’ Remain Cautious
Calgary Buyers’ Remain Cautious
Sales of million dollar plus homes a bright spot in 2010 market
Calgary, November 1, 2010 – Home sales in the city of Calgary were down month-over-month in October 2010, showing signs that buyers still remain cautious, despite signs of economic recovery. Year-over-year sales continued to trend lower in the month of October, according to figures released today by the Calgary Real Estate Board (CREB®).
The number of single family home sales in the month of October 2010 shrank by 7 per cent at 888, compared with September 2010, when sales were 958. The number of condominium sales for the month of October 2010 was 310. This was a decrease of 15 per cent from the 366 condominium transactions recorded in September 2010.
Year-over-year, the number of single family homes sold in October 2010 in the city of Calgary were down 31 per cent. In October 2009, single family home sales totalled 1,285. Condominium sales saw a decrease of 48 per cent from the same time a year ago. In October 2009, condominium sales were 601.
“Buyers remain cautious, perhaps waiting to feel a little more confidence in Calgary’s economic growth and their own job security,” says Diane Scott, president of CREB®.
“We believe economic recovery will build momentum into 2011 as the outlook for oil and gas and other sectors continues to improve. This, coupled with low interest rates and improved affordability, should eventually help to stimulate Calgary’s housing market,” adds Scott.
The average price of a single family home in the city of Calgary in October 2010 was $444,744, showing a 3 per cent decrease from September 2010, when the average price was $460,278, and a 4 per cent decrease from October 2009, when the average price was $462,465. The average price of a condominium in the city of Calgary in October 2010 was $287,793, showing a 1 per cent increase from September 2010, when the average price was $284,028 and no significant change over last year, when the average price was $289,155. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
The median price of a single family home in the city of Calgary for October 2010 was $387,900, showing a 1 per cent decrease from September 2010 when the median price was $390,000. This was a 5 per cent decrease from October 2009, when the median price was $410,000. The median price of a condominium in October 2010 was $255,000, showing a 4 per cent decrease from September 2010, when the median price was $265,000, and a 3 per cent decrease from October 2009, when it was $263,500.
All city of Calgary MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median price.
“Our average price is being buoyed by more sales in the million dollars plus category. Despite a slowdown in certain market segments, homes sold in the city of Calgary at a million dollars or more have actually seen an increase of more than 15 per cent when compared to the same time one year ago. This boost in sales is, indeed, a bright spot in our current market,” says Scott.
Single family listings in the city of Calgary added for the month of October 2010 totalled 1,765, a decrease of 22 per cent from September 2010 when 2,252 new listings were added, and showing a decrease of 3 per cent from October 2009, when 1,819 new listings came to the market.
Condominium new listings in the city of Calgary added for October 2010 were 721, down 22 per cent from September 2010, when the MLS® saw 921 condo listings coming to the market. This is a decrease of 16 per cent from October 2009, when new condominium listings added were 859.
“We are seeing some decline in the number of new listings coming on to the market. A continuing decline in supply will help bring the market into balance,” says Scott.
“We believe we will see a tempering of our inventory levels, as some sellers offer marginal reductions in prices, or others choose to pull their home off the market for a period of time,” notes Scott. “Homeowners should consider speaking with their REALTOR® about their current marketing strategy—there are always options in every market.”
“Overall, we’re cautiously optimistic that Calgary’s economic recovery will pick up as we move into 2011—but in-migration will be needed to fuel a sustained recovery in Calgary’s housing market,” says Scott.
courtesy of CREB.
October 12, 2010
Condominium Special Assessments
Condominium special assessments have recently become so commonplace they tend to be a factor in the majority of residential condominium resale transactions. I suspect this is the case for a number of reasons including:
• Aging condominiums built in the 1970s and 1980s may now require
major maintenance that was either not anticipated or not fully
funded.
• Apartment buildings converted to condominiums during the hot
market of 2005 and 2006 may never have been fully refurbished
and problems are now surfacing (i.e. elevators, roofs, mechanical
equipment).
• The rush to complete some condominium buildings during the hot market led to shoddy workmanship and expensive repairs are now required to fix the problems.
• Due to their prevalence, special assessments no longer have the stigma once associated with them and it is easier for condominium boards to pass and implement them.
Whatever the reason, the passing of a special assessment by a condominium board while a contract is “executory” can become a very unpleasant surprise for whoever is burdened with it – the buyer or the seller (Note: Executory refers to the time period after conditions are removed but prior to the closing date). The existing Residential Real Estate Purchase Contract does not specifically address special assessments except that the seller’s lawyer is required to obtain and provide the buyer with an Estoppel Certificate, which confirms that all condominium contributions that are the seller’s responsibility to the closing date are paid. Based in part on the foregoing, the practice that has evolved among conveyancing lawyers is to require the seller to pay any special assessments "due and payable" by the closing date. The buyer assumes responsibility for any special assessments payable post closing, no matter when assessed.
This practice has been expressly incorporated in clause 4.7 of the new Residential Purchase Contract for Resale Condominium Property, which should be available for use by industry members in the very near future. However potential problems may still arise.
While this practice is balanced, it can still result in circumstances of hardship for either party.
Here is a recent example of a seller with low equity caught up in the following situation. Two days before the closing date, the condominium board passed a resolution implementing a substantial special assessment payable in two instalments over the next several months. However, the resolution contained an “acceleration” clause, making the entire amount due and payable immediately in the event of the sale of any unit. The management company refused to issue a clear Estoppel Certificate without the payment of the special assessment, which substantially depleted the remainder of the seller’s equity.
On the other hand, a buyer who has done all due diligence and reviewed all available documentation could be hit with a significant special assessment shortly after closing if, for example, the elevator unexpectedly breaks down and has to be replaced. If the buyer doesn’t have the financial resources to pay the special assessment it can result in substantial penalties, late interest, and ultimately foreclosure of the unit.
As a result, where the relative bargaining position of the parties permits, the new clause contemplates the possibility that the parties could “otherwise agree in writing” to further shift the burden of any known or unexpected special assessments to one or the other of them.
The following are suggested clauses that can be used to help improve the position of either the buyer or the seller of a condominium. The appropriate clause would be inserted in 7.6 of the Purchase Contract (Additional terms of sale).
Clause for the benefit of the Buyer
7.6 "The Seller is responsible to pay all special assessments levied by the condominium board up to and including the Completion Day, no matter when actually due and payable."
This wording would obligate the seller to pay all special assessments approved by the condominium board even if not due and payable by closing. Any special assessments levied after closing would, of course, still remain the obligation of the buyer.
Clause for the benefit of the Seller
7.6 “The Buyer is responsible to pay all special assessments levied by the condominium board after final acceptance, no matter when actually due and payable.”
This wording would protect the seller from having to pay for any special assessments levied after the purchase price is negotiated and a contract entered into. The seller would remain responsible to pay for any pre-existing special assessments due and payable by the closing date.
Notwithstanding the fine print of the contract, it is always possible for the parties to negotiate and re-designate responsibility for any known special assessments as follows:
7.6 “The (Buyer or Seller) is solely responsible to pay the special assessment in the sum of $.......................due on ……………………
If not disclosed by the seller, information concerning an existing (or imminent) special assessment will typically surface during the condominium document review conducted on behalf of a buyer. Invariably the buyer will then try to negotiate either a price abatement or an amendment to the contract obligating the seller to pay for the special assessment. As a result, if the seller and the listing agent know about an existing or pending special assessment, the best policy is likely to disclose it to a potential buyer from the start and attempt to incorporate it into the initial contract negotiation.
Conclusion
Regardless of whether you are buying or selling a resale condominium, awarness of the potential of special assessments being passed and the proper handling of known special assessments in the contract will avoid hurt feelings and complications on closing. Needless to say, from a buyer’s perspective a thorough and professional condominium document review is the best line of defense against unpleasant and unexpected special assessment surprises post closing.
courtesy of Lubos K. Pesta, Q.C.
• Aging condominiums built in the 1970s and 1980s may now require
major maintenance that was either not anticipated or not fully
funded.
• Apartment buildings converted to condominiums during the hot
market of 2005 and 2006 may never have been fully refurbished
and problems are now surfacing (i.e. elevators, roofs, mechanical
equipment).
• The rush to complete some condominium buildings during the hot market led to shoddy workmanship and expensive repairs are now required to fix the problems.
• Due to their prevalence, special assessments no longer have the stigma once associated with them and it is easier for condominium boards to pass and implement them.
Whatever the reason, the passing of a special assessment by a condominium board while a contract is “executory” can become a very unpleasant surprise for whoever is burdened with it – the buyer or the seller (Note: Executory refers to the time period after conditions are removed but prior to the closing date). The existing Residential Real Estate Purchase Contract does not specifically address special assessments except that the seller’s lawyer is required to obtain and provide the buyer with an Estoppel Certificate, which confirms that all condominium contributions that are the seller’s responsibility to the closing date are paid. Based in part on the foregoing, the practice that has evolved among conveyancing lawyers is to require the seller to pay any special assessments "due and payable" by the closing date. The buyer assumes responsibility for any special assessments payable post closing, no matter when assessed.
This practice has been expressly incorporated in clause 4.7 of the new Residential Purchase Contract for Resale Condominium Property, which should be available for use by industry members in the very near future. However potential problems may still arise.
While this practice is balanced, it can still result in circumstances of hardship for either party.
Here is a recent example of a seller with low equity caught up in the following situation. Two days before the closing date, the condominium board passed a resolution implementing a substantial special assessment payable in two instalments over the next several months. However, the resolution contained an “acceleration” clause, making the entire amount due and payable immediately in the event of the sale of any unit. The management company refused to issue a clear Estoppel Certificate without the payment of the special assessment, which substantially depleted the remainder of the seller’s equity.
On the other hand, a buyer who has done all due diligence and reviewed all available documentation could be hit with a significant special assessment shortly after closing if, for example, the elevator unexpectedly breaks down and has to be replaced. If the buyer doesn’t have the financial resources to pay the special assessment it can result in substantial penalties, late interest, and ultimately foreclosure of the unit.
As a result, where the relative bargaining position of the parties permits, the new clause contemplates the possibility that the parties could “otherwise agree in writing” to further shift the burden of any known or unexpected special assessments to one or the other of them.
The following are suggested clauses that can be used to help improve the position of either the buyer or the seller of a condominium. The appropriate clause would be inserted in 7.6 of the Purchase Contract (Additional terms of sale).
Clause for the benefit of the Buyer
7.6 "The Seller is responsible to pay all special assessments levied by the condominium board up to and including the Completion Day, no matter when actually due and payable."
This wording would obligate the seller to pay all special assessments approved by the condominium board even if not due and payable by closing. Any special assessments levied after closing would, of course, still remain the obligation of the buyer.
Clause for the benefit of the Seller
7.6 “The Buyer is responsible to pay all special assessments levied by the condominium board after final acceptance, no matter when actually due and payable.”
This wording would protect the seller from having to pay for any special assessments levied after the purchase price is negotiated and a contract entered into. The seller would remain responsible to pay for any pre-existing special assessments due and payable by the closing date.
Notwithstanding the fine print of the contract, it is always possible for the parties to negotiate and re-designate responsibility for any known special assessments as follows:
7.6 “The (Buyer or Seller) is solely responsible to pay the special assessment in the sum of $.......................due on ……………………
If not disclosed by the seller, information concerning an existing (or imminent) special assessment will typically surface during the condominium document review conducted on behalf of a buyer. Invariably the buyer will then try to negotiate either a price abatement or an amendment to the contract obligating the seller to pay for the special assessment. As a result, if the seller and the listing agent know about an existing or pending special assessment, the best policy is likely to disclose it to a potential buyer from the start and attempt to incorporate it into the initial contract negotiation.
Conclusion
Regardless of whether you are buying or selling a resale condominium, awarness of the potential of special assessments being passed and the proper handling of known special assessments in the contract will avoid hurt feelings and complications on closing. Needless to say, from a buyer’s perspective a thorough and professional condominium document review is the best line of defense against unpleasant and unexpected special assessment surprises post closing.
courtesy of Lubos K. Pesta, Q.C.
September 7, 2010
Calgary Economic Outlook
Provided below are economic outlooks provided by both Calgary Economic Development and the City of Calgary. I encourage everyone to follow the link and read the full report. I have highlighted specific parts that pertain to this blog.
Calgary Economic Development
Highlights
"Calgary will experience a Charlie Brown economy in 2010; an economy that
experiences variable performance with ups and downs, similar to the pattern on his shirt. This is a result of Calgary’s economy being dependent upon the state of the U.S. economy and energy markets."
"Calgary, despite best efforts, is still essentially an oil and gas economy, reliant upon the state of energy markets. So, ultimately, as energy prices rise and fall, so does the economic activity in Calgary. We try hard to find new economic activities to strengthen, such as technology or creative industries. We work to put strategic infrastructure in place to make Calgary a more attractive place to work and live, such as airport enhancements and public transit. We are the volunteer capital of Canada. However, we can’t escape a global recession. When oil and gas prices fall and capital dries up, the economy is affected as companies cut spending and jobs. All across the value chain the impacts are felt. Cuts to oil sands capital expenditure result in the loss of work and jobs for engineers, lawyers, accountants, financiers, manufacturers, and transporters. When wages are lost or cut, housing markets are affected and retail spending is curtailed."
"There is great risk in believing that this economic recession is done and gone, for that may create complacency. We risk going back to our former ways. Some people have been more greatly impacted than others - mostly those that have lost jobs - but, in Calgary, for 93 per cent of the labour force, very little has changed in the grand scheme of things. Humans learn from mistakes by adapting behaviour. If we assume all is well there is a risk that we will not have learned our lesson well enough. It is interesting to reflect that we will never claim that we are in recession until there is irrefutable proof of at least two consistent quarters of negative performance. Yet, before we are actually even out of recession we proclaim we are out of recession. Human nature. Cautious on the negative; optimistic on the positive. Again, this approach sets us up for greater challenges ahead, if we don’t truly reflect on the impacts, and adapt behaviour accordingly. More meaningful and sustained recovery is ingrained in a greater and more robust scorecard than currently being watched by the majority of the developed world. We celebrate with one day’s worth of positive data, only to sink the following day on negative performance of some other data."
"Recovery is going to happen. When exactly, no one knows. Balance sheet recessions, like the one we are in, have proven historically to be longer and slower to recover. It might take another 6, 12 or 18 months before we can truly say that the worst might be behind us. And when it does, it likely will be a slow, steady recovery that will look incredibly modest. In the long-term however, more modest growth rates might become the new norm, and ultimately be what we need to keep us honest."
City of Calgary
Highlights
"The Calgary market is struggling with opposing forces. Investors and builders wish to see continued and sustained price increases. First-time buyers in 2010 are facing increased prices that are testing their ability to pay while new federal legislation has more stringent mortgage qualifying requirements. The downturn in energy prices has also put a pause on the residential market while anticipated interest rate hikes are resulting in a short term increase in demand as buyers seek to get in while they still can."
"After dropping 14 per cent from peak prices in July 2007, average prices in Calgary rose throughout 2009 by 5.4 per cent, which is almost double the average price appreciation experienced in the 1990’s. Th e wildcard for the future is interest rates. If they go up too high too quickly they will dampen sales activity, but our expectations are for the prime interest rate to be stepped up in small increments, with a muted impact on posted mortgage rates over the next year. The outlook for housing prices in Calgary is a short run-up in anticipation of increased interest rates, then a market pause after June and a normal annual cyclical pattern returning to the market with September being the hot month of the year for sales. Continued weakness in job creation may pose a downside risk to the forecast."
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