Buy & Sell Recreational Property in Canada

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Geraldine Santiago. Buy & Sell Recreational Property in Canada

BUY & SELL RECREATIONAL PROPERTY IN CANADA

Introduction

What Do You Need to Know about the Recreational Housing Market?

Buyer’s market

Seller’s market

Balanced market

Supply and demand

Who Is Buying Recreational Property in Canada?

What Are Buyers Paying for Recreational Properties?

British Columbia

Alberta

Saskatchewan

Manitoba

Ontario

Quebec

Nova Scotia

New Brunswick

Prince Edward Island

Newfoundland and Labrador

The Yukon

The Northwest Territories

Cottage Associations of Canada

A Note about Terminology

1. Searching for That Perfect Recreational Home

Where Do You Start?

Factors to Consider When Looking for a Recreational Home

Community

Neighbourhood

Privacy

Preferred activities

Accessibility

Seasonal or year-round property

Maintenance

Strata or condominium restrictions

Zoning

Zoning and developments

Zoning restrictions on rentals

New-home warranties

Homes Directly for Sale by the Owner

2. Types of Recreational Properties and Types of Ownership

Cottages and Summer Cabins

Floating Homes

Condominiums

Ski-in/Ski-out Condominiums

Ski Chalets and Winter Cabins

Mobile Homes, Mobile-Home Parks, and Land-Lease Communities

Hunting Cabins

Ranch and Farm Recreational Homes

Title and Ownership

Freehold

Leasehold

Strata title

Co-operative

Co-ownership

Joint tenancy

Tenancy in common

3. Assembling Your Team of Professionals

Real Estate Agent

Responsibilities of your agent

What is your relationship with a real estate agent?

The exclusive buyer’s agent contract

Sample 1: Buyer-Agent Fee Agreement

Who pays the agent’s commission?

Sample 2: Commission Agreement

What do agents do to earn their commission?

Are agents allowed to receive bonuses or other gifts from financial institutions?

How do you choose an agent when buying a recreational property?

Do agents provide referrals to other professionals?

The Difference between a Lawyer and a Notary Public

Choosing a lawyer or notary public

The role of the lawyer or notary public

Recreational-Home Inspectors

Environmental Experts

Protecting Your Legal Interest

Title insurance

4. Financing

How Do You Get Financing for a Recreational Property?

What Are the Types of Mortgage Loans?

Conventional mortgage

High-ratio mortgage

Insured mortgage

Assumable mortgage

Condominium mortgage

Open mortgage

Closed mortgage

Vendor take-back (VTB) mortgage

Portable mortgage

Reverse mortgage

Blanket mortgage

Vacation property mortgage

Mortgage Insurance

Mortgage default insurance

Mortgage Interest Rate

Mortgages for Vacant Land

How Much Down Payment Do You Need?

Appraisals

The Documents the Lender Will Require

Checklist 1: Gathering the Documents for the Lender

5. Ownership and Taxation

GST/HST

Property/Land Transfer Tax (British Columbia and Ontario)

Property Classes

Property Tax Assessment

Who pays for the property taxes of the current year?

6. Land and Water Issues

Maps

Forest recreation map

Topographic map

Plan

Agricultural land reserve map (BC)

Surveys and Survey Certificates

Hiring a surveyor

Survey notes

Geotechnical survey

Land Issues. Land title search

Right-of-way and easement

Restrictive covenants

Setback

Access roads

Buying acreage or vacant land

Profit à prendre

Mineral rights

First Nations lands

Water Issues. Waste management systems

Sewage disposal inspections

Chemical, environmentally friendly, and composting toilets

Grey water

Water supply

Water and contamination testing

Water wells

Cisterns or water holding tanks

Heated waterlines

Flood plains

Marine (submerged) cables

Shorelines properties

Riparian rights

Shoreline ownership

Docks

Waterways

Dredging

Building a bridge or culvert

Reused and recycled materials

Wetlands

Legislation and regulatory bodies

Fisheries Act

Niagara Escarpment Commission

Islands Trust Fund

7. Buyer Beware!

Protect Yourself from a “Leaky Condo”

What is a special assessment?

Beware of Buying a Former “Grow House”

Mould Issues

Precautions When Using Wood Heating

Potential Problems with Oil Tanks

How can you know whether an underground oil tank is leaking?

Provincial and territorial standards for oil tanks

Electric Wiring Issues

8. Building a Recreational Home, and Other Options

Can You Build on Your Property?

Location

Estimating Costs

Financing

The Builder. Finding and hiring a builder

Communicating with your builder

Overseeing the progress

Preparing the Land

Power and telephone lines

Water and sewage

Building Inspectors and Municipal Inspectors

Alternatives to Building a Recreational Home. Prefab homes

Camping on your land

9. Buying Recreational Property as an Investment

Determining Investment Potential

The Importance of Location

Accessibility

Exposure through events and films

Recreational activities

Increasing the Property Value

10. Non-Residents: Buying and Selling Recreational Property

Can Non-Residents Buy Real Estate in Canada?

Canadian currency

Can non-residents obtain financing to purchase recreational property?

Down payment

Residents of the United States

Can a Non-Resident Reside in Canada, and for How Long?

Taxes

Residence status and income tax

Important Information for a Non-Resident Selling a Recreational Home

11. Making an Offer

What to Look for When Viewing Properties

Seller’s motivation

Prior offers

Property condition

Property condition disclosure statement

Sample 3: Property Condition Disclosure Statement

What Should the Offer to Purchase Include?

Competing or Multiple Offers

Evaluating Recreational-Home Prices

How sellers price their homes

Comparative Market Analysis

Comparing unique properties

12. Removing Subjects

Subject Clauses

Why do you include subject clauses in the contract?

The most common subject clauses

What does it mean to remove subjects?

How long do you have to remove subjects?

Recreational-Home Inspections. What should an inspection include?

Cottage inspection

Condominium inspection

What areas of a condominium may need repair?

Single-detached home inspection

What if you don’t want to have an inspection done?

Can you get a relative or friend to do the inspection?

An inspection for a remodelled property

The cost of the recreational-home inspection

Can the agent pay for the recreational-home inspection?

When the home inspection fails

Removal of All Subjects before the Subject Removal Date

The Deposit

What if the deposit cheque is NSF?

Where does the deposit go?

Checklist 2: Subject Removal

13. Closing Costs for Buyers

What Happens at Completion?

Title insurance

Fire and liability insurance

Additional Closing Costs

Adjustment costs

Utilities

Maintenance fees

Condominium surcharges

Strata forms

Transaction levy

Appraisal fee

Survey certificate

New home fees

Legal fees

Homeowner’s insurance

How much will insurance cost?

14. What Is Your Recreational Home Worth?

Why Are You Selling?

How Do You Know What Your Recreational Home Is Worth?

Comparative Market Analysis (CMA)

Pricing land only

Increasing or Decreasing Your Price

15. Gathering Data and Legal Documentation

Title Search

Survey Certificate

Property Condition Disclosure Statement (PCDS)

Oil Tank Removal

Zoning Information

Municipal Assessment

Restrictions

Other information for strata property

Other Documentation

Measuring Your Property

Pre-Sale Building Inspection

Checklist 3: Documents and Information

16. Selling on Your Own or with a Real Estate Agent

What Are the Costs of Selling a Recreational Home?

Do You Have What It Takes to Sell Your Own Recreational Home?

What Are the Pitfalls of Selling without an Agent?

What Are the Benefits of Selling with an Agent?

Choosing the right selling agent for your recreational property

Agents specializing in rural land

Types of Listings

Open listing

Exclusive listing

Multiple Listing Service

The Listing Agreement

Sample 4: Listing Agreement

Responsibilities of Listing Agents

The agent’s commission

17. Marketing Your Recreational Home

What Do You Do to Market a Property?

Print advertising and websites

Signage and tools of the trade

Marketing to friends, relatives, and neighbours

Advertising

18. Showing Your Recreational Home

Showing Made Simple

Providing access to a recreational home

Open Houses and Agent Tours

Dos

Don’ts

Protecting Yourself

19. The Offer

Separating Qualified Buyers from the Lookers

Who Can Be Legally Bound to a Contract?

When You Receive an Offer

Condition precedents

Multiple offers

Lowball offers

Negotiating a Sale

What to negotiate

Selling your furniture

When You Reach an Agreement

What if the recreational home does not pass inspection?

Showing after Accepting an Offer

When Condition Precedents Are Met

Suspicious Transactions

Checklist 4: The Contract

20. Closing, Completion Date, and Possession

The Closing Procedure

What Happens at Completion?

Reimbursement of property taxes

Capital gains tax

Completion must be done on a weekday

Possession

When do you hand over the keys?

What should you leave behind on possession day?

What should you not leave behind?

Doing a walk-through with the buyer or buyer’s agent

A special touch

Appendix: Cottage Associations of Canada

British Columbia

Alberta

Saskatchewan

Manitoba

Ontario

Watershed Protection Organizations

Glossary

Acknowledgments

About the Author

Notice to Readers

Self-Counsel Press thanks you for purchasing this ebook

Contents

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Since the early part of 2000, recreational property sales across Canada have increased, and trends are showing that this will continue for some time. Major influences that have given rise to increased sales in recreational property include interest rates at a 40-year low and increased consumer confidence and job security. These factors have led to increased demand for recreational property, particularly near greater metropolitan areas.

First-time recreational-home purchasers should do their homework carefully. Compared to purchasing property in the city or suburbs, there are many more factors to consider when purchasing recreational property. These factors vary and are often unique to specific regions, provinces, and municipalities. Buyers need to educate themselves about bylaws unique to each municipality, as well as provincial and federal regulations that pertain to fisheries, oceans, wildlife, forests, and the environment. Environmental considerations with regard to real estate typically fall under a provincial department of the environment or a ministry of natural resources. Should you wish to alter or make additions to your recreational property near or on water, there could also be federal laws that affect and restrict your intended use of the property.

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If you are new to buying or selling real estate or unfamiliar with some of the commonly used terms, please consult the glossary for definitions. Note that the terms “real estate agent” and “agent” are used interchangeably in this book.

Maintenance is always a concern, especially if you do not spend time on the property year-round and you have not hired an in-house caretaker. You may want to find out if you can hire the assistance of a local caretaker who will work on a weekly or monthly basis to ensure that your home remains secure and undamaged. Sometimes, you will find your neighbours in the same or similar situation, in which case you can perhaps hire a caretaker together. Another option is to have a system in which your neighbours check your recreational home when you are not vacationing there, and vice versa.

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