We are now in the second half of July 2010 and the busy spring market for real estate is over.  In fact the slowdown occurred early with statistics showing reduced sales for June. It had been busy all through Fall and Winter and people have been nervous entering summer in anticipation of HST and higher interest rates.  Banks  made small downward adjustments in long term rates but Canada’s official interest rate rose .25% in June and another .25% on July 20.  That should maintain a degree of market interest as people try to buy while they can get low interest mortgages.  The major banks began to raise longer term mortgage rates during the last week of March and again in mid April as the long term bond rate went up due to speculation of higher rates coming.  Most people were expecting that the official Bank of Canada interest rate would begin to rise June 1st and soon after but these were small adjustments from a rate close to zero.  There is good reason to hold rates low for now when problems in Europe and concern over restraint in China have hurt the Canadian dollar and commodity prices for minerals and oil which are so important to Canada’s economic performance.  This continuing world recession will slow pressure for rate increases in Canada. High interest rates would help raise the Canadian dollar above the US dollar and hurt the Canadian manufacturing sector which is the main part of Ontario’s economy.  With oil prices generally on the rise and concerns about the danger of offshore drilling in the US, we can expect the Canadian dollar to rise to dangerous levels due to higher valuation of Canadian tar sands oil reserves even without an interest rate increase over the next several months. Much of the real estate activity has been driven by fear of more increases in interest rates.  People want to lock into a long term mortgage while rates are still fairly low.

The real estate market was hot in our local areas of Pickering, Ajax and Whitby and other popular places in the City of Toronto.  The mild weather and absence of snow in Southern Ontario certainly helped keep the market alive in the winter and give an early start to the cottage market.  This busy winter market was unprecedented and the big question now is what will happen after the current market summer slow down.  Recent developments have shown that the economic crisis is far from over and unemployment is a very serious concern and could get worse so the recovery is a fragile one.   July 9th statistics gave a false positive reading to employment in Ontario by including temporary jobs created by the G8 and G20 meetings and the pre-HST boom. While technically the recession was over by the end of 2009 the recovery remains questionable. There is a huge Government deficit both Federal and Provincial which will take many years or major Government spending cutbacks to repay once the effort is made. Right now interest rates remain at historic lows and incentives for first time buyers have brought new buyers to the real estate market. From September 2008 there was a severe slow down in real estate sales which continued until about May in the spring of 2009. There was a rush to be ahead of the Ontario HST which adds 8% provincial sales tax to the GST of new home purchases (over $400,000), all real estate commissions and all legal fees which started in July 2010.  Utility and fuel costs have risen because of the HST. Higher taxes associated with home ownership, purchase and sale have already slowed the market. The 905, 519 and 705 areas are significantly benefiting from the City of Toronto’s Land Transfer Tax which adds considerable cost to a home purchase in Toronto  (except for first time buyers).
The auto sector is doing reasonably well now and jobs have been preserved at GM and Chrysler who were in bankruptcy situations. Ford has remained strong, their sales are solid and they are keeping most Ontario plants open. In Oshawa people at GM are working overtime and extra shifts to build new Camaros.  Impala production in Oshawa has been renewed along with new Cadillac models and the made in Oshawa Camaro continues to be produced below demand levels.  GM is benefiting greatly from increased sales in the growing market of China. Toyota’s vehicle problems have helped GM as well and GM is now actually making a profit.  Even if there are a few small increases in mortgage rates the real estate market in Ontario is likely to continue in its strength.  The February 16 announcement by Canada’s Finance Minister Jim Flaherty of tighter rules for qualification for an insured high ratio mortgage have made a greater than originally expected impact on the market and not just by keeping borderline qualified buyers out of the market. With the rise in long term interest rates the new rules force home buyers to qualify for a mortgage at the high 5 year posted fixed rate even if they are selecting a discount, variable or lower short term rate. Many who can easily afford to buy a home are not qualifying because of the requirement that they qualify for the highest rate mortgage now offered.  All of these factors combined should lead to a stable but slow market for the remainder of 2010 and into 2011. Right now it is definitely a buyers’ market.

Condominium sales remain strong and fear of there being too many new ones being built is unfounded as condominiums reflect a lifestyle change which is beginning to extend to the baby boomers. There has been little activity in the cottage market for two seasons but we predict a busier cottage season this year but no boom.  Lower priced cottages have been selling as have those with price drops.  Reasonable pricing is the key as the market has many cottage options in Ontario with a wide range of prices. The best cottage investments would be properties close to the GTA where the drive is not too far.  Buyers for all types of properties need to be cautious of overpaying and need to think of the future when they may have to renew large mortgages at a higher interest rate.

I predict that the Ontario, Canada real estate market will remain slightly positive through 2011 despite the HST and a rise in interest rates.  Canadians always seem to adjust quickly to new taxes. I do expect a slowdown but no “crash”. Most home buyers now are locking into longer term mortgage rates that are much higher than short term rates.  I believe you will save if you get a lower variable rate now as I predict any rise in rates will not be as large as the current spread between long term and variable rates. What you do depends on your willingness to take risk and how important certainty is to your budgeting.

Miskin Law Offices are ready to assist you in home sales, purchase and mortgaging from our conveniently located Whitby and Peterborough locations. We handle the legal work and help you make decisions at no extra cost if you seek our advice. Our main office in downtown Whitby on Brock St. just north of Mary St. has free parking.  Our Peterborough office near the Lift Lock, in Time Square at Hunter and Armour also has free parking for our clients.   Both Murray Miskin and our main real estate staff member, law clerk Arlene Nicholson, now live in Peterborough and are regularly at the Peterborough office in addition to being in Whitby most days. We will accommodate your needs when it is time to come in for your real estate transaction. Our fees are highly competitive and we are happy to explain them to you. Our standard fee is presently $650 on a purchase and $550 on a sale (plus GST and expenses).   We do not recommend closing a purchase and sale on the same day.  You will save much trouble plus moving costs if you close your purchase ahead of your sale. Bridge financing is very inexpensive too.  Beware lawyers who quote a fixed price because there are almost always extra costs involved in the form of expenses such as registration charges and taxes. Almost always our price will be lower or we will agree to match the advertised fixed or “all inclusive” price of other lawyers. Very few lawyers can beat our personal service and reasonable cost for the legal work involved in real estate transactions. As part of our service we will review an offer before it is signed or made firm,  for our clients’ protection with no extra charge. Call Arlene at our office, Extension 119, with your questions.

Last Will and Testament

The Miskin Law Office prepares Wills and Powers of Attorney for individuals in Ontario, Canada. This is done after a first meeting with a lawyer and the client to assess a client’s situation and needs in order to best meet the individual requirements and wishes of the client.  The purpose is to simplify future estate issues to ensure a smooth transition of assets which will reduce the need for future legal services and also plan for reducing taxes payable after death.  We encourage clients to prepare wills that do not lead to family disputes which can ruin relationships and cost a lot of money.  Where there already is an estate dispute we work with clients to resolve the issues sensibly and avoid costly court proceedings.  If there is a dispute mediation is a big part of our law firm’s range of services and we represent clients in Estate Mediation. Murray Miskin also acts as mediator in estate disputes. Estate litigation can be very costly and time consuming and we usually refer complex or unresolvable disputes to lawyers who specialize in such litigation. The best thing is to avoid disputes with properly prepared legal documents. A Will is a document that you can sign with your binding instructions as to who will receive your assets after your death. It names an Estate Trustee (formerly known as Executor) whose responsibility after your death is to manage the estate in accordance with your wishes. You may also propose guardians for your underage children and indicate preferred funeral arrangements in your will. We often prepare specialized wills for people who have children with disabilities or special needs. Until your death the will may be revoked or changed so long as you are mentally competent. Minor changes can be done by Codicils which cost less than a new will. Wills should be redone immediately on a marriage break up. If you do not have a valid will the law determines what happens to your estate without consideration of your preferences.  This may be fine for many families where there are no common law relationships.  If you are living common law or there are children of prior relationships involved it would be wise to obtain legal advice immediately. A Power of Attorney for property is a document you can sign which gives power only in your lifetime over your assets to another person whom you may designate. That authority may be set up to be effective any time or only if you become incapacitated. It may be restricted to dealing with or not dealing with certain matters. You may have more than one person designated so both or either may sign for you. You may name alternates and specify whether the attorney has a right to be paid for what they do. It does not take away your own rights to sign on your own behalf.   A Power of Attorney is a critical document to have should you ever become totally incapacitated or suffer a loss of mental competence.  A Power of Attorney expires on your death.

You may also sign a separate  Power of Attorney for Personal Care where you authorize another person  (again with an alternate) to make health care choices for you when you are unable to do so yourself. This is sometimes called a Living Will. In it you may state your preferences on treatment issues and life support questions.  Many people who want these documents prepared have strong opinions on the possible choices their doctors and family members will have should they become sick to the point where they may have no hope of recovery and may become a burden on others.  Some people do not want their next of kin to decide what to do but instead they may have  a close friend they wish to involve in decisions.  You may also name a doctor or type of doctor you wish to have assess you and give advice when critical decisions must be made.

We strongly emphasize the need to use a lawyer to prepare any of the above document to ensure it is valid and does what you want it to do.  Cheap Will and Power Attorney kits are available but pose a serious danger, in that, what you prepare will be invalid unless properly done following strict legal requirements.   For the money you save doing it by yourself it is not worth the risk.  In preparing these documents we always have a lawyer meet with you for as long as necessary to advise you and take careful instructions to make sure the document prepared is what you want it to be. We generally bill and expect payment by cash, cheque, Interac or credit card at the first meeting.  It is important to have a fully qualified and experienced lawyer discuss your intentions with you to ensure that the will is done properly.  We do not believe it is sufficient to give instructions to a member of the lawyer’s staff in a meeting or by phone.  It is important that the lawyer assess capacity issues at a meeting to prevent future disputes of wills. We sometimes require clients to get a doctor’s note on capacity ahead of signing a will. At a later meeting the documents are signed in accordance with Ontario legal requirements with the lawyer present to oversee, explain the document and discuss any last minute changes.  In cases of complicated wills with unusual provisions or special requirements due to personal circumstances we may charge extra and we will let you know and decide how to proceed at our no cost or obligation meeting in advance of actual will preparation.

Our usual fees (including basic planning for the estate and including disbursements) are set out below with 13% HST added to any fee: Wills: one will $250, a pair for $400
Codicils: fee for one is $100, $150 for a pair
Power of Attorney: one document of each type is $150, a pair of each type are $250

The above fees are discounted when multiple documents are prepared.  Clients pay the fee on a first meeting to discuss wills and then the documents are reviewed and signed on a second visit. WE ENCOURAGE YOU TO GET YOUR WILL DONE SOON. NOBODY KNOWS WHEN THEIR WILL IS GOING TO BE NEEDED OR WHEN THEY MAY LOSE CAPACITY TO SIGN A WILL OR POWER OF ATTORNEY.

Some clients require personalized estate planning for their special situations.  We may refer you to accountants or other experts to help with planning. This will cost a little extra but probably save later costs in taxes paid by the estate and provide more structured plans for future generations to preserve wealth.  We can assist you with up to date information about recent changes in tax structures.  Please call and make an appointment for Estate Planning.  The first meeting is free and with no obligation.Plan carefully for the next generation.

“The practice of law at the consumer level is a highly competitive area,” says Murray Miskin of Miskin Professional Corp. in Whitby.

“Ultimately, the lawyers will probably end up making less money because for one thing, there will be fewer deals in the purchase and sale of homes, so they’ll be doing less volume of work. But also, they may have to make concessions to clients because of the competitive nature of fees.”

Miskin’s real estate practice includes residential home sales throughout the GTA and into cottage country via his firm’s office in Peterborough.

He worries not only that the HST will stymie any possible resurgence of home sales but also that the construction industry could suffer due to the higher tax rate on new home purchases.

From his vantage point in Whitby, he was front and centre during the uncertainties swirling around the Oshawa General Motors plant.
Without any confidence in jobs and the economy, people stopped buying property.

“Last winter was bleak for the real estate market. Real estate agents weren’t making any money. Real estate lawyers weren’t making any money,” he says.

“A lot of lawyers had to lay off their real estate staff and they’re just starting to come back again. So this past year has been very difficult for real estate practitioners until the market started heating up again.”

He suggests that if the economy continues its recovery, the Bank of Canada will have no choice but to raise rates by next summer, which would coincide with the new tax.

While he acknowledges “the real estate market is a very volatile market,” he says lawyers might need to become creative and offer clients deals or discounts to get them in the door.
That’s exactly what his firm is doing.

“What we’re saying to our clients is if they come to us with a deal that closes after the HST is in effect, we will adjust our fee so they don’t have to pay extra,” says Miskin.

“With new homes, there’s often a delay in closing, so we’re trying to give the client some stability where even if there is a delay, they won’t have to pay us more. We want to get the deals in and offer some help to the clients who are hurting also.”

But within the city of Toronto, Miskin isn’t optimistic that the market will easily absorb the tax.
“It may put a permanent damper on the market just like the Toronto land transfer tax has put a permanent damper on the Toronto market,” he says.

“The Toronto land transfer tax has been good for the GTA, anywhere outside of Toronto where it’s less expensive to purchase because of the land transfer tax, and I think people will factor all of these taxes into their decision-making process.”

The Miskin Law firm discounted the extra cost in legal fees from HST on real estate  transactions brought to our office before April 1, 2010. Eligibility for this discount has expired.

Ontario Canada Real Estate Lawyer

This home buyers guide to real estate terms was prepared by Ontario Law Society’s title insurer Title Plus.  The following definitions are not legal definitions, they are provided to enhance your understanding of what may be involved in your home purchase.

Agreement of Purchase and Sale (APS)
The APS is a legal agreement that offers a certain price for a home. The offer may be firm (no conditions attached) or conditional (certain conditions must be fulfilled before the deal can be closed).

Amortization
The number of years it takes to repay the entire amount of a mortgage.

Appraisal
An estimate of a property’s market value.

Appreciation
The increase of a property’s value over time.

Assessment
The value of a property, set by the local municipality, for the purposes of calculating property tax.

Assumable Mortgage
A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments.

Blended Mortgage
A combination of two mortgages, one with a higher interest rate than the other, to create a new mortgage with an interest rate somewhere between the two original rates.

Bridge Financing
Money borrowed against a homeowner’s equity in a property, usually for a short term, to help finance the purchase of another property or make improvements to a property being sold.

Builder
The company responsible for construction of the houses in any particular subdivision. The builder buys the lots from the developer and then builds the dwelling.

Chattels
Usually, chattels are personal effects, which you take with you when you move. Examples are: furniture, art work, etc.

Closing Date
The date on which the sale of a property becomes final and the new owner takes possession. (It is the real estate transaction’s completion, when the parties involved agree that all legal and financial obligations have been met, and the deed to the property is transferred from the seller to the buyer.)

Condominium
A residential structure in which apartments or townhouses (units) are individually owned as pieces of real estate while the land and common facilities are jointly owned.

Condominium Corporation
Operates the condominium and the land.

Common Areas
Those areas in a condominium development that are enjoyed by all residents.

Conventional Mortgage
A first mortgage issued for up to 75% of the property’s appraised value or purchase price, whichever is lower.

Counteroffer
One party’s written response to the other party’s offer during purchase negotiations between buyer and seller.

Debt Service Ratio
The percentage of a borrower’s gross income that can be used for housing costs, including mortgage payment and taxes (and condominium fees, where applicable).

Deed
A legal document that conveys (transfers) ownership of a property to the buyer.

Developer
The company responsible for taking raw land, subdividing it into lots, bringing in the services (such as sewers and roads) etc., and then selling the lots to the builder.

Easement
A legal right to use or cross (right-of-way) another person’s land for limited purposes. This right belongs to someone other than the landowner. A common example is a utility company’s right to run wires or lay pipe across a property.

Encroachment
An intrusion onto an adjoining property — such as a neighbour’s fence, storage shed or overhanging roof line that partially (or even fully) intrudes onto your property.

Equity
The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner’s financial “stake” in the property.

Foreclosure
A legal process by which the lender takes possession and ownership of a property when the borrower defaults on the mortgage obligation.

High Ratio Mortgage
A mortgage for more than 75% of a property’s appraised value or purchase price.

Land Transfer Tax
Payment to the provincial government for transferring property from the seller to the buyer.

Lien
Any legal claim against a property, filed to ensure payment of a debt.

Mortgagee
The lender.

Mortgage Insurance
Government-backed or private-backed insurance protecting the lender against the borrower’s default on high ratio (or other types) of mortgages.

Mortgagor
The borrower.

Multiple Listing Service
A system for relaying information to Realtors about properties for sale.

Ontario New Home Warranty Program
See Tarion Warranty Corporation

Prepayment Privilege
A mortgage feature that allows the borrower to repay a portion or all of the principal balance with or without penalty. This privilege is frequently restricted to specific amounts and times.

P.I.T.
Principal, interest and taxes. Together these make up the regular payment on a mortgage if you elect to include property taxes in your mortgage payments.

Principal
The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated on the principal amount.

Status Certificate
A written statement of a condominium unit’s current financial and legal status.

Subdivision
One large piece of land under one ownership being subdivided into several lots to be sold to many purchasers.

Tarion Warranty Corporation
A private corporation set up by the provincial government to administer the Ontario New Home Warranties Plan Act. The act is designed to protect consumers buying new homes by ensuring that they get a quality home. All builders in Ontario must enroll every home in the program.

Variable-rate Mortgage
A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a larger portion of the payment is applied to the principal.

Vendor-take-back Mortgage
When sellers use the equity in a property to provide some or all of the mortgage financing in order to sell the property.

Zoning Regulations
Strict guidelines set by municipal governments regulating how a property may or may not be used.