Tips for Home Renovations:
- Get as many recommendations you can on the contractor you plan on using – do not be shy about calling references that the contractor provided as well. You must trust this person.
- Avoid contractors who demand a large down payment to buy materials – most reputable contractors maintain charge accounts with their suppliers, and this shouldn`t be an issue for them.
- Know exactly what needs to be done before you start your renovations or you may be steered towards spending more money than originally intended.
- Get every detail about your renovation written down – verbal agreements are hard to back up if something goes wrong in the end. A written estimate should include; A complete description of the work that will be done, the type and quality of materials that will be used, the project start and completion dates, itemized costs and the total price, a statement of any guarantees made by the contraction and the required method of payment. Avoid a contractor who refuses to do this.
- If you do not like one of the workers on site – talk to the head contractor about it. You hired them, and they are in your house, if you don’t trust someone, kick em’ out.
- All blank spaces on a printed contract should be filled with NA or NIL – Also, strike out anything you do not agree with, and make sure you and the contractor initial every single change. If there are lots of changes, you may request the contract be rewritten. To be safe, you could have a lawyer go over the contract before the start date.
- Make sure your contractor cleans up the mess at the end of each day. All the dust can add up and collect in your heating and cooling system which can be dangerous.
- Change your air filters during and after your home renovation, especially if you are having drywall work done. The dust can do real damage to the HVAC system.
- Be prepared to make a lot of decisions – right down to the cabinet handles and knobs. You may be sick of the whole process, but keep a positive mind. You don`t want to be kicking yourself for decisions you made a year prior.
- Do not make the final payment until every last thing is complete to your standards. Before the process starts, enquire whether or not your deposit or down payment is refundable, and if so, under what conditions.
Torrens Land Title System
The Torrens system has been in use in Alberta since 1887 – and its main purpose is to simplify land transactions and to certify the ownership of an absolute title to realty. This system does away with the need for a chain of title; tracing title through a series of documents. Today, a prospective buyer is not required to look beyond the record in the government-managed registry – providing an ease of service.
Most countries use one of three basic systems for land ownership and transfer. These are:
- Private Conveyancing: Documents are kept by the owner. Any person buying or selling this land, will require the seller to provide these documents going back over as many years as necessary to prove ownership of the land.
- Deeds Registration: All documents are sent to a central registry office, which indexes them under the same of the purchaser or grantee. The registry does not examine these documents or guarantee their legality.
- The Torrens System: A government office has custody of all original land titles and all original documents registered against them. Government staff examine and register the documents and issue the titles. The government then guarantees the accuracy of all the titles.
Torrens system follows three principles:
- The Mirror Principle: This refers to the “register” or certificate of title, which accurately and completely reflects the current facts about a person’s title. A title is free of adverse claims or burdens unless they are mentioned on the title.
- The Curtain Principle: The current certificate of title contains all the relevant information about the title. Thus, a potential purchases has nothing to worry about that is not being disclosed on the title.
- The Insurance Principle: This provides compensation for loss of rights through an Assurance Fund. The register reflects the absolutely correct status of the land, and if, through human error, a flaw appears and anyone suffers a loss, it is made right so far as money is able to compensate.
In other words the Torrens system helps buyers and sellers feel secure about conducting land ownership transactions; they do this by:
- Conclusive Evidence of Ownership: This is called the principle of indefeasibility. Because the government has records of all land titles and is responsible for cataloguing and preserving them, buyers are guaranteed their land purchase is exactly as the title describes
- Facility to Transfer: Title owners can transfer ownership to others more easily.
- Compulsory Registration of Titles: All titles must be registered in the governments land registry system. This ensures accurate records of all transactions are kept.
- An Assurance Fund: In the rare case that an owner is defrauded or suffers a financial loss due to some error in the land title system, an assurance fund is in place to compensate the owner for such losses. Suffering a loss in Alberta is extremely rare due to the accuracy of this system!
To conclude, the Torrens land title system is near perfect – extremely accurate, easy to use & cheap (Only $10 CAD to pull a title!) – no other land title system compares.
There is already much speculation about what is happening in the Calgary real estate market, both short term and long term, due to the recent flooding.
I want to provide you with a few facts, some speculation and then leave you with some thoughts and advice on what this might means as you think about your next move in the Calgary market.
Let’s start with the facts:
1. Many displaced people will need temporary accommodations until their homes are repaired or replaced.
2. Many contractors will come to Calgary to assist with the repairs and replacement of homes and will need accommodations.
3. Our rental market in Calgary was 1.2 per cent as of April 2013 (as stated in a Calgary Herald article June 20, 2013).
4. Calgary’s real estate market fluctuates wildly between highs and lows based on supply and demand.
5. We are currently waiting to see how many homes were affected by the flooding in Calgary and the surrounding areas. Whether these people want to sell or not, their homes are either unsalable for an extended period of time or at a much lower value due to “as is” condition.
6. Active listings for the Calgary Real Estate Board totalled 4,584 units in June, of which more than 660 units are listed in flood-affected areas (as stated by the CREB).
7. There is now a large demand for construction trades people in Calgary and surrounding areas.
8. Some insurance company’s temporarily halted providing insurance on homes in flood affected areas, which is required by mortgage companies to fund mortgages.
9. In some cases mortgage insurers are now doing full appraisals on high ratio funded homes in flood affected areas.
10. Many of the properties affected were condo buildings, the flooding may have created structural or electrical problems uncovered by current reserve funds have not allocated for and may not be covered by insurance.
Now some speculation…
1. Due to the large amount of displaced people and incoming trades coming to find work in Calgary and area, there will be a very large demand on an already tight rental market and vacancy rate. This could cause..
a. Rents to increase.
b. Rental properties becoming harder to find.
c. Investors to consider the purchase of more investment properties.
FACT: Last time we saw investors flood the Calgary real estate market in 2009 we saw home values decrease by 10%, caused by investors buying on sheer logic and without emotion.
2. This will place a shortage of qualified trades people in the housing industry both new and resale. This could cause…
a. New homes to take longer to complete for builders.
b. An increased activity in the resale market due to excessively long construction times.
c. Affected homes may take longer to come back as a viable supply to the Calgary resale market.
3. All real estate markets are driven by supply and demand. A large amount of homes/condos are off, or won’t enter, the market due to their damage caused by flooding. This could cause…
a. A diminished supply of homes for sale with a continued or increased demand of buyers to purchase causing the absorption rate to lower into an deeper sellers market.
b. A tighter condo market due to inability of buyers to obtain mortgages or large special assessments due to flood damage.
c. If normal buyers stay active in the market place this could falsely increase prices past where trending calculations place fair market value.
4. If sellers choose to sell their homes in “as is” condition due to relief or insurance funds not covering the cost of repairs from flood damage this could cause…
a. Flipping investors come into the market place to repair the homes and sell them at a profit, making purchase values far less, driving the average sale price down.
b. After initial depression of prices, once renovated resale homes start coming onto the market, average sales prices may spike again.
5. If homes continue to have issues getting home insurance financial institutions may decline mortgages on these residential homes on which could cause…
a. Firm sales to fall apart on possession day due to lenders not funding mortgages without proof of home insurance.
b. This could also cause a domino effect with the related purchases of the sellers.
6. Mortgage insurers will be more reluctant to insure high ratio mortgages (mortgages with less than 20% downpayments) on flood affected areas. This could cause…
a. Conditional sales to fall apart after acceptance due to the inability to obtain financing on flood affected homes.
7. A decrease in consumer confidence in the Calgary real estate market due to uncertainty temporarily, could cause…
a. Sales activity to temporarily slow,
b. Home prices to temporarily soften,
c. Buyers to permanently leave the Calgary market.
In my opinion…
1. It seems certain we will see a very tight rental market. This most likely will see a temporary increase in rental rates.
2. This will be a long road before we see the end of it. There are many things even outside the real estate market that will be effected long term due to Calgary’s flooding.
3. Anyone who tells you they can predict the outcome of the future real estate market has been alive since at least June 1929 or longer. Due to our semi arid desert conditions, this type of flooding is not common nor will our reaction to it be predicable.
1. Please do your homework prior to removing conditions on any home in Calgary and surrounding areas. Verify the approval of home insurance in flood affected areas prior to lifting financing conditions.
2. As a seller, consider non-disclosure of conditional sales due to a possibility of high ratio mortgages not being approved.
3. Be patient when it comes to relying on trades for repairs in homes. If you have purchased a home with anticipation of renovations, anticipate longer than normal job completion times.
4. If choosing to get into this market, be aware that with all investments comes risk. The real estate market is no different. We do not know what the future will bring. Be prepared to ride out highs and possible lows in the ongoing months to a year or longer.
5. Agents, be diligent. Do your homework so that your clients do not get caught in an undesirable circumstance.
6. If the worst happens and you are unable to complete on your legally binding contract due to unforeseen circumstances, consult a lawyer quickly.
The great thing about real estate is that it is based on supply and demand. With the inability to make more land, time (supply) is always, eventually, on your side. This too will pass. It may be months, it may be years, and in some instances it has been decades, but it will pass. It is impossible for me to predict the future but I will do all I can to answer any questions you have along the way.