Typical new home purchasers will spend a considerable amount of time researching the community profiles of the areas of interest as well as researching the benefits of new home purchases vs. re-sale homes. Few, however, take the time to research the details of the purchase or what is involved in a real estate purchase agreement. You should be aware that all purchases of real estate in Alberta are done in writing and contracts for the purchase of newly constructed homes contain significant terms and clauses that benefit the purchasers.

For instance, the deposit protection afforded under a new home warranty program in Alberta is the most comprehensive in Canada and ensures that your initial deposits are protected to limits defined in the agreement should the builder default. What is often overlooked is that deposits differ from down payments and they are not the same thing. Deposits are monies placed with the builder or lawyer as an indication of sincerity and good faith by a purchaser and all contracts must include deposits of some amount. Down payments are monies paid to bridge the difference in purchase price and total price. In the event of default by the purchaser the builder may be entitled to retain the deposits as damages towards costs. Down payments however are not retained by the builder.

To illustrate the point, suppose a purchase agreement of $400,000 contains an initial deposit of $5,000 and an additional deposit of $35,000 with further payments of $50,000 upon closing. In the event of a default, the deposits totaling $40,000 are defined as “initial” and “additional” meaning they are designated as deposits and treated as such. The down payment amount of $50,000 would not be in jeopardy as the amount is described as a “cash to close” or balance of down payment. Deposits may make up part of the down payment but are treated separately.

Certainly, reputable builders will always carefully explain the contract to their customers and provide the opportunity for review by a lawyer. Ensure your contract is well written and be sure to understand the terms prior to approving the agreement by signature. Consult a lawyer for full explanations of your obligations and rights under the agreement.

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Growop’s a Bummer for Real Estate Agents (05/18/2007)

Canada’s realtors are declaring war on former marijuana growop’s. While stopping them from launching is beyond there control, coming together to developing a clear policy to protect the unsuspecting buyer from the repercussions of purchasing one of these properties. Unfortunately providing a clear policy the issue has been difficult.

Among other concerns, former grow-ops pose health risks, structural damage due to mould or water, or changes to the foundation as a result of growers trying to bypass electricity meters or obtain power illegally. All these things can drastically reduce a properties value.

The Canadian Real Estate Association, provincial real estate associations and local real estate boards are also offering their members training and workshops with police and industry groups. They have introduced mandatory or voluntary disclosure requirements for sellers and are doing as much as possible to increase public awareness about the potential pitfalls of former grow-op sites.

The Calgary Real Estate Board (CREB) participates in a grow-op task force that includes fire, police and health officials, as well as banks and mortgage brokers. A majority of CREB members also take courses and workshops provided by the board and city police during the past two years. . CREB requires that realtors have sellers sign a disclosure form regarding a property’s grow-op status. Realtors who do not disclose could be held liable for damages.

The City of Calgary requires that a condemned former grow-op’s remediate heating, electricity, plumbing and air quality be inspected and approved before it goes back on the market. Calgary’s city council gets positive reviews for creating new bylaws that give municipal officials more authority over the remediation process. Calgary is probably slightly ahead than other municipalities on grow-ups because it tackles the problem collectively and came up with some good recommendations.

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