Due Diligence Fails

Podcast Episode 95:
“A Couple on Due Diligence

I talk a lot about due diligence because it is one of the most important aspects of achieving success with real estate. This is a two-part Tale, showing a couple different examples of problems to look out for when doing one’s due diligence. The first example is about what happened when someone bought a property that was scheduled for renovation, but didn’t look into the plans. The buyer thought everything was taken care of—until things went wrong with the contractor. The second example is about someone who bought a bunch of condo units. The buyer got hit with a special assessment shortly after closing, which was a surprise because there was no deferred reserve study available. In this podcast, I draw important lessons from these examples and make suggestions about how to avoid similar problems.


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For an experienced and reliable Alberta real estate lawyer in Edmonton, contact Barry now!

House/Home Inspection” image by Mark Moz used under CC Attribution 2.0 Generic.

Removing Conditions on Purchase Contract

Podcast Episode 94:
“Removing Conditions—Should I or Shouldn’t I?

Conditions on a real estate purchase contract should only be removed once the due diligence is complete. But what if the conditions are sort of met, but not completely? Should you still remove conditions if the property seems good, the numbers appear to work, and due diligence is more-or-less done? In this Tale, our investor removed conditions even though they only had verbal assurances about rent and utilities, rather than the written tenant information that was supposed to be part of the deal. As you can probably guess, things weren’t what they were supposed to be, but the deal was already done by the time our investor figured out what was really happening! Listen to the audio to get Barry’s take on strategies for dealing with this sort of situation.

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If you’re buying or selling a home in Alberta, you need an experienced lawyer that you can trust. Get in touch with Barry now!

“3D Realty Handshake” image courtesy of Scott Maxwell. Used under Creative Commons Attribution-Sharealike 2.0.

Property Inspections, Reports, and Permits

Podcast Episode 93:
“Inspection Reports & Multi-family Diligence.”

Under Alberta’s Residential Tenancies Act, an inspection report must be made whenever a tenant moves into, or out of, a rental property.  But what happens if you buy a property and can’t get the in/out report? Similarly, building permits for multi-family dwellings specify their maximum number of units. What happens if you buy a building that has illegal suites? This episode of Tales from the Trenches explains the legal issues of both inspection reports and occupancy permits in Alberta.

 

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Use the form below to contact Barry McGuire, veteran Edmonton real estate lawyer.

“3D Home Inspection Big Check” by http://www.ccpixs.com/ used under CC Attribution 2.0 Generic.

Joint Ventures, RRSP Mortgages, Due Diligence, & More!

Podcast Episode 92:
A Few Quick Tales.”

Here’s some great stories about people buying and selling real estate in Alberta. These five quick Tales from the Trenches are short, but they show a wide range of different issues, problems, and successes.

In a joint venture, it’s always nice when a more experienced investor can help out someone who’s just getting started, which is the subject of the first Tale. The second deals with rules surrounding RRSP mortgages. Did you know that the money needs to be at arm’s length from the person whose RRSP it is? The third Tale is about Alberta Health’s Minimum Housing & Health  Standards. I’d recommend anyone looking to buy real estate in Alberta take a look at these (available HERE), especially if they want to rent out the property. The second last Tale is about seller’s warranties. They can be hard to enforce, and so due diligence with things like fire safety searches is important before committing to buy. Finally, a real estate deal that is too good to be true can have hidden problems. It might still be a good deal, but it’s best to look a gift horse in the mouth by still doing your due diligence.

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If you’re buying or selling real estate in Alberta, get yourself an experienced Edmonton lawyer. Use the contact form below!

House/Home Inspection” image by Mark Moz used under CC Attribution 2.0 Generic.

When to Remove Conditions on a Purchase Contract

Podcast Episode 90:
Diligence Pays Off.”

I’ve said it before and I’ll say it again: when you’re buying a property, never remove conditions on the purchase contract until you’ve done due diligence. A real estate lawyer like me can protect your interests and help you negotiate a better deal, but I can only work with the documents and evidence available. In this Tale, our investor was working on buying a multifamily rental property. Unfortunately, there were many discrepancies with the contents of units as well as with the estoppel certificates (aka rental confirmations forms). Good thing they didn’t remove conditions before they finished their diligence!

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Use the form below to contact Barry McGuire, real estate lawyer, Edmonton, Alberta.

Exercise That Diligence” image by Alan Levine used under CC Attribution 2.0 Generic.

Worst Case Condo Investment

Podcast Episode 68:
Disaster at Penhorwood: Update.”

In a previous Tale, we reviewed the calamitous and stomach turning events at the Penhorwood Condominium complex in Fort McMurray, Alberta. Our review looked at events occurring in 2011, but in 2014 things really came to a head. I thought this was serious enough to reprint some our previous Tale, and then follow-up with a discussion of how the circumstances evolved. Read on and be very aware that some condominiums have ultra-serious issues.

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Should I Become a Developer?

Podcast Episode 64:
Development Is a Senior Strategy.”

Buying and holding single-family homes is a great strategy for anyone starting out in real estate investment. Many people eventually get into multifamily properties, which builds on the experience of basic buy-and-hold. Becoming a developer is a very different type of strategy and is much more difficult. The rewards can be worth it for a senior investor, but there is also a lot of risk involved, and so development should be approached cautiously—if at all.

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Say No to Condos Less than 8 Units

Podcast Episode 61:
New Homes And Subdivision.”

Purchasing a new property before it is built is far more complex than buying an existing one. There are even more possible issues when subdividing and condominiumization are involved. Subdivision takes a long time and has many complicating factors. I don’t generally recommend small condos (i.e., less than 8 units.)

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Buying Long-distance Property

Podcast Episode 59:
Travel and Tenants.”

Managing properties when they are far from where someone lives can be tricky. Use this fact to help you find motivated sellers. Beware that pre-possession inspections require custom clauses and you can’t just kick existing tenants out if they are a problem. When finding replacement tenants, know the difference between rent deposits and security deposits.

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Multifamily Location Is Key

Podcast Episode 58:
You Are Buying the Neighbourhood.”

When buying a property, you are buying the neighbourhood and neighbourhoods are not homogenous. Do some diligence around schools opening or closing, new public transit soon or in the works, and rezoning. Check parking lots and dumpsters where you intend to buy; these will give you an informal tenant profile. Any environmental considerations?

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