I have been practicing law for over 35 years, but it seems I learn something new every day. Laws change and you need to be up to date in order to practice in a manner that protects both agents and clients. Here are five tips to assist you with what I hope will be a successful 2019.
1. Get everything in writing:
Whenever I assist a real estate agent with a claim made against them by a client, or from the regulator, a common request is to see all the signed documents –
especially written instructions from a buyer or seller whenever you are asked to make any changes on a listing, presentation of offers in a bidding war or the agreement of purchase and sale. Do yourself a favour this year to always document instructions you receive from a client, whether by a signed agreement, email or text, to make sure there is always a written record of every action you are taking, especially when prior instructions are being changed.
2. Rent control:
In Ontario, as a result of changes made on Nov.15, 2018, every new rental unit created on or after that date is no longer subject to rent controls. This means the landlord will be able to increase the rent more than the government increase in 12 months. If you act for a tenant in a new unit, you may want to consider adding a provision to the lease making it clear that any future increase will not be more than a specific amount, say five per cent, to protect your tenant.
3. Non-resident sellers:
If a seller is a non-resident, 25 per cent of the entire purchase price needs to be held back until the seller satisfies their income tax obligations relating to the sale. In some cases, this 25 per cent holdback can result in there not being sufficient funds available on closing to pay the mortgage on the property and the real estate commission. This is one of the reasons to always do the FINTRAC identification as soon as possible. By asking for a driver’s licence, you can usually determine right away that the seller will be here for closing. When the seller signing the agreement is out of the country, make sure you ask about residency as soon as possible.
4. Be extra careful with assignments:
I expect there to be more assignment deals this year, especially if buyers who purchased two to three years ago are now having difficulty closing. Make sure to make the deal conditional on lawyer approval as there are HST and other issues relating to when the original deposits and the profit are to be made payable. Also, you need to be careful to make sure that your own commission on any assignment agreement is paid as soon as the builder consents to the deal, or else you may have to wait an extra year before you get paid.
5. Get everyone to sign the buyer representation agreement:
Too many times I have seen situations where, for example, one spouse signs the buyer representation agreement and then the other spouse or an adult child goes out and buys a property, to try and avoid paying the agent their commission. Or they buy in a company name to try and hide their identity.
Make sure you always get everyone to sign your agreement, even if it means going more than once to sign, especially if one of the spouses is out of town.