Buy & Sell Recreational Property in Canada

Have you dreamed about owning the perfect weekend getaway? Are you thinking about buying a vacation home? A ski chalet? A hunting lodge? A waterfront cottage? Maybe now is the right time to turn that dream into reality. Buy & Sell Recreational Property in Canada is an easy-to-understand and well-rounded look at selling recreational property in Canada, written by an experienced real estate professional. Whether the readers are seasoned veterans buying a large chalet or novices selling a small rustic cabin, this book will help them to buy or sell their property with confidence and get the best deal they can. This book provides information specific to the Canadian real estate market. It guides the reader through the entire process, step by step, from seeking buyers to the final paperwork. It also includes tips on determining when is the best time to buy or sell.

INTRODUCTION xvii
PART 1 - PREPARING TO BUY RECREATIONAL PROPERTY 1
1 SEARCHING FOR THAT PERFECT RECREATIONAL HOME 3
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
2 TYPES OF RECREATIONAL PROPERTIES AND TYPES OF OWNERSHIP 9
Cottages and Summer Cabins 9
Floating Homes 9
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CONTENTS
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vi Buy & sell recreational property in Canada
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
Contents vii
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
viii Buy & sell recreational property in Canada
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
8 BUILDING A RECREATIONAL HOME, AND OTHER OPTIONS 49
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
9 BUYING RECREATIONAL PROPERTY AS AN INVESTMENT 55
Determining Investment Potential 55
The Importance of Location 56
Accessibility 56
Exposure through events and films 56
Contents ix
Recreational activities 56
Increasing the Property Value 56
10 NON-RESIDENTS: BUYING AND SELLING RECREATIONAL PROPERTY 59
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
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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
Contents xi
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
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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
CHECKLISTS
1 Gathering the documents for the lender 29
2 Subject removal 79
3 Documents and information 98
4 The contract 123
SAMPLES
1 Buyer-agent fee agreement 19
2 Commission agreement 20
3 Property condition disclosure statement 68
4 Listing agreement 106