Quick Guide for Sellers to the New Alberta Real Estate Purchase Contract.

Changes to the AREA Contract:
Selling Your Home in Alberta.

 

The July 2017 Alberta Real Estate Association (AREA) purchase contract has 10 major changes. I posted a long blog and podcast about these changes recently, but sometimes a quick guide is helpful. Below are the three most important changes from your perspective as a seller: Permits, Dower Rights, and Vacant Possession.

 

1. Permits

As seller you must disclose in the contract:

  1. Whether you have received or know about any government/city notices about your property. You must also disclose whether you know about any lack of permits. Notices could be about anything. Could be more important things like upgrading or moving electrical service or pending work on water or gas lines. Or perhaps smaller but irritating notices regarding getting rid of noxious weeds or your responsibility to mow the grass on attached municipal property.
  2. What about, “known lack of permits for any development on the Property…”? If you put a family room in the basement with an extra bathroom, it probably won’t be good enough to say, “I didn’t know I needed permits for the plumbing and electrical.” You most likely will be responsible for getting permits if permits were required.

Deal with these issues when you are listing the property with your realtor. Tell your realtor everything you think is relevant. Solving issues, especially permit issues takes time and money. Your sale will certainly be delayed and a buyer will want some of the sale proceeds held back if these issues come up closer to the closing date.

 

2. Dower Rights:

Dower is an old legal concept all about the rights of a non-title spouse. If you are married (not common law), on title by yourself, and either you or your spouse have ever lived in the sale property at any time since your marriage, then your spouse not on the title must consent to the sale of the property. The change in the new contract is that your non-title spouse must sign a Dower Consent as part of the real estate purchase contract. Formerly, this was taken care of by lawyers in the closing paperwork. Now you have to deal with it much earlier in the sale process. Failure to disclose could void the contract.

Coaching: your non-title spouse must be on board with your decision to sell the property. If they aren’t, they won’t sign the Dower Consent and your deal will collapse.

 

3. Vacant Possession:

The 2014 contract said that, as seller, you had to provide vacant possession to the buyer, “subject to the rights of existing tenants, if any.” The September 2016 contract now says you have to give the buyer vacant possession. No more, “subject to the rights of existing tenants, if any.” If there are tenants, it’s up to you to advise the buyer. The buyer may want to take over your tenants—especially if they are an investor. But, they may not and it’s up to you to negotiate a closing date that allows you to meet the obligation of giving vacant possession. There are lots of possibilities under this scenario, too many to discuss here. Bottom line, unless you know for sure your property will be vacant on possession day, then you need to address the issue in your contract negotiations. This is a tricky area.

 

For an in-depth discussion of the new 2017 AREA contract, including a podcast with explanations, check the following linked blog post: https://barrymcguire.ca/2018/05/30/real-estate-purchase-contract-alberta

You can also ask your realtor about other changes and consult us at RMLO Law LLP in Edmonton. Get in touch with Barry today if you’re planning on selling your home in Alberta!

“House renting, buying, selling contract” image by Mark Moz used under CC Attribution 2.0 Generic.

Selling Homes in Alberta and Real Property Reports

What the Heck Is a Real Property Report and Why Should I Care?

In the Province of Alberta, a Real Property Report (RPR) is a required part of the standard Multiple Listing Service (MLS) real estate purchase sales contract. It is a document that was formerly called a Land Survey because a professional group known as the Alberta Land Surveyors’ Association produces it. Continue reading

Investor Lawyer vs. Everyday Millionaire

Everyday Millionaire podcast logo

“Podcast Interview with Barry McGuire: Enduring Lawyer, Authentic Counsel.”

What does a successful life in Alberta real estate look like? Legal education, investing experience, and the importance of family are all topics covered in this hour-long interview with Barry McGuire. The host of the Everyday Millionaire podcast, Patrick Francey, is an investor, entrepreneur, and educator who has known Barry for many years. Their wide-ranging conversation is littered with nuggets of wisdom and humour. Check it out at the following link:

http://theeverydaymillionaire.ca/episode-30-barry-mcguire-enduring-lawyer-authentic-counsel/

Get to Know the Real Estate Purchase Contract in Alberta

Podcast Episode 118: “Big Changes To The Standard AREA Contract.”

September 2016 (with mild tweaks in July of 2017) brought numerous and meaningful changes to the existing 2014 residential purchase documentation approved by the Alberta Real Estate Association (AREA). These changes affected both the Residential Purchase Contract used for all homes and houses and the Residential Resale Condominium Property Purchase Contract, used for condominiums. Existing wording has been modified and new wording added. As we go through our commentary, we will refer to the contracts as the 2014 contract and the 2017 contract. This podcast and the accompanying text explain the changes and what they mean for buyers, sellers, realtors, and lawyers dealing with real estate in Alberta.

Download the audio file HERE.
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Inheriting Property Isn’t as Simple as it Seems

Will and Testament

Podcast Episode 117: Estates Are Tricky!

Real estate can cause all kinds of problems when a family member passes away. First, it can take a long time before the will is executed and the inheritor is actually in control of the property. Second, the person who inherits the property also inherits the financial responsibility (mortgage, taxes, etc.), which they end up responsible for even before they own the real estate! This Tale is about what happened when someone inherited a piece of property and almost went into foreclosure with it.

Download the audio file HERE.
Download the handout HERE.
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How to Invest in Canadian Real Estate with Assignments: Basics, Exercise, and Case Studies

“The Practical Side of Assignments.”

This 30-minute video is a hands-on introduction to real estate investment in Canada using assignments. I’ve posted about this topic before (e.g., podcast and blog), but this video focuses on the practical side of this creative investing strategy. Watch it to get a definition of assignments and the basics of how they work from a legal perspective, then try an exercise and review case studies showing real life examples of deals using assignments.

If you’d like to learn more about assignments, you can get a free 33-page creative investing guide when you sign up for our newsletter.

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Walk Away From a Real Estate Deal at Your Own Peril!

Podcast Episode 116:

“Failure To Close? More Than Your Deposit Is At Risk!”

A real estate purchase contract is a legally binding agreement. If the buyer doesn’t meet their obligations by closing the purchase, there can be financial repercussions. At a minimum, the buyer will lose their deposit. But it can be far, far worse. In this Tale, a BC real estate buyer didn’t close and ended up paying for it after the courts ruled in favour of the seller.

Download the audio file HERE.
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Avoid Jail-time and Make Money: Assigning Offers to Purchase Real Estate in Canada

Podcast Episode 115:

“Flipping / Assigning Properties? Don’t Go To Jail!”

Not too long ago, I wrote a blog post about the legalities of flipping properties using a Creative Investing Strategy called “assignment.” Now I’m making that topic available as a podcast because I want Canadian investors to have every opportunity to make money without getting on the wrong side of the law. In a hot real estate market, flipping properties by assigning your interest in the purchase can be lucrative. Just make sure to do it legally because the CRA is cracking down on so-called “shadow flipping” and undeclared income!

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Don’t Buy a Renovated Home Until You Watch This Video!

DIY vs. Pro Home Renovations in Alberta.

Both professionals and amateurs can do renovations, but what does that mean for a potential home-buyer? Permits and inspections are one side of it. Then there’s the issue of quality. In this video, lawyer Barry and realtor Keith discuss the potential pitfalls in purchasing a renovated property in Edmonton, Alberta.

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