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Edge News

March 2010 

REALpac releases office green lease guide
Market Watch: Consumer confidence hits two year high
Make the most of green upgrades
REALTORS® welcome EI benefits for self-employed Canadians
Mortgage brokers and agents licences up for renewal
Wired Office: Should you upgrade to Windows 7?
Get to know MTO policies for real estate signage
LEGAL BEAT: Conduct can create agency relationship
Errors and omissions new course starts
Sponsors contribute to conference success
New online study guide available

 

REALpac releases office green lease guide
The Real Property Association of Canada (REALpac) has developed a Green Lease Guide for Commercial Office Tenants. The REALpac Green Lease Guide, released in February, highlights what tenants in leased spaces ought to look for when selecting a building and what green elements to consider when designing a fitout and managing an office. The Guide was designed to be used in conjunction with the REALpac Office GREENLEASE™ National Standard Lease for Single-Building Projects, although the Guide can easily function as a standalone document. See http://www.realpac.ca/splash.asp for more information. See more news at www.orea.com/newsupdates.

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Market Watch: Consumer confidence hits two year high
The Index of Consumer Confidence rose 13.8 percentage points in January to a 23-month high, according to the Conference Board of Canada’s latest Index of Consumer Confidence. The index is over 40 points higher than it was one year ago suggesting Canadians are seeing a light at the end of the recession tunnel. In Ontario, an increase of 12.3 points in January boosted confidence in the province to 93.7 – more than double its December 2008 level of 45.9. To see the full report, visit www.conferenceboard.ca.

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Make the most of green upgrades
As energy conservation becomes more of a concern for both government and consumers, REALTORS® can better serve their clients by knowing more about heating system upgrades and government grant programs for them.

Clients who are interested in upgrading their heating systems can take advantage of the Ontario Home Energy Savings Program and the federal ecoEnergy Retrofit program which provide grants for retrofitting their homes. Homeowners can receive up to a combined maximum of $10,000 from both the provincial and federal government in grant money.

Only homes that have undergone a residential energy efficiency audit by an energy advisor certified by Natural Resources Canada will be eligible for grants under the ecoEnergy Retrofit program. So what’s involved?

Check for leaks and drafts
To qualify for federal grants and provincial rebates, homeowner must complete two home energy assessments: one pre-renovations and one post-renovations. Only renovations that begin after the initial assessment qualify. Renovations need to be completed by the earlier of either 18 months of receiving the pre-retrofit evaluation report or by March 31, 2011.

A typical energy audit consists of a walk-through to assess the home’s insulation, heating and cooling systems and other energy uses. The home’s ventilation, leaks and drafts are then identified using a “blower door” depressurization test. An evaluation report is produced and the advisor provides an EnerGuide rating label for the home. The energy advisor will submit the file to NRCan, who will then transfer the file to Ontario to process the audit grant cheque.

Once the audit is completed, the homeowner can choose which (or all) of the recommendations he or she wishes to implement. On completing the renovations, the homeowner should contact the energy advisor to perform the post-retrofit evaluation, and then submit the grant application. The homeowner should receive a grant cheque within 90 days of the post-retrofit evaluation.

All renovations, whether completed by the homeowner or a contractor, should be documented with receipts, photos and product literature to ensure full credit is received. After participating and completing the program, homeowners can register for another eligibility period in the program and continue with additional renovations.

Only energy advisors certified by Natural Resources Canada (NRCan) and employed by licensed service organizations can conduct energy audits under both programs. Licensed organizations can be found on the Natural Resources Canada website.

Grants available
Grants vary based on the energy efficiency and the type of equipment purchased, however, each upgrade qualifies for a flat incentive amount. For example, replacing an existing heating system with an ENERGY STAR® qualified gas furnace with a 94 per cent annual fuel utilization efficiency (AFUE) rating or higher and a brushless DC motor qualifies for $1300 in rebates ($650 federal $650 provincial), while replacing it with an ENERGY STAR® qualified gas furnace with a 92 per cent AFUE qualifies for $750 in rebates ($375 federal $375 provincial).

When replacing any heating equipment, the new equipment must have an efficiency rating equal to or higher than the original equipment. If the homeowner is installing two new systems, the second system must be of the same type and efficiency.

A table of grants available can be found at nrcan.gc.ca.

Aside from the rebates (up to a maximum of $10,000), the actual savings from participating in the program depend on the home’s condition and the types of upgrades chosen. Participants typically reduce their energy use by up to 30 per cent. This translates into a savings of $450 on a $1,500 annual heating bill.

Green Energy Act puts more focus on audits
The Government of Ontario put more focus on energy conservation when it introduced Bill 150, the Green Energy and Green Economy Act, in February 2009.

Among its provisions, Bill 150 included a requirement that all sellers of low rise residential units would have to produce a home energy audit at the time of sale.

OREA was successful in getting the government to amend Bill 150, because while it supports the government’s Home Energy Audit Rebate Program to encourage the voluntarily assessment of a home’s energy efficiency, mandatory audits will add costs to the real estate transaction that will make home ownership less affordable.

In the amendment to the bill, the government added a provision that allows purchasers to waive their right to receive an energy audit report provided they do so in writing. In addition, mandatory energy audits will no longer apply to leases or commercial properties and, in fact, will only apply to low rise residential units. The government has also indicated that home energy audit reports will be transferrable from the seller to the buyer.

Currently, the Ministry of Energy and Infrastructure is planning to work with stakeholders to draft regulations governing the implementation of home energy audits. Once the regulation has been drafted, it will be posted on Ontario’s environmental registry at http://www.ebr.gov.on.ca/ for public comment. The Ministry has not announced a timeline for the implementation process.

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REALTORS® welcome EI benefits for self-employed Canadians
Self-employed REALTORS® can now participate in the Employment Insurance (EI) program, CREA, the Minister of Human Resources and Skills Development and the Minister of State for Small Business and Tourism announced on February 1.

Beginning in January 2011, self-employed Canadians will be able to access Employment Insurance (EI) special benefits, such as:

  • maternity benefits for up to 15 weeks
  • parental/adoptive benefits for up to 35 weeks maximum
  • sickness benefits (15 weeks maximum), if you are who is unable to work because of sickness, injury or quarantine; and
  • compassionate care benefits (six weeks maximum), to provide care or support to a family member who is gravely ill with a significant risk of death.

REALTORS® who opt in to the program will pay the same EI premium rate as salaried employees in their province. They will not be required to pay the employer portion of premiums, which takes into account the fact they will not have access to EI regular benefits. Premiums, and resulting benefits, will be based on income.

To opt into the program, REALTORS® must enter into an agreement with the Canada Employment Insurance Commission through Service Canada. REALTORS® will have to register online using My Service Canada Account at www.servicecanada.gc.ca.

Those who enter into an agreement between January 31, 2010 and April 1, 2010, will be able to make a claim for EI special benefits as early as January 2011. REALTORS® who enter into an agreement with the Canada Employment Insurance Commission after April 1, 2010, will have to wait 12 months before being able to make a claim for EI special benefits.

For further information: or to arrange an interview, please contact: Alyson Fair, Publicist, The Canadian Real Estate Association, (613) 237-7111 ext 2284, afair@crea.ca

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Mortgage brokers and agents licences up for renewal
More than 1,300 real estate brokers and sales representatives met the requirements to be licensed as mortgage brokerages, brokers or agents under the new Mortgage Brokerages, Lenders and Administrators Act, 2006 (the Act). Licensees under the Act are beginning the first full renewal cycle. All mortgage broker and agent applications must be completed on-line and received by the Financial Services Commission of Ontario (FSCO) by midnight on March 31, 2010.

The FSCO on-line licensing system Licensing Link is available for renewals until midnight March 31, 2010. You must ensure your principal broker has sufficient time to review and submit your application to FSCO or your risk not having your licence renewed. Those principal brokers, mortgage brokers or mortgage agents who have not renewed their licenses by March 31, 2010, but continue to deal and trade in mortgages, may be subject to fines & prosecution.

Mortgage brokers and agents who choose not to renew their licence may allow their licences to expire.

Mortgage brokerages have a continuous licence and do not need to renew the licence. If you wish to close your brokerage you must apply to FSCO to surrender the brokerage licence. Please contact FSCO to request a licence surrender declaration form.

Mortgage brokerages must have a licensed principal broker at all times.

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Wired Office: Should you upgrade to Windows 7?
By now, you’ve probably heard some mention of Microsoft’s new operating system known as Windows 7. Released in late October 2009, most new PCs now come with Windows 7 pre-loaded. However, if you’re not in the market for a new machine, should you make the move to Windows 7? Here are some facts to consider if you’re thinking about taking the leap.

Windows 7 improvements
Improved interface: Windows 7 incorporates a new interactive taskbar, allowing you to align the objects on the taskbar according to your needs. The taskbar has bigger buttons and full-sized previews. Jump Lists take you directly to the documents, pictures, songs, or websites you use each day.

Improved media sharing and storage: Windows Media Player has been enhanced, and drag and drop features which were not previously available have been added.

Improved home networking: The interface for connecting machines to a home network is now easier to use. Improved network security helps make home networks less vulnerable to hackers.

Improvements to accessories: The calculator can now perform unit conversions, calculate fuel economy and auto lease payments. Wordpad looks similar to Microsoft Word, and has the word prediction feature (based on your writing style, can sometimes guess what your next word will be).

Thinking of upgrading?
Before you can upgrade, you’ll need to determine whether or not your computer hardware is compatible with Windows 7. To do this, download and run Microsoft’s Windows 7 Upgrade Advisor, which can be found by going to www.microsoft.com and searching for Windows 7 Upgrade Advisor. If you learn that your computer is not compatible with Windows 7, you will not be able to upgrade to Windows 7. If your machine is compatible, here are a couple of additional things to consider…

Are you satisfied with your current system? If so, save yourself some time and money. Skip the upgrade for now. Windows 7 may look refreshed and have some new features, but any time you upgrade, there’s an investment of time and the potential for unexpected problems.

Are you currently running Windows XP? Before you install Windows 7 you’ll first have to install Windows Vista, or do a full backup and then erase the contents of your hard drive.

Are you a frustrated Windows Vista user? If so, do yourself a favour and get the Windows 7 upgrade. Windows 7 is more stable and secure than Vista and has some enhancements that you’ll appreciate.

So many versions, so little time
If you’re currently running Windows XP or Windows Vista (any version), you are qualified to purchase the “upgrade” rather than the “full” version, which will save you some money.

Here’s a brief summary of the various versions of Windows 7:

Windows 7 Home Premium – makes it easy to create a home network and share all of your favorite photos, videos, and music.

Windows 7 Professional – you can run many Windows XP productivity programs in Windows XP Mode and recover data easily with automatic backups to your home or business network. Using Domain Join, you can easily and securely connect to company networks. The entertainment features of Windows Home Premium are also included.

Windows 7 Ultimate is the high-end version of Windows 7. It combines ease-of-use with the entertainment features of Home Premium and the business capabilities of Windows 7 Professional. For added security, you can encrypt your data with BitLocker and BitLocker ToGo. And you can work in any of 35 languages.

Each package contains two disks: one with the 32-bit edition and one with the 64-bit edition of Windows 7. Make sure you know which edition to install on your PC.

Installation
You can hire an IT professional to install Windows 7 for you, or you can do it yourself. Be sure to set aside a few hours for the install.

To install Windows 7 on a computer currently running Windows XP, you’ll have to:

  • Backup all data
  • Boot to the Windows 7 installation disk
  • Select "Custom Installation" and re-create primary drive partition(s)
  • Re-configure the operating system and restore your backup

If upgrading to Windows 7 from Vista, the installation procedure involves:

  • Backup all data (to be on the safe side)
  • Insert the Windows 7 disc and click "upgrade"
  • Double-check that everything works

Should I or shouldn’t I?
Microsoft is currently looking into battery problems apparently affecting Windows 7 notebooks. They are searching for a common cause to the battery complaints, and are working to correct the problem. There will be a fix available once the problem has been resolved.

Overall, upgrading to Windows 7 is recommended if you are running Windows Vista. Performance, security and ease of use have been improved. If you’re running Windows XP, you’ll have to consider if the gains are worth the effort to upgrade.

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Get to know MTO policies for real estate signage
REALTORS® working with properties that enter onto public highways in Ontario need to be aware of guidelines for entrance permits as well as real estate signage.

The Ministry of Transportation (“MTO”) administers permit control within 800 m of a provincial highway under the Public Transportation & Highway Improvement Act (PTHIA). Permits are required for entrances onto the highway, construction of buildings, land development adjacent to the highway and placement of signs visible from the highway.

“MTO has a provincial policy in place to maintain the efficiency of the highway system and to ensure public safety,” says Tony DiFabio, Senior Planner and Policy Advisor. “All development next to highways must comply with standards and requirements set by the ministry not only for safety reasons, but also for aesthetics as well as future expansion and highway widenings.”

Although the policy guidelines are province-wide, DiFabio says REALTORS® and property owners should always check with the MTO office in their region. “Some regions may have site specific issues such as setback differences or other local requirements.”

It’s important to note that permits for entrances to a provincial highway are issued to the property owner and are non-transferable. Anytime the property is sold, the new property owner is required to obtain an Entrance Permit from MTO to recognize their entitlement to retain the existing access connection. The permit also clearly states the permitted use of the existing entrance. “However, if the use of the entrance is not changing, there is no fee for obtaining a new Entrance Permit for a change in property ownership,” says DiFabio.

When selling property that requires an entrance to a provincial highway, REALTORS® should consider drafting a clause indicating that Entrance and Sign Permits do not survive closing and should be a condition of the offer (obtaining or transfer).

MTO also offers a free, pre-consultation service for proposed property purchasers or their REALTORS®, advising if the entrance to the highway is recognized by MTO, whether there are certain conditions as to the use of the entrance or whether the entrance is temporary in nature and therefore cannot remain if the lands are sold.

Placement of real estate signs
As long as they don’t exceed 3.7m2 (40 square feet), MTO has no restrictions for real estate signs placed on properties listed for sale. Up to this size limit, no permit or fee is required. Any sign larger than 3.7m2 such as Temporary Development Signs that advertise future subdivisions or commercial development do require a permit and a fee will be charged. Other restrictions for commercial development signs include : a maximum of two sign structures per development site, they require a sign permit that will be valid for two years and the total area of these signs cannot exceed 46m2 (500 sq. ft).

Although regular sized real estate signs do not require a permit, they must be situated inside the property limits of the parcel of land for sale. According to the MTO, signs placed within MTO’s right-of-way will be removed without notice to either the property owner or their agent. Placement of signs by private individuals within MTO’s right-of-way is also not allowed. This includes signs such as open house ‘A’ frames, portable read-o-graph signs, fingerboard signs attached to telephone or fence posts, or signs advertising directions to a property that is for sale at intersections, either on or off MTO’s right-of-way.

DiFabio says understanding ministry requirements and procedures will prevent unnecessary delays or hassles during a real estate transaction. “A call to the local MTO Corridor Management Officer prior to property negotiations is not only good planning, but can often make the difference in a smooth transition of ownership from one party to another.”

Depending on the specific situation, your client may require one or more of these permits:

Entrance permits: new entrances to the highway, change in use of existing entrances (field use to residential use), relocation of existing entrances, paving of existing entrances, temporary entrances, change in ownership, change in design, altering any existing entrance.

Building/land use permits: new building and structures, additions to existing buildings, wells and septic systems, underground and above ground storage tanks, fences and hedges, trees, shrubs, gravel pits, parking areas.

Sign permits: All signs within 400 m of the highway (including temporary and portable signs) require ministry permits.

Encroachment permits: All work and installations, municipal or private, within the highway right-of-way (including landscaping, placing of culverts or pipes, paving, etc.) require encroachment permits.

For more information and permit forms contact your local MTO Corridor Office at www.mto.gov.ca or call toll free at 1-800-268-4686 or 416-235-4686.

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LEGAL BEAT: Conduct can create agency relationship
The buyer used REALTOR® “S” to look for a condominium unit but refused to sign a Buyer Representation Agreement (BRA).

Offers were made for a unit accompanied by an OREA Confirmation of Co-Operation and Representation Form that indicated that the Listing Agent was representing the seller and that S was representing the buyer and would be paid the 2.5% commission under the MLS®. The offers were not accepted.

The buyer called the Listing Agent directly to put an offer through her. She confirmed with the buyer and S that a BRA had not been signed. The buyer signed one with the Listing Agent. She reduced the total commission and an offer was accepted and the deal closed. The Listing Agent sent S a "finder's fee" of $1,500.

The Small Claims Court judge decided that the buyer ignored S in order to cut him out of his commission without reducing the net to the sellers and thereby increasing the commission to the Listing Agent. The Listing Agent " appropriated to themselves the value earned by the labour of the plaintiff. They cannot retain it." S was entitled to his commission on the basis of "quantum meruit" to avoid an unjust enrichment to the Listing Agent.

The Confirmation Form clearly indicated an agency relationship and an acknowledgement that S would be paid. The buyer and the Listing Agent were ordered to pay S the 2.5% less the $1,500 that had already been paid.

Stoicevski v. Nelson, Carroll, Prudential First Choice

MERV'S COMMENTS
An agency relationship can be created by contract, as is done in most situations and also by conduct, as may happen more frequently in some commercial transactions. Using an OREA Confirmation Form may help prove your relationship for this property even without a signed Buyer Representation Agreement. It is dangerous for a Buyer to ignore his or her REALTORS® and also for another REALTORS® to get caught in the middle of such a situation.

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OREA NEWS
Errors and omissions new course starts
Risk Management Strategies for Errors and Omissions Insurance is a new six-credit course designed to help real estate professionals understand terms used in errors and omissions insurance policies. This course, developed by ACRE, outlines the key reasons for claims being made against the insurance policies, describes how deductibles are applied and what their limits are, and helps real estate professionals understand the test for negligence or negligent misrepresentation. To enroll: go to www.orea.com and click on Continue Your Real Estate Education, Courses offered, E-Learning, or call the OREA Real Estate College at 416-391-6732 or 1-866-411-6732.

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Sponsors contribute to conference success
OREA’s 2010 Annual Conference was made possible by the donation of our generous sponsors. Sincere thanks to our platinum sponsors, Ontario Association of Home Inspectors and GE Security Canada Supra; industry sponsor EXIT Realty Corp. International; gold sponsors Filogix Limited Partnership, Wireless Communications Plus, Rogers Wireless and Teranet; and silver sponsors Real Estate Institute of Canada, TitlePlus and TD Insurance Home and Auto.

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New online study guide available
Has studying got you stressed? The new passit online study guides are designed to help ease the stress of studying for real estate pre-licensing courses in Ontario. Passit has two learning modes. In study mode, students get immediate feedback, answer explanations and specific course references (including page numbers). Students can review the entire course, specific chapters or math only. Test mode prepares students for the exam with various timed sample tests covering the entire course. End-of-test feedback highlights weak areas for further study. Go to www.passit.ca for more information.

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