The following outline is designed for Course Number Three in the Humber College Real Estate Sales Program, entitled "Additional Residential Transactions." This guide highlights the primary learning objectives and essential memory points necessary for exam preparation across each topic. When you encounter page references, these correspond to the specific pages in the curriculum where you can find detailed information on each learning objective.
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Humber College Real Estate Course 3 Additional Residential Real Estate Transactions
For a detailed outline of Course Number Three in the Humber College Real Estate Sales Program titled "Additional Residential Transactions," it's crucial to focus on the learning objectives and key memory points, alongside the specific page references to the curriculum for comprehensive exam preparation. Below, you will find a structured approach to understand and remember the essential topics for each section of the course. Humber College Real Estate Course 3 Additional Residential Real Estate Transactions...
Introduction to Additional Residential Transactions
Learning Objective: Understand the scope and importance of additional residential transactions in the real estate industry.
Memory Points:
Diverse types of residential transactions beyond basic buying and selling.
Key differences between standard and additional residential transactions.
Page References: p.1-5
Advanced Financing Options
Learning Objective: Gain insight into various financing methods available for residential real estate transactions.
Memory Points:
Pros and cons of different financing options.
Impact of financing options on buying decisions.
Page References: p.6-15
Condominiums and Co-operatives
Learning Objective: Learn the specifics of buying and selling condominiums and co-operatives, including legal and financial considerations.
Memory Points:
Distinctions between condominium ownership and co-operative shares.
Understanding of condominium declarations, by-laws, and reserve funds.
Page References: p.16-28
Rural Properties
Learning Objective: Explore the unique aspects of dealing with rural properties, including zoning, septic systems, and water supply.
Memory Points:
Key considerations for rural property transactions (e.g., land use, environmental concerns).
Importance of due diligence in rural property sales.
Page References: p.29-40
Investment Properties
Learning Objective: Understand the fundamentals of investing in residential real estate, including analysis and valuation.
Memory Points:
Techniques for evaluating residential investment opportunities.
Understanding cash flow, capital appreciation, and ROI.
Page References: p.41-55
Lease Agreements and Landlord-Tenant Legislation
Learning Objective: Learn the intricacies of residential lease agreements and relevant landlord-tenant laws.
Memory Points:
Essential elements of a lease agreement.
Rights and responsibilities of landlords and tenants.
Page References: p.56-65
Estate Sales and Sales Under Power of Sale
Learning Objective: Understand the process and legal implications of estate sales and sales under power of sale.
Memory Points:
Differences between regular sales, estate sales, and power of sale transactions.
Legal requirements and procedural steps for each type of sale.
Page References: p.66-75
Ethical and Professional Standards
Learning Objective: Emphasize the importance of ethics and professionalism in conducting residential transactions.
Memory Points:
Key ethical principles in real estate transactions.
Professional conduct expected in complex residential transactions.
Page References: p.76-85
Preparing for the Exam
Learning Objective: Provide strategies and tips for effectively preparing for the course exam.
Memory Points:
Review techniques focusing on complex transaction types.
Importance of understanding legal and financial nuances in additional residential transactions.
Page References: p.86-95
For each of these sections, it's important to closely read the referenced pages, take detailed notes, and regularly review and quiz yourself on the material to ensure retention and understanding. Practice applying the concepts through case studies or practice questions if available, focusing on real-life applications of the principles discussed. This approach will not only prepare you for the exam but also enhance your practical knowledge as a real estate professional dealing with a broad spectrum of residential transactions.
Introducing Condominiums
Condominiums are a type of property ownership where individuals own their own living unit (unit) and jointly own the communal spaces (common components) with other condo owners. A condominium company represents the collective interests of its members, and owners and residents must follow the condominium board's regulations and bylaws to protect the corporation's assets.
Condominium ownership types
Can be leased or freehold
Freehold standard: owners own their unit plus a share in the property's common parts, with tenants in common ownership of shared components (no units but shared components like roads and a community centre)
Leasehold: a condominium on a plot of land leased for 40-99 years
Builder might register the company before building and selling the condo units
Built-in rights to establish more units or shared components at a later stage of development within the same condominium organisation
Condominium design
Units and common elements: the apartment is the owner's solely owned private living area, while elevators, hallways, and gardens are examples of common components
Owners split the costs of common element upkeep and repairs
Condominium Law
The Condominium Act governs all condo organisations, regulating condominium formation, governance, and bylaws
Creates the Ontario Condominium Authority and the Ontario Condominium Management Regulatory Authority
Declarant submits a declaration and description with the Land Registry Office to create a Condominium Corp
Condominium Rules
The Board of Directors monitors the condominium corporation's affairs and assures compliance with the Condominium Act
Creates and enforces condominium regulations and bylaws
A condominium manager generally runs the day-to-day operations
Rules, bylaws, and shared facilities agreements govern the condominium
Condominium Management Licenses in Ontario
There are two types of condominium management licenses in Ontario: permits for individuals (Transitional General Licence and General Licence) and licenses for condominium management businesses.Humber College Real Estate Course 3 Additional Residential Real Estate Transactions...
Condo Manager Obligations:
Cannot work for more than one management business without their prior approval
Must carry their most current Certificate of Licensing and present it upon request
Must transmit, retain and store records including client files and notifications
(Page 1)
Leases and Rental Units
Landlord-tenant contracts are called leases, where the legal owner of the property grants another (tenant) the right to use, possess, and enjoy the property for a set term and consideration
Leases can be verbal, written, or inferred by a person's actions (all leases beyond 3 years must be in writing)
Lease contract: describes the parties' agreement in advance of drafting a formal leasing agreement
Lease Agreement Type: In Ontario, the Residential Tenancy Agreement (Standard Form of Lease) applies to most residential leases
Rent-Related Provisions:
Legal rent: the maximum a landlord may demand
Maximum rent increase: the greatest percentage increase a landlord may make without consent
Rent deposit: any rent deposit must be transferred to the final month's rent
(Page 2)
Tenant Duties and Illegal Acts
Tenant duties: pay rent, keep the rental tidy, repair any rental property damage, obey the lease's terms
Illegal Tenant Acts: cannot modify the locking mechanism on a rental unit's entrance door without the landlord's approval, cannot be without rent
Rental Unit Types
Single-Family Units: detached, semi-detached, and duplex; townhouses and other horizontal multiple housing units; high-rise apartment structures
Multi-Family Units: low-rise duplex, triplex, or fourplex; low, mid, or high-rise apartment complexes; condominiums
Primary and Secondary Dwelling Units
Primary residence of a property
Accessory Dwelling Units (ADUs): self-contained living apartments assembled over a laneway garage, basement apartments, granny flats, in-law apartments, nanny suites
Accessory Dwelling Units (ADUs) and the Law
Must meet all zoning, building code, and Ontario Fire Code criteria
Allowed in various places, others need a permission or are outlawed, so check zoning restrictions
Shared Utilities and Amenities
Validate any shared utility, amenity, or facility limits, usage, and costs (e.g., shared laundry, internet, electricity, gas, water, parking)
To be lawful, a secondary unit must meet the Ontario Building Code, Electrical Safety Code, Fire Code, and municipal zoning standards
Municipal Occupancy Standards
Specify the maximum number of residents per unit
Toronto's maximum person count: a livable room cannot accommodate more than one person per nine square meters of floor space
Toronto's minimum room size law: single occupancy rooms need a minimum of six square meters, minimum floor space for two or more people is four square meters, no wall less than two meters long in sleeping rooms
Landlord Termination and Tenant Termination
Landlord may only terminate a tenancy for legal grounds, must give written notice to vacate, and file an application with the Landlord and Tenant Board
Tenant may terminate lease with 28 days' notice if they fear for their own or a child's safety
Residential Tenancies Act Provisions
Landlord must provide the Information for New Tenants pamphlet to new renters
Tenant may assign their right to occupy the leased property, landlord may agree or disagree
Tenant may sublet their rental unit to another individual with the landlord's consent
The Landlord and Tenant Board
Explains the Residential Tenancies Act and resolves most landlord-tenant issues
Mediates or arbitrates disputes between landlords and renters, issues final orders
Landlord Obligations for Safety and Maintenance
Provide a safe living environment (adequate lighting, clear surroundings, working cameras, secure doors/windows)
Maintain necessary smoke alarms, CO alarms, fire safety doors, and equipment
Ensure electrical system condition and address hazardous building materials
REBBA Documentation Requirements
Disclose your interest in the property in writing as soon as possible and before any offer is made
Use the most recent tenancy agreement (Standard Form of Lease)
Ensure all advertising laws are followed to prevent prejudice
Confirm the landlord has received and is using the required permits
Ensure all documents meet legal standards, including the consent clause on rental applications
Third-Party Professional Referrals
Suggest at least two distinct third-party professionals to avoid the impression of personal bias
Valuation Methods
This method uses reasoning to arrive at a value estimate. The key steps are:
Identify comparable properties within the local market that have been rented close to the evaluation date, targeting the same tenant type, with no one pressuring or coercing the other party (Page 4)
Collect detailed data on each comparable property to make significant improvements and really understand them (Page 4)
Analyze all relevant data, including the similarities and differences between the comparable and subject properties (Page 4)
Adjust each comparable property in relation to the subject property (Page 4)
Reconcile the dates and arrive at a final value estimate (Page 4)
Operating Profit
Net operating income is calculated by subtracting operating expenditures, vacancy, bad debt, and property taxes from the total revenue (Page 4)
Tips for Landlords Leasing Furnished Units
Consider market factors, the pros and cons of furnished flats, insurance requirements, furniture quality, and funding options (Page 4)
Short-term rentals like seasonal ski chalets and lakeside cottages are not covered by the Residential Tenancies Act (Page 4)
Landlords must correctly describe the extra items and list the furnishings offered when advertising furnished rentals (Page 4)
Rent increases are not limited for short-term rentals, but expenses may rise; short-term rentals may be prohibited in some areas (Page 4)
Landlords who routinely lease out short-term units are not subject to rent increases and may adjust rates to market demand (Page 4)
Short-term rentals have higher costs, shorter lease terms, and different amenity requirements compared to traditional leases (Page 4)
Rights and Obligations of Salespersons in Short-Term Rental Transactions
Salespersons may help clients rent short-term accommodations if the company is registered with RECO, TICO, or both (Page 4)
Salespersons must clarify their position in the transaction and disclose any fees or remuneration (Page 4)
Salespersons must comply with REBBA requirements, including advertising the brokerage's registered name and disclosing fees (Page 4)
The Residential Tenancies Act does not apply to ultra-short-term rentals (Page 4)
Condominium Leasing
Condominium leasing differs from apartment leasing, as condominium buildings contain both owners and renters (Page 4)
Condominium corporations have rules, restrictions, and authorities that landlords and tenants must respect (Page 4-5)
Condominium landlords must meet all requirements and limitations before listing their property, such as minimum rental terms and restrictions on use (Page 5)
Salespersons can assist landlords and tenants by understanding the proportion of owner-occupied vs. tenant-occupied units, as the lack of pride in ownership may result in reduced maintenance and repair priority (Page 5)
Condominium corporations may control the usage of common elements, and tenants must accept and follow these rules (Page 5)
The Residential Tenancy Act prohibits landlords from prohibiting pets, but a condominium corporation's rules or declaration prohibiting dogs take priority (Page 5)
Condominium Management
Condominium managers must carry their license and present it to anyone who asks (Page 5)
Condominium management companies must be insured, and the types of insurance and notification requirements are specified in the Act (Page 5)
Annual license renewal is required for condominium managers (Page 5)
Condominium Development and Zoning Regulations
The Planning Act governs Ontario's land use planning, and all new condominium developments must obtain the required permissions (Page 5)
The Building Code Act governs the construction, renovation, and conversion of structures, and a building permit is required before construction can begin (Page 5-6)
Zoning violations can be appealed to the Committee of Adjustment, who may approve minor variances (Page 6)
Developers of new-build condos must also fulfill Tarion Warranty Corporation regulations (Page 6)
Buying to Lease
Investor-landlords may be ready to buy a unit in a new building based on the floor plans and immediately start leasing it out (Page 6)
If leasing a unit during the occupancy term, the developer may need to approve it (Page 6)
It is best practice for the landlord to wait until the building has been registered and the title has been transferred before leasing the unit (Page 6)
Insurance Factors
The Act does not require landlords to have insurance for leasing or associated situations, but landlords should consider liability, contents, and property insurance coverage (Page 6)
Landlords must use fully licensed and insured contractors for any renovations, and the condo corporation's board must also approve (Page 6)
Calculating Rent
Condominium landlords must calculate rent to cover all expenses, fixed and variable, and appreciate the necessity of establishing the proper rate from the start, as the RTA limits rent increases (Page 6)
Property Management
Individual unit owners who rent their condos typically hire their own condominium property managers (Page 6)
If the landlord is a non-resident investor, the property management must retain 25% of rent payments and send them to the CRA monthly before sending the balance to the landlord (Page 6)
Lease Agreements
A lease is a contract between two parties to utilize a property in return for a fee, and it must have specific components to be legally enforceable (Page 6)
Landlords may request personal and professional references, a credit report, and proof of work and income from prospective tenants (Page 6-7)
Lease agreements typically include clauses defining the parties, clauses requiring the parties' input or action, standard clauses, and additional terms (Page 7-8)
Amendments, conditional notices, and waivers can be used to modify a lease agreement after it has been signed (Page 8)
Condominium Ownership and Leasing
When an owner leases their condo unit, they become a landlord and engage in a landlord-tenant relationship governed by the Residential Tenancies Act (Page 9)
Owners must inform the condominium corporation within 10 days after signing or renewing a lease, providing the tenant's information (Page 9)
New condominium warranty requirements apply, including deposit protection, delayed occupancy compensation, and coverage for workmanship, materials, and structural issues (Page 9-10)
Buyers of new pre-construction condos have a 10-day refund period to cancel their purchase after receiving the fully signed APS or disclosure statement (Page 10)
Condominium Payments and Fees
This section covers the various payments and fees associated with condominium ownership, including monthly upkeep fees, maintenance costs, insurance, and the reserve fund. It explains how these fees are calculated and the importance of understanding the condominium's financial health.
Monthly Upkeep Fees
Paid by all condominium unit owners
Depend on the yearly budget
A portion goes to the reserve fund for major repairs and replacements (Page 7)
Maintenance Costs (Common Expenses)
Also known as common expenditures
Paid monthly from the condominium unit owners' fees
Used for the general maintenance and upkeep of the building and common areas (Page 7)
Liability Insurance
Protects the condominium corporation from litigation and covers damage to units and common components (Page 7)
Reserve Fund
Monies set aside for future major repairs and replacements of common elements and assets
Required to be established and funded as soon as the condominium corporation is registered (Page 7)
Reserve fund study must be conducted at least every three years by a qualified professional (Page 7)
If major repair costs exceed the reserve fund, the board may implement a special assessment (Page 7)
Calculation of Maintenance Fees
Based on the proportional share in the condominium complex specified in the declaration (Page 7)
Calculated as: Budget approved for next year x Percentage of holding title (Page 7)
Can also be calculated per square foot: Maintenance fee / Total acreage (Page 7)
Condominium Types and Structures
Description:
This section outlines the different types of condominium structures, including traditional condominiums, common element condominiums, vacant land condominiums, and phased condominiums. It also covers mixed-use buildings and shared facilities agreements.
Traditional Condominium
A building split into condo apartments
Owners have an interest in the common components (Page 7)
Common Element Condominium
No individual units, just owners' interests in common components
Owners share ownership and pay for common element upkeep, repair, and changes (Page 7)
Vacant Land Condominium
Allows construction and sale of units without completion of all structures
Developers can sell land and incorporate before building (Page 7)
Phased Condominium
Owners own their units
Declarant has the freedom to introduce additional units or common parts at a later stage (Page 7)
Allows for more creativity in development (Page 7)
Mixed-Use Building
Residential condos above retail or commercial areas
Shared by a residential corporation and a commercial property (Page 7)
Shared Facilities Agreement
Ensures unit owners pay for shared facilities or utilities proportional to their usage
Does not need to be registered under the Condominium Act (Page 7)
Condominium Building Styles
Description:
This section outlines the different types of condominium building styles, including high-rise, low-rise, townhomes, detached, semi-detached, and rowhouses.
High-Rise Condominium
Five or more stories with elevators (Page 7)
Low-Rise Condominium
Typically four stories, may or may not have elevators (Page 7)
Townhome Condominium
Each house is a distinct condominium unit (Page 7)
Detached Condominium
Condominium unit in a detached home not joined to another dwelling (Page 7)
Semi-Detached Condominium
Condominium unit attached to another house on one side (Page 7)
Rowhouse Condominium
A row of three or more dwellings connected by a common wall (Page 7)
Condominium Duplex/Triplex
A single building split into two or three homes with independent entrances (Page 7)
Comparing Condominium Complexes
Description:
This section discusses the importance of understanding a condominium's amenities and fees, as well as the different types of maintenance costs. It also covers the process for making alterations to a condominium unit.
Shared Facility Agreements
Allow two or more condo corporations to share and pay for common facilities
The lower the fees, the more owners share the cost (Page 7)
Maintenance Costs
General maintenance costs that have been budgeted for
Major repairs paid out of the reserve fund (Page 7)
Alterations to the Condominium Unit
Alterations inside the unit require board of director's permission (Page 7)
Alterations to exclusive use common elements require board approval (Page 7)
Approved alterations are registered on title and remain even after the owner sells the unit (Page 7)
Tenant-to-Owner Occupancy Rates
Description:
This section emphasizes the importance of understanding the ratio of tenant-to-owner occupancy in a condominium, as it can be a warning sign for buyers.
Tenant-to-Owner Occupancy Rates
A building with a ratio of 25% or higher tenant-to-owner occupancy is a warning sign for buyers (Page 8)
Reserve Fund
Description:
This section delves deeper into the condominium reserve fund, explaining its purpose, funding requirements, and the process for conducting reserve fund studies.
Reserve Fund Purpose
Used solely for major repair and replacement of common elements and corporation assets (Page 8)
Must be allocated in the developer's first-year budget and set aside upon registration (Page 8)
Reserve Fund Study
Required at least every three years for newly registered condominiums (Page 8)
Conducted by a qualified professional with no affiliation to the board or corporation (Page 8)
Provides projections of repair and replacement costs, and contribution requirements (Page 8)
Special Assessments
If repair costs exceed the reserve fund, the board may implement a special assessment (Page 8)
Collectible in the same manner as common expenses, failure to pay results in a lien (Page 8)
Reviewing the Reserve Fund
Description:
This section highlights the importance of thoroughly reviewing the condominium's reserve fund, including how the monies are collected and spent, and the role of third-party professionals in the review process.
Reserve Fund Monies
Must be held in a separate bank account in the name of the condominium corporation (Page 8)
Interest or other income from the reserve fund forms part of that fund (Page 8)
Board of Directors' Responsibilities
Responsible for major decisions regarding building maintenance, finances, and enforcing the Condominium Act (Page 8)
Third-Party Professional Review
Recommended to use a status certificate condition to allow the buyer's lawyer to review the reserve fund (Page 8)
Buyer's lawyer can pursue clarification through the corporation's management, board, or seller's lawyer (Page 8)
The Status Certificate
Description:
This section explains the purpose and contents of the status certificate, a crucial document that provides key information about the condominium corporation and unit.
Status Certificate
Statutory form that provides information about the condominium corporation's management, finances, and legal proceedings (Page 8)
Corporation must provide the status certificate within 10 calendar days of a request, for a fee of up to $100 (Page 8)
Includes the current declaration, bylaws, and rules (Page 8)
Confirms any current or planned special assessments (Page 8)
If the corporation does not provide the certificate within the required time, it is deemed to have been provided (Page 8)
Completing a Condominium Resale Agreement
Description:
This section outlines the considerations and best practices for completing an agreement of purchase and sale for a condominium resale, including inspecting the unit, documenting disclosures, and understanding measurement criteria.
Inspecting the Unit and Common Elements
Inspect the unit and common elements prior to drafting an offer (Page 8)
Check the accuracy of the legal description and any modifications madeAgreements and Schedules
Agreements often include schedules that outline how the buyer will pay the remaining amount owed at closing. As a buyer's salesperson, you should utilize Schedule A to include the completion amount and a requirement that the buyer's lawyer verify the status certificate. The salesperson should locate information such as copies of the declaration, description, and condominium bylaws, confirm that no new condominium components will be added, and check for condominium board approval of the agreement provision. Additionally, the salesperson should review the adjustment clause for taxes, maintenance, and utilities owing. (Page 10)
Key Points:
Schedules outline how the buyer will pay the remaining amount owed at closing
Schedule A should include the completion amount and a requirement for the buyer's lawyer to verify the status certificate
Salesperson should locate information on the declaration, description, and bylaws, confirm no new components, and check for board approval
Review the adjustment clause for taxes, maintenance, and utilities
Offer Strategy
An offer strategy helps ensure that all facts, clauses, conditions, and terms of an offer are correct and thorough. This includes identifying the property address and the legal names of the seller(s) and buyer(s), summarizing the offer, deciding on the dates, and determining what information must be included on a schedule. As a buyer's salesperson, you must check every fact in the offer and ask for a copy of the client's driver's license to verify their information. You can also use resources like GeoWarehouse to verify the seller's identity, legal description of the property, and tax bills. (Page 10)
Key Points:
Offer strategy ensures all details of the offer are correct and thorough
Identify property address, seller(s), and buyer(s)
Summarize the offer, decide on dates, and determine schedule information
Verify client information and use resources like GeoWarehouse
Offer Components
The offer includes various components such as title, inspection, insurance, document preparation, residency, and tender. The buyer is entitled to a clear title free of liens and encumbrances, and the seller must inform the buyer of any mortgages that need to be discharged. The buyer admits to seeing the property but declines a professional home inspection. The seller must maintain property and fire insurance until closing. The seller is responsible for transferring the deed and arranging for mortgage discharge. The government may reassess property annually, and the salesperson or brokerage will not be held liable for any modifications. (Page 10)
Key Points:
Title: Buyer entitled to clear title, seller must disclose mortgages
Inspection: Buyer declines professional inspection
Insurance: Seller maintains until closing
Document preparation: Seller responsible for deed transfer and mortgage discharge
Residency: Handles tax implications for non-resident sellers
Tender: Buyer pays seller, seller provides outstanding documents
Condo Fees and Assessments
Owners are responsible for all maintenance costs and must pay the common expense fees according to the statement. Unpaid common costs or reserve fund contributions can result in a lien on the owner's unit, and the corporation may demand reimbursement plus interest, legal fees, and collection charges. Owners are also responsible for special assessments in installments set by the board, which can lead to unexpected increases in ownership costs. Buyers should have the corporation's reserve fund evaluated by a real estate lawyer or other specialist before submitting an offer. (Page 10-11)
Key Points:
Owners responsible for maintenance and common expense fees
Unpaid fees can result in a lien and the corporation demanding reimbursement
Owners responsible for special assessments set by the board
Encourage buyers to have the reserve fund evaluated before submitting an offer
Condominium Management and Changes
The condo board may make decisions without owner participation, but owners can seek a special board meeting to vote on concerns or to dismiss the board. Reasonable rules and bylaws may be made, amended, or repealed by the board, and owners must be advised of planned modifications. Changes are limited, and if there is a conflict between the pre-written component of the APS and any new conditions, the added conditions take precedence. (Page 11)
Key Points:
Board can make decisions without owner participation
Owners can seek special board meetings to vote on concerns or dismiss the board
Board can make, amend, or repeal reasonable rules and bylaws
Owners must be advised of planned modifications
Common Elements Condominiums
A common elements condominium must have two parts: freehold ownership of a property (POTL) and a presumed shared interest in a common element (SECI). The property description separates the actual property or connected land from the common parts, and the common element condominium costs are adjusted upon completion. The owner of a common elements condominium company owns their home freehold, but the common elements are shared and not attached to the home. (Page 11)
Key Points:
Common elements condominium has freehold ownership (POTL) and shared interest in common elements (SECI)
Property description separates actual property from common parts
Common element condominium costs adjusted upon completion
Owner owns home freehold, but common elements are shared
Property Types
Buyers have various property type alternatives, including a city lot, an infill redevelopment opportunity, a structure on a city lot, a rural vacancy, and a remote building lot. Key considerations for each type include zoning, restrictions, easements, surveys, and the availability of services. Infill redevelopment aims to increase housing stock by utilizing existing utilities, while rural properties may lack access to services and facilities. (Pages 11-12)
Key Points:
Property type alternatives: city lot, infill redevelopment, urban structure, rural vacancy, remote building lot
Considerations: zoning, restrictions, easements, surveys, availability of services
Infill redevelopment utilizes existing utilities
Rural properties may lack access to services and facilities
Building Permits
A buyer who wishes to build on a property must obtain a Building Permit, which requires the submission of various documents such as architectural drawings, floor plans, and elevations. The municipality reviews the application within a specified timeframe and issues the permit if approved. Once the permit is issued, the builder or buyer must comply with certain obligations, such as starting construction within a specified time, posting the permit on the site, and notifying the municipality about any changes to the proposed construction. (Page 12)
Key Points:
Building Permit required before construction can begin
Documents required: architectural drawings, floor plans, elevations, etc.
Municipality reviews application and issues permit if approved
Builder/buyer must comply with obligations after permit is issued
Warranty Programs
New homes are typically covered by a provincial warranty program, such as Tarion in Ontario. Builders must be registered and the home enrolled prior to construction starting. The warranty provides protection for deposits, late closings, and substitutes, and it covers different aspects of the home for one, two, and seven-year periods. As a salesperson, you should obtain the builder's registration and house enrollment numbers. (Page 12)
Key Points:
New homes covered by provincial warranty program (e.g., Tarion in Ontario)
Builders must be registered and home enrolled before construction
Warranty provides protection for deposits, late closings, and substitutes
Covers different aspects of the home for 1, 2, and 7-year periods
Obtain builder's registration and house enrollment numbers
Representing a Builder
When representing a builder, the services you provide as a salesperson can be unique. The representation agreement must contain required minimum content, and you should verify that the builder is enrolled under the provincial warranty program. Builders may offer "spec homes" at various stages of construction, and the salesperson should be familiar with the key components of the Builder's Agreement of Purchase and Sale, including standard and upgraded features and finishes. (Pages 12-13)
Key Points:
Representation agreement must contain required minimum content
Verify builder is enrolled in provincial warranty program
Spec homes offered at various stages of construction
Key components of Builder's Agreement of Purchase and Sale
Financing New Homes
Financing a newly built house or hiring a builder is different from financing a resale property. A construction loan is a short-term, high-interest loan intended to fund building costs, with the lender paying "draws" to the builder as the project progresses. After construction is complete, a take-out mortgage is established by the lender, which usually becomes the first mortgage with a longer term and lower interest rate. The lender will also obtain a deposit from the buyer and hire an appraiser to determine the value of the finished home. (Pages 13-14)
Key Points:
Construction loan: short-term, high-interest loan for building costs
Progress Draw Mortgage: lender pays draws to builder as project progressesTemporary or Seasonal Dwellings
Temporary or seasonal dwellings that do not fulfill the year-round occupancy criteria. Examples include cottages that are not insulated enough for year-round habitation. These types of dwellings are not covered under the provincial warranty. (pg. 13)
Temporary or seasonal dwellings
Do not meet year-round occupancy criteria
Examples include cottages not insulated for year-round use
Not covered under provincial warranty
Homes Constructed on Existing Foundations
Homes constructed on existing footings/foundations are not covered under the provincial warranty if more than 40% of the home's foundation is pre-existing. (pg. 13)
Homes with more than 40% pre-existing foundation not covered
Must be less than 40% pre-existing to qualify for provincial warranty
Owner-Built Homes
Owner-built homes, where the owner constructs the house on their own property and lives in it or controls the building, are covered under the provincial warranty. However, these rules do not apply to properties that were built and then inhabited by the builder or leased out to others before being sold. (pg. 13)
Owner-built homes on owner's property covered
Does not apply if builder inhabited or leased before selling
Renovations and Model Homes
Renovations are covered under the provincial warranty. Model homes are normally covered unless inhabited before sale. (pg. 13)
Renovations covered
Model homes covered unless inhabited before sale
Custom Homes and Residences Owned by Limited Partnerships
Custom homes receive provincial warranty coverage if built by one certified contractor from foundation to completion. The house is not insured if several contractors work on different areas of it. Residences owned by limited partnerships in which investors buy shares or units are also covered. (pg. 13)
Custom homes covered if built by one certified contractor
Not covered if multiple contractors work on different areas
Residences owned by limited partnerships covered
Homes Not Covered
Homes where the builder simply constructs the shell and the owner finishes the inside, as well as homes bought from a trustee or receiver, are not covered under the provincial warranty. (pg. 13)
Homes where builder constructs shell and owner finishes inside not covered
Homes bought from trustee or receiver not covered
Inclusions and Exclusions of Provincial Warranty
The provincial warranty covers:
Wear and tear
Poor upkeep
Flooding, war, riot, vandalism
Bugs or rodents
Subsequent damage caused by warranty flaws (e.g., water damage to a TV caused by a side wall leak)
The warranty does not cover:
Homeowner-caused deficiencies (pg. 13)
Covered:
Wear and tear
Poor upkeep
Flooding, war, riot, vandalism
Bugs or rodents
Damage caused by warranty flaws
Not covered:
Homeowner-caused deficiencies
Acquiring the Provincial Warranty
To acquire the provincial warranty, the buyer must go through a specific procedure:
Buyer has rights under the Customer Service Standard and should tour the new home with the builder for a Pre-Delivery Inspection (PDI) Tour. Any flaws are noted during this tour. (pg. 13)
The Certificate of Completion and Possession (CCP) / Warranty Certificate marks the start of the provincial warranty. This is completed by the buyer and builder during the PDI inspection. (pg. 13-14)
The builder must submit the CCP to the provincial warranty authorities within 15 days of possession. (pg. 14)
Specific procedure to acquire provincial warranty:
Buyer tours home with builder for PDI, noting any flaws
CCP/Warranty Certificate completed during PDI, marks start of warranty
Builder submits CCP to authorities within 15 days of possession
Salesperson's Duties
When dealing with a builder (seller), the salesperson must:
Verify the builder follows the Code and promote/protect the builder's interests
Ensure all documentation and marketing materials are created appropriately
Provide all agreements, APS, deposits, notifications, etc. to parties as soon as possible
Keep all documents on file
When dealing with a buyer, the salesperson must:
Advise the buyer to seek legal services if the salesperson lacks reasonable knowledge/expertise
Confirm the builder's registration with the provincial warranty program
Instruct the buyer to verify the new property is registered for provincial warranty coverage before building begins
Discuss warranty coverage (pg. 14)
When working with builder:
Verify builder follows Code, promote/protect their interests
Ensure proper documentation and marketing
Provide agreements, APS, etc. to parties promptly
Keep all documents on file
When working with buyer:
Advise to seek legal services if lacking expertise
Confirm builder's registration
Instruct buyer to verify warranty coverage
Discuss warranty coverage
Rural Living
Rural living offers a simpler, calmer existence with smaller towns, lower population densities, and a focus on agriculture and related enterprises. It can also reduce the cost of living, such as lower property taxes. (pg. 14)
Simpler, calmer lifestyle
Smaller towns, lower population densities
Focus on agriculture and related enterprises
Lower cost of living, such as lower property taxes
Types of Rural Properties
Year-round rural residential homes: Quieter with greater space between neighbors. Services and utilities may vary (e.g., private/public waste and water systems, insulation for year-round use, adequate hydro service).
Seasonal cottages: Non-winterized buildings used in the summer, with private well and septic system.
Hobby farms: Smaller rural land bought to pursue a personal hobby, not intended as a major revenue source.
Rural residential empty lots: May not have clear boundaries, require investigating lot size, severance, utilities, and development costs.
Beachfront/lakefront properties: Most costly and popular rural homes, with potential conservation authority restrictions on shoreline enhancements. (pg. 14)
Year-round rural residential:
Quieter, more space between neighbors
Varying services and utilities
Seasonal cottages:
Non-winterized, summer use
Private well and septic
Hobby farms:
Smaller rural land for personal hobby
Not major revenue source
Rural residential empty lots:
Unclear boundaries, need to investigate
Beachfront/lakefront:
Most costly and popular
Conservation authority restrictions
The Planning Act and Rural Development
The Planning Act prevents the transfer of land without the owner's authorization and requires subdivision plans or land severance for development.
Subdivision plans are not always necessary in rural areas due to less intensive development.
Severance is the most common method of splitting property in rural settings, breaking one parcel into two or three portions. (pg. 14-15)
Planning Act requirements:
Transfer of land requires owner authorization
Subdivision plans or land severance required for development
Subdivision plans not always needed in rural areas
Severance most common rural property splitting method
The Road Access Act
The Road Access Act prevents landowners from arbitrarily blocking private roads, resulting in landlocked lots. Private roads are access roads for vehicles to one or more property parcels. (pg. 15)
Road Access Act prevents blocking private roads
Prevents landlocked lots
Private roads provide vehicle access to properties
Ownership Rights on Rural Properties
Rural properties may contain wood, mining, or air rights that are owned by the Crown (provincial government) or another party, not the property owner.
Timber rights: If the owner has no timber rights, the trees are either Crown-owned or sold to another person.
Mining rights: Prospectors may be able to stake claims on mining rights under the Mining Act, without needing the property owner's permission.
Air rights: Relate to controlling or occupying the space above the earth, especially in urban areas. (pg. 15)
Ownership rights may be held by Crown or other parties:
Timber rights
Mining rights
Air rights
Farmland Location and Factors
Key factors affecting farmland include:
Climate: Temperature and rainfall affect agricultural yields. The growing season shortens as one moves north.
Topography: Lowlands like floodplains are suitable for farming, while steep slopes have weaker soils.
Soil type: Rich soils like in Holland Marsh provide different crops, while poor soils yield less or require more fertilizer.
Chemicals: Insecticides protect plants
Our Team of Humber College Real Estate Sales Person Real Estate Experts
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