Your identity – and your house – have been stolen! Without you knowing, the fraudster transferred ownership, placed a large mortgage on your dream home and left you with a nightmare.

Few realize the growing incidence of real estate fraud against what may be the most important asset we own: our home.”

What Happens

“People who have been targeted by real estate or mortgage fraud face the difficulty of reclaiming their identity. They are forced to fix their credit rating, incur significant costs and time regaining their title to defend their ownership rights, or being burdened by a mortgage they haven’t arranged. Real estate fraud in the US costs between $4 billion and $6 billion annually, with over 1300 cases being investigated by the FBI, and the incidence of real estate fraud in Canada is on the rise.”

Be warned says Terrence Belford of the Globe and Mail. ‘Booming markets bring not only higher home prices but often a significant increase in residential real-estate fraud.” Quoting Ray Leclair, Vice President of TitlePlus, “we see instances of fraud rise with booming markets, especially in major cities.”

Leclair adds that “real-estate fraud is not confined exclusively to any upsurge in prices. “It can also take place years after you have bought a home, at a time when homeowners would not expect it.”

Not In Canada Eh?

Belford notes that “while there are no hard statistics on real-estate and mortgage fraud for Canada, in the United States estimates of annual losses run between $4-billion (U.S.) and $6-billion a year. In June, 2008, the U.S. Federal Bureau of Investigation had 42 working groups investigating 1,380 cases – and that was after the U.S. real-estate bubble burst.”

Why Don’t We Know This?

Belford points out that according to Mr. Leclair, “industry statistics suggest mortgage fraud alone results in annual losses in the hundreds of millions of dollars which in many cases results in little publicity because banks are concerned about maintaining customer confidence – they just quietly absorb the losses.”

Did Your Realtor® Advise You?

We all want to be protected from problems. Being advised that such a problem exists is a beginning. It should be part of your Realtors® ‘Have You Considered’ checklist.

The immediate solution to protecting yourself against Mortgage Fraud is Title Insurance. It is one of those costs that should appear on your list of to-does when you buy a home. Many local insurance brokers offer this protection service at a reasonable cost. Check it out! It could happen to you and the benefit by far, outways the cost.

Extended reading

• Belford’s Report
• Real Life Example in Richmond
• Law Society of B.C. Real Estate Fraud Alert June 2010

liberal quotes – direct marketing email: Hub International

If a buyer defaults before a deposit is fully paid, can the seller terminate the Contract of Purchase and Sale and successfully sue for the unpaid deposit money? It depends on the contract.

The Agreement

In Agosti v. Winter 1, a standard form Contract of Purchase and Sale 2 required a $10,000 deposit, “upon subject removal.” No other deposit requirements were added to the standard wording. The purchase price was $280,000. In Clause 2, the standard wording required all deposits to be paid to the brokerage in trust in accordance with the Real Estate Services Act.

The standard contract made time of the essence. It also provided that if the buyer failed to pay the balance due, the seller could terminate the contract, in which case:

12. … [t]he amount paid by the Buyer will be absolutely forfeited to the Seller … on account of damages, without prejudice to the Seller’s other remedies.

The Problem

Upon subject removal, the buyer failed to pay the $10,000 deposit and then told the sellers that she would not proceed with the purchase. The sellers terminated the contract and sold the property to another purchaser for $275,000, being $5,000 less than the first deal. The sellers then sued the buyer for the unpaid deposit and general damages. In a summary trial, the sellers sought judgment for the unpaid deposit.

The buyer claimed that since the sellers terminated the contract, they could not now rely on it to collect the unpaid deposit. According to the buyer, the sellers could only claim general damages, which in this case were $5,000, being the seller’s loss on the re-sale of the property.

What Happens

When one party breaches a fundamental term of the contract, the innocent party may treat the breach as repudiation, terminate the contract and sue for damages. Both parties are then discharged from further performance of the contract. The innocent party, however, retains any rights acquired up to that time. If, at the time of repudiation, the seller has acquired the unconditional right to a deposit that remains unpaid, the seller may collect it.

The Understanding

In Agosti, the British Columbia Court of Appeal dismissed the seller’s claim for the unpaid $10,000 deposit. Unless otherwise altered, the standard contract does not give a seller an unconditional right to the deposit when repudiation occurs. The standard contract does not say a seller is absolutely entitled to the deposit if the sale does not complete.
In the court’s view, if the sale does not complete, the standard contract does not make the deposit non-refundable or forfeit it automatically to the seller. Instead, the standard wording permits a seller to claim the deposit on account of its damages. The court said that, “If the damages are less than the deposit, the Seller is not entitled to the excess, but it is returned to the Buyer.” 3

The Result

In Agosti, the sellers were entitled to payment of the deposit when the subjects were removed. The standard contract said the deposit would be held by the brokerage or paid into court, pending resolution of the sellers’ claim. The amount forfeited to the sellers would be “the amount paid by the Buyer … on account of damages.” Assuming the sellers proved their $5,000 in damages, that is the amount of the deposit that would be forfeited to them.
Given the standard contract, if upon a buyer’s default, a seller wants the ability to terminate the deal and recover any unpaid deposit, the better practice is to give the seller an absolute right to the unpaid deposit by adding words making the deposit non-refundable. 4

The Author

Mike Mangan
B.A., LL.B.

1. Agosti v. Winter, 2009 BCCA 490 aff”g 2008 BCSC 1308.
2. British Columbia Real Estate Association, “Contract of Purchase and Sale” (January 2005).
3. Agosti v. Winter, 2009 BCCA 490 at para. 21.
4. Vanvic Enterprises Ltd. v. Mack, (1985) 66 B.C.L.R. 211 (BCCA).

* “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA, Larry Yatkowsky,Realtor® and YatterMatters makes no guarantees as to the accuracy or completeness of this information. **Header format – YatterMatters

What and Why

As a Notary Public I often find myself explaining to clients what surveys are and why they are required by their Banks as a condition of their mortgage.

Most Banks require Purchasers to have either a valid survey or title insurance. If you are buying strata property a survey is not required. A survey shows the measurements of the property lines and the location of the house within the property lines, any rights of way, and the location of any other permanent structures on the property. This is not to be confused with a subdivision plan which shows the location of all the lots on the street, a Survey only shows your lot and your house on it.

If the house is over the property lines or built on a right of way, this can jeopardize the Purchaser’s mortgage as this information must be relayed to the Banks before they will advance your mortgage funds.

If there turns out to be a survey problem, Purchasers can apply for title insurance and if the title insurance company is willing to insure the transaction with a survey defect on it, the Bank may or may not still fund the mortgage to close the transaction, depending on their own review of the situation on a case by case basis.

The Reason

This highlights the importance of having a valid survey before you purchase a house and even the value of making it a subject in your contracts of purchase and sale, but make sure you know the differences of the types of surveys out there.

Generally speaking a survey is good for mortgage purposes provided it is not any older than 25 years and no changes have been made to the original foundation of the property. A valid survey will have a date on it and the signature and seal of a licensed surveyor.

Courtesy Notaries of B.C.

THE THREE Fs

There are 3 common types of surveys, Forms, Foundation, and Final, the three Fs of surveys. Each have important differences.

A Forms survey is completed when the pegs are laid before the foundation is poured. It is required by the municipality when applying for a building permit. This type of survey will be marked “forms” right on it, but they are usually not acceptable for most Banks as forms can be moved and shifted around before the foundation is poured so they are not always accurate and usually too old as they are done when the house is built. These are usually available at the municipality offices for a minimal fee, but are usually not otherwise useful as most banks will not accept these surveys for mortgage purposes, so save yourself the trouble of making that trip to City Hall.

A Foundation survey is done when the foundation is laid, this is more reliable than the forms survey and is also marked “foundation” right on it, there are some banks that will accept this type of survey, but the majority of them will not as it usually doesn’t show all of the out buildings, such as garages.

The most reliable type of survey and the one accepted by all the banks is the Final survey, done after the house is completed and all the out buildings are completed as well, anything with a foundation under it will be shown on this type of survey, along with the location of all rights of way.

Once you have this type of survey it can be used every-time you need to refinance your mortgage or switch Banks, and can be passed on to new owners when you sell your property, provided it is not older than 25 years and no changes are made to the foundation.

It is a worthwhile investment to have a survey done for peace of mind and convenience as it may also be used to help you locate your property lines and rights of way if you are planning to put up a fence, shed, porch, or garage, to ensure it is done within your property lines.

Changes

If you are planning any other major renovations or construction projects that would change the size of your house you will need to get a more detailed survey done when applying for your building permit, this type of survey will cost considerably more to have done than a survey that is done for mortgage purposes only. For most people they will only need a survey for mortgage purposes, when they are buying an existing finished home, these types of surveys are very reasonably priced in comparison with title insurance policies.

If you are a Buyer and are not sure if you have a problem with a survey or if it is one your Bank will accept it is a good idea to have your legal professional review it for you. If it is substandard they can order a new one for you. A proper survey is a requirement prior to ‘closing’ your purchase and advance your mortgage funds on the completion date.

If it is a subject in your contract to have a valid and satisfactory survey, your Realtor or legal professional should review it for you to make sure it meets all the requirements before you remove this subject.

If you are a Seller or Realtor it is a good idea to provide a Survey to the Buyer if you have one, as part of the disclosure process.

Need a quick, reliable survey for mortgage purposes, I recommend Don from Westcoast surveys at 604-543-8665. Ask for a quote for your area. He’ll be happy to help.

Wanda Wong Wilson
– Notary Public -604-267-2215

*Disclaimer: All information Courtesy of Wanda Wong Wilson, Notary Public. Wanda can be reached at 604-267-2215

At present anyone can call themselves a home inspector. It is estimated there are 300 – 400 inspectors in British Columbia and while many are knowledgeable and conscientious, others are not.

Government Speak

“A home is the single biggest investment most British Columbians make, but financial risk can be the result of an incorrect or misleading report from an unqualified inspector,” said Minister John van Dongen. “Whether they’re buying their first condo or starter home, dream or retirement home, consumers need to have confidence that the person who is doing the inspection has the qualifications to make a professional assessment.”

Who’s In Charge

The Business Practices and Consumer Protection Authority (BPCPA), will register inspectors and will respond to any complaints from consumers.

When

After 31 March 2009, all home inspectors in B.C. will need to be licensed by BPCPA. However, they cannot apply for licenses until after February 27, 2009.

Need an inspector before then, be sure to ask whether they meet government requirements:

• Canadian Association of Home and Property Inspectors (BC)
• Applied Science Technologists and Technicians of British Columbia
• National Certification Program for Home and Property Inspectors
• Carry insurance
• Have had a Criminal record check

More information on licensing is available at Business Practices and Consumer Protection Authority.

Need a home inspection or have questions about home inspections email Mike via his site.

Mike Woodbridge

Woodbridge Inspection Inc.

*Mike originally qualified as an architect in England and is now a home and commercial property inspector based in Kitsilano.

**Mike Woodbridge assumes this information is deemed to be correct, but it should not be relied upon without verification.

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I’m always happy to answer your Vancouver Real Estate question. Call or send me an email Twitter or Skype me at YatterMatters.

Larry

*Disclaimer: Statistics Courtesy REBGV. While believed to e accurate they are not guaranteed.
** Numbers provided may vary as they are dynamically posted by the REBGV.

*** This is the first in a serious of posts about home inspections to be provided by Woodbridge Inspections Inc. YatterMatters assumes no responsibility for the accuracy of statements made by Mike Woodbridge or Woodbridge Inspections Inc. While believed to be accurate the information is not guaranteed and should not be relied upon without verification.

Preparation makes everything look easy!

Making the most of selling your Vancouver home takes effort.

1st Impressions

Vancouver’s very competitive market means nothing should be left to chance. Take every opportunity to make it right before you start.

“Honey-Do” List

To help maximize the Buyer’s experience follow these 10 quick tips.

1. Declutter your home
2. Hide your pets
3. Make yourself scarce
4. Don’t discount the first offer
5. Always negotiate
6. Out with the old
7. Remember curb appeal
8. Depersonalize your home
9. Aim for light and bright
10. Fix anything that’s broken

Thanks Lani

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I’m always happy to answer your Vancouver Real Estate questions. Call or send me an email Twitter or Skype me at YatterMatters.

Larry