Thursday, March 26, 2009

Buying a Condo? Special Issues to Take Into Consideration.

Condominiums are growing in popularity, and for a number of reasons. But when purchasing a condo, people tend to assume that the level of due diligence required prior to purchase is less then that of a standard house. In fact more due diligence is required. This article goes over some of the key elements, with respect to a Condo purchase, you need to make sure you look at prior to giving a binding offer.

Due Diligence is the process of taking the required steps for you to become properly informed about the situation surrounding the potential transaction. If you are a Real Estate expert, you probably don't need to ask as many questions then if you are not.

With all property there are basic forms of due diligence, such as title checks. In addition to standard title issues, buyers should also do the following
  • Contact the police detachment in the area and ask if there is any knowing criminal history with the property, or open complaints.
  • Contact the fire department and ask if there have been any fire calls to the property.
  • Contact the local health board and ask if there are any open or past complaints from the address.
  • Contact City Hall, and make sure there are no pending compliance orders (tree removal, etc)
  • Contact City Hall and ensure you have the latest assessment, and the valuation model used for that assessment.
Five phone calls and a wealth of historical information that could have serious implications to your insurance policies, or resale potential later on.

But what about Condo's. Certainly they are managed by boards, so you don't have run down or other issues right?


I find Condo's interesting for one main reason. They are multi million dollar corporations that are managed by people with little or no business training. So it is vital that you are not assumptive about a Condo's operating model. You need to ask the questions. We will break these questions up into three categories. The Corporation, Legal Issues,and Structural/Building Issues.

The Corporation is effectively the board. They are the ones responsible for managing the day to day maintenance and obligations of the condo. Every owner pays a monthly fee into a general fund that is used to manage general expenses. With that, there are rules and regulations that the occupants need to follow, in the form of by-laws.


1. Know and ask about the board. Current, and past.

Here you want to get the pulse of governance. Is this a dictatorship by one or two people who feel the board is their own pet project. Or is this a communal effort? Talk to a board member, and ask them about things like

a) how many vacancies are their on the board

This helps show the interest in the board, and may highlight control issues.

b) are their known significant political issues

This helps show if there are internal struggles, that may cause problems for significant capital expenses later on.

c) Ask for a copy of the last 2 or 3 years of board meetings.

These minutes will show all the issues tenants have brought up. It gives you an idea of the tenant profile, what issues are outstanding, and the way the board handled it.

2. Know the finances.

The finances are like windows to the soul of a corporation, and condos are no different.

a) Get last years budget and audit statement. Get this years budget.

You may not be a financial guru, but you should get a copy of the last years budget, and year end audit to see how close they are together. Also ask for this years budget. That shows what type of expenses are forthcoming.

b) Map out what the condo fees are for.

You should also map out exactly what the condo fees include. Heat, Water, shared facilities like pool/tennis court etc.

c) Know what the reserve fund is.

A Reserve fund is a pool of money that the condo corp will keep on hand in the event there is the need for immediate or emergency repairs. For example if it is a central shared heat, $12-$15k should be on hand to handle boiler central heat issues at any time. The reserve fund is important. If this is an older condo (20 years or more), then the risk of a major roof/structural issue increases significantly. If there is no reserve fund, then when such repairs are required, each tenant needs to cough up their share.

So if you buy a condo with no reserve fund, a few weeks after you move in, you may be slapped with a $15k shared reserved contribution for a new roof. This is why you need to know the health of the finances before you move in.

If there has been a call to contribute by the owners, this is called a pending or current cash call. Be careful as these are liabilities on the condo, that you may get bit with if you don't do your due diligence.

d) Know the management services.

Try to talk to the management company and get their feel for operations, the board, the property, and [pending issues. Third party contractors have an interested habit of being blunt when they are unhappy. You should also keep track of the expenses, knowing if the operating or management costs are due to increase, or if the contract is up for renegotiation.

This knowledge helps you anticipate costs, and shows stability in the organization.

e) If you are looking to rent out the Condo, know if there is a rental pool, and other rental issues such as vacancy rate, owner:renter ratio etc.

Fees, guidelines, regulations are all important so you know the issues for potentially renting.


Legal issues include current liabilities, anticipated liabilities, and compliance issues.

a) Is anyone suing the condo right now?

Has someone been injured on the property, is a management company suing to get their money they are owed, or is the condo suing a tenant for failure to pay, or breach of a by-law. Know where the corporation currently sits with law suits. That could have a significant financial impact down the road. You don't want the reserve fund for the roof to pay for a claim.

b) What type of insurance does the condo carry. Is it sufficient and how is it managed. Is there a claim process? Does it include water breaks?

The insurance is often skimped on by boards who are struggling to keep their books balanced. But without proper insurance your investment is at serious risk. the type level, and quality of insurance shows the attention the board keeps. In a condo situation, I have never seen 'too much" insurance. I all too often don't see enough.

c) Does the condo qualify for insured mortgages like Fannie/Freddie Mae, CMHC?

There are regulatory requirements for your home to qualify for a low down payment insured mortgage in Canada by CMHC, or in the US through the Mae organizations. You will need to make sure this condo fits the bill if you intend on using an insured mortgage provider. In addition it will effect your resale abilities.

d) Contact City hall, as pointed out above.

I need to repeat this as this is a regulatory issue. If this is multi phased, ask the zoning office if there are any issues or contentions with the zoning process for this project. In addition talk to the building inspectors office and ask what type of failures, remedies,or complaints have been lodged if any. It all paints a picture for you.


Let me reiterate. You must ALWAYS get an inspection on the home. Just because it is a condo does not mean you don't have to get it inspected. In fact the risk of collateral effects is higher, so an inspection is even more important. It will also reveal dodgy maintenance which shows the board may be corner cutting or incompetent. Two things you don't want in your investment.


a) What is the age of the building?

Straightforward but important. If this is multi phased what are the years of the different phase completions.

b) What are the significant maintenance or refirb projects that have been completed in the last 2 years.

These are things like anew sprinkler system, roof, resurfacing driveways, exterior windows etc

c) Are there any deferred projects, put off for lack of funds, or properly planned?

This is the one question that should really give you a sense of the overall maturity of the condo board. How well do they plan, strategize, and execute.

Things you should ask or look out for include the roof, exterior surfaces windows, siding), gardens, common facilities (heating, pool), communications, garage/parking lot.

d) use a standard check list for the actual unit, looking for all the usual suspects.

This is where your inspection is very important. Your inspector will highlight issues of contention for you with the unit, and can be used to tour common areas as well.

It might seem like a large task, but its not. Its just a few extra steps with the condo's to ensure that people who are able to make decisions about your investment, know what they are doing and have a track record for it. Condos are the last places to be assumptive it will be fine. Condo's can be very political and tense to live in when you are not happy with how things are being handled.

In addition your mortgage provider will also want most of this information, so doing the work upfront saves time, and shows a professional attitude on your part down the road.

So now that you have done your due diligence you can decide to make the offer. Always try to make it conditional on your inspection, on financing, on selling you home, and if possible on your retention of employment up to closing.

If you do have a specific real estate or condo legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.

Copyright © 2009 Peter MacSweeney.
All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

Enter your email address:

Or clickSubscribe By Email

Ask Your Legal Question Now. Response in MINUTES.

Please Click Here to Read More..

Monday, March 16, 2009

Property Disclosure, Statement of Condition

Buying a house can be a very stressful experience. There are so many unknowns with the quality of the house, not including the bucket loads of money you need to spend. Most locations require that sellers provide buyers with a Property Disclosure Statement, or A Property Condition Disclosure Statement. They are the same thing and basically it is a report card of the property filled out by the seller.

If you are a seller, it is vital that you fill this out correctly. Knowingly forgetting, or misleading can cause serious problems down the road. This is part of your sales pitch, and if it is false, it is a type of misrepresentation. You should also know that false inspections can be used to undervalue your home.

If you are a buyer it is very important to read the statement, and make sure that you understand the key elements that may cause a problem. Also look for soft language, such as "slight, mild, minor, suspected, possible". Those are all words that could be hiding a bigger problem.

But most important. Get a home inspection. If you do not get an inspection and take the disclosure statement at face value, there are two problems.

1. It is hard to prove the problem knowingly existed before you moved in;

2. You have not done your due diligence. In other words the court expects a buyer to take basic steps to protect themselves. Failing to get a home inspection is the single largest problem new home owners have when suing the former owner.

The market has shifted, so it is now much easier for a buyer to take the time and get an inspection prior to signing on the dotted line. Should you put an offer on a house, make sure that it is conditional on the inspection. Also consider other conditions such as subject to your selling your home, financing, and a new one... subject to employment retention.

Contracts for the sale of land are different then other contracts. If you contracted with the small store on the corner you would buy a bag of tomatoes, and you did not, the courts would not force you to buy the bag. They would rule you have to pay the profit margin.

Houses, Land, Art, and Collectibles are different. The courts can try to force the transaction. So if you try to back out of buying a house, and you don't have the conditions in place, you may be in a bit of a pickle.

This is why it is VITAL to get a few conditions on buying the property. Most important is the subject to the inspection.

When picking an inspector it is not suggested you use one from your realty company. Get an independent inspector. In addition walk through with the inspector. Make sure they are earning their money. Ask question. If you have a contracting friend it is always a good idea to have them tag along with the inspector.

I have a friend named Polly. He builds foundations. The city inspector often does not inspect properly. However if Polly is there, the inspector feels they need to "earn their wage" and gives a better effort. The same goes with any service. When their are eyes, there is doubt. People as a rule work better under supervision.

So don't cut the corner and try to save $200 for a home inspection. If you are confident in the value of your home, have your own inspection done. This can be used to counter any inspection that may be fraudulent. It also helps if there is a dispute down the road.

Hire an inspector, follow them through, and read the report. Finally make sure you fill out the Disclosure statement properly, and if you are buying, read it!

If you do have legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.

Copyright © 2009 Peter MacSweeney.
All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

Enter your email address:

Or clickSubscribe By Email

Ask Your Legal Question Now. Response in MINUTES.

Please Click Here to Read More..

Land Ownership Basics Explained

Property law in law school is not one of the most popular subjects, although it is mandatory in most schools. As a result of land existing far before humans, or the creation of law, the rules for land ownership are a mismatch of old and current influence. Regardless of the history, there are a few elements that are easy to explain, that will give you a solid foundation on understanding land ownership. This applies to the entire Common Law area.

The concept of land ownership is based on Title. Title is the description of someones rights over a piece of land. Someones rights over a piece of land can vary immensely. It is a sliding scale from no rights to absolute control. The type of control is called an interest. If you are in control now, you have a present interest. If you are going to be in control in the future you have a future interest. Here are some examples of a present interest:

  • Most people have no rights to enter Area 51. They are trespassers with no title.
  • When you enter Tim Hortons or Starbucks as a customer you are a business guest. Your title is a License (permission) to use the property as a customer. That License can be revoked at any time. You can get kicked out for any reason.
  • If you are at a Hotel, your title is the right to stay and live in the room for the contracted period, in private. This is quiet possession.
  • If you rent from a home owner, you have the right to live in the house/apt for the lease period in private. This is also quiet possession.
  • You have a shared driver with your neighbour. The land is technically theirs but you have a certain title to use the land for that purpose. (easement)
  • If you own a home outright you live in your title is absolute.
Here are some examples of a future interest.
  • If you rent out your home, you have a future interest to live in it, when the lease expires. That is future possessory interest. You have the right to posses it in the future. You can sell that interest by re-leasing, or re-renting the property out.
  • Your parents have transferred their house into a life estate, and you get the house on their death. That means your parents have a present possessory interest in the house until their death, and you have a future possessory interest after their death.
Here are some items that complicate title, which are called encumbrances. These issues can seriously complicate a sale.
  • If you owe someone/business money, they may go to court and ask for a lien to be placed on your house title. That basically says to anyone, "If you buy this piece of property, I need to be paid off before you get clean title"
  • If you owe Tax, either property or income, that may be put on as a lien/encumbrance.
  • If you have a mortgage or have used the house as collateral for a loan, that is an encumbrance
  • If you owe child support that will cause title problems
  • If the house is co-owned, and one of the owners wont co-operate in a sale, that can complicate things.
  • If you have rented or leased the land, that is a right that gets passed on with the sale (unless your lease states otherwise)
So you can have a present or a future right to the land. As mentioned that is the interest. While you have a current right to own the land, you may not have a right to be on it. That is the possessory part. Your landlord although she owns the land, is not allowed to enter it while you are living their. Your landlord has a non-possessory interest in the land.

If you have a 10 year business lease, and the building is sold, the new buyers buy it SUBJECT to (which means they must honour) the 10 year lease.

The various types of title are looked at when doing a title search prior to a sale. Your Lawyer/Title Insurance Company will go to the land registry in your area (or recorder of deeds in your county), and look up the piece of land (Roll Number), and check to see if there is anything on file, like the items listed above, that will complicate a sale.

Changing the ownership or interest in the land is called a conveyance. Any time there is a conveyance or a lien or something put on the land, it is recorded in the county, or land registry office. This is a central location for people to be able to know who owns land, and under what circumstances.

That explains the basic concepts of land ownership. In the next article we will look at the sale of land, deed types, and disclosure.

If you do have legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.

Copyright © 2009 Peter MacSweeney.
All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

Enter your email address:

Or clickSubscribe By Email

Ask Your Legal Question Now. Response in MINUTES.

Please Click Here to Read More..

Friday, March 13, 2009

Difference in Country, State, Provincial Laws Explained

Lana is an HR guru who live in Ontario. She was wondering how useful it is to have general legal information. Specifically she asked

"Why would I read anything that is not related to Canadian law? If something says U.S. law I will ignore it. It is not relevant to me."

Lana has a very common perception about the law. However Lana may not be giving enough credit to the basic concepts of law that are nearly universal in the Common Law world. The major Common Law jurisdictions include, Australia, Canada, Ireland, England, New Zealand, Northern Ireland, United States and Wales. Scotland, Quebec and Louisiana have mixed civil/common law rules. Most Caribbean nations, Belize, and south pacific nations also use common law systems.

Countries with significant colonial influence such as Botswana, Hong Kong, India, Indonesia, Kenya, Malaysia, Namibia,South Africa, Tanzania, and Zimbabwe, all use Common Law to some significant extent in their judicial system.

Common Law, as we know it in the western world, is law that originated in England. Courts had been set up, and through trials, and hearings, different rules came to be. Judges created laws when there was no written law. This concept still applies today. Where a law needs interpretation, or needs to be applied, the courts will interpret the law. Often they will create a list of criteria that must be met for a provision in a law to be enforced.

When looking at a comment of law, and wondering if it applies in you area, think to yourself. "is this a general principle or specific". General principles of law are very similar between Common Law countries. Specific laws can be very different. The more technical, the more local, sometimes even down to the city level! The more general, the more wide spread.

Here are some examples from different legal categories.

Contract Law. It is generally accepted that a contract occurs when parties agree to exchange something of value. It is also generally accepted that contracts for property must be in writing. Specific local rules that vary from place to place, such as all contracts for electrical work must be submitted to city hall. Obviously that is a city rule and very local, to the city that enacted it.

Criminal Law. Defending property with lethal force is against the law virtually everywhere. Conceptually a crime consists of two parts. Intent, and Action. If you did not intend to do something, it may not be a crime. If you intended but did not act, it is not a crime. More specifically many places have Criminal Negligence, there was no intent, but it was obviously dangerous. Some locations have strange crimes, like drinking on Sunday. That is a very specific local crime.

Wills, Trusts and Estate Law. To ensure your wishes are honoured at death you need a will, that must be witnessed. That is a general accepted rule. Now the specifics are very important. Some places require two witnesses, others need three. Some say you need to have them sign together, others say within a week of each other. So the general principle applies, but the specifics depend on the location.

Evidence Law. In general anything you say, can be used against you. Some locations allow police reports as evidence, others don't and consider them hearsay and not trust worthy.

Liability Law. If someone is injured you are liable if you had a duty to protect them, or warn them. That applies universally. The level of liability, and duty depends on the location.

Insurance Law. You have a duty to disclose to your insurance company anything that may impact their underwriting. You can not do a "you did not ask if I was busted for DUI". It is universally accepted that failure to disclose a material fact can cause serious insurance issues. On a more detailed level some locations are required by law to give you an insurance quote. Others are not.

Family Law. What is best for the children is the priority for custody and visitation arrangements. This is universal. (although many courts assume the best is with the mother, even in 2009). What is not universal is the amount of support required. Some locations have formulas and guidelines, others are more case by case.

So when you are reading an article about law or about a legal issue, don't be afraid if it focuses on one country, or state or province. Look at the general concepts. Its those general concepts that most people don't know and give the best benefit. You will always take something away that will help, even if it may not be 100% applicable.

If you do have legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.

Copyright © 2009 Peter MacSweeney.
All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

Enter your email address:

Or clickSubscribe By Email

Ask Your Legal Question Now. Response in MINUTES.

Please Click Here to Read More..

Thursday, March 12, 2009

Renting a Room From a Friend. Lodger explained.

David owns a house in California. His friend James was going through a divorce, so David offered for him to rent a room in his house, by ask him to throw some weekly money towards food, beer and utilities. James got a uhaul and loaded his last possessions up, and put them in Davids garage.

James is not a tenant. He is a lodger

A lodger is someone who shares the resources and facilities with the landlord. In most jurisdictions, if there is only one lodger (i.e. David only 'rents' one room), they are NOT protected by the local landlord protection laws. STo evict them you usually need to give reasonable notice, which is usually the same amount of time as the money they contribute. So in James case this would be one week notice.

James is not protected by eviction laws, procedures etc. He is simply a guest, and would be considered a trespasser if he stays beyond his welcome period. In California Penal Code 602.3 allows the cops to take him away kicking and screaming if he is past the notice period.

Now after three weeks of living, David asked James about his plans. James said he would be looking for a new place as soon as he saves up first and last, which will be anther two weeks.
2 weeks later James picks up and leaves, with all his stuff behind.

David now needs to follow proper laws for selling abandoned property. In California that is Civil Code 1980. Whenever a tenant leaves property the usually steps are give the tenant notice (sending to their old address), and wait a certain period of time. You then sell the goods at auction, and keep whatever is owed to you. Technically the owner of the abandoned goods is allowed to receive the difference.

Now if David had more then one room rented, James would be considered a Tenant. So if he was kicking up a storm in the house, David would need to follow the proper eviction procedures, and could not just give him unilateral notice. Whenever you are living somewhere that includes any of the following

  • Share the kitchen with the landlord
  • Are living in connection with work (farm, nanny)
  • Half way houses, correctional facilities.
  • Rehab houses
  • Commercial properties not zoned for residence
  • Emergency shelters
  • Hospitals
  • House confiscated as a result of crime (grow op)
  • Where you share facilities with the owner of the house
  • Hotel/Motel
  • Campground

You are usually not a tenant, and not protected by tenancy laws. However you are protected by contractual agreements, so make sure that you read and understand any contract you have in relation to living or staying there.

If you are not sure about the status of your living accommodations, then contact your local housing board,. Alternatively you can ask through the link provided at the bottom of this article.

If you do have landlord tenant question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.

Copyright © 2009 Peter MacSweeney.
All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

Enter your email address:

Or clickSubscribe By Email

Ask Your Legal Question Now. Response in MINUTES.

Please Click Here to Read More..


Trace AnyoneTrace AnyoneTrace Anyoneplay race car gamesFree Links Direct