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Posts tagged ‘condominiums’

9
Feb

The dangers of not including a status certificate condition on a condo purchase

toronto-condosToday’s Mastermind meeting focused, yet again, on the fast paced downtown Toronto real estate market particularly with respect to condo purchases. As mentioned in previous posts, condominiums have experienced unprecedented price growth over the last year. This is due to a perfect storm of low interest rates, employment growth, a wide choice of condo sizes and styles, and lack of inventory in the freehold sector. As the Manhattanization of Toronto continues, supply in the condo market is likely to tighten which in turn will increase competition and drive prices up even further.

An offer on a typical condo usually includes a Status Certificate clause which, in the simplest terms, allows a potential purchaser some time to review condominium documents that include budgets for future improvements or repairs to the building, but also specific accounting information on the unit being purchased and what the unit holder is responsible for as far as maintenance fees. A typical clause would specify that the buyer would instruct the seller to order the status certificate from the management company as soon as the offer was accepted and the seller (or seller’s agent) would have 10 days to deliver the certificate to the buyer (or buyer’s agent), who would then have 2 days for their lawyer to review the documents and make recommendations if necessary.

Today market conditions warrant a new approach. Offer holdback dates and bully offers are becoming the new normal. An astute agent will order the status certificate (about $100-$125) well ahead of time. It is important to know however that there is a limited shelf life on status certificates and if the listing extends longer that a month, it is recommended to get an updated version. Many management companies now have the capability to deliver the certificate digitally which will also shorten the 10 day time period for delivery. The reality is that not every agent is ordering a status certificate ahead of time. Buyers are submitting clean offers (no conditions) knowing full well that a seller will favour their offer over any offer with a condition, unless it is for substantially more money.

So what could go wrong? If you can imagine it…it can go wrong. For the most part, very little can go sideways if the unit owner owes back maintenance fees or taxes because proceeds from the sale would pay those off on closing, but illegal uses or unapproved renovations could put a buyer in serious jeopardy by requiring them to return the suite back to the previous condition. Recently I had heard about a buyer who bought without a status review only to find out later that the unit had suffered a serious fire. While the unit had been completely restored the buyer was deeply traumatized by this information because of a major fire in her home growing up. The craziest story I have heard was of a condo owner who used a concrete saw to open up a load bearing wall in their condo! Many years ago I delivered a status certificate to a lawyer on behalf of a buyer I was working with. The Lawyer came back quickly with this recommendation…”I would not buy in this building even if you gave the unit to me for free”. The small boutique building was deep in debt, had a couple of lawsuits pending and required extensive window replacements and as a result a special assessment was being considered. In another building, the management company had stolen all the reserve funds which hadn’t been caught because the company hadn’t provided yearly audited statements as required. Other buildings have class action lawsuits against Kitec plumbing, other condos have special assessments to top up their reserve funds or do elevator replacements or underground parking resurfacing. These Special assessments are not limited to older buildings in need of updates or repairs either. Occasionally new buildings quickly realize that the maintenance fees needed to effectively run the building are not sufficient. Higher fees have a considerable impact on value of the units as well as financing qualifications for purchasers.

Moving forward, agents need to explain the ramifications of not including this clause in an offer. There are extra things you can do, like google the address, call the agent of a recent sale and ask them if the certificate revealed anything, ask neighbours, and dig as deep as you possibly can. Even then, that may not be enough.

Mark McLean is the Broker/Manager at the Bosley Real Estate Queen St W office, the Immediate Past President the Toronto Real Estate Board and a director at the Ontario Real estate Association. The opinions expressed here do not reflect the opinions of TREB, OREA or Bosley RE.

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25
Apr

Smaller Condos, Changing lifestyles

I have been lucky enough to get to a bunch of new condominium launches in the city over the last few months and with the exception of a few, I would say that on the whole developers are getting more and more creative with their designs, architecture and interiors. Marketing companies, the machines behind the condos, are coming up with some great names and slogans all meant to capture our imaginations. The goal in all this is simple; get the customer into the door and sell them a condo. It’s not rocket science.  I’ve probably seen a thousand different floor plans and surprisingly the layouts are all fairly standard.  What is evident is that suite sizes are getting smaller. 20 years ago, a standard one-bedroom suite was 700+/- square feet today its’ more like 450 square feet. When you think about it, the reasons are clear; it costs more to build so in order to build affordable units you need to build them smaller. When it is less expensive to buy, more first time buyers can get into the market.

Well, having smaller suite sizes is all well and good, but I believe there are fundamental changes in the design of these suites that need to be addressed. It is clear that when you live in a small apartment you need to shift your lifestyle accordingly. Think for a moment about appliances. The diminutive condos being built today offer 30” fridges and stoves, and 24” dishwashers.  It seems absurd to have full size appliances when smaller ones could free up more living space.  Today, there are many manufactures who build smaller appliances for smaller homes. They require less space and use less energy. Builders will argue that they get better deals when they buy in bulk but who is actually driving the sales here?  I think it’s the builder who has the ability to demand smaller appliances for smaller units.

Of course the big challenge in all this is getting the purchasers to buy into changing their lifestyles a little. A smaller fridge means shopping for the next few days and not the week or month. With rising food costs, maybe we should be adapting a more European lifestyle anyway. Less food going to waste means less food in the dumpster too.  Today we don’t necessarily consider how appliances impact our lives, we just take them for granted, but in 50 years there is no question that we will be living in a much different world.  How we purchase and consume food may, in fact, cause us to re-evaluate our appliance needs.

19
Apr

Water and Waste in Toronto 2061

Last weekend I took #1 son to the Royal Ontario Museum in an effort to occupy a busy guy on a cold and wet weekend day. We stumbled upon a great exhibit aptly entitled “Water”. It was an interesting diversion. According to one of the displays, Canada has the third largest fresh water supply in the world, coupled with a much smaller population. On average we consume 87 gallons of water a day, but here is a strange but true fact, there is actually 29 million gallons of water available to each and every person in Canada. Based on that statistic, I think we are going to survive just fine.

So why am I mentioning this? Well its’ not so much the water we use that concerns me, its’ the water that dump back into the system. First of all, let me say that I am not a militant environmentalist. I actually don’t consider myself all that “green”. I drive a Yukon but at least its’ a hybrid so lets’ just say I’m green with a small “g”. I’m actually way more pragmatic and tend to focus on what all this water use will mean in the near future.

Consider a recent survey released by Unilever and RBC and featured in the Globe and Mail a few weeks ago. “Nearly three-quarters of Canadians admit in a new survey they treat their toilet like a garbage can, flushing down food, hair, bugs, cigarette butts and other items they should throw away in another manner. Each flush wastes six to 20 litres of water, meaning the continued use of household toilets as trash cans significantly adds up, with potentially serious implications for Canada’s water supply.”

As anyone who has sailed in the Toronto Harbour can attest to, in the few hours after a big rain storm, the harbour is absolutely littered with waste from the streets including what we sailors refer to as Balloon Fish (you would call them used condoms). The reality is that when we have a big storm, the city cannot deal with the additional waste so it bypasses the treatment plants and goes straight into the lake. One word….Gross.

Now imagine if you will, what will happen in 20 years when Toronto has 1 million more condo units in the downtown core. That means, at the very minimum 2 million more people adding to the treatment plants on a daily basis. All of a sudden, the idea of limiting water use, or more specifically waste water, seems quite important. So we are faced with some choices. First we can invest heavily in upgrading our sewer systems (read- digging up the existing decades old sewer pipes on your street), build better and more efficient sewage treatment plants, or attack it from the source, which is to limit how we use our water. Already households are being retrofitted with wireless water meter reading devices, but this is simply a way to pay for the water we use. It doesn’t really address how we use it. While probably a next to impossible task, perhaps it would be better to monitor and meter the waste we push out rather than the water we consume.

I think a better system, one that can be initiated now, would be to install mini water treatment plants in residential and commercial buildings. These plants would capture grey water, scrub it and then recycle it for use in toilets, and irrigation. The use of grey water is not a new idea. It is currently used in many areas around the Globe, from private homes to areas with water supply shortages.  Here is a diagram of how a basic grey water system works except that instead of directing water into a planter bed, it is used to flush toilets. Perhaps we will need to keep the lid down so Fido doesn’t drink from the bowl. Its’ time we thought about it.

Special thanks to Carl Lindstrom of Greywater.com for the diagram.

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