French Drains and Sump Pumps

Growing up around horses, I often heard the expression “no hoof, no horse”. Essentially, it means that you have to take good care of your horse’s hooves or it will become lame and you’ll have no horse to ride. The same goes for houses: the foundation of a home must be solid and protected. If you don’t look after it properly, you may be putting your house at risk.

Water is one of a house foundation’s biggest enemies. Ground water and rain water will look for the lowest point and that would be the big hole in the ground where your basement is. Water pressing up against the foundation will eventually find a way in and the concrete will crack under pressure. As much as possible, homebuilders take steps to prevent water from damaging foundations. The most common way is by installing French drains.

French drains are wide drain pipes that surround the exterior foundation of the house. They are perforated to let water seep in and they rely on gravity to draw the accumulated water into the sump pump pit in your basement. Once the water in the pit reaches a certain level, the pump activates and flushes the water back out of the house and into the ditch.

So, in reality, we’re bringing the outside water in and the pumping it back out again. I know what you’re thinking: why bring it in the house? Why not have an outdoor pit? I wondered the same thing. There are outdoor pits, but they’re usually secondary pits for homes that have ongoing water issues. An outdoor pit is much more expensive to install and much harder to access for regular maintenance than a basement pit is. They need to be quite deep and so they’re usually only used in areas with very high water tables.

As a homeowner, you’ll hear your sump pump go off from time to time, especially during the spring or after heavy rains. The frequency will depend on your home. Some homeowners have sump pumps that run every day, others only once in a while. The important thing is that your pump is doing what it was meant to do – getting the water out of your house!

What if my sump pump pit is dry?

Occasionally homes will have dry sump pump pits, even in the spring thaw. This could mean that the house was built on sand or on a hill, where water is less of an issue. Newer homes often have French drains that are gravity drained directly into the ditch. If this is the case for your house, make sure to check the exit pipe from time to time to make sure the water is flowing well. Older homes may have been built before French drains were standard, or may have drains that have become blocked or crushed over time.

It’s in your best interest to make sure that your French drains and your sump pump are in good working order. Because we live in an area with a high water table, many insurance companies no longer cover damage caused by water infiltration, which can mean high repair costs for homeowners who have water issues.

Protecting yourself when buying a home with a sump pump

On the Vendor’s Declaration form, one of the questions the seller must answer is how often does the sump pump go off? If the answer is mainly during spring thaws and heavy rains, you can be reasonably certain that the drain system is working properly. However, if the answer is daily, then you know the house is in an area with a high ground water table. Is this something that would stop me buying the house? No. If there were no signs of a damaged foundation from water pressure and the humidity level was low, it wouldn’t stop me from buying. In fact, I bought my own house knowing the sump pump operates daily. I made sure there was a backup battery sump pump in case the main one stopped working or the power was out. I also have a generator in case we lose power for long periods of time. My basement is finished and dry. I do check every time there is a power outage that my backups are working properly!

However, if the water in the sump pump pit is a reddish colour, I would put on the breaks and do further investigations. Red water or a reddish jelly-like sludge in sump pump pits and street ditches indicates the presence of ferrous ochre, which is a mineral that hardens when it dries and that can block French drains. I will write a separate post on this as it can be a serious issue if the homeowner doesn’t do maintenance cleaning of the French drains. Just know that, handled properly, it can be controlled.

According to the building code of Quebec, every home should have a sump pump pit 0.25 m2 wide and 750m m deep. In addition, the pit should have an airtight, childproof cover. Most pits I see don’t have air tight covers. It’s a fairly new regulation, so we are only seeing them in newer construction. It makes sense to keep the humidity out of the basement, it’s just harder to check the pump is functioning properly.

So when visiting homes, check the Vendor’s Declaration for the frequency of the pumping and if there is evidence of ferrous ochre. Then have a look into the pit, if you can, to verify the colour of the water and size of the pit.

Make sure the hoof of the horse is sound!

For more information;

https://www.rbq.gouv.qc.ca/fileadmin/medias/pdf/Publications/francais/fiche-bonnes-pratiques-puisards-fosses-retenue.pdf

Information made available in this guide in any form is for information purposes only. It is not, and should not be taken as, legal advice. It is not in any circumstances a substitute for the advice or services of a notary or lawyer. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website.

Sellers Declaration

The Sellers declaration is what I like to call a CYA form (cover your a..) It is a form for the seller to declare to best of his knowledge, everything he knows of importance about his home to a buyer. It is to protect the seller, buyer and real estate broker so everything is transparent.

Examples of questions are; How old the furnace is, does the property conform to local by-laws, does the property have a septic tank and so on.

It is also for the seller to declare everything that is wrong with the house, is there or has there ever been, carpenter ants, a flood, foundation repairs, problems with equipment (furnace…), has it been a Grow house (drugs grown in the house), has there been a suicide or violent death in the house…

It is a 7-page questionnaire that became a mandatory form in July 2012 of chiefly residential homes with 5 dwellings or less, including immovables held in divided or undivided co-ownership(condos). It must be completed and signed at the same time as the brokerage contract.

The answers must be in good faith and to the best of the sellers’ knowledge, if the seller doesn’t know he leaves the question blank or ticks don’t know if there is that as an option.

The seller must clarify his answers and provide supporting documents if he has them. If the window leaked, what was done to fix it? If changed provide receipt if available.

One question in particular seems silly but has good reason to be on the questionnaire is,

D7.3 To your knowledge have the ever been ice accumulation or icicles hanging from the roof in winter?

The question is to see if the roof has a ventilation problem, has it ever had big icicles, ice damning… The seller in this example answered no, I personally don’t think anyone can answer no, every home has had icicles at one point. I always tell my seller to add – only small icicles, if that’s the case. Or answer no and add no large icicles on the side of the document. As the seller is signing this document and it becomes a legally binding document integrated within the Promise to Purchase, answer it carefully!

Buyers that are interested in the property will be given a copy of the declaration, so they have all the information regarding the house and can better decide if they wish to present a Promise to Purchase. Should they write an offer they must sign a copy of the declaration acknowledging receipt of it and its contents. Building Inspectors and Banks also receive a copy of the declaration.

The Declaration is to reduce the risk of legal action for the sellers by making sure buyers are well informed and have better knowledge of the condition of the property.

I advise my sellers to fill the form out in detail, don’t leave anything out. If there was a silly dishwasher leak 5 years ago, put it in! If the leak caused more damage than you believed the buyers and their inspector will have been informed and they will have had the chance to look out for signs of an issue during the inspection. Better to deal with an issue before the sale than in court after! CYA!

Information made available in this guide in any form is for information purposes only. It is not, and should not be taken as, legal advice. It is not in any circumstances a substitute for the advice or services of a notary or lawyer. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website.

Why Listing High Can Backfire

“Let’s try it at a higher price first, then reduce to the broker’s suggested price later if we need to.”
I can’t tell you how many times I’ve heard clients say this. While it is a pricing strategy that gets used a lot, in my experience, it isn’t usually the best one.

Say your experienced local broker suggests listing at $349,000 but you want to try higher – $399,000 for example. You list your home at 399,000$ and all the buyers who have been looking rush to see your home in the first two weeks. They have seen everything on the market already, so they know what they can get in the $399,000 price range. And your home doesn’t compare; it’s either smaller or not as renovated as the other homes they have seen. As a result, you don’t get any offers. Meanwhile the people in the under $350,000 price range won’t visit your home because it’s out of their price range, even though your house would have been perfect for them.

Sellers often say to “tell the buyers to make an offer” but buyers in the higher price bracket won’t make a low offer on your home because they want something bigger or more renovated. Buyers in the lower price bracket won’t make an offer because they won’t even visit a home they can’t afford on paper.
So where does that leave the seller? Cleaning and prepping their house for visits that won’t yield offers. When the broker finally convinces the seller to reduce their price, the buyers in the lower price range think there is something wrong with the house because it has been on the market for so long.

I’ve seen sellers wait too long to reduce and miss the busy Quebec spring market. Buyers overwhelmingly want to move in July once school is out. There is also the quirky July 1 moving date that can affect first time buyers. Tenants in Quebec have to give notice to their landlords by March 31 that they are cancelling their lease June 30. Thus, they must buy a home by the middle of March in anticipation of a July 1st move. The sellers of these homes must then buy a new house with occupancy for July 1st, creating a snowball effect for 2nd and 3rd time buyers who all end up having to move around July 1st. Why do you think movers in Quebec can charge 3x their normal rate the last week of June?

If you over-priced your home and missed the influx of buyers in the spring market you can take a break from all that cleaning because you won’t see as many visits during the summer holidays. Mind you, this year maybe a little different with the travel restrictions.

In today’s market, many savvy home owners and brokers are pricing spot on or just under market value to create a frenzy in the first few days of listing and encourage multiple offers, which in turn drives the sale price over the listing price. Lately, seeing 3 to 5 offers on a property within two days of listing is a common occurrence. In the last two weeks alone, I have seen listings selling from $2,000 to $30,000 over asking within two days of listing the property. The owner only had to clean and prep for a day or two and it was sold – no months of visits!

So, if your home has been on the market for months and you’re still waiting for the right buyer, remember there are three reasons a house doesn’t sell: Location, Condition and Price, and price fixes the first two!

The moral of the story is don’t over price your home and hope for offers. Work with an experienced local broker with strong a marketing strategy, price it right, price it tight and you won’t have to hope –  the offers will come to you.

Certificate of Location; What is it Really?

A Certificate of Location is a document, prepared by a land surveyor(arpenteur), consisting of a plan(map) and report on the current situation and state of immovable (the piece of land and all things attached to it, house, shed, servitudes) with respect to titles, lot regulations, zoning regulations and municipal bylaws.
In the standard Quebec Brokerage contracts and Promise to Purchase forms (offer) the seller undertakes to provide the broker/buyer with a certificate of location describing the property in its current state. This means that since the certificate was made, no physical change, no zoning change, no cadastral change (Quebec’s cadastral reform started in 1994) were made. No fences/pools/windows have been added or removed, no extensions to the buildings, no buildings removed or made smaller and no landslide bylaws and no flood area changed.
The Certificate is required by the notary and the bank during the sale of the property. The notary needs it to preform a title search. It will show the notary if there are any discrepancies between the measurements, encroachments or illegal views on a neighboring property. The Board of Notaries and the OACIQ (Real Estate Association) requires that the certificate must be made within the last 10 years. Due to the frequently changing municipal by-laws and the law in the Civil Code referring to ten-year prescription that allows acquiring a right of ownership.
A listing real estate broker has a duty to check the certificate of location and tell the seller to order a new one if necessary. Using a local broker to your area is important as they will be aware of bylaw changes in your neighborhood that you may not be. An arpenteur/surveyor can take from 3-6 weeks to deliver a new certificate, depending on the time of year! There is a law that I have only seen enforce once recently, that says a notary should receive the certificate of location at least 20 days prior to the signing of the dead of sale. So again, I cannot stress this enough, as a seller you should order you new certificate before you list your home!
If a new certificate is required, it will be at the seller’s expense. Locally it cost between $750 to $1200 plus tax for a new certificate on a single-family non-waterfront home. Waterfront homes are more expensive due to the mapping of the 20 year and 100-year flood lines (the highest water level in the last 20-100 years). Houses close to ridges, ravines and wetlands can also be more expensive as the arpenteur needs to map the height of the slope, map the landslide risk zones or the proximity of the wet area.
In the past when selling an empty lot, a surveyor would do a plot survey (with or without installing markers) instead of a certificate of location, as there are no buildings to locate on the land. A survey on large plots of land can be expensive, I recently had a quote of $5000 for 100 arpents. Luckily for sellers, empty lots are not required to have a survey to be sold unless mutually agreed upon in the offer. However, surveyors are now offering to do certificates of locations on the first part of the lot closest to the road. They will ‘locate’ any servitudes, neighbor encroachments and if there is a stream on the property the surveyor will locate the protect zone around the stream (see example of stream protected zone in diagram above). As the surveyor is only surveying a small portion of the lot, the cost of the certificate is approximately the same as a single-family home.
As a seller it is imperative you understand the importance of having your up to date certificate of location ready before you get an accepted offer on your property. If you receive an offer with a 30 day closing at the notary signing and your certificate is not valid, you may have to delay the signing or you could incur extra costs to put a rush on the certificate or pay title insurance to protect yourself and the buyer. If the certificate unveils a surprise of an encroachment, the signing may have to be delayed in order to clear the title. Your buyers may not want to or cannot wait for you and render the offer null and void or charge you for cost incurred for the delay in the signing.
Don’t let a out of date certificate make a smooth transaction turn into a nightmare!

**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

Preparing for visits

The most common complaint I hear from sellers is the need to keep their house clean and ready for visits. More than a few clients have told me they wish they could just move out until their house is sold!

Preparing your house for visits by potential buyers is extremely important and yet, I’ve seen houses where the owners clearly didn’t understand this. If you don’t clean you house before visits, even the best broker is going to have trouble selling it.

Smell

You might not realize that your home has a smell to it, but someone visiting it for the fist time will – especially if it smells bad!

Some culprits to consider:

– Pets. Make sure the cat litter is clean and, if possible, out of the house. Dog beds smell like dogs, so wash them regularly while your home is on the market, and store them into the garage during visits.

– Basements. Basements tend to be damp, so they need dehumidifiers. Musty-smelling basements are a huge turnoff for potential buyers.

– Cooking odours. Do not cook especially fragrant foods like bacon, curry or fish the day of a visit. The smell lingers and visitors might find them offensive. The smell of baking cookies, on the other hand, can leave people with a positive impression of your home.

– Fragrances. Do not go overboard with scented candles or scented room sprays. They can be overpowering, and visitors will think you’re trying to hide something.

To try instead:

– Flowers. A beautiful bouquet can freshen up any room. With a little TLC, they can last a week or two and are worth the investment.

– Natural cleaning products. Replace your usual cleaning products with all-natural, lemon-scented products that leave a pleasant fresh smell without being overpowering. Another option is plain vinegar, which leaves no smell at all once it dries.

Sight

De-clutter, de-clutter, de-clutter!  You want potential buyers to be able to imagine themselves living in your house. With this in mid, pack away as many of your personal effects as possible, clear out closets and cupboards, and minimize furniture. Then give your house a thorough cleaning.

Kitchen and bathrooms are especially important to buyers, so make sure that yours look their best. They should sparkle! The bathroom should feel like a spa, so buy some new fluffy towels and a bathmat. Clear countertops of personal items and – please – make sure the toilet lid is closed!

Aside form the obvious de-cluttering and cleaning, you should also think about:

– Packing it up. Purchase a few large plastic storage bins and when visitors come, quickly sweep everything off the counters and tables into the bins. Then store them in the cupboard with the lid closed – or better yet, put them in the trunk of your car and leave with them.

– Lighting. Bright rooms are more welcoming and look bigger. So turn on all the lights and open the curtains and blinds (unless the view is terrible!).

– Access. Walkways should be cleared of snow, wet leaves and toys. Potential buyers shouldn’t have to come in through the back door because you haven’t bothered to shovel the snow. Every visit should start by way of the front door. For your visitors’ safety, stairs should be kept clear as well.

– Details. Finally, when was the last time you clean your light switch plate covers? You may not notice the smudges and fingerprints, but I assure you the buyer will.

Sound

Soft music is always welcome, but the key word is soft – as in turned down, low background music. The buyers aren’t there to rock it out!

Get out!

You, your kids and your little dog too! Buyers don’t feel comfortable wandering around someone’s home while the owners are watching them. Buyers will rush through their visit so as not to inconvenience them.

If you can’t leave, try to be as inconspicuous as possible. Do not be that owner who follows around the buyers to show them all the good qualities of your home. This backfires more often than is successful.  For example, if the you tell the buyer there are a lot of kids in the area, the buyer may imagine he will be over run with kids screaming, when truly there are only 5 kids living close by. Everyone interprets things differently!

Make a good impression

Often, after a day of visits, I hear buyers giving nicknames to the houses we’ve seen. Do you want to be the dirty house or the dream house? The smelly home or the house with the great light? How about the bra house? The owner of one home we visited had her bras and underwear hanging to dry in the bathroom! I have even had the naked house, where a man walked out of his bedroom bearing all. You can imagine how that visit ended!

So take a good look around your home. Walk around and look at it as though it were your first time seeing it. Will it make the right impression?

You may think buyers look past your belongings and your clutter to the house and its layout, but most of the clients I’ve worked with are influenced by how the house is presented. You want buyers to walk away remembering all the positives – that’s when you’ll get an offer.

***The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.***

Multiple Offers

Dealing with a multiple-offer situation as a Quebec buyer

Entering a bidding war with another buyer isn’t ideal, but when the market is hot and the property well-priced, it’s bound to happen. Knowing the ins and outs of a multiple offer situation will help you come out the winner.

First come, first served?

The first thing to know is that it doesn’t matter who wrote their offer first – the seller is in the drivers’ seat. If a seller is confident, he’ll be getting a second offer, he may choose to wait to respond to you until he has received it and then review both offers at the same time. In this situation, the timing of your offer matters less than its terms.

Deadlines come into play here. A buyer who is interested in a hot property can put a short deadline on his offer. This offer is only binding on himself, committing him to buying the property at the given price and conditions until the specified deadline. If the seller does not accept before the deadline, the buyer can walk away. Sometimes, sellers won’t want to take the risk if the offer is good and will accept the first offer within the deadline. However, if the first offer is low or not what the sellers want, they don’t have to respond by the deadline, as the deadline is only binding for the buyer. Once the sellers counter a buyer’s offer, they are bound by the terms of the counter and its deadline and they cannot accept any other offer unconditionally until the deadline has passed. Unless your offer is amazing, the sellers will most likely wait to see what the second one has to offer. Remember: deadlines bind the person who wrote them, not the party receiving the offer or counter!

Once you’ve submitted your offer, be available to your broker! If a decision has to be made quickly, you should be available to decide and sign at a moment’s notice.

Your best possible offer

Should a second offer be presented to the seller, the seller’s broker must, by law, disclose this information to the first offer buyers. If the seller has not countered the first offer yet, they then have a chance to amend their offer. The second buyers knew there was an offer on the table when they wrote their offer, so they most likely came in with their best offer – not a preliminary offer (or a fishing expedition!). In Quebec, it is illegal for a real estate broker to divulge the amount and conditions of the other offer(s) to a buyer, as that would be favouring one buyer over the other. Offers must remain private between the parties.

If the sellers have already countered the first offer when the second offer is presented, the first buyers hold the power; if they accept the terms of the counter-offer, the deal is binding. If they, in turn, counter, they are opening the door for the seller to be free to accept the second offer.

If the seller hasn’t answered any offer yet and you are given the option to alter your offer – do it! In most cases the seller will just accept one offer without countering anyone. You may only get this one chance, so make it the best you can.  It is not always the highest priced offer that is the best; it is the offer with the best conditions and a good price that usually wins the day. Remove any unnecessary conditions and make it a ‘clean’ offer. Then come in at your top price, and by this I mean the absolute highest amount you’re willing to pay before walking away.

Go over list if you love it, or offer a weird number, like $1,850 higher. People tend to offer full price or they offer 1, 2, 5, or 10 thousand dollars over -round numbers – so be different and offer $5001.00! It just might make the difference in being the better offer.

In a multiple offer situation, you only get one chance, so make sure you give it your best shot. Even after giving buyers this advice, I have still heard some walk away saying they would have paid what the second buyer paid. Put your best offer forward so that, in the event you don’t get the house, you won’t have any regrets about the one that got away.

Can a seller hold a mini auction? Yes!

The seller is holding the cards. If there are two or more offers in front of him but none of them are what wants or if he thinks he can push for more money, he can tell everyone to come back with their best price. He will ask everyone to amend their offers by a specific deadline (usually before the shortest deadline of all the offers, that way he is reducing the likelihood of someone walking away, which they might if he countered everyone). Once every buyer who wishes to change their offer has submitted their amendments, the seller will pick whichever offer he thinks is the best.

Can a seller accept two offers? Yes!

Few people realize that a seller can accept more than one offer at a time. Here’s how and why:  if a seller accepts an offer from Buyer 1, he can accept an offer from Buyer 2 conditional on the first offer not fulfilling its conditions within the offer time frame. Sellers will do this to protect themselves. If all the offers they received have some conditions to them, then the house is not sold until the conditions are removed. So why not hold on to a second buyer just in case? It can also happen that the seller accepts an offer and then the next day a better one comes along, so he accepts that too on the condition that the first one can’t fulfill his financing or some other part of his offer. Buyer 2 will be given a deadline shorter than the first on all conditions so that it will be a firm offer before the first offer. That way if the first buyer even asks for an extension to fulfill his conditions the seller can refuse and Buyer 2 gets the house.

Remember, a sale is not firm until all conditions are removed. The seller can and should continue to market his home until he has a ‘firm’ offer.

So go in with your best offer, with the least amount of conditions possible. Do your building inspection before you write your offer, if you have the time. Or, if the vendors have said they will reply after the weekend, try and get all your conditions removed before Sunday night and send a revised offer Monday morning! Remember you only get one chance in a multiple offer situation, make sure your offer is the best it can be.

Multiple offers definitely favor the sellers but as a buyer, just understanding the process will help you come out on top with the keys to your dream home!

**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

 

Why it’s Important to Hire a Professional Building Inspector

Building inspections

Since the dawn of Holmes on Homes and every other real estate related TV show, buyers have started to feel that they are building inspectors. Uncle Joe may have renovated 5 homes in the last 10 years but he is not up to date on codes and local issues. Professional building inspectors inspect 5 to 10 houses a week! I have attended too many inspections to count but I still rely on professional inspectors to advise me.

I want to make myself super clear here…

Hire a Real Estate Board approved inspector who has professional liability insurance covering fault, error and omission. Quebec doesn’t have laws to who can or can’t be a building inspector, all they have to do is get a business licence. However, the real estate board OACIQ, has 5 organizations of inspectors that they have approved. The 5 approved associations are;

The Quebec Association of building Inspectors (QABI)

The National Building Inspectors and experts Association (NBIEA)

Les inspecteurs thermographes de l’ATIB

The Quebec Order of Architects

InterNACHI Québec

These inspector’s must;

  1. Have Liability insurance
  2. Have a recognized inspection service agreement
  3. Practice standards recognized by the OACIQ
  4. Provide a written report

So step one; ask your real estate broker for a list of reputable and insured building inspectors from the area. If they are a member of an approved OACIQ association even better! Use a local inspector! They will know the issues relate to the neighborhood you are buying in, like Pyrite and iron ochre.

Step two; realize that an building inspector is like a GP doctor, they have a great base knowledge, can diagnose common issues but they refer to a specialist when for the bigger issues. An inspector is there to flag issues; he will let you know his opinion but if it is a bigger issue he should suggest to bring in a specialist.

I have had a building inspector tell a buyer that the house needed a new central support beam only to be told by the specialist that it just needed one support post. Big difference in price between the two! So make sure you ask a specialist before you run for the hills.

Have the chimneys inspected by a chimney inspector, a building inspector will just do a visual where a chimney inspector will go deeper.

If there is a septic system have the owner clean and ensure it is in good working order it prior to closing. Older Heating systems should be inspected as well if they are not regularly service.

Understand that inspections are for you to find out about the house and to verify there is not a major structural defect(s). A building inspection is not done so you can re-negotiate with the owner to fix small issues. The buyer must act in good faith under all circumstances. In most cases you are not buying a brand new home, maintenance and small issues are to be expected. I don’t think I have ever been to an inspection where the inspector didn’t say that the soil around the outside of the house needed to be re-graded slanting away from the house or that the insulation in the attic needed to be pulled away from the soffits.

What you are on the look out for is major issues that could significantly reduce the value of the property, approximately 2-3% of the value of the property. If something large is found at that point you have a few choices.  You can walk away from the sale by providing the sellers a copy of the building inspection report and a written notice stating you are rendering the Promise to Purchase null and void.  Or either you can get professional estimates for the work required and have your broker try to work out a fair price deduction for the work required or have the owner repair the issue. Here again you would provide the written report along with an explanation of the problems. Once an agreement is made an Amendment form will be written up with the changes to the Promise to Purchase.

What you need to understand is all of this must take place within the deadline set out in the Promise to Purchase, usually 11-14 days.  Generally building inspection conditions are 7 to 10 days, that means the building inspection(s) must be completed within that time frame. However, there is a second deadline of 4 fixed days for reviewing the reports. So the original 7 days to 10 days plus the 4, equals 11 to 14 days to remove the building inspection clause. If at the end of the deadline the buyer doesn’t render the offer null and void or waive the condition, the condition waives itself and the buyer has deemed to waive it! So watch those deadlines!

Before closing I just want to touch lightly on Hidden Defects, it is a subject of another blog on its own.

A Hidden Defect is – hidden- no one, not the seller, not the brokers, not the inspector nor you the buyer are aware of the defect. It maybe behind a wall or in the floor but whatever it is no one knew about it when you bought the property. In Quebec unless removed in an offer, every home is sold with a legal warranty of quality protecting the buyer against hidden defects.

If there is a hidden defect after the sale and you take the vendors to court, the first question the judge asks is….”Did you hire a professional building inspector to inspect the property”. If you answer no, I wish you the best of luck in your court case because you are going to need it! How can you prove the defect was hidden from a professional if you didn’t use one?

Moral of the story, hire a local professional building inspector!

**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

Accepted offer, Now What Happens?

You just got the call, they accepted your offer! Woohoo! You jump around for a few minutes but when you calm down you need to realise you are on the clock – you have deadlines to meet or you could lose the house to someone else!

  1. Inspection

Have your home inspected by a professional, not uncle Bob who once renovated a home! Hire an inspector that is approved by the Real Estate Board (OACIQ Organisme d’autoréglementation du courtage immobilier du Québec). Make sure he is insured. Best way is to ask your Real Estate Broker for a list of inspectors from the area you are purchasing in. These inspectors will know the issues relate to the neighborhood you are buying in, like iron ochre or pyrite.

Have the chimneys inspected, if there is a septic system ensure it is in good working order and have the owner clean it prior to closing. Heating systems should be inspected as well.

Understand that inspections are for you to find out about the house and to verify there is not a major structural defect(s).  A building inspection is not done so you can re-negotiate with the owner to fix small issues. In most cases you are not buying a brand-new home, maintenance and small issues are to be expected. What you are on the look out for is major issues that could significantly reduce the value of the property, approximately 2-3% of the value of the property. If something large is found, you have a few choices.  You can walk away from the sale, have your broker try to work out a fair price deduction for the work required or have the owner repair the issue.

Make sure you understand the deadlines in the offer. If in your Promise to Purchase you have a delay of 7 days for your inspection, it is 7 days not 7 business days. In Quebec there is no such thing as business days in real estate contracts. On standard OACIQ Promise to Purchase forms there is a second deadline to know about. First, you have the delay to actually do the inspection ie 7 days (whatever time frame you put in the offer), second you have another 4 days fixed to review the report and waive the inspection or render the offer null and void. So, in reality the condition is 11 days total. You must do the inspection within the first deadline (ie 7 days) not the second (4 days).

Should you require more time to bring in other inspectors, the original 7 days can be extended if both parties agree. Do not wait until day 7 ask for an extension because if another offer comes in on the property the owner could just say no to an extension and you are left making a hard decision whether or not to accept a home that might have issues or not.

The deadline will expire itself, meaning if you do not notify the sellers within the allotted time, it is deemed that you have accepted the building inspection and waived the condition.

  1. Finance Letter

The next phone call you will make is to your mortgage lender, of course you were pre-approved, so this step is easy! Send the mortgage lender the information on the house, as they will now want to approve that the house is worth what you are paying for it. They will require the detailed real estate listing, certificate of location and the full offer with seller’s declaration. The lender will also finalize your personal documents and verify proof of down payment again. Often the lender will spend an appraiser to evaluate the home. This alone is a 2-3-day process and is only done once the lender is satisfied with all other documents. You do not need to be present for the appraisal visit the evaluator will contact the real estate broker directly to arrange a visit.  With a deadline of 10-12 days there is no time to dilly doddle!

If you didn’t get pre-approved, get ready to run to find all your paperwork and get it to the mortgage lender. Ask your real estate broker for a referral, even within your own bank as the back-door rates with your brokers contacts are usually better then what you can get through the front door.  Time is of the essence so don’t delay. Using your brokers contact, also insures that the broker will be kept informed of any delays or hiccups along the way and can react faster.

The finance condition deadline is set out in the negotiations, if the condition is 7 days for example; the condition starts the day after the offer was accepted as day 1 and ends at midnight on the 7th day. With this condition if buyer has not given proof of financing by the deadline the seller has the choice within in 5 days to make the buyer file for a loan at the seller’s bank or render the offer null and void by written notification.

  1. Sellers Conditions

The main condition for the seller is providing an up to date Certificate of Location. The Certificate is a map of property with all the buildings on the lot, it states any servitudes or encroachments. A surveyor will take about 3 weeks to make a new certificate so hopefully if the seller requires a new certificate he ordered it when he listed the property. If not, as long as it is ready prior to signing and there have been no changes that effect the titles (ie. Encroachments on a neighbour’s property) the sale can proceed as normal.

If you are buying in the country area there are other conditions in your Promise to Purchase that the Seller is responsible for. Namely having the and septic tank cleaned, and the system verified in good working order. If the property is service from a well the seller will also be responsible to provide proof of potable water. As you have hired an experience real estate broker he/she will be aware of these situations and advice you accordingly.

  1. Firm Offer!

You made it, you met all your deadlines! Now on to the less stressful steps.

  1. Hiring a Notary

Again, speak to your Real Estate Broker and get a list of the local notaries. They know the area and can advise you accordingly. The notary will contact your bank and handle the transfer of funds, he will do a title search on the property and work with your real estate broker regarding the documents. Remember in Quebec the notary must have the funds free and clear in their trust account 48 hours prior to the sale. For your down payment, wire transfers are the safest way, as a certified cheque can be held by banks for days.

On your Promise to Purchase you have agreed on a Closing date, the fine print says, ‘on or before’ this means you can sign on the day or a few days earlier. Occupancy remains the fixed date in the offer but signing can be moved forward to comply with everyone’s schedules.

The notary will have you come to his/her office a few days before the transaction to sign your mortgage papers and to go over the sale and adjustments. The adjustments are the balancing act of the municipal and school taxes, propane and/or oil tank, condo fee, basically the fixed costs that are attached to the property. The Seller will have to be up to date on all of his bills and then the notary will charge you the balancing days of the paid bill. For example, if you buy on December 1st you will have to pay the seller the taxes for the month of December as he has already paid the municipality for the month.

  1. Home Insurance

The mortgage lender will demand that you have property insurance on the home as of the closing at the notary’s. The notary will request a letter from your insurance company before the Title Deeds are signed. Ask the seller who they use for insurance, it might be easier to stay with the same company.

  1. Little Things

Hydro, make sure you call Hydro and let them know you are moving. There is also the cable company, internet etc… A good thing to do is take a reading of the hydro meter when you first arrive at your new home and give the number to Quebec Hydro to ensure there are no extra charges.

Now you just have to pack everything you own, stick it a truck and meet it at the new house!

**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

 

 

Conditional offer How does it Work?

Shopping for a new home before you have sold your first house can be frustrating. You see a house that would be perfect, but you can’t buy before you sell yours. A conditional 72-hour clause in your offer is a solution.

Clause R2.1 of a Promise to Purchase states that the Promise to Purchase is conditional to the buyers selling their present home within a time period (30,60 or 90 days usually). They must fulfill all other conditions of the offer, do their building inspection and get a bank approval letter for their mortgage (conditional to selling their present home) so the only conditions remaining on their offer are selling their home, presenting an unconditional bank letter and of course the signing of the deed of sale.

While the buyers work at selling their home, the seller holding the ‘conditional offer’ doesn’t want to put all his eggs in one basket, he wants to try and sell his house to someone else that doesn’t have to sell their house to buy his house. To be able to do this the Clause R2.2 must be ticked in the offer. This clause allows the seller to continue to actively market his home and look for another buyer.

Should the seller receive another offer he deems acceptable, whether it Is a higher or lower price than the first offer, he can accept it conditional to the first offer falling through.  The second buyers would then have to fulfill all their conditions, building inspection, finance etc.. Once all the second offers conditions have been waived, other than the notary signing, the sellers must turn to the first offer and give them 72 hours to remove the condition of selling their house and present a non-conditional finance letter OR render their offer null and void. The 72 hour time frame commences as soon as the first buyer receives a time stamped telegram or a time stamped hand delivered amendment. It doesn’t matter if it is a Friday night or on the weekend, the 72 hours starts as soon as notice has been received.

If you are the first buyer with a conditional offer on a home, the first thing I suggest you do when your offer is initially accepted is to speak to your bank to see if you could buy without selling your home if you received a 72 hour notice. Could you afford a bridge loan? Two mortgages? It’s better to know ahead of time to avoid panic and scrabbling when you receive the 72 hour notice. Especially as the notice time could be when the banks are closed over the weekend.

For the second buyer, he must take a risk when there is a conditional offer already on a house. He has to invest money in a building inspection, get his mortgage approved and then sit and wait to see if the first buyer can get financing without selling their house or sell their house by the end of the 72 hours. Many buyers don’t want to go through the trouble unless it is their dream house, or they believe the first buyers can not fulfill financing without selling.

As a seller whose house is just new to the market or the market is hot, conditional offers are not ideal. A home that has been on the market for awhile it is a good option though. Sellers usual are not as negotiable when dealing with conditional offers, as they feel it is more like a first option to buy than a firm offer. So, when a second offer comes along that has normal, finance and building inspection conditions they often accept less money as they feel it is a real offer.

Be that as it may, you still have first dibs at the house and if the bank is willing you can get the key to your dream home! In the time from acceptance to the signing at the notary you may have the time to sell your present home, if the price is right!

Conditional offers are very common in a buyers market and could be the right option for you to get your dream home if handled properly!

**The foregoing provides only an and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**