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Kat’s Blog
Selling Your Home to Avoid Power of Sale

When homeowners are unable to make their mortgage payments, the most common solution for mortgage lenders in Ontario is to use the power of sale process to sell the property. Power of sale is a legal remedy that allows the lender to sell the mortgaged property and recoup their investment. When a property is sold under power of sale, the first to be paid are the real estate agents, lawyers, and other people who helped to process the sale. Secondly, all registered mortgages are to be paid off in the order in which they were placed on the property. Finally, any remaining money that remains after paying off debts and fees must go to the former owner of the property.

Unfortunately, the fees incurred in the power of sale process can be very high, and in many cases, there is no money left for the homeowner. A far better solution is for the homeowner to take action immediately upon receiving the initial set of power of sale documents. Ron Alphonso is an Ontario mortgage broker, who specialises in stopping power of sale situations. Ron lets his clients know if they can refinance their mortgage, or if selling is the best option. If selling is the best option, Ron connects the homeowner with a specialised power of sale real estate agent. If you need help with a power of sale, you can contact Ron at ron@mortgagebrokerstore.com or via phone at 416-499-2122.

This article was provided by http://mortgagebrokerstore.com/
and http://powerofsalesontario.ca/

Ontario Fair Housing Market Plan – is it time to sell?

Ontario’s newly-announced Ontario Fair Housing Plan is likely to have a cooling effect on the GTA housing market in the near future.

The plan that got initialized by the three levels of government introduces potential limitations on vacant properties, a new 15% Non-Resident Speculation Tax and new rent control measures.

Rent controls will be expanded on buildings built after 1991 retroactively to April 20th, 2017. It will restrict landlords to increase rents only by the rate posted in the annual provincial rent increase guideline. Presently, only buildings built up to 1991 fall under rent control. The downside of rent control is that it directly effects the supply. Tenants will face less accommodation options yet available units will be more expensive to start with.

Providing it passes the legislature, the Non-Resident Speculation Tax will be effective retroactively to April 21st, 2017. However, many economists are sceptical about the impact the tax will really have on GTA prices. Foreign buyers are popular scapegoats, but according to statistics, they are only responsible for no more than 5% of Toronto market now.

The biggest problem facing the Toronto market is low supply. Developers run into bureaucratic hurdles every step of the way starting with approval wait times that can take up to 5 years in Toronto.

Concerned about the upcoming legislation, Toronto Real Estate Board issued the following message: “TREB strongly believes that public policy decisions with regard to the housing market should be evidence-based and supported by empirical data. In this regard, it is not clear that the issues targeted by the policies announced today are fully understood at this point, nor is it clear how effective these policies will be, or if they will have unintended outcomes.”

Here is a link to the official Ontario Fair Housing Market Plan: https://news.ontario.ca/mof/en/2017/04/ontarios-fair-housing-plan.html)

Reporting the sale of your principal residence to CRA

April is income tax month, and I’d like to remind all my clients that Canadians who sold their homes in 2016 are now mandated to report the sale to the Canada Revenue Agency. In order to claim your principal residence exemption, your income tax return requires basic information such as date of purchase, proceeds of deposition and a plain description of the property. You won’t have to pay tax on any gain from the sale of your principal residence. However, you have to make sure you follow the new rules of reporting the sale, otherwise you can face penalties up to $8,000. These new provisions will allow the CRA to keep track of the amount of real estate transactions and to detect wrongful tax activity. According to the Canadian Real Estate Association there were 536,118 homes sold in Canada through MLS system in 2016.

Toronto Short-Term Rental Condo Restrictions

Many of my investor clients have recently been asking me about short-term rental regulations for their units.

Last year City of Toronto started looking into regulating short-term rentals, such as Airbnb, to align its regulations with Vancouver and New York. For the time being the city is dealing with short term rentals on a case-by case basis.

In March 2016, one such cases resulted in a charge against a short-term rental host in North York due to an old municipal by-law requiring a minimum short-term rental of 7 days.

However, a more prominent step has been taken in December when an Ontario court ruled in favour of Ottawa condo corporation against an Airbnb host. According to the ruling, a single-family restriction was breached by owners who rented their unit through Airbnb, expedia.ca and hotels.com. Justice Robert Beaudoin wrote that the owners, “who have leased their unit, on a repeated short-term basis in a hotel-like operation, are in breach of the declaration.” This court decision sets a precedent for further rulings against short-term rentals that are in violation of their condo rules.

New short-term rental bylaws are expected to be introduced this year. They will most likely regulate the rental market and add a requirement for income tax registration. My advise for investors is to keep in mind that condos are governed by the rules set out in the declaration, hence a review of such rules might help to determine whether or not short term rental is the right option for your unit.

Protecting yourself with a financing condition

The new mortgage rules that recently came in effect are making it tougher to obtain the necessary financing for some buyers. And although it’s tempting to present a “clean”, no-condition offer on a house you really desire, there are a number of reasons to step back and to consider adding a financing clause to your offer.

A bidding war on a home you really like can be a stressful experience and that puts buyers under pressure to make their offers as attractive as possible. I find most buyers are under the impression that a mortgage pre-approval guarantees their financing. They forget that most pre-approvals are conditional on an appraisal. Since homes in today’s hot market demand the top dollar, a lot of appraisal figures are coming short of the final selling price. Unfortunately, it takes most buyers by surprise AFTER the deal is firm, and in some instances, too close to closing.

Buyers also tend to overlook other conditions that can effect their final loan approval. Some of these conditions may include the verification of income, employment, down payment, insurance, payments of the debts, etc. It’s the most beneficial for buyers to satisfy those conditions as soon as possible and to make sure their lawyer receives the mortgage instructions from the lender in a timely manner.

My best advise is to have a financing condition in the offer and to work closely with your mortgage broker to avoid any stress on closing.

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HomeLife/Realty One Ltd.
Real Estate Brokerage*

501 Parliament St. Toronto, ON M4X 1P3

Mobile: 647.225.2426
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Fax: 416.922.5808
E-mail: kat@katanderson.ca

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