A status certificate is like a disclosure statement.  It reveals important information that any condo buyer would want to know such as details about the condominium corporation’s financial status, reserve fund studies, whether or not condo fee payments are up to-date, any pending lawsuits or legal claims against the corporation or, any pending or contemplated special assessments or rule changes.

When buying a resale condominium, your offer should always include a condition upon you receiving and reviewing the Status Certificate and its attachments so you can ensure that you are satisfied that the condo is suitable for you with no surprises planned. The common practice in this area is that the buyer, often through their REALTOR®, orders and pays for the status certificate (more on that in a moment).  The Condominium Corporation, usually through their property manager, then has a maximum of 10 days to issue the documents. Most buyers ask that the package be delivered directly to their lawyer for review and comment before conditions are removed.

The Condominium Act in Ontario clearly states that there is a maximum fee of $100.00 INCLUDING taxes that can be charged so, this is what you should be paying. CAUTION:  I recently came across a situation here in Collingwood where the Property Management company attempted to charge my client $115.00.  When challenged on the legality of that, they did back down and agreed to only charge the legal fee of $100.00.  (Yes, I’m still pretty angry about their initial attempts!)

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What Is a Condominium

The term condominium applies to a form of property OWNERSHIP rather than to a physical STYLE of building. They can be townhomes, apartments, industrial/commercial units, detached houses or any other physical structure.  What makes them condominiums is that the owners of all the units agree to share in the ownership and maintenance of the common elements of the property.  Typically these may include roads, grounds, recreational facilities and sometimes common roofs, walls, etc depending on the project. There are also other types of condos such as Vacant Land, Leasehold, Common Element and Phased Condominiums.

A condominium corporation is created to manage the affairs of the community and these are regulated under the Condominium Act. Specifics of individual corporations and unit ownership are outlined in something called the Declaration, Description, Bylaws and Rules.  These documents set out boundaries of units, they describe common elements, they outline the conduct of the management of the corporation as well as the rules. These are managed by a board of directors of the condominium corporation to which all owners belong.

We have dozens and dozens of condominium projects in the Collingwood – Blue Mountain areas and each has different nuances, assets, challenges, resale values, policies and so on. Needless to say, it’s very important to know all of these variations, rights and obligations before you commit to a firm purchase agreement.  Yup, that’s where I come in!

Most people start with the basic idea of looking at rental income versus expenses to see if there is a positive cash flow.  That would of course be nice but is also a very limiting view of the true hidden value of owning income properties.  The real value is in leverage – that means you are getting a return on every dollar you invest by borrowing money and then having someone else retire the debt thereby creating a financial gain for you.  As your mortgage gets paid down, your equity increases and therefore, so does your return on your investment.  In simple terms, if you invested $50,000 in an income property and the value never increased a single cent, you would still have doubled your money at the point your mortgage principal has been paid down by $50,000.

This is a rather simplistic view and there are many other factors to look at.  Last year, I posted an article by David Larock that I think explains it very well.  Dave points out that one of the keys is low interest rates.  We’ve all heard for the last year that interest rates are poised to go up and while I don’t think that is in the next few months, I do think we’ll start to see that over the next year so 2012 may really be a good time to look seriously at starting your real estate investment portfolio.

John and I own income property and the experience has been good.  There have been learning curves and some bumps along the way however, it is something we would and will do again.  It would be my pleasure to assist you by sharing those lessons learned.

This fall, a family from east of here purchased a condo in Craigleith and spent their first week-end their over Thanksgiving.  Here is what they said in their latest email:

“We picked up the keys on Thursday evening, went home and the drove back Friday evening. We stayed for the entire long weekend. I think it was the best Thanksgiving weekend for weather I have ever seen.  The colour change on the mountain was beautiful . We had a great time (no buyers remorse). We love the location. We sat on the patio several times and had a meal while looking at Georgian Bay. We did lots of walks, went to the Village. Roasted marshmallows on the shore at night.  It was a nonstop weekend but great.  We were doing lots of shopping too, as all the wall coverings and other small items we were looking for new pictures, art, etc. to make it feel home like. Lots of fun.  Toured a lot of the apple festival studios like the rest of the tourists. Long story short we are very happy with the purchase. Looking forward to seeing you some time for a beverage on the patio.”

This wonderful family of four bought a condominium in Heritage Corners in June and here is what they had to say in an email to me last week (re-printed with permission):

“ Since June, we have been to Blue Mountain almost every weekend.  We have only skipped two weekends- one for our son’s piano concert and one for my husband’s birthday. We never realized how much joy this vacation home was going to bring to our family.  All of us look forward to going there. 

Last weekend , it  was our son’s birthday, and the forecast was not great so we decided to stay home. He was not pleased with our decision, so on Friday we decided to go anyway. I made a plan for bad weather (movies, shopping), but it turned out to be one of the best weekends ever. We went biking in the morning, and in the afternoon we went to GNE fair which was the biggest fair we have ever been  to.  We ended our day at Alphorn where we ate the world’s biggest schnitzels and the staff sang Happy Birthday to our boy who said it was the best celebration he ever had.”

They have also become fast friends and it’s a delight to both see them and hear about their adventures in discovering all the delights of our region.

Observations for the month of July:

• For the first time since February 2011, sales for the month were up over 2010 levels with 9% more sales (175 versus 160 in July 2010)
• All of the gain was in the Town of Collingwood where the number of sales were up 15.1% over July 2010.  Meaford continues to struggle this year with sales down 24% and in Grey Highlands, they wer down 19%.  All other areas were down less than 5%.
• The 12 month average residential sale price was up in each area of the Georgian Triangle by 5-10% over this time last year
• The number of new listings for the month was up 12% over July 2010 while the number of expired listings were down by 2%
• Of the 175 sales posted in July, 145 were residential sales with 70 being priced from $150,000 – $249,999, 51 from $250,000 – $499,999 and 15 were over $500,000.
• The YTD sales to listing ratio is strongest in Collingwood at 45% suggesting reasonably balanced market conditions
• The average residential sale price, YTD in the Georgian Triangle was $321,726.
• At the end of the month, there were 2525 active listings for sale.

The chart below shows Year To Date data for all areas included in the Georgian Triangle Real Estate Board Area. 

In a joint effort between the Province of Ontario and the Ontario Real Estate Associaton, the two put together a helpful, brief video that explains it well.

If you want to sell your current home and use the proceeds as a down payment on a different property, what do you do if the closing dates don’t fall on the same day? More to the point, what do you do if you have to buy your new home before you sell the old one? In these cases you need a short-term loan to bridge the gap between the two transaction dates and the solution, appropriately enough, is called bridge financing. Today’s post will explain how it works for borrowers who are considering this option.

Let’s start by addressing a few common concerns: If you need a bridge loan, it does not alter or limit your ability to qualify for a mortgage in any way. Also, you don’t actually need to qualify for bridge financing itself – the only requirement is that you have an unconditional offer to purchase for the property you are selling. It is almost always offered in combination with a traditional mortgage loan – your lender simply bridges your financing gap to help facilitate the overall transaction.

Here is an example of how a bridge loan would work:

Assume you have just accepted an unconditional offer to purchase your current property on October 30. After paying off your mortgage and covering your disposition costs, you will be left with net proceeds of $180,750 (see item A). You then buy a new property, but the sellers want you to take possession on October 12, which is 18 days before you will complete the sale of your existing home.

After making a $35,000 deposit, you decide to use $130,750 (see item B) of the net proceeds from the sale (you hold back $50,000 for closing costs and minor renovations).  You need that $130,750 on October 12, but you won’t receive it from your buyer until October 30. As such, your mortgage planner helps you secure an 18-day bridge loan at prime +3% (6% in today’s terms) at a total cost of $385 (see item C). Problem solved.

Lenders typically expect a gap of no more than 30 days between your buy and sell dates, although bridges for longer periods may be offered by some lenders on an exception basis. Because bridge loans are usually unsecured and short term, lenders charge higher rates; as in the example above, you should expect to pay somewhere in the range of prime + 3% to prime + 4%, which works out to 6% to 7% in today’s terms (some lenders will also charge an application fee of approximately $250). Keep in mind that, on balance, bridge loan rates will have far less impact on your overall financing costs than mortgage rates because they only apply on the shortfall, and they are only in place for a brief period of time.

If you have borrowing room on any existing lines of credit, most lenders will ask you to draw down these lines first, before then bridging the remaining gap. On the day you complete the purchase of your new home, you will be required to sign a Letter of Direction and Irrevocable Assignment of Funds. This is a promise to use your net sale proceeds to pay off the lender’s bridge loan before taking any money for yourself. On larger bridge loans your lender may go a step further and require that a collateral charge be registered on the property you are selling (this is a slightly more expensive step that achieves the same basic end).

While not all lenders offer bridge financing, an experienced, independent mortgage planner will have access to several who do. So instead of worrying about lining up your closing dates on the same day and trying for perfection in an imperfect world, use bridge financing as an easy and cost-effective tool when coordinating buying and selling transactions.

David Larock is an independent full-time mortgage planner and industry insider. Visit his blog for many more interesting articles and some great mortgage advice.

In the month of June, there were 196 sales including 173 residential sales (single family homes, condominiums, manufactured homes), 11 farms, 10 parcels of vacant land and 2 commercial sales.  The majority of residential sales activity was concentrated in the $150,000 to $250,000 price ranges.

Statistics generally mean very little when looked in isolation from other comparative data.  This month, I thought it may be helpful to give some context to our data by looking back over the last five years.  Note that 2007 was the peak year that broke all previous records and, 2009 data most strongly reflected the 08/09 recession.

Key Points:

• There is a strong supply of listing inventory
• Sales have been relatively stable but not robust.  While sales are down from 2010, last year included sales created by pent-up demand from the ’09 “recession.”
• Upper tier sales (anything over 500,000 is generally in the top 10% of the local market place) continue to be strong following the trend that began last year.  This suggests continued interest in our local market from high net-worth individuals who are benefitting from recovering stock market portfolios, substantial equity gains and, are in many cases approaching retirement.

Taking a closer look, below is a chart isolating residential sales only in the six key areas of the Georgian Triangle Market.

Key Points:

• Generally speaking, it is a buyer’s market in most areas of the Georgian Triangle with the exception being the Town of Collingwood where more balanced market conditions currently exist.
• The 12 month average residential sale price is up in all of the key areas and most notably in Collingwood and Blue Mountain.  This figure represents an average sale price – not a median therefore, the numbers are higher due to the increase in upper tier sales in those two markets.
• Over-all, the average price is up about 10% in the last five years
• Over one-third of all sales in the Collingwood and Blue Mountain areas were condominiums

I’m certainly hearing lots of REALTORS® express some concern about the market being a little slow.  Many properties are sitting on the market longer and we are seeing lots of price reductions coming through.  Less than 1 in 3 properties listed for sale sells during the listing period yet, some properties are experiencing multiple offers and quick sales.

Sellers need to be sharp with their pencils as pricing is the single most important factor in getting a home sold.  Buyers also have high expectations and lots of choice so having homes in tip-top condition and in good showing form, is increasingly important.

Buyers have the luxury right now of ample choice and low interest rates.  Prices are not dropping but rates will inevitably climb so buyers are well advised to get into the market but with attention to value and affordability.

If, as mentioned in Part 1, a house had an accessory suite in existence during the Rae years (1994 to 1996), the suite MAY automatically have legal, non-confirming by-law status however, the onus is on the owner to prove it.  In addition, fire code regulations must be met.  In making an offer on such a property, buyers need to ensure that the appropriate conditions and clauses are inserted into their offers to confirm that these requirements have been met otherwise, they may be buying into a costly dream that could easily become a nightmare.

According to the Town of Collingwood’s Official Plan section on Single Family Conversions, accessory apartments are permitted subject to certain conditions:

They must be located within a single family, detached dwelling and must be an integral part of the main house
They must be smaller than the main dwelling unit
They must be serviced
There is a limit of one accessory unit per home
They must have an extra parking space
Must be self contained with a private entry and kitchen

Under the new Collingwood zoning by-law passed last spring, if these conditions are met and, if the accessory unit does not exceed 40% of the gross-floor area of the building, then there is no longer a need for a zoning by-law amendment.  Again, buyers should not assume that an existing accessory apartment complies with zoning regulations and should put appropriate clauses in offers to deal with these.  These should also include a request for a current fire inspection report.

In regard to new construction or renovation of a suite in a home, it must comply with today’s building and fire codes and, if on septic system, with the Health Unit requirements as well.  Development charges do not apply when adding an accessory apartment but owners need to obtain a building permit BEFORE construction begins to ensure that ceiling and window opening requirements, access, mechanical and ventilation systems, fire separation rules and so on are all complied with.  For example, some of the basic, specific requirements under the rules say that:

The ceiling height must be at least 6’11” (6’5” under beams)
½” drywall on walls and ceilings
30 minute fire separations between the unit and any common areas
20 minute, fire-rated, self-closing doors
Egress window openings of 3’8”2 and at least 15” opening for each dimension
Vents have to be directed outside
All rooms need to be naturally or mechanically ventilated
Sprinklers are required in unfinished mechanical rooms
There must be working smoke detectors on every level of the house

If you are considering the purchase of a home with an accessory apartment (often slyly referred to as an in-law suite) with the intention of renting it out, don’t assume what you see is legal.  You run the risk of having a complaint or inspection triggered that could result in your having to rip out or seriously modify the suite.  Take the better route of putting the onus on the current owner to provide you with verification that the suite has legal status and meets a recent fire code inspection.