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Geraldine Santiago, Realtor

Self-Counsel Press
(a division of)
International Self-Counsel Press Ltd.
Canada       USA

INTRODUCTION                                                    xvii
     Where Do You Start?                                          3
     Factors to Consider When Looking for a Recreational Home     4
        Community                                                 4
        Neighbourhood                                             4
        Privacy                                                   4
        Preferred activities                                      5
        Accessibility                                             5
        Seasonal or year-round property                           5
        Maintenance                                               5
        Strata or condominium restrictions                        6
        Zoning                                                    6
        New-home warranties                                       7
     Homes Directly for Sale by the Owner                         8
     Cottages and Summer Cabins                                   9
     Floating Homes                                               9

        Condominiums                                                                           10
        Ski-in/Ski-out Condominiums                                                            11
        Ski Chalets and Winter Cabins                                                          11
        Mobile Homes, Mobile-Home Parks, and Land-Lease Communities                            11
        Hunting Cabins                                                                         12
        Ranch and Farm Recreational Homes                                                      12
        Title and Ownership                                                                    12
            Freehold                                                                           12
            Leasehold                                                                          13
            Strata title                                                                       13
            Co-operative                                                                       13
            Co-ownership                                                                       13
 3      ASSEMBLING YOUR TEAM OF PROFESSIONALS                                                  17
        Real Estate Agent                                                                      17
           Responsibilities of your agent                                                      17
           The exclusive buyer’s agent contract                                                18
           Who pays the agent’s commission?                                                    18
           What do agents do to earn their commission?                                         21
           Are agents allowed to receive bonuses or other gifts from financial institutions?   21
           How do you choose an agent when buying a recreational property?                     21
           Do agents provide referrals to other professionals?                                 21
        The Difference between a Lawyer and a Notary Public                                    22
           Choosing a lawyer or notary public                                                  22
           The role of the lawyer or notary public                                             22
        Recreational-Home Inspectors                                                           23
        Environmental Experts                                                                  23
        Protecting Your Legal Interest                                                         23
           Title insurance                                                                     24
 4      FINANCING                                                                              25
        How Do You Get Financing for a Recreational Property?                                  25
        What Are the Types of Mortgage Loans?                                                  25
           Conventional mortgage                                                               25
           High-ratio mortgage                                                                 26
           Insured mortgage                                                                    26
           Assumable mortgage                                                                  26
           Condominium mortgage                                                                26
           Open mortgage                                                                       26
           Closed mortgage                                                                     26

vi   Buy & sell recreational property in Canada
       Vendor take-back (VTB) mortgage                                     26
       Portable mortgage                                                   27
       Reverse mortgage                                                    27
       Blanket mortgage                                                    27
       Vacation property mortgage                                          27
    Mortgage Insurance                                                     28
       Mortgage default insurance                                          28
    Mortgage Interest Rate                                                 28
    Mortgages for Vacant Land                                              28
    How Much Down Payment Do You Need?                                     28
    Appraisals                                                             29
    The Documents the Lender Will Require                                  29
5   OWNERSHIP AND TAXATION                                                 31
    GST/HST                                                                31
    Property/Land Transfer Tax (British Columbia and Ontario)              31
    Property Classes                                                       32
    Property Tax Assessment                                                32
       Who pays for the property taxes of the current year?                32
6   LAND AND WATER ISSUES                                                  33
    Maps                                                                   33
       Forest recreation map                                               33
       Topographic map                                                     33
       Plan                                                                34
       Agricultural land reserve map (BC)                                  34
    Surveys and Survey Certificates                                        34
       Hiring a surveyor                                                   34
       Survey notes                                                        34
       Geotechnical survey                                                 34
    Land Issues                                                            34
       Land title search                                                   34
       Setback                                                             35
       Access roads                                                        35
       Buying acreage or vacant land                                       35
       Profit à prendre                                                    36
       Mineral rights                                                      36
       First Nations lands                                                 36
    Water Issues                                                           36
       Waste management systems                                            36

                                                                Contents   vii
             Water supply                                                  37
             Flood plains                                                  38
             Marine (submerged) cables                                     38
             Shorelines properties                                         39
             Wetlands                                                      40
             Legislation and regulatory bodies                             40
    7    BUYER BEWARE!                                                     43
         Protect Yourself from a “Leaky Condo”                             43
            What is a special assessment?                                  44
         Beware of Buying a Former “Grow House”                            44
         Mould Issues                                                      45
         Precautions When Using Wood Heating                               45
         Potential Problems with Oil Tanks                                 46
            How can you know whether an underground oil tank is leaking?   46
            Provincial and territorial standards for oil tanks             46
         Electric Wiring Issues                                            46
         Can You Build on Your Property?                                   49
         Location                                                          50
         Estimating Costs                                                  50
         Financing                                                         51
         The Builder                                                       51
             Finding and hiring a builder                                  51
             Communicating with your builder                               51
             Overseeing the progress                                       52
         Preparing the Land                                                52
             Power and telephone lines                                     52
             Water and sewage                                              52
         Building Inspectors and Municipal Inspectors                      52
         Alternatives to Building a Recreational Home                      53
             Prefab homes                                                  53
             Camping on your land                                          53
         Determining Investment Potential                                  55
         The Importance of Location                                        56
            Accessibility                                                  56
            Exposure through events and films                              56

viii    Buy & sell recreational property in Canada
        Recreational activities                                                            56
     Increasing the Property Value                                                         56
     Can Non-Residents Buy Real Estate in Canada?                                          59
        Canadian currency                                                                  59
        Can non-residents obtain financing to purchase recreational property?              59
        Down payment                                                                       60
     Residents of the United States                                                        60
     Can a Non-Resident Reside in Canada, and for How Long?                                60
     Taxes                                                                                 60
        Residence status and income tax                                                    60
     Important Information for a Non-Resident Selling a Recreational Home                  61
PART 2 — PROCEEDING WITH THE PURCHASE                                                      63
11   MAKING AN OFFER                                                                       65
     What to Look for When Viewing Properties                                              65
        Seller’s motivation                                                                65
        Prior offers                                                                       65
        Property condition                                                                 66
     What Should the Offer to Purchase Include?                                            67
     Competing or Multiple Offers                                                          67
     Evaluating Recreational-Home Prices                                                   70
        How sellers price their homes                                                      70
        Comparative Market Analysis                                                        70
        Comparing unique properties                                                        71
12   REMOVING SUBJECTS                                                                     73
     Subject Clauses                                                                       73
        Why do you include subject clauses in the contract?                                73
        The most common subject clauses                                                    74
        What does it mean to remove subjects?                                              74
        How long do you have to remove subjects?                                           74
     Recreational-Home Inspections                                                         75
        What should an inspection include?                                                 75
        Cottage inspection                                                                 75
        Condominium inspection                                                             75
        Single-detached home inspection                                                    76
        What if you don’t want to have an inspection done?                                 76
        Can you get a relative or friend to do the inspection?                             77

                                                                                Contents    ix
           An inspection for a remodelled property                   77
           The cost of the recreational-home inspection              77
           Can the agent pay for the recreational-home inspection?   77
           When the home inspection fails                            77
        Removal of All Subjects before the Subject Removal Date      78
        The Deposit                                                  78
           What if the deposit cheque is NSF?                        78
           Where does the deposit go?                                78
13      CLOSING COSTS FOR BUYERS                                     81
        What Happens at Completion?                                  81
          Title insurance                                            82
          Fire and liability insurance                               83
        Additional Closing Costs                                     83
          Adjustment costs                                           83
          Transaction levy                                           84
          Appraisal fee                                              84
          Survey certificate                                         84
          New home fees                                              84
          Legal fees                                                 84
          Homeowner’s insurance                                      84
PART 3 — SELLING YOUR RECREATIONAL PROPERTY                          87
14      WHAT IS YOUR RECREATIONAL HOME WORTH?                        89
        Why Are You Selling?                                         89
        How Do You Know What Your Recreational Home Is Worth?        89
           Comparative Market Analysis (CMA)                         90
           Pricing land only                                         90
        Increasing or Decreasing Your Price                          90
15      GATHERING DATA AND LEGAL DOCUMENTATION                       93
        Title Search                                                 94
        Survey Certificate                                           94
        Property Condition Disclosure Statement (PCDS)               94
        Oil Tank Removal                                             95
        Zoning Information                                           95
        Municipal Assessment                                         96
        Restrictions                                                 96
            Other information for strata property                    96
        Other Documentation                                          96

x   Buy & sell recreational property in Canada
     Measuring Your Property                                                         97
     Pre-Sale Building Inspection                                                    97
16   SELLING ON YOUR OWN OR WITH A REAL ESTATE AGENT                            101
     What Are the Costs of Selling a Recreational Home?                         101
     Do You Have What It Takes to Sell Your Own Recreational Home?              102
     What Are the Pitfalls of Selling without an Agent?                         102
     What Are the Benefits of Selling with an Agent?                            103
        Choosing the right selling agent for your recreational property         103
        Agents specializing in rural land                                       104
     Types of Listings                                                          104
        Open listing                                                            104
        Exclusive listing                                                       104
        Multiple Listing Service                                                104
     The Listing Agreement                                                      105
     Responsibilities of Listing Agents                                         105
        The agent’s commission                                                  108
17   MARKETING YOUR RECREATIONAL HOME                                           109
     What Do You Do to Market a Property?                                       109
        Print advertising and websites                                          109
        Signage and tools of the trade                                          110
        Marketing to friends, relatives, and neighbours                         110
     Advertising                                                                110
18   SHOWING YOUR RECREATIONAL HOME                                             113
     Showing Made Simple                                                        113
        Providing access to a recreational home                                 113
     Open Houses and Agent Tours                                                114
        Dos                                                                     114
        Don’ts                                                                  115
     Protecting Yourself                                                        116
19   THE OFFER                                                                  117
     Separating Qualified Buyers from the Lookers                               117
     Who Can Be Legally Bound to a Contract?                                    118
     When You Receive an Offer                                                  118
        Condition precedents                                                    118
        Multiple offers                                                         118
        Lowball offers                                                          119
     Negotiating a Sale                                                         119

                                                                          Contents    xi
           What to negotiate                                         120
           Selling your furniture                                    120
        When You Reach an Agreement                                  120
           What if the recreational home does not pass inspection?   121
        Showing after Accepting an Offer                             121
        When Condition Precedents Are Met                            121
        Suspicious Transactions                                      121
20      CLOSING, COMPLETION DATE, AND POSSESSION                     125
        The Closing Procedure                                        125
        What Happens at Completion?                                  126
           Reimbursement of property taxes                           126
           Capital gains tax                                         126
           Completion must be done on a weekday                      126
        Possession                                                   127
           When do you hand over the keys?                           127
           What should you leave behind on possession day?           127
           What should you not leave behind?                         127
           Doing a walk-through with the buyer or buyer’s agent      128
           A special touch                                           128
APPENDIX: COTTAGE ASSOCIATIONS IN CANADA                             129
GLOSSARY                                                             133
 1 Gathering the documents for the lender                             29
 2 Subject removal                                                    79
 3 Documents and information                                          98
 4 The contract                                                      123
 1 Buyer-agent fee agreement                                          19
 2 Commission agreement                                               20
 3 Property condition disclosure statement                            68
 4 Listing agreement                                                 106

xii   Buy & sell recreational property in Canada
Chapter 1

There are many options available to recreational
home and property purchasers. You must con-
                                                       Where Do You Start?
sider your preferences for location and lifestyle.     Start looking for recreational real estate proper-
Couples or partners purchasing a recreational          ties by scanning classified advertisements, Inter-
home together may need to make compromises             net websites, and local real estate magazines.
or trade-offs. Choosing the right recreational         Multiple Listing Service (MLS), put out by the
home for you and deciding which areas best suit        Canadian Real Estate Association, contains in-
your needs are very personal choices.                  depth details of properties and is a valuable
                                                       resource. An MLS feature sheet can contain infor-
     Assess your personal preferences and think
                                                       mation such as —
about the kind of lifestyle change living on a
recreational property would entail, even if it’s for       • price;
short vacations. For most people, a recreational           • total area;
home does not necessarily translate to living in a         • previous year’s taxes;
rustic log cabin in the thick of the woods. Rather,
their ideal recreational home may have all the             • monthly charges pertaining to strata title
comforts of home, including custom cabinetry,                ownership;
spacious master suites, a gourmet kitchen, a home          • distance to schools;
theatre system, specialty flooring, nine-foot ceil-        • distance to transportation services;
ings, a landscaped backyard, a games room, and
                                                           • parking facilities (e.g., garage, multiple
more. As a first time recreational purchaser, you
                                                             car park);
need to think about what kind of needs and
expectations you have (and determine how unre-             • outdoor areas such as a large lot, balcony,
alistic some of these expectations may be!).                 patio, and/or sundeck;

     • geographical features, and views from the           Recreational home purchasers who are semi-
       property;                                      retired or retired may want a more peaceful and
     • nearby recreation centres and/or fitness       tranquil setting, away from the noise and hustle
       centres;                                       and bustle of a community, and perhaps closer to
                                                      a golf course or a beach.
     • central location;
     • type and number of fireplaces;
     • swimming pool, hot tub, and/or sauna;
                                                      When considering the neighbourhood you want,
                                                      look at the area surrounding your recreational
     • library and/or games room.                     home. Are the neighbours similar to you? Are
    The MLS feature sheet is a very important         they young couples, families with teenage chil-
document because potential buyers rely on the         dren, or retired couples?
accuracy of the information. The information is           Talk to the residents in the neighbourhood,
included in a computerized data system to which       and walk around the area to get a better sense of
the real estate board in your area contributes.       the community. You may want to find out about
The list can be obtained from the local board,        the local politics: Do the locals resent the num-
from your realtor, or by browsing or       ber of city people who are buying property for                                   seasonal use? Are there strong views from the
    Note that the MLS does not include “For Sale      locals about whether to allow more density as
by Owner” (FSBO) properties on its website. Only      more recreational buyers move into the neigh-
properties listed by an agent are included. (See      bourhood? Will you spend enough time in
the section Homes for Sale by Owner later on in       the community to be affected by local political
this chapter, as well as Chapter 16, for more         differences?
information on FSBOs.)                                     Consider potential pollutants in your chosen
                                                      neighbourhood. Noise pollution may be caused
Factors to Consider When Looking                      by highways, industry, or airports; odour pollu-
                                                      tion may result from farms or industry; and
for a Recreational Home                               chemical pollution may come from farms, indus-
Location, location, location! When searching for      try, or even golf courses (which are maintained
your recreational property, think about your and      using pesticides, herbicides, and fertilizers).
your family’s lifestyle needs. Some things to con-        You may find the quality and availability of
sider: the type of community and neighbour-           municipal services important, such as hospitals,
hood, privacy, preferred activities, accessibility,   police and fire departments, road maintenance,
seasons and climate, strata restrictions, zoning      garbage collection, mail delivery, and snow
and developments, and home warranty.                  removal. Make sure that you understand what
                                                      services the neighbourhood has to offer and
Community                                             whether or not they are suited to your needs.
Most cottage buyers base their decisions on
price, but lifestyle requirements are equally         Privacy
important. Younger couples, for example, often        When buying recreational property — whether it
want to be close to a small community where           is a one-acre property or a 20-acre property —
they and their children can enjoy community           many people want or need privacy from their
events and programs.                                  neighbours, or from the world in general. Different

4   Buy & sell recreational property in Canada
types of fences can be used to obtain privacy,             Equally important is access in and around
including chain-link fences, wooden fences, or        the area where you purchase. For example, some
trees along the border of a property. It is impor-    waterfront cottages can only be accessed by
tant for owners of recreational property to realize   water taxi, and this can increase your vacation
that although they have a variety of ways to          expenses. If your getaway can only be accessed
obtain privacy, they may not block off access         by way of a water taxi, seaplane, train, or ferry —
roads, rights-of-ways, and so on.                     or perhaps a combination of these — think of the
                                                      cost of each of these transportation methods as
Preferred activities                                  this will add to your cost of owning a recreational
                                                      property, especially if you were to commute on a
What activities you prefer to participate in          regular basis. Also, you will need to consider the
should also be considered when purchasing your        costs of transporting supplies and materials
recreational home. What do you plan to do on          if you were to fix, renovate, or build on your
your property? If you plan to raise horses or farm    property.
worms, is this permitted? Are you allowed to fish
or hunt on your property? Note that fishing is
strictly regulated by each province and you do        Seasonal or year-round property
require a licence to fish on your property. Before    Is the area in which you are planning to purchase
making any plans to fish, contact the provincial      ideal for year-round activities or only for sea-
government for current regulations.                   sonal activities? If you owned a recreational
                                                      home in British Columbia’s Okanagan Valley, for
Accessibility                                         example, you could enjoy swimming, boating,
                                                      and waterskiing in the summer, skiing in the win-
Few city dwellers concern themselves with get-        ter, and wine festivals throughout most of the
ting around by car. The situation is quite the        year. This provides the recreational-home owner
opposite for many recreational homeowners.            with maximum enjoyment of the property.
The nearest public highway cannot always be
accessed from the local public road; sometimes it         If you intend to use your property year-
can only be accessed via a private road. You must     round, you should be looking for a property that
investigate whether the access is public or private   is winterized — property that can be used and
and whether there is a restrictive covenant on        occupied during the winter period. Non-winterized
title (see Chapter 6 for more information). You       properties need to be prepared for vacancy dur-
may also want to consider who is responsible for      ing winter months. For example, waterlines must
the upkeep of the access or roadway and whether       be drained and water supply shut off.
it is open year-round.
     In some situations, the cottage may be on an     Maintenance
island and accessible only by water. Provisions       Maintenance is always a concern, especially if
must be made for water transport as well as park-     you do not spend time on the property year-
ing facilities on the mainland.                       round and you have not hired an in-house care-
    Accessibility to your recreational home is        taker. You may want to find out if you can hire
very important for many reasons. One thing to         the assistance of a local caretaker who will work
consider is resale value: usually, people living in   on a weekly or monthly basis to ensure that your
the city want a very short distance to get to their   home remains secure and undamaged. Some-
recreational property, with minimal commuting         times, you will find your neighbours in the same
hassles.                                              or similar situation, in which case you can perhaps

                                                                 Searching for that perfect recreational home   5
hire a caretaker together. Another option is to      bylaws, rules, or regulations that impose restric-
have a system in which your neighbours check         tions or prohibitions. It is very helpful to obtain
your recreational home when you are not vaca-        strata council meeting minutes going back as far
tioning there, and vice versa.                       as possible — at least for the past 12 months —
     Perhaps there is a local recreational home-     and including the most recent annual general
owners’ association or cottage owners’ associa-      meeting.
tion where a caretaker or a property manager of           Common restrictions include age restric-
some sort is already hired. Contact the associa-     tions, which, for example, specify that some
tion in your area and find out what your options     developments are designated for adult-only resi-
are.                                                 dents; rental restrictions, which limit the number
     Another option is to rent out the property,     of residential strata units that can be rented; and
either directly or through a rental company.         restrictions on the size, weight, number, and type
More and more rental companies specializing in       of pets. Restrictions are not necessarily a nega-
resort-type recreational properties not only offer   tive issue for homebuyers. For example, although
property management services, but will take care     there may be restrictions that limit or prohibit
of everything from marketing and booking guests      rentals, this may be a positive factor for buyers,
for your property to cleaning and dealing with       in that most or all the occupiers of a building are
emergencies. In any type of rental activity, there   also owners.
will be some risk of damage to your property, so         Most strata corporations also place restric-
make sure that you have the proper documenta-        tions on the following:
tion, insurance, and permits to allow for renting.       • “Use” — specifying what activities cannot
                                                           take place on the property (such as run-
Strata or condominium restrictions                         ning a business)
Buying a condominium involves a type of hous-            • Window coverings — imposing unifor-
ing ownership that is more formally known as               mity of colour of window coverings
strata title ownership. In addition to ownership         • Waterbeds — prohibiting, requiring dam-
of a unit, you share ownership of common areas,            age insurance, or restricting their location
such as hallways, garages, and elevators, and              within the building
share financial responsibility for their mainte-
                                                         • Hot tubs — prohibiting placement on
nance with the other owners of the building. This
                                                           roof decks because of potential damage
is reflected in monthly maintenance charges.
                                                           from leaks or weight
    If you are interested in purchasing a property
                                                         • Hardwood floors — prohibiting them
such as a condominium, find out about the
                                                           because of noise, especially in frame
bylaws and other rules that govern that property.
You may also want to ask for documentation on
the history of the property and include, in your
offer to purchase, a statement that you are satis-   Zoning
fied with the disclosure statement that the seller   Under the authority of the municipal govern-
has provided. (Property condition disclosure         ment, zoning specifies the types of buildings that
statements are discussed in Chapters 11 and 15).     may be built on particular properties and how
    Restrictions vary from one housing develop-      those buildings may be used: as residential prop-
ment to another. Find out what the restrictions      erty (a single-family unit, a multi-family unit,
are and whether there are strata corporation         and/or a duplex), as recreational property, or as

6   Buy & sell recreational property in Canada
a commercial or industrial building. Look for               Zoning restrictions on rentals
zoning information on your MLS feature sheet.
                                                        If the recreational home is not your primary res-
Ask about the zoning of surrounding properties
                                                        idence and you are planning to use it only for
to determine if, for example, a factory or condo-
                                                        limited periods of time, you may wish to consider
minium development might suddenly appear
                                                        renting your recreational home to generate extra
nearby. Also be aware of the possibility of zoning
                                                        income. This income can help pay down your
changes in the future. If you purchase a home
                                                        mortgage or contribute to costs of maintenance,
with a view, for example, check to see if that view
                                                        utilities, insurance, and so on.
is legally protected. Find out whether there are
height restrictions that will keep someone from             However, you must be aware that district
erecting a building that will block your view.          bylaws vary from municipality to municipality.
                                                        For example, in a resort community properties
    Zoning and developments                             can be located in several different zones. This
                                                        could mean that some properties are located in
Zoning in areas where there are recreational            zones that allow for both residential and tourism
properties differs significantly from zoning in a       use, while other areas do not allow rental periods
more established community or city. Most homes          that are less than 28 consecutive days because
in a city are found in subdivisions. There are          that is considered tourist accommodation and is
highly developed city plans, and residences are         not allowed in some residential zones.
developed in predictable patterns. Lots are usu-
ally based upon subdivision agreements regis-               Some regions don’t specify rental periods in
tered on the title of the property. These               their zoning bylaws. In some areas where tourism
agreements set out the pattern of the building,         is promoted (for example, in areas near a ski
confirm water, sewage, and other utilities, and         resort) daily rentals are allowed. Some recre-
establish the layout of roadways, sidewalks, and        ational properties are purchased solely to pro-
parks.                                                  vide rental accommodation.
    Cottage developments rarely follow a pre-               In some areas there are no formal restric-
dictable pattern or plan. Cottage properties that       tions on short-term rentals; however, bylaws are
border waterfronts have often been subdivided           subject to change. Make sure that you know what
over the course of many years. Development in           the municipal bylaws and zoning restrictions are
the area may be sporadic. In many cases, munic-         pertaining to your property.
ipal involvement is kept to a minimum and most
of the day-to-day concerns are handled by cot-          New-home warranties
tage associations.                                      There are pros and cons to consider when decid-
    Some municipalities in cottage country have         ing whether to buy a new recreational home or a
passed seasonal zoning provisions. This could           resale. Buying a new recreational home means
very well prevent the conversion of a cottage into      that you may be able to choose or upgrade the
a year-round recreational property or retirement        finishing materials, flooring, cabinets, and elec-
home. If this is in your plans, be sure to verify the   trical features. As well, the building will comply
zoning bylaws (or ask your realtor to verify them       with the latest building and electrical codes and
for you). Plans for expansion or winterization          energy-efficiency standards, which will result in
may be futile. Without being able to use the cot-       lower maintenance costs.
tage year-round, the cottage’s marketability can            But more important, recreational home-
be adversely affected.                                  buyers may want the security of new-home warranty

                                                                   Searching for that perfect recreational home   7
programs that are available in most provinces.          analysis (CMA) to verify if the price is within fair
Contact a new-home warranty office or visit its         market value.
website for a list of registered builders in the area        Second, it is common practice for sellers to
where you are considering purchasing. Although          hire the services of a listing agent. The listing
warranty coverage varies from one province to           agent has a code of ethics to which he or she is
another, typically the programs guarantee labour        bound. He or she is also bound by the laws of the
and materials for your new home for at least one        country and has a fiduciary duty to inform his or
year after completion. The warranty also ensures        her client who is selling a property about the
that major structural defects will be corrected for     legal importance of full disclosure. It is also the
a minimum of five years (and up to ten years in         listing agent’s responsibility to verify the accu-
some provinces).                                        racy of the information being given to the poten-
    At present, warranties are required by law in       tial buyer. Not having an agent working on
Ontario, Quebec, and British Columbia, and are          behalf of the seller may raise questions regarding
voluntary in most other provinces. In British           the disclosure of water damage, mould problems,
Columbia, the law requires consumer coverage            and other serious health and safety issues.
to be provided in the form of home warranty                 Buyers’ agents, in seeing that there is no list-
insurance, which is a bona fide insurance product       ing agent to represent the seller, may find pur-
that can only be sold by government-approved            chasing a FSBO a potential risk because there may
insurance companies.                                    not be any confirmation about the history of the
     Comprehensive warranties on newly built            property or the accuracy of what is disclosed. A
recreational homes are readily available and eas-       buyer’s agent has a fiduciary duty to protect the
ily obtained. Even in provinces where the war-          client’s interests, and the seller of a FSBO may not
ranty is not mandatory, many lenders will not           be aware of his or her duty as an owner to dis-
grant you a mortgage unless you obtain a war-           close all information. So, if you are buying a
ranty. Clearly, a warranty is a good thing to get,      recreational property for the first time, retain a
as it offers you peace of mind.                         buyer’s agent to ensure that your interests are
                                                        protected at all times.
Homes Directly for Sale                                     There are perhaps only two reasons for pur-
                                                        chasing a FSBO. First, both parties can save on
by the Owner                                            agents’ fees because there is no commission to be
Sometimes you will find that a recreational prop-       paid. This may influence both parties in coming
erty you are interested in is being sold by the         to an agreed-to price, which may or may not be
owner, as a “For Sale by Owner” (FSBO, pro-             lower than fair market value. Second, a bidding
nounced “fizbo”), usually because the seller            war is unlikely to happen. Because the property
wants to save on agents’ fees. You should be            is not listed on the MLS, the chances of people
aware of the advantages and disadvantages of            finding out about it (unless it is very well adver-
purchasing a FSBO.                                      tised) are reduced. Go to the following websites
                                                        for more information regarding FSBOs:
    First, FSBOs tend to be priced according to
what the owner would like the homes to sell for,            •
rather than what the market is willing to pay. If           •
you are looking at various types of properties,             • (US website)
including FSBO properties, make sure that your
agent provides you with a comparative market

8   Buy & sell recreational property in Canada

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