Summary: Advertising Guidelines for Real Estate Agents in Ontario

As a real estate agent in Ontario it is important to understand the various statutes and regulations that are applicable to the way in which you advertise your services. The Real Estate Committee of Ontario (RECO) has published various documents on advertising guidelines which contain important information on the minimum requirements that must be met within advertisements, the prohibitions that apply to advertisements, and finally, the consequences that are associated with non-compliance.

The guidelines are a helpful way to ensure that your advertisements comply with the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sched. C, (REBBA) and Ontario Regulation 580/05 under the Act, which is the Code of Ethics for realtors. The most notable change in the new guidelines is that they do not contain any requirements pertaining to contact information. Also, there are no restrictions in relation to words that are used to describe a real estate sales “team”.

It is important to understand that advertising practices of realtors are not limited to the scope of these two advertising laws, but that there are other federal, provincial and municipal laws which may apply. For example, the Competition Act, the Personal Information Protection and Electronic Documents Act (PIPEDA), trademark and copyright statutes, provincial consumer protection legislation, and applicable municipal by-laws.

What are the minimum requirements that must be met?

The Code of Ethics sets out four minimum requirements that must be included in all forms of advertising. These requirements are outlined in section 36 of the Code and are as follows:

1. Identification of the registrant: the name of the registrant (salesperson, brokerage or broker) must be clearly and prominently placed in the advertisement. This relates to the size and legibility of the printed name, the location of the name in relation to other elements of the advertisement, the frequency that the name is used, when the name is used, and how quickly the name is referred to.

2. Identification of individuals: the name that is used to identify an individual realtor, broker, or salesperson must be the same name that is registered with RECO. If two registrants share a common last name (related, married etc.) they are permitted indicate this jointly (John & Mary Smith, Brokers).

3. Identification of brokerage: realtors must include the name of the brokerage that they are employed by, and this name must be the same as the one registered with RECO.

4. Description of the registrant: when a particular registrant is identified, the specific description of what the registrant does must be included. The following conditions apply:
a. a salesperson must use the terms “salesperson”, “real estate salesperson”, “sales representative” or “real estate sales representative”;
b. a broker must use the terms “broker” or “real estate broker”;
c. a broker of record must use the terms “broker of record” or “real estate broker of record”;
d. a brokerage must use the terms “brokerage” or “real estate brokerage”; and
e. when multiple registrants are identified in larger advertisements and listing these titles would take up to much space or create clutter, the registrants involved are permitted to include a symbol such as an asterisk to denote that the description occurs throughout the advertisement and applies to all.

If you are unsure of what the registered name on RECO is you can confirm this information on MyWeb, or through RECO’s website at www.reco.on.ca.

What are the prohibitions that apply to advertising?

Specific prohibitions pertaining to advertising are included in various sections of REBBA 2002, as well as section 36 and 37 of the Code of Ethics. The main prohibitions are as follows:

1. Registrants must not use terms that could confuse the audience about the registration status of the registrant. For example, terms such as “sales agent”, “sales associate” or “sales consultant” are not permitted to be used.

2. Registrants must not include anything that could indicate the identity of parties that have been involved in the transactions they have completed, unless written consent has been obtained from that party. This consent can be obtained independently, or a registrant can include a condition within the customer service agreement or the terms of a representation agreement.

3. Registrants must not include anything in the advertisement which could be used to identify a particular property that they are associated with, unless the brokerage has the written consent of the property owner (whether it be the buyer or seller).

4. Registrants must not include any details of the agreement regarding a real estate transaction (such as price) unless written consent of all parties has been obtained.

5. Finally, as outlined in Section 37 of REBBA 2002, there are general prohibitions against including any “false, misleading or deceptive statements” and/or inaccurate representations. Basically, as outlined in the guidelines, “you must say what you mean, and mean what you say”.

If you fail to comply with these requirements and prohibitions you will be contacted in writing by the Registrar who will inform you of the non-compliance and identify the issue. They will request that you take the appropriate actions to correct the errors identified and inform them of when the corrections have been made. If the registrant fails to correct the advertisement, formal action may be taken by the Registrar. This could include sanctions imposed by the Discipline Committee, a formal compliance order issued by the Superior Court of Justice, or prosecutions issued at the Provincial Offences Court.

All of this information can be obtained directly from RECO’s website, along with more in depth descriptions and various visual demonstrations of both correct and incorrect advertising. There are a number of resources available to real estate agents, such as an Advertising Checklist and Advertising Guidelines, which should be referred to and can be found at the following website: RECO Advertising Guidelines.

The content of this blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

Top List of Issues from Summer 2012

1. Surveys
Some examples of clauses that are commonly used which can create problems include:

“Vendor will provide a survey”.

This is assuming the vendor has the original survey to provide. If not, the purchaser can insist on one being obtained costs approx. $600.00 to $900.00 for a simple residential survey. The requirement to obtain could delay the closing date.

“The seller agrees to provide, at the seller’s own expense, a copy of an existing survey of the property showing the current location of all structures, buildings, fences, improvements, easements, rights-of-way, and encroachments affecting the property. The seller will further deliver, on completion, a declaration confirming that there have been no additions to the structures, buildings, fences, and improvements on the property since the date of this survey”.

Unless survey was recently obtained by the current owner, the existing survey likely would not show all improvements and/or additions such as decks, pools or property fences. Including the language “at the vendor’s/ seller’s expense” can be misleading when the vendor did not intend to provide anything beyond what was already in their possession.

“The seller agrees, at his own expense, to provide a legible copy of a survey for the property.”

Seems innocent enough. Legible means all numbers can be read. Not so easy when it is a photocopy of a photocopy. By saying at own expense you have included a willingness to spend money to obtain. This often results in a request to obtain a new copy, which can be done through Land Survey Records Inc. that maintains an online site where you can obtain an existing survey at an approximate cost of $150.00. The website where this information can be obtained is: http://www.landsurveyrecords.com/

Examples of safe clauses that can be inserted in an Offer to Purchase a residential property is:

“Attached to this agreement is a copy of the information available that depicts the property boundaries.”

“Immediately upon acceptance, the vendor will provide any relevant documents in their possession that depicts the property boundaries on the property, including but not limited to, a survey if one is available.”

2. Condo Common Fee
Be sure to update this as the budget is passed or even better add language like $200.00 or as adjusted pursuant to the Status Certificate.Be aware of special assessments a status certificate is only $100.00 and should be obtained when you are listing to avoid any surprises.

Common issue which is set out in the status certificate is if any items have been replaced by the owners without proper consent or even with consent but now becomes the responsibility of the owner and no longer part of the common expenses. Watch for owners having replaced windows and/or doors.

3. Shortsale
Avoid a shortsale by investigating title and finances when listing.
Pull parcel registry – at the land registry department in Barrie $8.00 to pull parcel registry (this is the typical cost)
Obtain the relevant instruments, which cost 50 cents per page. This would include the deed to ensure title is correct, and confirm owners named on title, any mortgages or other liens registered.
Do executions search against all owners’ names for $11.00 each. This search is based on the municipality where the property is located and will identify any claims that will be required to be released prior to the property being sold. The sooner this information is known the easier it is to rectify.

4. Fixtures and Chattels
To avoid any problems spell it out. An example I encountered there was a dishwasher removed and the seller’s lawyer told me it was a large appliance that needed to be listed and not a fixture. The result was the old removed dishwasher was dumped on my client’s front lawn in response to my letters. Grey areas are big screen televisions, bbqs hooked to propane from the building.

5. Alarm Systems
Two times this summer the alarm system was removed when it should not have been because it is clearly a fixture. When on contract, as both these were, should be listed as a rental item. When in doubt insert under rentals and insert after “if applicable”.

6. Power of Attorney
Be aware that lenders are very cautious about allowing the purchaser to use a power of attorney. Some say NO way. Some say OK if you have been a customer with an account at the branch for a year or some other time limit. Some allow it to be used to sign up and obtain the mortgage but not allowed for closing. The power of attorney will need to be provided with the agreement and actually registered prior to the closing. If anyone is signing using a power of attorney that should be clearly noted by inserting after the name of the person signing “as Attorney for _______”

7. Vermiculite
If the house to be inspected is 20 years or older you should ensure that the home inspector retained is qualified with identifying vermiculite insulation. I have had three properties where this was an issue this summer. First you need to have a home inspector that will investigate for this. Once it has been identified in the property the home inspector can either follow the protocol provided by the lab or you can retain a consultant. An advantage of home inspector taking and submitting the sample is the cost. A disadvantage is the home inspector will not have the expertise to read the report or recommend how to resolve the problem. A rough cost estimate for removal and reinstatement for an attic of a 1200 sq ft home is $8,000 to $10,000. It is important to note that if it is in a location that is not the living area, Health Canada recommends not disturbing it and there is no requirement for removal. Once it is known it is something that would be considered a “material fact” in my opinion it is required to be disclosed. If the vermiculate is in the living area it should be removed and the removal in a living area is more expensive to remove as well as to reinstate.

This article can also be accessed on Advocate Daily’s Website by clicking here.

If you have any questions or comments about this article please feel free to contact me at shari@elliottlawyers.com

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

Home Ownership Program

This blog is intended to increase awareness about the Home Ownership Program that is provided by the Social Housing Department of the County of Simcoe. This week I have encountered my first purchase in which the purchasers are already taking advantage of this program. It aims to assist those individuals currently renting who have a low to moderate income to purchase an affordable home. The program includes 10% down payment assistance in the form of a forgivable loan, which is a loan that is made with the understanding that if the borrower meets certain requirements, repayment of the loan will not be fully required. A guide outlining the details of the program as well as where to obtain an application can be found by clicking here. This is Great information to be able to pass on to those renting and wanting to get into home ownership. I suggest you check it out.

Tenant Legislation Encourages Abuse

It is important to insert a clause into your agreement of purchase and sale for a property that contains a tenant. This is true even when it appears the tenant is leaving before the closing date. As can be seen in the recent decision D’Amico v. Hitti, 2012 ONSC 4467 out of the Ontario Superior Court of Justice, there are many “unscrupulous residential tenants” that will take advantage of the Ontario justice system by manipulating the law and taking advantage of legal loopholes. Justice Ted Matlow recognized this problem when reviewing this case, and a number of other similar cases, which prompted him to call for changes to be made in relation to how landlord and tenant disputes are approached and handled within Ontario.

In this case, Melissa D’Amico (“Landlord”), owned a small building located in Toronto, which she decided to utilize as a rental property. She entered into a residential lease with Rony Hitti and Hitti’s company Toronto Bespoke Inc. (“Tenant”) on October 11, 2011. Pursuant to the lease, the Tenant agreed to pay a monthly rent of $3,600.00 per month, for a twelve-month period, commencing on October 15, 2011. Immediately after the lease was executed, the Tenant and his spouse moved into the rental property.

Almost immediately, the Tenant refused to pay their Landlord their rent for the first month. As a result of their refusal, the Landlord had her real estate agent serve the Tenant with a Notice to End a Tenancy Early for Non-payment of Rent dated October 21, 2011. The Tenant then continued to fail to pay rent to the Landlord, which prompted her to initiate proceedings and file an application with the Landlord and Tenant Board (“Board”) on November 8, 2011, seeking an Order for the termination of tenancy, a payment of the rent that was in arrears and an eviction of the Tenant.

At the hearing at the Board, which took place on November 28, 2011, the Tenant offered the Landlord a cheque for the entire amount that was outstanding up to date, and further convinced the Landlord to withdraw the application. As a result, the application was withdrawn. However, on December 5, 2011, the bank notified the Landlord that the payment had been stopped and the cheque was dishonoured. At this point, the Landlord hired a legal representative who initiated proceedings and filed another application with the Board on December 20, 2011. The Board scheduled this second application to be heard on January 23, 2012.

On January 25, 2012 the Board rendered an Eviction Order that had the following ramifications:
a. a termination of the Tenant’s tenancy, and a requirement to vacate the premises on or before February 5, 2012, unless the Eviction Order was voided by the Tenant by paying the amount that was owed to the Landlord;
b. a requirement to pay $12, 265.99 which represents the amount of rent and other compensation owed, as well as the charges related to NSF fees;
c. a requirement to pay $118.36 per day from the date of January 26 2012 until the date that the Tenant vacate the unit; and
d. a requirement to pay $170.00 for repayment of the cost of filing the second application with the Board.

On February 5, 2012, the Tenant provided a non-certified cheque to the Landlord in the amount of $11,045.00, which was sufficient to void the Eviction Order. However, once again on February 8, 2012, the bank notified the Landlord that the cheque was not honoured due to insufficient funds. The Landlord then attended the Court Enforcement Office and paid the fee of $318.00 to file and enforce the Eviction Order. Shortly afterwards, the Landlord found out that the Tenant had filed a motion with the Board to void the Eviction Order. The Tenant submitted a sworn affidavit confirming payment in the amount of $11,045.00 was provided to the Landlord. The Void Order was granted, and the Eviction Order was not permitted to be enforced by the Landlord.

On February 10th, 2012, the Landlord brought another motion to set aside the Void Order, which was scheduled for March 7, 2012. On March 8th, the Board issued an order on consent, which required the Tenant to pay $14,963.00 to the Board in trust on or before March 12th.The Tenant did not do this, and on March 16th the Motion to Set Aside the Void Order was granted and the Eviction Order remained in full force and effect. However, on the very same day, a final appeal was undertaken by the Tenant in another attempt to prolong the hearing and ultimately extend the amount of time that they could remain in possession without payment of rent.

As of the date of the final hearing the Tenant owed $25,445.00 to the Landlord. When the hearing was finally concluded, it was determined that the Tenant’s “appeal raised no bona fide question of law, that it was totally devoid of merit, vexatious and an abuse of process”. Justice Matlow was very unimpressed by the Tenants improper conduct, and awarded costs fixed at $13,072.12.

Justice Matlow also stated that he was hoping for this decision to be considered by individuals who were in a position to amend the rules that are followed by the Court in relation to landlord and tenant issues, specifically when they are an obvious abuse of the system. Some of the amendments that he suggested should be considered include restrictions on the right of appeal in residential landlord and tenant cases and a requirement for a leave to appeal to be obtained before appeals can be brought forth.

The full case can be accessed by clicking here.

You can also take a look at an article written in the Focus Section for Law Times which makes reference to my article by clicking here.

This article can also be found in our September Newsletter by clicking here.

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

Joint Tenancy Versus Tenancy in Common

There are two common ways to take title to property when two or more people are involved in the transaction. They include Joint Tenancy and Tenancy in Common.

1. Joint tenancy involves ownership by two or more persons of the same property, all of whom hold title to the property and share equal ownership of the property.
2. Tenancy in common is a relationship in which each of the tenants involved has a separate and divisible interest in the property, which may or may not be equal.

As a real estate agent it is important to be aware of the various factors that must be considered when facing a situation in which there is a joint tenancy or tenancy in common relationship, specifically in situations where one of the tenants passes away.

Where there is a joint tenancy, the surviving joint tenant is automatically entitled to obtain title to the property, and therefore, entitled to sell the property to someone else without any personal representatives of the deceased intervening with the transaction. This key characteristic of joint tenancy is referred to as the ‘right of survivorship’, which means that the full interest in title to a property will transfer over to the surviving joint tenant upon death of the other joint tenant. When acting as the real estate agent for the buyer, and purchasing a property from the surviving joint tenant, it is important to ensure that the seller provides and registers a Proof of Death Certificate on title to the property.

Unlike joint tenancy, a tenancy in common relationship does not have the same ‘right of survivorship’ implications. In this type of ownership relationship, when one individual dies, the death operates to sever the relationship. This means that each party involved would only retain their share of the property in question, and the deceased persons share would be transferred to whomever the deceased had previously determined would be entitled to it, often dealt with by way of a Will and if there is no Will, then the rules set out under the Succession Law Reform Act, R. S. O. 1990, c. S.26 will be applied.

The content of this blog can also be found on Advocate Daily’s website by clicking here.

The content of this blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

If you have any questions or comments about this blog please contact me at shari@elliottlawyers.com

Termination of Joint Tenancy or Tenancy in Common

In situations where one of the owners involved with a joint tenancy or tenancy in common relationship would like to sell their share of the property, and the other owners do not, there are different options available to the individual to terminate their interest in the property. When title is held as tenancy in common, any owner involved is entitled to deal with their interest or share in the property in whatever way they choose, without permission of the other owners. However, it is often difficult for one of the multiple owners to sell the portion they own separately, as there are not many buyers who are looking to purchase a partial interest in a home.

With both joint tenancy and tenancy in common, one solution is to sell their portion to one or more of the other owners. However, if the parties are unable to reach an agreement about how the property should be divided, the tenancy may be terminated by filing a ‘partition action’, which can force the sale of a property.

Pursuant to the Partition Act, R.S.O. 1990, c. P.4 an application may be made to the Ontario Superior Court of Justice by anyone who has an interest in a property and wishes to bring an action for partition. The action would request that the court force the sale of the property and divide the net proceeds of the sale between each party, which is referred to as a partition by sale.

As a real estate agent, if you are assisting multiple parties to purchase a property you would be doing your clients a favour if you suggest they consider the terms of an exiting agreement at the time of purchase. There are many examples of public court cases between family members and friends when one party wishes to sell and the co-owners do not. The moral of the story is to ensure that a written agreement is prepared at the time of the purchase that contains provisions pertaining to what should happen if issues surrounding the sale of the property were to arise in the future.

A full article on this topic can be accessed in our September Newsletter by clicking here.

To subscribe to our newsletter click here.

The content of this blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

What to do if the property you are purchasing has a tenant

In a file that I recently encountered I made a suggestion for an amendment to the agreement of purchase and sale due to the fact that there was a tenant at the property in question. If you are making an offer on a property that has a tenant, even if you have been told the tenant will be moved out before the closing date, it is advisable to insert the clause set out below to ensure you do not inherit the problem on closing but rather are free to move on. This is important because there are many “unscrupulous residential tenants”, as discussed in a recent case D’Amico v. Hitti, 2012 ONSC 4467, who will try to extend the amount of time that they vacate their rental property by engaging in improper conduct that abuses the process of the justice system. This case will be further discussed in upcoming newsletters.

The clause that should be inserted is as follows:

This Offer is conditional upon the Seller being able to provide vacant possession on the Completion Date. If on the Completion Date the tenant has not vacated the premises, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. Upon notification by the Seller to the Buyer that the tenant has vacated the premises this condition shall be deemed waived and the Offer shall be firm and binding provided this is the last condition to be fulfilled. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller.

It is important to address this matter in the agreement of purchase and sale in order to avoid potential problems getting rid of the tenant in the future. You can also check out my blog and/ or the July 2012 newsletter which contains an article on what to do when the property you are purchasing has a tenant. The blog (which also contains a link to the July Newsletter) can be accessed by clicking here.

The content of this blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

First Time Home Buyers’ Tax Credit

What is the Home Buyers’ Tax Credit (HBTC)?

The HBTC was introduced in Canada’s Economic Action Plan in 2009 to help first-time home buyers pay the costs that are associated with buying a home. These costs include things such as legal fees, disbursements, and land transfer taxes. The HBTC is a non-refundable income tax credit that is calculated based on a $5,000 amount for a home that qualifies and was purchased/acquired after January 27th 2009. Individuals that are eligible to receive this credit can collect up to $750 in federal tax relief, and both you and your spouse/common-law partner can share the credit that is received (only the maximum of $750). The credit rate is calculated by multiplying $5,000 by the lowest personal income tax rate of the year, which is 15% for 2012; therefore, the credit would be $750.

How do I claim the First Time Home Buyers’ Tax Credit?

In order to claim your tax credit you must complete Schedule 1 when you file your Canadian federal income tax return. On line 369 of Schedule 1 you enter $5,000, which is the maximum amount that can be claimed. This amount can be split between you and your spouse/ common-law partner, or if there are two individuals that are both entitled to the amount because the home is jointly owned, than both individuals can split the amount, but the total must not exceed $5,000.

Is the HBTC connected in any way to the Home Buyers’ Plan (HBP)?

Although the two are similar, and have some coinciding eligibility requirements, they are not connected to one another. This means that if you participate in the HBP this will not affect your eligibility for the HBTC.

You can read this full article in the August 2012 Newsletter by clicking here. If you have any questions about this blog, I invite you to contact me at shari@elliottlawyers.com.

The content of this blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

RRSP Withdrawal for Home Purchase (Home Buyers’ Plan)

The Home Buyers’ Plan is a plan that allows a home buyer to withdraw funds from most registered retirement savings plans (RRSPs) in order to buy or build a qualifying home either for you, or a relative that has a disability. Some RRSPs that do not allow any withdrawals to be made include some locked-in or group RRSPs, but more information about this matter can be obtained from the individual who issues your RRSP.

In any single calendar year up to a maximum of $25,000 can be withdrawn from the RRSP. You have the option to withdraw a single lump sum or you can make a series of smaller withdrawals throughout the year, as long as the total amount of withdrawals does not exceed the maximum amount of $25.000. It is important to note that before any amount is withdrawn from your RRSP, the RRSP contributions must be in the RRSP for at least 90 days, or else they may not be deductible. Any withdrawals that are made have to be repaid within a period of 15 years, and each year you will have to make a payment until the HBP balance is completely paid off. If you fail to repay an amount in a certain year then the amount will be included in your income for the year in which the withdrawal was made. You should consult with your financial advisor before withdrawing any funds for this purpose.

The content of this blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

You can read this full article in the August 2012 Newsletter by clicking here. If you have any questions about this blog, I invite you to contact me at shari@elliottlawyers.com.

Land Transfer Tax: Refund for First Time Homebuyers

When an individual is purchasing their first home, they are eligible for a Land Transfer Tax Credit (LTTC) which is a refund of the cost of land transfer tax in the province in which the property is being purchased. The rebate is available regardless of the purchase price but only to a maximum of $2000.00. This rebate applies to both new and resale homes and there is no interest paid on the refund. For example, a home with a purchase price of $200,000 the tax payable is $1725.00 and would be totally refunded. A home with a purchase price of $300,000, the tax payable would be $975.00. I have a LTT calculator for use on my website under “Practice Areas: Real Estate Law”, located at the bottom of the page. This calculator can be used to determine the LTT for your clients.

Any taxpayers that meet the eligibility requirements may claim an immediate refund at the time of registration. Some lawyers leave the rebate application up to the clients. Normally, lawyers prepare the application as part of the closing procedure and obtain the rebate immediately. If the refund is claimed at time of registration it may offset the land transfer tax that would ordinarily be payable. If the refund is not claimed at registration, then the refund may be claimed directly from the Ministry of Finance and the application must be made within 18 months after the date of closing. No interest is paid on this refund.

It is also important to note that any applications made for a refund payment are subject to audit by the Ministry of Finance and charges/ fines can be laid if a person attempts to obtain a refund by deceit, falsehood or any other fraudulent means. The Ministry would investigate the matter further and determine whether or not there was “willful default”, and if so, there would be a 25% penalty (up to a maximum of $500.00) coupled with interest payments dating back to the date of registration. The homebuyer would also be required to give back the refund that was received under fraudulent means. Further information on this topic can be found in Section 7 of the Land Transfer Tax Act, R.S.O. 1990, c. L.6.

The content of this blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

You can read this full article in the August 2012 Newsletter by clicking here. If you have any questions about this blog, I invite you to contact me at shari@elliottlawyers.com.