Toronto Real Estate and Neighbourhoods Blog | Move Smartly

Buying a Condo – Exclusive Use vs. Ownership

Rachel Loizos in Legal

Between the glitzy sales office and the way condo documents are drafted, it can be confusing for consumers to know what they are actually buying when they agree to buy a condo.  It may seem like splitting hairs, but there is a big difference between buying a condo with a parking space and buying a condo unit and a parking space.  The difference is ownership vs. exclusive use. 

The different rights that correspond to ownership and exclusive use of space are easily examined when we look at parking spaces, lockers and terraces within a building. 

Exclusive use means that your condo unit comes with the right to the exclusive use of some amenity in the building.  This is often a parking spot, a locker or a terrace.  As the owner of the condo unit, you are the only person who can use the other space (parking, locker, terrace) while you own your condo.  If you sell the condo, the right to the exclusive use of the space is transferred with the sale.

Ownership is different.  If you actually own the space that the parking spot, locker or terrace occupies, you could then (theoretically) sell it to some other person whenever you wanted to.  If you decided to get rid of your car, you could then likely sell your now-superfluous parking space.  Be sure to review your condo documents carefully, as there may be prohibitions on selling a parking space without the unit.

Obviously, there is more value in actual ownership than merely having the right to use something.  You should ask these questions before you decide which condo development is right for you – and how much you are willing to pay for a unit.  Read the condo by-laws carefully to see what rights you will actually have when it come to the property you now ‘own’.

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law.
Email Rachel

Subscribe to Move Smartly by Email

Related Post:

How Important is Parking to Toronto Condo Buyers?

Title Insurance Won’t Always Protect You

Rachel Loizos in Legal

I will relay a sad story about how a home buyer got swindled by an unethical vendor in a resale transaction in the City of Toronto recently.  In August of 2007, a purchaser closed a real estate transaction and bought a very cute little bungalow in the east end of the city.  Unfortunately, the vendor did not pay the water bill.  The arrears did not show up on a search and the fact that the account was overdue was only discovered after the transaction closed.

At the request of the bank, the purchaser was required to get title insurance and did.  The policy of title insurance stated that it would cover water arrears, but ONLY if they were the kind of arrears that would be revealed by a search.  Unfortunately for our purchaser, these were the kind of arrears that are not revealed by a search, and thus not eligible for compensation under the policy.

Water arrears, like tax arrears, will be registered as a lien against the property – meaning that the unsuspecting purchaser foots the bill when the unscrupulous vendor flees. 

Certainly small claims court is an option, but it will be difficult to collect the funds even if the purchaser is successful in their suit because the vendor has moved to another country.

This story made me particularly annoyed for a variety of reasons, not the least of which is the fact that when you use someone's utilities without paying for them it is called stealing, plain and simple, and I have no tolerance for it.

The moral of the story?  If you are purchasing property being sold under a power of attorney, protect yourself and ask your agent to insert a clause allowing for a reasonable holdback for utilities.  The same can be said if you know the vendor intends to move to another province or country following the closing.  Unfortunately, there is no way to ensure you will find out and it is almost impossible to collect these funds after closing.  Truly, buyer beware.

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law.
Email Rachel

Subscribe to Move Smartly by Email

Related Post:

Why Home Buyers Need Title Insurance

FlexHousing™ Brings Adaptable Housing Options to Canada

Rachel Loizos in Real Estate Trends

A recent article in DreamHomes & Condominiums magazine highlighted one of the most interesting trends in real estate that I have seen in awhile.   The trend is in what are called Flex-Homes, which as explained on the CMHC site, comprises a concept in housing that incorporates, at the design and construction stage, the ability to make future changes easily and with minimum expense.  The intention of FlexHousing™ is to allow homeowners to occupy a dwelling for longer periods of time while adapting to changing circumstances and meeting a wider range of needs. Similar concepts are referred to as Universal Housing in the United States and Australia and Lifetime Homes in the United Kingdom.

The CMHC site also goes on to list the myriad of ways that this style of housing is beneficial for everyone because of the ability of the home to grow with you.

Home Buying in a Gentrified Toronto

Rachel Loizos in Legal, Real Estate Trends

Assuming that Toronto has a housing bubble, and that it will not burst (or if it does, it won’t be soon enough), how are average people supposed to enter the market? I agree that consumers should not buy above their means, but what if that results in being priced out of everywhere you want to live?

I came across a very interesting New York Times article recently that (although cheekily mocked for its navel-gazing in a satirical blog) does raise a very interesting point.  The article, peppered with Richard Florida references,  highlights Brooklyn and the San Francisco Bay area where people, priced out of the market, join together to purchase property that they could not otherwise afford.

In a previous post, I described Tenancy in Common, a method of owning property with others.  In the face of gentrification and rising markets in general, this could provide those people who were going to share a rental space the opportunity to share an owned space.  Obviously, this type of ownership is not for everyone, and it is not a new concept - but obviously more relevant as we face increased housing costs and fewer options.

I believe that this kind of ownership is certainly a sensible way to start.  Having said that, make sure you go in to the transaction with your expectations known, and even if you decide to buy property with your brother, make sure that you have documented the agreement between you in detail.  Nothing drives people apart like disputes over money so to protect the relationship, make sure you have clear expectations from the outset.   

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law.
Email Rachel

Subscribe to Move Smartly by Email

Related Posts:

How to Take Title - Sole Ownership, Joint Tenancy and Tenancy in Common

Richard Florida and Toronto's Openness Paradox

Bejeweled Phantoms: Will Foreign Investors Accelerate Gentrification in Toronto?

 

Real Estate Fraud Action Plan: Enhancing the Security of the Ontario Electronic Land Registry System

Rachel in Legal, Real Estate Trends

Some new developments are coming to pass in the legal world as it relates to real estate. You may or may not know that the province of Ontario was the first jurisdiction in the world to provide electronic registration of land-related documents. In order to enhance the security of the system, the Ontario government's Real Estate Fraud Action Plan has outlined its new Access Requirements.  The people who are currently registered to use the system are required to re-register in order to continue to use it. The Ontario Bar Association has been sending fairly regular reminders about this, so it will be interesting to see if any deals are actually delayed because of the transition.

Do It Yourself Renovations

Rachel in  Lifestyle, HomeBuying, Legal

With spring in the air and my tulips breaking the surface in my garden, my thoughts naturally turn to home renovations.  I enjoy taking on small ‘upgrade’ projects around the house and thus far have managed not to cause more harm than good.  If you are also experiencing the need to visit a big box store for the perfect solution to your design/ structural/aesthetic issues at home, good luck but remember that you could be exposing yourself to risk.

Review Your Agreement Before You Are Bound

Rachel in Legal, Home Buying

In Ontario, your contract, the actual Agreement of Purchase and Sale, is very likely an Ontario Real Estate Association standard form contract.  This standard form of contract will typically be modified to include the particular conditions that you and your agent have negotiated, but the bulk of this document is pre-formulated.  Before you sign an agreement, you read it, and if you have any questions, you should ask your agent to explain what the clauses mean.

I would recommend that you have your lawyer review the agreement before you sign it.  It can be very difficult to extract yourself from an agreement once it has been signed, so it is important that you can actually perform what is expected of you in the contract - you will not know what those things are unless you are familiar with your agreement. 

As an example, one little thing that I have noticed is that contracts will typically state that the time for the closing of the transaction is 6:00 p.m. on the date of closing.  Unfortunately, the electronic registration system will only allow registrations until 5:00 p.m. This may seem silly, but it could cause problems.  What this indicates to me is that the people who are giving these documents to home buyers and sellers are not explaining what they really mean, or that they are just not paying attention. 

As a home buyer, if you are reluctant to have your lawyer review your agreement before you sign it, you may at least want to consider adding a condition that makes the deal subject to the approval of your solicitor within a certain amount of time of accepting the offer. 

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law.  Email Rachel

Subscribe to Move Smartly by Email

Related Posts:

Buying Resale - Visit the Property Before Closing

Basement Rentals: Make Sure You Want To Be A Landlord

Rachel in Legal, HomeBuying

I have heard many people say that they want to rent out their basement or that they want to buy a property that can accommodate a tenant.  Whether this is prompted by changes in life circumstance, cash flow, or it is the condition on which you can afford to buy the property you are looking at, it is important to consider that there are rules and regulations that govern the ‘second suite’ in Toronto.

Buying a Condo - Know Your Rights

Rachel in Condo Buying, Legal

If you are currently or have ever considered buying a condo, you should check out this site.  It  belongs to the Canadian Alliance for Condominium Owners Rights.  This is a great resource, and even if the issues presented in their articles are not relevant to you right now, they certainly will be (or at least they should) once you sign that agreement to purchase a unit.

The articles are interesting and cover a broad range of topics relating to condominium ownership.  As a future unit owner, you would do well to consider the issues raised. 

As part of your due diligence in your search for the perfect nest, I would recommend trying to interview owners that presently live in a project done by the developer you are considering.  How do they like the property management company?  How is the board run?  Is it run to the satisfaction of the owners in general?  I am not encouraging you to do anything creepy, but casually stopping someone and telling them you are considering buying from their developer will usually garner you a response.

Although the content is heavily weighted towards helping consumers who are currently facing difficulties, take a look at the site so that you realize the kinds of issues that you may potentially face in the future as a unit owner.

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law.
Email Rachel

Subscribe to Move Smartly by Email

Related Posts:

Ask a Lawyer: Condo Conundrums

New Condominium Deposits

New Condominium Interim Closing

Condominium Conversions

Don't Let Closing Costs Catch You Off Guard

Rachel in Home Buying, Money, Legal

Home buyers, especially first time home buyers, are often surprised by their closing costs.  Although the standard legal fees and land transfer taxes have typically been accounted for, there are the additional ‘little’ expenses that very often throw people,  even people who have bought and sold multiple properties, off course.

In the Realosophy HomeBuyers Guide, we recommend budgeting 2% to 3% of the purchase price for your closing costs. At the time of writing, the Realosophy HomeBuyers Guide did not have to take into account the new Toronto Land Transfer Tax, so if you are purchasing in the Toronto area, you will need to account for this additional amount.