Top 5 Mistakes Buyers Make When Purchasing Real Estate
Jul 9th, 2011
1. Underground Oil Tanks
The government outlawed the use of oil tanks on residential property in the early '90s and there are numerous fire code and municipal regulations relating to the removal or abandonment of an underground oil storage tank.
Sellers must disclose if they have an unused or abandoned underground storage tank on their property and they are held responsible for all contamination on the property that they fail to disclose to a buyer. Sellers should obtain a site profile when selling the property in order to prevent a buyer from later claiming that the property was contaminated.
Have the property inspected and seek expert opinion, especially if the underground storage tank is thought to be leaking.
2. Checking financial burdens
Your lawyer will clear title of all financial obligations prior to transferring title to your name.
However, when a seller agrees to sell a property to a buyer, the seller agrees to deliver clear title, except for charges the parties agree may remain on title.
Buyers and their lawyers must make sure there are no mortgages, liens, judgments, or other financial charges outstanding on the property. If there are, they must know what is owed under each charge on the property. If the seller has zero or "negative equity" in the property, find out what other resources the seller has to clear title, pay the real estate commission and legal fees.
If the property is being sold under a court order, read a copy of the order to see if any conditions for a sale are set out. The contract of purchase and sale does not exempt building schemes or easements. Be sure you know if these are registered on title and what they mean.
Before making a firm contract with the seller, have your lawyer check title and ensure that everything is in order.
3. Know your Condo
When purchasing a pre-sale condo (prior to the building being completed) or a new condo, the developer disclosure statement (a statement which discloses material facts about a development property) is the most significant element in the statue's disclosure scheme.
Unless otherwise exempted, a developer must not enter into an agreement with a buyer for the sale or lease of a development unit, unless the developer has provided a copy of the disclosure statement to the purchaser, in compliance with The Real Estate Development Marketing Act (REDMA). If the disclosure statement does not comply with the REDMA, or otherwise contains a misrepresentation, the developer must either file a new disclosure statement, or file an amendment to the original one. The amendment must be provided to each existing purchaser within a reasonable amount of time.
Until a developer provides the purchaser with a disclosure statement, including any existing amendments, the purchaser has the unlimited right to rescind, even after completion. However, a purchaser who received a disclosure statement (in compliance with REDMA) still has seven days to rescind the contract, regardless of whether the title has been transferred.
Be sure to get a receipt for the disclosure statement, showing the date you received it.
4. Renting Rules for Condos
The Strata Property Act permits a strata corporation to prohibit or limit residential rentals. Rentals can be limited either by the number or the parentage of strata lots that may be rented, and the period of time that residential strata lots may be rented. If a rental bylaw is passed, the bylaw must set out the procedure the strata corporation must follow for administering the limit.
The family member exemption permits an owner to rent anytime to a family member, regardless of a rental restriction bylaw. A family member consists of a spouse of the owner, a parent or child of the owner or a parent or child of the spouse.
If the developer filed the Rental Disclosure Statement (RDS) prior to January 1, 2010, the amendment distinguishes between the first owner versus a subsequent owner. The first owner can rent for the whole time that they remain the first owner, despite any rental restriction bylaw. If the RDS is filed after January 1, 2010, all owners can rent for 100 years.
Before buying, ask the seller for a Form B, which includes the rental disclosure statement
5. Checking for Hidden Defects
Material Latent Defects (MLDs) are defects not easily discovered through a reasonable inspection of the property. If the property contains MLDs, the seller has a legal obligation to reveal them and full details must be included in Property Disclosure Statement and provided to the buyer prior to an accepted.
Material latent defect can be a defect that renders the property unfit for habitation, dangerous or potentially dangerous to the occupants. A defect that would be expensive to fix, a lack of appropriate municipal building permits, a situation that affects the real estate in respect of which a local government has given notice indicating that the circumstance must or should be remedied.
Material latent defects covers areas including oil tanks on the property, plumbing, structure, permits, grow-ops and stigmatized properties.
Written by Maggie Chandler, marketing vancouver homes since 1981.