HST changes will effect new homes over $400,000

The HST comes into effect tomorrow and the following 2 things will effect Ontario's real estate market:

1. New homes with a value of $400,000 or more will see a change. New homes with a value under $400,000 will be uneffected. The resale of old homes will also be unaffected.

2. The taxes on real estate commissions will increase from 5% GST to 13% HST.

There is however a rumour in the works that Ontario may cut HST by 1% by 2011 by cutting back on the PST portion of the HST, lowering the total HST to 12%.

At the same time expect to see more tax breaks for your income taxes. The HST change was designed in combination with a slew of income tax reductions which will allow more lower and middle-class people in Ontario to pay their bills, their mortgages and have more spending money. The HST is "virtually revenue neutral".

The people whining about the HST are mostly rich people who will now have to pay more for the following services:

Dry Cleaning Service.
Maid / Cleaning Services.
Massage Services.
Tobacco & nicotine products.
Golf fees.
Gym memberships.
Lessons for sports (ie. soccer, ballet, karate).
Fitness trainers.
Hair salons & barbers.
Vitamins.
Live theatre tickets.
Repair & renovation work by Plumbers, Electricians, etc.
Landscaping and Snow Removal.
Hotel Rooms.
Taxis.
Funeral services.
Legal fees.
Domestic Travel in Ontario (railways, air & bus).
Magazine subscriptions.
Private resale of cars (with registration).
Ice rink rentals.
Hunting/fishing licenses.
Gasoline and diesel.
Natural Gas & Electricity.

The final two aspects of it is to encourage more people in Ontario to add solar panels, windmills and/or geothermal heating for their homes) and to think more wisely about their automotive purchases.

On the plus side the following will actually decrease in price!

Alcohol.
Movie tickets.
Sporting event tickets.

I frankly support the HST. I totally support anything that puts more of the tax burden on the rich and makes it easier for lower and middle-income earners.

Is the Construction Industry Corrupt?

With all the scandals with houses that are built with defects (not up to code and end up costing new homeowners way more than expected to have the house fixed) there is a growing movement of angry homeowners who are upset with what they see as corruption in the construction business.

Shoddy workmanship.

Phony promises.

Construction costs that go way over budget.

And then there is Mike Holmes, the messiah of the construction and renovation industry in Canada. He actually stands up for homeowners and pushes for "construction done right - the first time!" But for all his efforts in trying to get the housing industry in Canada to change their ways the Canadian government ignores the issue, ignores the pleas of homeowners and is probably accepting bribes from executives in the construction industry.

And this isn't just an issue for the construction industry, there's also the rather unregulated renovation industry and people who do their own renovations. Lets take the following case as an example:

Cotton Vs. Monahan

In April 2006 Walter and Shelley Cotton bought their dream home in Brantford, Ontario. Afterwards they found out their new home wasn't up to the building code and it was going to cost them an extra $85,000 to fix it.

The old owners, Gary, Laurie and Carey Monahan, had shown the Cottons the Sellers Property Information Statement (SPIS). The form lists the extensive renovations done to the house without any building permit. The Cottons and their real estate agent went over the document and each of their questions was answered properly.

The Cottons told their real estate agent to submit an unconditional offer without a home inspection clause, despite the agent’s advice against doing so.

After the deal was closed they had an inspection which revealed numerous problems which violated the building code. It took 6 months to fix everything and was an absolute chaos.

The Cottons then sued the Monahans for the cost of the repairs, arguing the hidden defects were actively concealed. The Monahans responded they answered all the questions in the SPIS and that the new buyers failed to exercise due diligence by conducting a home inspection.

Legal fees for the 10-day trial were approx. $100,000.

The judge quoted the following line from Bora Laskin in a 1960 Law Society lecture: “Absent fraud, mistake or misrepresentation, a purchaser takes existing property as he finds it . . . unless he protects himself by contract terms.”

The judge also quoted a 1979 decision wherein a seller aware of defects must disclose them to the purchaser only if they are dangerous or unfit for living in. Otherwise there is no obligation to reveal hidden defects.

Thus trying to sue for hidden defects in the house people have to prove those defects are actually dangerous and were knowingly concealed by the seller.

The judge ruled in favour of the Monahans, deciding they had accurately and truthfully filled out the SPIS form.

The SPIS form is published by the Ontario Real Estate Association and is apparently the single most frequent cause of Ontario real estate litigation

Lessons Learned

#1. Never sign a SPIS form. They're unnecessary and can only cause future lawsuits.

#2. Get a freaking home inspection before buying the house! Talk about stupid.

If you're going to buy a house you can't take people on their word. It doesn't matter if its a new house or an old one with lots of renovations. Have it inspected for faults first.

An inspection can also dramatically lower the price of a house. Once people know it has so many thousands of $$$ in repairs needed it becomes evident that the house really isn't worth as much as they claim it is. It would make sense to make an offer (after the house has been inspected and a contractor has made an estimate as to the repair costs) that deducts the cost of repairs.

"And every one that heareth these sayings of mine, and doeth them not, shall be likened unto a foolish man, which built his house upon the sand:

And the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell: and great was the fall of it."

- Matthew 7:26-27.

Mortgage Calculator

I found this mortgage calculator online.

Free Mortgage Calculator

Parking, Parking and Bicycle Parking

When you buy a condo its often assumed that you also getting a parking spot. This is not always true however.

You may have to pay extra for your parking spot. On a monthly basis as opposed to outright buying the parking lot when you buy the condo.

Thinking to save money (and get some exercise) you might also say "Hey, I'll just get a bicycle instead and sell the old car."

But do your research first because some buildings don't have the greatest parking spots for bicycles either. Some buildings are bicycle friendly, to both their residents, their guests and whomever happens to be visiting the neighbourhood...

Its called "Being Neighbourly" or just plain nice.

But some building managers are just plain jerks. They want their bike racks to be for residents only so they stick them in the parking garage... or alternatively they do have it outside, but they chop off bikes of people who don't live there. (Often using a sticker to determine who is actually a resident.)

See 565 Sherbourne Chopping Off Bikes.

Its not very neighbourly at all. Its arguably illegal because it involves stealing people's bikes right off the sidewalk. (And bicycle theft often leads to a rash of bicycle thefts in the area, because some people figure its okay to just steal someone else's.)

When it comes to parking you want everyone in the neighbourhood to get along. You don't want people fighting over parking spots, whether they be residents or guests. Its smart just to have extra parking spaces for both cars and bicycles. The moment people start fighting for a parking spot that is when things start to get ugly.

You know... vandalism, scratched cars, potatoes in the exhaust pipe, your car set on fire...

So when picking a condo make sure you understand the condo's policies on both parking for you and for guests. The last thing you want is a feud that is going cost you more than you bargained for.

"Good fences make good neighbours."

Humour - Lousy Real Estate

A doctor vacationing on the Riviera met an old lawyer friend and asked him what he was doing there.

The lawyer replied: "Remember that lousy real estate I bought? Well, it caught fire, so here I am with the fire insurance proceeds. What are you doing here?"

The doctor replied: "Remember that lousy real estate I had in Mississippi? Well, the river overflowed, and here I am with the flood insurance proceeds."

The lawyer looked puzzled. "Gee, how did you start the flood?"