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Posts Tagged ‘buyer’

Buyer beware the ‘as is’ clause

Friday, January 25th, 2013

The “as is” condition might mean the homeowner does not have the time or money to make repairs, or in the case of a foreclosure or estate sale, the seller may not be familiar with the condition of the house.

By Joe Richer |   Fri Jan 25 2013 |  moneyville.ca

Q: What do I need to know about buying a home listed in “as is” condition?

A: When a home is listed for sale “as is,” it doesn’t necessarily mean that it is in a poor state of repair. The term simply means the property is being sold in its current condition and the seller will not be making any repairs to complete the sale.

The “as is” condition might mean the homeowner does not have the time or money to make repairs, or in the case of a foreclosure or estate sale, the seller may not be familiar with the condition of the house.

Whatever the reason, if you’re interested in the property, the only way to know the true condition is to have a home inspection carried out. Consider including a contingency clause in your offer based on your satisfaction with the inspection. If a deficiency with a budget-busting repair cost is uncovered during the inspection, you’ll want the option to walk away without penalty.

The advantage of an as is sale is the purchase price may be comparatively lower than similar properties in the neighbourhood. But be sure to factor in the cost of repairs and renovations when accounting for the total cost of the purchase.

Buying as is isn’t for everyone. If you’re planning to ask the owner to address a defect or are unwilling to follow-through on the purchase if the inspector finds anything wrong, you’re probably best to avoid making an offer on an as is property.

If you have a question for Joe, email askjoe@reco.on.ca. Joseph Richer is RECO’s registrar and is in charge of the administration and enforcement of all rules under the Real Estate and Business Brokers Act. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at youtube.com/recohelps.

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When can you walk away from a house deal?

Tuesday, November 13th, 2012

Be sure you fully understand the details before closing a real estate deal

By Mark Weisleder | moneyville.ca article

Putting your home up for sale can be a tough decision, but once made and the ball is rolling, you may not be able to change your mind. Last week’s column about a $3.3 million home sale that went wrong for the seller prompted several related questions from readers.

Here they are:

Is there a buyer’s remorse period in Ontario?

If you are buying a new condominium from a builder, you have 10 days to change your mind. You do not need a reason. This does not apply if you buy a new house from a builder and does not apply if you are buying a resale home or condominium. Why condos only? The clause is included in the Condominium Act.

Can a buyer sign an offer and then walk away?

The Ontario real estate contract gives a buyer 24 hours to pay the deposit, once the offer is accepted by the seller. The buyer cannot just change their mind or they can be sued.

For example, the buyer offers $300,000 for a house which is accepted. The buyer changes his mind and doesn’t pay the deposit and walks away from the deal. The seller resells the property for $275,000. They can still sue the first buyer for the difference, or $25,000.

Can buyers use conditional clauses as escape hatches?

Most real estate contracts are conditional on the buyer being able to get a mortgage and being satisfied with a home inspection. Other conditions include being satisfied with a condominium status certificate when buying a resale condo.

Many buyers think these conditions give them the right to just change their minds. It is not that easy. The case law has demonstrated that buyers must try and satisfy any condition in good faith. This means that you need a legitimate reason why you found the home inspection report or condominium status certificate unsatisfactory.

Who gets the deposit when buyers change their mind?

In most cases, the deposit is held by the seller’s real estate brokerage, in trust. Under the law, when a deal breaks down, the brokerage cannot pay the deposit to anyone without either a mutual release or direction signed by both the buyer and the seller, or an order of the court. As such, when deals do not close, if there is no agreement, the deposit can be locked up for a long time, and the buyer will not have access to it to make an offer on another property.

Is there a “legal” way for a buyer to get out of a deal?

It depends. If for example, there was a right on your title for the City to access 20 per cent of your property for any reason, known as an easement, and that was not disclosed to the buyer, they can usually cancel the agreement without penalty. However, there have been other cases that indicate if there is a problem with a city work order or title problem for which the seller can obtain title insurance to protect the buyer, then the buyer cannot refuse to close. A buyer can also cancel if there has been substantial damage to the property before closing, such as a flood that was not repaired. You can’t refuse to close if the oven is not working.

The better answer in all of these situations is to be very careful and serious before you make any decision to buy a home. Changing your mind later can be very expensive.

More Mark Weisleder columns

Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com

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