Expanding the Meaning of Latent Defect
A latent defect is a defect in a property you are buying or selling that cannot be detected through a reasonable but thorough inspection of the property. That’s not a perfect definition, but good enough for this article. A hole in the wall behind a door or damaged shingles on a roof are not latent defects because if you look carefully when inspecting the property, you will find them. A cracked foundation behind drywall in the basement is likely latent because you cannot reasonably remove the drywall in the course of an inspection. A seller has the legal obligation to disclose latent defects to a buyer … but only if the seller knows about them. If the seller doesn’t know about the cracked foundation, then the buyer has no remedy against them if and when they later discover it.
There are now cases going on where people are attempting to expand that legal concept. Whether it will succeed is unknown. For example, what if you purchased a property with a convicted pedophile next door. The seller knew about it but didn’t tell you. It may have even been motivation for the seller to move. This is not a latent defect under the traditional existing definition. However, what other remedy do you as a buyer have? The costs to proceed through trial could be very expensive. The odds are perhaps against you. On the other hand, the law is constantly evolving. It will be interesting to see how this argument eventually turns out. Remember that even if the original trial court agrees and finds liability on the part of the vendor for failing to disclose this information, an appeal court can overturn it. In them meantime, as a buyer …. ask more questions about the property you are about to purchase and the surrounding neighbourhood. Consider asking if the seller has any material information about the neighbourhood that affects the property. Also be prepared that a seller may refuse to answer such a vague and loaded question.
Wintershines Festival
I took my son and neice to the Potash Corp Wintershines Festival Sunday. It gave me the excuse to go for a sleigh ride. The driver was friendly and when I commented on his harnesses, he told me he makes them himself. I asked him for permission to take his photo. He agreed but suggested his horses were better looking.
My Father’s Pocketwatch
From my grandfather to my father to me
My father gave me this watch a short while before he died. His name was Thorsten. His father, Per, had given it to him. One of the first things my mother did after she started working when I was in grade 7 was to get this watch repaired so it would run again and purchase a stand for it. It’s almost a year as I’m posting this that dad passed away .. at about the time shown. It was just him and me. I’m glad I was there.
Zeiss 35 f2
Mortgage Amortizations Shortened in Canada
Today, the federal government / finance minister announced that they will be changing CMHC rules to help discourage homeowners from overextending themselves on mortgage loans. As soon as the policy is implemented shortly, CMHC will only insure mortgages with amortization periods of 30 years or less. 35 year insured mortgages will no longer be available if you have less than the required 20% down to avoid CMHC insurance. The “amortization period” is the number of years it will take to pay off your loan completely.
Not that long ago, new CMHC’s rules were announced so that when applying for a CMHC mortgage, borrowers must qualify as if they were obtaining a 5 year fixed rate mortgage (based on rates posted by the Bank of Canada), even though they may be signing up for a variable rate mortgage with a lower interest rate. As of the date I’m posting this comment, RBC’s variable rate is 2.85% but their posted 5 year rate is between 5.19 and 4.14% depending on whether you qualify for the special offer they have advertised. (The Bank of Canada 5 year rate that controls all of the lending guidelines is presently 5.19%)
Personally, I don’t mind seeing this change to shorten amortization periods. I was raised by my parents to avoid debt. They grew up during the depression so I can certainly understand why they felt that way. My legal career started when interest rates on mortgages were between 19%-21%. Many people were being foreclosed as they could no longer afford their homes or investment properties. It would be sad to see people lose their homes en masse again if interest rates rose a few percentage points, forcing borrowers into default because they could no longer afford to pay.
Using a 5% interest rate calculated semi-annually and a loan of $200,000.00, the monthly payment would be $1002.84 if the loan was amortized over 35 years. Shortening the amortization to 30 years only brings the payment up $65.00 per month to $1,067.38. That’s p[robably not a real burden for most people, given that the extra money goes directly to your equity and will allow homeowners to pay their loan off 5 years sooner. That’s $23,400 of extra payments/forced savings over the first 30 years ($65 x 12 x 30) to avoid paying $60,170.04 over years 30-35 if you took a longer amortization (5 x 12 x $1002.84). $37,000.00 of savings is not a bad return for the effort! Of course having to pay an extra dollar now is more expensive than a dollar many years later, but there are many people who will spend whatever they have in their hands. For that type of person, a slightly larger monthly payment that goes all to equity anyway can be a blessing in disguise.
Amortizing that same loan over 25 years would cost $1163.21 per month.
Another change applies if you want to refinance your home. Previously, you could get a CMHC insured mortgage for up to 90% of the value of your home on a refinance … whether your were just switching banks or perhaps staying with the same lender but getting additional money to pay off some credit cards, etc. That 90% will be reduced to 85% as of March 18, 2011. It is also designed to discourage high levels of consumer borrowing.
Blooming Cactus
Trang's Cactus
Cactus Buds
Emerging Cactus Bud
My wife has a green thumb when it comes to flowers. I may be good at keeping the trees and grass healthy but when it comes to flowers, I don’t have her skills or patience. Her flower beds outside are all full of snow, but she is happy to see her cactus plant blooming pink and white flowers once again after Christmas. Taken with my NIkon D200 and Sigma 150 f2.8 macro.
Selling on MLS without A Realtor – Sort Of
Most people have probably heard that there will be changes allowing people to sell without a realtor on the MLS system. The voluntary agreement was reached because of some pressure from the public and Canadian Competition Bureau. Most people don’t really understand how it will work. This is my understanding. Previously, only realtors could list a property on the MLS. That will not change. However, realtors will now be able to offer a flat fee service to list your property on the MLS and the rest is up to the owner to sell themselves. In theory this was possible before but realtors wanting to offer that type of service stated they were being denied the ability to list properties on the MLS on that basis. Whether that was true and the extent is beyond my knowledge. In other words, this change does not mean a private home owner will be able to make their own postings and amendments to postings on the MLS. They will still need a licensed realtor to do that. For those that want complete control over their listing, private companies such as saskhouses.com will likely continue to be a very popular choice. Some private sellers may opt to list on both systems to get the best overall exposure. However, it is now more feasible than before for some realtors to offer limited services rather than full services when listing a property. Whether this will affect overall realtor commissions in the future or not remains to be seen.
Migrating Snow Geese
Migrating Geese near Marshall Saskatchewan
PST on Sale of Business Equipment
I do a lot of sale of business transactions. Most often, buyers and sellers are not aware that the province of Saskatchewan requires the buyer to pay PST on any used equipment they are purchasing from the seller when they are purchasing the assets of a business. The seller has 2 options. They can charge and collect the PST directly from the purchaser. Then they must remit it with their next PST return. Alternatively, the seller can let the buyer self-assess and pay it on their own. That is usually the easiest for the seller. A buyer might want to follow this route when purchasing the business assets, expecting they might never be required to pay. However, if it is a new business starting up, the buyer will need to apply for a PST number. This request triggers the province to ask for the applicable forms to be completed and PST on used equipment must be remitted.
