Buyer beware: Cracks in walls, foundations can be sign of costly repairs ahead

March 16, 2012
Mark Weisleder

Cracks, like the one seen over the door in this basement, can be a sign that costly work is needed.

Toronto Star/Rene Johnston

 

There is an old superstition that if you step on a crack in the pavement, you will break your mother’s back. When it comes to houses, if you see or step on a crack, ask questions, because it can be a sign of costly repairs to come.


In early February, 2008, Ronald and Kathleen Jacob agreed to buy a house on 122 St. in Edmonton from Kenneth and Renee Pool. The house was 90 years old and the offer was conditional on the Jacobs being satisfied with a home inspection.


During the inspection, the Jacobs noticed cracks on the drywall and ceiling in one of the rooms and also that some of the doors and windows did not close properly. They asked the Pools whether they had faced problems with the home’s foundation and the answer was no.


The home inspection report said it excluded defects in the property such as cracks that may result from hidden defects because inspectors cannot search behind walls or under floors during an inspection.


After they moved in, the Jacobs had to pay $10,500 to fix the foundation when it slipped, damaging an area around the front porch. They sued the Pools in small claims court, claiming they either knew about the problem or concealed it.


In court, the Pools counter argued the cracks had been there for years, they did not hide them and hadn’t had any problems with the foundation.


Randy Bilyk, a civil engineer was called as an expert witness by the buyers. He testified that one third of basement foundation problems are caused by the settlement of soil. This can cause cracks in the foundation, allowing penetration of water. It can also cause doors to stick and windows to misalign.


He also testified that had he been called for the inspection, he would have conducted a visual inspection as well as a laser inspection to see if the home was level. He said the ceiling and wall cracks, the misalignment of the windows and the results of the laser test, would have raised concerns leading to further testing. That further resting might have revealed issues with the foundation.


He found no evidence that the Pools had done any repairs to try and stabilize the foundation or to disturb the soil around the foundation where the problem later occurred.


The law on hidden defects says that if a seller knows about a major hidden defect, does not disclose it or actively covers it up, then the buyer can sue them after closing. The judge accepted that there was no proof the Pools knew about the foundation problem or had covered anything up. As a result, the Jacobs lost.


What are the lessons of this case?


Not all home inspectors are the same so check their level of experience before you hire them. Consider additional testing, such as whether the house is level, especially in older homes.


Sellers, if you know about serious problems to your home, disclose them up front to any buyer or just fix them before you put your home up for sale.


Buyers, open every window and test every door during an inspection to make sure there are no visible problems.

Direct Energy scraps controversial new contracts amid customer uproar

Interesting article below - as a consumer who rents from Direct Energy I too called many times only to have the phone disconnected (as one consumer indicated in the below article written by Ellen Roseman).  Let's take note of the verbage used in the press release by Direct Energy  "AT THIS TIME" - will they re-introduce this and when?



March 16, 2012

Leslie Ferenc



Direct Energy has pulled the plug on controversial plans to charge buyout fees to customers who cancel water heater rental contracts.




The company confirmed there won’t be any changes to its water heater contracts, “at this time,” after backlash from angry customers opposed to the new terms and conditions.



The decision was announced Thursday by senior vice president of Canadian Services Rob Comstock, who apologized “wholeheartedly,” for the brouhaha and confusion caused by the proposed contract revisions which would have billed customers a hefty fee if they decided to rent or purchase water heaters from other suppliers.


“…We have not communicated this initiative as well as we could,” Comstock said admitting the mea culpa in a statement.


“I also want to say sorry to those who had difficulty getting through to us during a period of unprecedented call volumes. Please accept my apologies.”


Controversy erupted earlier this month after Direct Energy sent letters to some of its 500,000 customers advising they would be billed exit fees of $100 to $1,000 and more – depending on the age of their water heater—if they cancelled rental contracts. Those charges didn’t apply under existing agreements.


An April 2 deadline had been imposed and customers were required to call advising they wished to maintain their contract unchanged or be subject to the new rules. The deadline was later extended to May 1 after anxious customers jammed phone lines making it impossible to get through and fueling the frustration.

See the article below:


Roseman: Break free from Direct Energy by buying your own water heater


March 14, 2012
Ellen Roseman


I’m pulling the cord on Direct Energy. I just sent an email, saying I plan to buy the water heater I currently rent.


Of course, it’s cheaper to own your water heater. But in Ontario, renting is convenient because the utilities include the cost in customers’ energy bills.


I made the move to ownership after I started hearing from Direct Energy customers. They were upset to find new contract terms would be imposed on them unless they called to opt out by April 2.


I wrote a column last Saturday about the company’s decision to charge fees of $200 to $1,000 to cancel rental contracts. (You can cancel at no cost under current rules.)


The trickle of email became a flood over the weekend. Many people had yet to receive their letters, but they felt the terms were unfair.


How could Direct Energy force you to accept changes if you didn’t call to say no? Why give less than 30 days’ notice? Wasn’t negative option billing banned in Ontario in 2005?


On Monday, I heard from many customers who were in a panicky state. They couldn’t get through to Direct Energy when calling the number given in the letter (1-866-202-1120).


“I have been on the phone for three hours on redial, trying to keep my existing contract,” said Fred Goodall. “They must be overloaded with people cancelling the new contract.”


Charles Shaver was disconnected a few times before reaching the call centre. Then, he was upset that he couldn’t get a written confirmation of his request to keep the old contract.


Direct Energy provided an email address for customers only late Monday. It’s rentalterms@directenergy.com.


Confusion was a common theme. Many people thought the letters were about offering a service guarantee and inflation price protection.


Only the penultimate paragraph — which was not in bold print — mentioned the need to call by April 2 “to retain your existing agreement unchanged.”


Should you accept Direct Energy’s new contract? Here’s my look at the pros and cons.



Pro: If your hot water goes on the blink, you’ll get it back within 24 hours of contacting the company. But that’s no big deal. Many heating contractors promise four-hour service on evenings and weekends.



Pro: You’re guaranteed that rental rate increases won’t exceed inflation. Again, no big deal. The new contract applies to older water heaters ranging from seven or eight years old to more than 15 years old. Direct Energy doesn’t do any regular inspections, so the servicing cost is low



Con: If you sell your house, the water heater rental contract stays with it. New owners who want to buy their own unit are stuck with Direct Energy’s cancellation fee. It’s easier to sell a house without a rental contract.



Con: Your water heater lasts 15 to 18 years, maybe longer. But if you want to buy or rent from another supplier before the tank dies, you have to buy it from Direct Energy and dispose of it (a cost not mentioned in the letter). New rental suppliers can’t take care of the disposal, as they do now.



Maybe it’s time to take the plunge and buy the water heater you now rent.



I called Direct Energy to ask about my 50-gallon conventional water heater, installed in January 2000. I could buy it and own it for a cost of $131.08 (including HST).



Since I pay about $17 a month in rental fees, I’ll break even in under a year.



Yes, I’ll have to find a contractor if my tank breaks down. But many firms sell and service water heaters. You’ll find names at the Heating, Refrigeration and Air Conditioning Institute’s website, www.hrai.ca. (Click contractor locator and put in your postal code.)



Bye bye, Direct Energy. The contract changes you’re making so arbitrarily show your disregard for customers like me. I’m standing on my own from now on.

Direct Energy gives extra month to change water-tank policy

Do you have a Rental Hot Water Tank from Direct Energy - if yes you need to read the following or when it comes time to cancel the contract it could cost you between $200.00 and $3,000.00.

- Have until May 1st to contact Direct Energy

- Inform them that you want to remain under your existing plan whereby the Rental Hot Water Tank can be removed for a no fee or a small cost

If you signed a new contract with Direct Energy after September 1, 2010 then you are already included in their new Terms and Conditions with the cancellation costs.

Read below for more details,




ctvtoronto.ca



Updated: Wed. Mar. 14 2012 7:01 PM ET



Under public pressure, Direct Energy has extended its deadline regarding changes to water heater rental contracts.



Customers will now have until May 1, instead of April 2, to decide if they want to stay with their existing agreement.



Direct Energy was swamped with calls from angry customers on Wednesday.



The company is changing its rental water heater contracts to make it more difficult to buy a tank instead of renting, or to switch to another company.



As CTV's Pat Foran reported, a hotline set up by Direct Energy is so jammed with callers that there is a constant busy signal. At times, the hotline even seems to crash. The company said it was experiencing technical difficulties.



Currently, if a heater is rented from Direct Energy, it can be removed at no cost, or for a small fee. But on May 1, that will change.



Under the new agreement, if a contract is cancelled, the renter will have to pay a buy-out fee of between $200 and $3,000, depending on the size and year of the tank.



The change affects 600,000 customers.



It affects homeowners with water heaters older than seven to eight years. If a heater is newer, it will not be affected. If customers signed up with Direct Energy after September, 2010, they're already in the new contract.



"We've changed our cancellation options. So if customers want to end their rental agreement they will pay a buy-out fee at which time they will own the equipment. Returning the used equipment to us is no longer an option," said Len Diplock, vice president of water heater and rental services at Direct Energy.



The company says most people who continue to rent from them will not see any additional charges. However, if a customer wants to stay with their old agreement they must contact Direct Energy. If they don't call or email, they will automatically be signed up with the new contract.



Some have compared the new contract system to negative-option billing. Direct Energy said it's doing its best to notify customers.



They're also offering incentives to get customers to agree to the new rental contract. Direct Energy offers a service guarantee to have hot water within 24 hours or the next month is free, and a promise not to rise rates more quickly than inflation.



To reach Direct Energy about the new contracts, call 1-866-202-1120, or email rentalterms@directenergy.com

2012 tax filing season: 5 triggers that could lead to an Audit

March 11, 2012
Alison Griffiths

A Canada Revenue Agency employee at the CRA tax return storage facility in Ottawa.

Canada Revenue Agency photo

 

 

The dreaded brown envelope arrived just after Christmas. Instant fear! Would it be a full-blown tax take down (called a field audit) or just an inquiry? I’ve experienced the former and a colonoscopy is preferable.


“Our records indicate that you have received income that appears to be partially reported, or not reported on your income tax return,” the Canada Revenue Agency form letter stated. At least the CRA was kind enough to enclose a preaddressed mailing label.


I had been nailed by the T-slip matching program that ferrets out income reported by employers as paid out but not noted as income by the likes of me. The offending amount was $537.83 earned from CBC. The cheque should have been issued to my company not me personally. I deposited in my personal account, transferred it to my company and listed it as revenue, thus compounding the error.
Needless to say the very best way to avoid the beady eye of the CRA is to ensure all T-slips are reported, including those you haven’t received. T3 and T5 slips which detail investment income from interest, capital gains, dividends and mutual funds are notoriously late arrivals.


Related: 11 questions you were afraid to ask the taxman


Because T-slips can easily be misplaced, forgotten or occasionally not arrive at all, a great defensive strategy is to compile a list of expected slips. Keep it handy on your computer’s desktop and add to it as money comes your way, rather than trying to re-create all income sources while completing your tax return.


With roughly 1.3 million returns reviewed annually, chances are you will receive one of those brown envelopes more than once during your working life. An audit is rarer, only 200,000 Canadians suffer this fate. Still, dealing promptly with any CRA request lessens the chances that the agency will dig deeper into your return.


Usually you will have 30 days to respond to a query. In my case, I slogged away unsuccessfully trying to get the CBC to re-issue the T-slip. Despite numerous calls to the CRA to explain that I was working on the problem, time ran out and my personal return was re-assessed. I owed $116.61 and the CRA levied $4.73 in arrears interest. Not the end of the world but annoying and if I don’t cough up the money by March 15, I risk a more extensive review or audit.


Related: How to avoid these 8 tax-filing mistakes


Here are three more common signals that might trigger a second look at your return by the CRA.


1. Double dipping: It’s bad enough when a marriage or common-law relationship breaks down. Even worse is the fact that separated spouses often receive special CRA scrutiny. Check with your ex to ensure only one of you claims things such as the children’s fitness credit (line 365), tuition transfer (line 324) or the amount for an eligible dependent (line 305).


2. Change: If your deduction history deviates from the norm, the CRA might come calling. Say you normally have $500 or so in charitable donations annually, then one of those heart-tugging disasters, such as the recent Somali famine, encourages you to hand over a couple of thousand to help out. The increase in your charitable claim, though laudable, is a red flag.

The lesson here is to keep documentation and receipts close at hand especially when there is a big change in your deduction pattern.


3. Self-employment: According to Industry Canada the number of self-employed grew 12 per cent in the first decade of this century. And this is a gold mine for CRA reviewers, as small business owners and the self-employed are audited more often than the general population. Tax software can lead do-it-yourselfers through the process of listing business expenses. Still, it may be worth spending the money to consult an accountant to ensure you are minimizing the chances of an audit.


Related: What’s new for the 2012 tax filing season


Here are five specific deductions at the top of the CRA’s second look list.


1. Other deductions (Line 232). The CRA loves to zero in on this category as Canadians try to deduct funeral expenses, wedding costs, loss on the sale of a home and divorce or separation legal fees.


2. Caregiver amount (Line 315) — You can claim the caregiver amount for an eligible dependent over age 18 with a net income of less than $18,906 and who has a mental or physical infirmity. But don’t try it if that person isn’t living with you. And if your 22-year-old broke her ankle skiing, that doesn’t count either.


3. Medical expenses (Lines 330 and 331) — Medical expenses are one of the most confusing categories for tax filers and, according to the CRA, often riddled with mistakes. Guide RC4064 isn’t perfectly comprehensible, (the CRA scores a C in my book for plain English) but it will clear up some confusion for individuals and families.


4. Student loan interest (Line 319) — You may be groaning under the load of student debt but the CRA won’t let you deduct interest paid for a line of credit or family loan.


5. Education and textbook amounts (Lines 321 and 322) — If the number of months you are claiming doesn’t match the number of months you were a student the red flag will be raised. Students often make the mistake of claiming for the academic year, rather than the calendar year.


One caution, there is no way to be completely safe as the CRA randomly selects an unknown number of returns for review each year. However, you can increase the odds of keeping a CRA inquiry or audit at bay by checking the Common Adjustments web page. Be especially vigilant in maintaining records and receipts for the red flag areas.

Bank of Canada held Key Borrowing Rate at 1%

March 08, 2012

Les Whittington

The Governor of the Bank of Canada, Mark Carney, listens during a high level public-private sector conference in Mexico City on February 25, 2012.

RONALDO SCHEMIDT/AFP/GETTY IMAGES

OTTAWA—The Bank of Canada held its key borrowing rate unchanged at 1 per cent amid concerns that high oil prices could undercut the current uptick in global economic conditions.

Bank governor Mark Carney said Thursday there are signs that Europe and the United States are beginning to overcome the troubles that have held back the world recovery.


But these improvements and jitters over Middle East oil supplies that have seen gas prices in Canada hit $1.25-per-litre could hinder the recovery.


“Commodity prices are higher than anticipated, supported by improved global economic conditions and a geo-political risk premium on oil,” Carney said in a statement accompanying the rate-setting decision.


“If sustained, the latter could ultimately dampen the improvement in global economic momentum.”


However, the Bank said “the heightened uncertainty around the global economic outlook has decreased” since January:

“With tentative signs of stabilization in European bank funding and sovereign debt markets, conditions in global financial markets have improved and risk aversion has decreased.


“The U.S. expansion is proceeding at a modest pace, reinforced by recent improvements in the labour market,” the statement added.


Nonetheless, Carney concluded, the process of winding down debt in the advanced economies means “the global economy is still expected to grow below its trend rate.”


Still, it all adds to a slightly better outlook for Canada, said the Bank, which predicted in January that the Canadian economy would expand by a modest 2 per cent this year.


“Although the economy will likely grow faster than forecast in the first quarter due to temporary factors, underlying economic momentum remains around trend, balancing domestic strength and external weakness,” Carney said.


He warned again that consumer indebtedness in Canada could prove to be a problem when interest rates eventually rise.

“Canadian household spending is expected to remain high relative to (economic output) as households add to their debt burden, which remains the biggest domestic risk,” the statement said.


The next scheduled date for announcing the Bank’s trend-setting overnight rate is April 17.

Canadian home sales expected to rise slightly in 2012

The number of Canadian homes sold this year will outpace 2011 while prices will hold steady in most parts of the country, the country’s largest real estate association said Monday in a rosy revision to its 2012 outlook.

The Canadian Real Estate Association said the number of home sales will grow by 0.3 per cent this year to 458,800 from 457,305 units in 2011, largely due to the continuation of low borrowing rates.

The national average price is forecast to dip by 1.1 per cent in 2012 to $359,100 but that’s due to a drop-off in multi-million dollar sales activity in Vancouver — Canada’s most expensive real estate market..

Prices are expected to remain around current levels in most parts of the country, CREA said.

The most recent forecasts reversed those CREA gave in November, when it expected home sales to fall by 0.5 per cent this year, and the national average home price to hold steady at $362,700.

The revisions come at a time when central banks in Canada and the United States are keeping their key lending rates low to counter the economic drag caused by the European debt crisis.

“Risks to the Canadian economic outlook remain elevated owing to the European sovereign debt quagmire, but the continuation of low interest rates is the silver lining,” CREA chief economist Gregory Klump said.

“So long as the European debt crisis is contained and a global economic recession avoided, low interest rates will support Canadian home sales and prices.”

CIBC economist Benjamin Tal said the new CREA forecast is much more in line with what he is projecting, and if anything it is “a best-case scenario” forecast, with his bias being toward an expectation of more significant price declines.

“This is basically a stagnating housing market,” Tal said.

“This is not a housing market that is going to be on fire. This is a housing market that you’ll see activity moderating and prices actually going down.”

CREA expects Alberta, Saskatchewan, and Nova Scotia will drive the sales growth this year, offsetting weakness in British Columbia, Ontario, and New Brunswick.

In Vancouver, prices are already falling from sky high levels a year ago, especially in the once bustling condominium market, and prices elsewhere in country are not rising significantly to offset those big declines, Tal noted.

By contrast, sales and prices are still moving higher in Toronto, with sales up 16 per cent from last February and prices up 11 per cent.

However, a stagnating market is “exactly what we need to see” over the next few years to avoid a housing bubble that could burst, Tal noted.

“I think even real estate agents will tell you that another year of crazy activity with house prices rising by 10 per cent would not be good for their business from a long-term perspective.”

Sales are now expected to pull back by 0.3 per cent to 457,200 units in 2013, with prices rising 0.9 per cent to a national average of $362,300, CREA said.

Ontario is expected to weigh down the national results, as it is the only province not expected to make “modest gains,” CREA said.

The outlook would put national sales activity on par with the 10-year average for annual activity, the agency noted.

The Bank of Canada and some economists have warned that Canadians are piling on too much mortgage debt while interest rates are low, and some may no longer be able to afford their homes when interest rates rise.

One paper issued by the central bank suggested that home prices have been influenced not only by low mortgage rates but also on expectations that values will keep rising.

Meanwhile, CREA’s Klump has steadfastly declared Canada’s housing market is healthy, and is more likely in for what he calls a “soft landing.”

“Recent trends are reassuring, but interest rates remaining low for longer will doubtless keep the Canadian housing market under scrutiny for signs of overheating,” Klump said.

Tal believes that if there is a reacceleration of activity, the federal government would step in again with new mortgage rules to curb activity. Meanwhile, the central bank is unlikely to raise interest rates to soften the market because it is too broad of a tool that could hit other sectors hard.

“The real measure of intelligence is what you do when you don’t know what to do,” Tal said.

“And what you do when you don’ you don’t take chances so this fog of uncertainty will prevent it from switching policy any time soon.”



Found on Moneyville.ca/Toronto Star

SOLD for 117% of Asking - within hours of Listing on MLS

Mississauga Home Sells for 117% of Asking Friday Night -


Whoever said 2012 was going to be a slow market -

I just listed the home Friday on MLS around 1 p.m. with Seller requesting showings to start at 5:30 p.m.

There were approx 30 showings between 5:30 and 7:00 p.m. that night.

Obviously the Buyers and their REaltors were excited about the home as we had 10 registered Offers - the home sold firm at 117% of asking price.

Sellers are delighted - unfortunately the Open House that was advertised in the Mississauga News on Friday was cancelled but with a young family they were able to return to "normal" living very quickly.

Buyers were very excited to be the proud new owners of this magnificent home - what an exciting evening for them.

Multiple offers can be tense for a Buyer - see below for my recommendations ... unfortunately only one Buyer can be successful in this type of situation.

                                                                                                                                                           

Multiple Offer Suggestions for Buyers:


1. Know the limit that you are willing to offer

2. Keep your emotions in "check" - it is too easy to get carried away in the moment and increase what your original "maximum" offer price was going to be just to win the home

3. Be mortgage "Pre-Approved" prior to coming into the offer - also have a chat with your Mortgage Broker to determine how much the home will be approved at (Appraisal Value for the Mortgage)

4.  Should you want a HOme Inspection - have this completed before the offer as an offer with no conditions is always considered to be "strong" and one of the things a Seller will look at

___________________________________________________________

Please do not hesitate to contact me should you have any questions or I can assist you with your Real Estate Requirements (Selling or Buying Homes).


For more information on the market please visit my web site :

www.LancasterTeamSellsHomes.com


Have a great day,

Susan Lancaster