Smarts Index
What came first, the chicken or the house?
All's Not Well That Ends Well
ASK THE INSPECTOR - Preparing the House for Inspection
ASK THE INSPECTOR - Q and A about building permits

"What came first, the chicken or the house?"

Like "What came first: the chicken or the egg?" there is no generally correct answer to the classic real estate problem of whether it's better to buy or sell first. Moving from one house to another involves the financial risk of carrying two houses simultaneously, or ending up on the street and having to move twice. Let us investigate which alternative has fewer disadvantages.

If the client BUYS first:

  1. He may have the satisfaction and security of knowing where he is moving to Öbut only perhaps!
  2. The smart thing to do is to include a clause in the offer, stipulating that the purchase is "subject to" the sale of the buyers home by a certain date (such as in 60 days).
  3. If the buyer needs new financing, there would also have to be an appropriate clause to that effect.
  4. Because of these two "subject-to" clauses, the buyer will have reduced bargaining power (in comparison with a subject-free cash offer). The seller will be less inclined to negotiate on his asking price.
  5. Then there is the uncertainty of whether the buyer's home will sell during that limited time period. To avoid tying up his principal's house needlessly, the listing broker will insist on inserting an escape clause: " The seller's acceptance of this offer is subject to him being able to continue to market his house during the next 60 days. If another acceptable offer should materialize during those 60 days, then the seller will give the buyer 24 hours to remove all subject clauses and make a firm and binding contract. Failure to do so will render this contract null and void and the seller will be free to accept the other offer."
  6. The lending institution that will grant the new mortgage for the buyer may not give a firm commitment until the buyer's house is sold. Besides the uncertainty of how much new financing the buyer will need, the problem may be the buyer's inability to carry two houses.
  7. Next, the buyer will find himself under pressure to sell: he has a limited amount of time to sell. Precious days will be wasted on getting the show on the road: processing, publishing and circulating the listing. It may be on the computer without a picture. The deadline for the next MLS catalogue might be missed. The MLS Tour could be fully booked for the next few weeks.
  8. Selling in a buyer's market often compounds additional problems. Overoptimistic/ unrealistic sellers tend to overestimate their home's market value and underestimate the length of time that is required to sell their house.
  9. The buyer will not have the luxury of being able to hold out for a good price: in fact he may be forced to progressively reduce his price in order to attract an offer. Everybody has seen the ads," Owner has bought and must sell". Some ruthless buyers may decide to wait and see how low the unfortunate owner is willing / able / forced to go.
  10. To add insult to injury, the buyer may be served (during the 60 days he has to sell) with the 24 hour escape clause before his old house is sold. As for most people, it is too risky to borrow bridge financing and to carry two houses. They will have no choice but to step aside and lose out on the home of choice. If somebody buys first, chances are that he will buy high (little bargaining power) and sell low (due to time pressure) and / or he may lose out anyway on the house.

If the client SELLS first:

  1. The preliminaries of putting the house of the market can be taken care of without wasting precious time.
  2. While their house is for sale, there is nothing to stop them from familiarizing themselves with what is on the market, should they find a suitable home before they have a firm offer on the old house, the "subject-to-sale" method is available.
  3. If they get an offer on their old house before they have found something they like, then they have the luxury of being able to drive a tough bargain ( to make only small concessions on the asking price).
  4. If the buyers are renters, then a long possession date should be no problem. A long possession date could be a bargaining factor and should be attempted on all offers
  5. After the buyers have received a firm offer with a substantial deposit (for their peace of mind), they can get their mortgage approval and,
  6. Drive a hard bargain on their next purchase. The owner of the house they want to buy will be more disposed to making price concessions.

So, if you sell first and buy later, there is nothing to stop you from looking while marketing your house, and if you play your cards right, you will sell high and buy low.

Regrettably, there is no universally perfect solution to this dilemma. Each client will have to weigh the risks of having to move before the next place is available: if they bunk with friends or relatives or rent temporary quarters, there is the expense of having to move twice, storing the furniture somewhere and possibly having to put a pet into a kennel. Worse still, where will the children go to school? For whatever it is worth, all of these problems are surmountable and merely inconveniences in comparison with the financial burden and fiasco of having to carry two houses for an indeterminate period of time.

Quoted from REM Magazine
February 2004.
Mr. Albert R. Teichner


Preparing the House for Inspection

Q: The potential purchasers of my home are having a home inspection performed. What do I need to do to prepare my house for the inspection?

A: A home inspection is a visible, non-intrusive review of all accessible areas and major systems of the home as they appear at the time of the inspection. As part of a home inspection, the inspector is not permitted to put holes in walls, ceilings or floors, and does not typically move all of the furniture, boxes and clothing in the home to inspect these areas. Significant amounts of personal storage, or "clutter" limits the inspector's review of the home. The inspector cannot report on what he or she cannot see, and therefore has to report these limitations to the potential purchasers.

Having some limitations is an inherent part of the home inspection process, but if there are too many limitations, the prospective purchasers may feel uncomfortable and less confident about the home. To avoid this, it is recommended that the home be prepared so the house is tidy and free of unnecessary storage during the home inspection.

Areas that must be fully accessible for the inspection are the attic, the major systems, and the basement walls and floor. The inspector must enter the attic space to inspect insulation levels, ventilation, and signs of leaking. If the attic hatch is in a closet, storage or shelving should be cleared so that convenient access to attic is available.

A home inspector will bring a ladder to access the attic. Be aware that bits of insulation and dust may fall out of the attic when the hatch is opened. Most home inspectors place a drop sheet under the attic hatch and clean up any fallen insulation subsequent to the attic inspection.

The major systems in the home are an integral part of the inspection and should also be made readily available. For example, the area around the furnace and water heater should be cleared to provide access for inspection, as should the areas below sinks. If the electrical panel or main water shut-off valve has been concealed, be sure to leave a note indicating their exact location. The electrical panel cover will be removed by the inspector to check the wiring conditions, so there should be adequate space around the panel to do so.

The exterior basement walls are also an extremely important part of the inspection process. They are inspected for signs of past water leakage, signs of cracking, and to determine the general condition of the foundation. Any boxes or personal storage in the basement should ideally be moved away from the walls and temporarily relocated to provide convenient access for inspection.

A few other things to consider when your house is being inspected:

Animals: If you have pets that roam free in the house and are not allowed outside, leave a note informing the inspector of this. The pet may best be left confined into one area of the home (such as the laundry area) to prevent the pet from "escaping" during the inspection. If there are large or unfriendly pets, they should be temporarily removed from the house and /or backyard during the home inspection.

Winterized Property: If the property has been "winterized" and the home's water supply or electrical service has been disconnected, these services should be restored prior to the inspection. With the water supply disconnected, the plumbing cannot be inspected. Inspection of the electrical system is very limited if it isn't connected. In some cases the heating system cannot be properly inspected in a winterized home.

Documentation: If documentation is available for recent upgrades or repairs, including warranties, it should be provided for the prospective purchaser to review. Other documentation that should be made available includes building permits and service records. This documentation will provide further information for the purchasers and help to answer some common questions that often arise during an inspection.

Obvious Defects: If there are obvious defects or damage (staining, holes, patches in walls/ceilings) an explanation should be provided. When the cause is not evident, the inspector and purchaser can only speculate, potentially leaving the purchaser in doubt. If repairs have been performed to correct the condition, information related to the repairs should also be provided.

Inspection Time: Be aware that the inspection process typically takes 2.5 to 3.5 hours for an average-sized home, and that the prospective purchaser and their real estate agent are usually present for the duration of the inspection.

Quoted from REM Magazine
February 2005


Explaining UFFI

Q: What is urea formaldehyde foam insulation (UFFI) and how can I tell if I have it in my home?

A: UFFI is a type of insulation composed of a urea formaldehyde resin. When mixed with a foaming agent and compressed air, it is easily injected into exterior wall cavities, which is a much more cost effective method of adding exterior wall insulation to existing homes than more conventional insulation. Urea is a substance that is formed by a chemical reaction between ammonia and carbon dioxide. This process occurs naturally within the liver of mammals and the nitrogen waste that is generated is present as urea in the urine of animals, including humans. Due to its high nitrogen concentration, it is most widely used as a fertilizer. It is also used (along with formaldehyde) in the formation of plastics and particleboard. Pure urea exposure will cause irritation to skin and could be a health concern if inhaled in large doses. However, in the form most commonly found in homes, it is not typically a health concern.

Formaldehyde is present naturally in the environment and is used in many building materials, including carpets, fabrics, plywood and particleboard. It is also present in tobacco smoke and as a product of combustion in wood and other fuel burning appliances. In low concentrations, formaldehyde is not a health concern, but in large quantities it can cause headaches, dizziness, respiratory problems, and/or irritation to eyes, nose and throat.

UFFI was first developed in Europe in the 1950's and came to Canada in the 1970's. The peak installation period for use in residential energy efficiency retrofits occurred between 1977 and 1980 as part of a federal government energy conservation effort. In December of 1980, the use of UFFI was banned in Canada after some homeowners who had UFFI installed complained of negative health effects, including headaches, fatigue and nosebleeds. These health problems were linked to the off-gassing of formaldehyde gas, which some-times occurred within the first one or two days after installation if the insulation components were not properly mixed.

The negative press that ensued prompted many home- owners who had UFFI installed to have it removed. Studies by the National Research Council of Canada into the levels of formaldehyde in UFFI homes were initiated in 1981 after the ban was enacted. The research revealed that homes that contained UFFI had formaldehyde levels below the acceptable level of 0.1 ppm (parts per million). In fact, homes that had recently installed carpet had higher levels of formaldehyde than houses with UFFI. The study found no link between elevated indoor formaldehyde levels and UFFI.

There are several ways of determining if UFFI is still present in a home. The most obvious sign that UFFI was installed are small, plugged holes at regular intervals in the exterior siding. UFFI was most often injected into the home through the exterior siding, either in mortar joints of bricks or concrete block, or directly into wood, aluminum, or other types of siding. Injection holes are typically one to four cm. round and spaced at regular intervals in some or all of the exterior walls. These holes were filled after injection with mortar, caulking, cork, or other types of sealants. It is sometimes very difficult to see the plugs, especially if they are tiny or in brick siding where the mortar plugs are well blended with the original mortar.

Other types of insulation such as cellulose fibre insulation can be injected into exterior walls, so the presence of injection holes may not provide conclusive evidence that UFFI is present.

Sometimes UFFI is found in the attic or basement ceiling at the exterior walls. It is a white, blue, or yellow, foam-like substance that typically crumbles easily when handled. Other indications that UFFI may have been installed in a home and later removed are drywall in an older house at the exterior walls, new brick or siding on an old house, or if a 15- to 20- year- old heat recovery ventilation system is installed in an old home. HRV's are air exchangers that were sometimes installed instead of removing the UFFI to ensure that fresh air was supplied to the home to prevent the build-up of formaldehyde inside the home.

It is important to ask questions before coming to the conclusion that a home has UFFI simply because there are injection holes, or newer drywall, new siding, or an HRV. It may turn out that the homeowner has done renovations to improve the appearance of the home or that some other type of insulation such as cellulose fibre has been injected into the walls.

Some people are still concerned with the levels of formaldehyde in a house that has UFFI. Air testing is available to determine formaldehyde levels if someone is concerned, but considering that UFFI has not been installed in homes in Canada for over 20 years and that even 20 years ago homes did not show signs of elevated formaldehyde levels, air quality testing will most likely reveal very low formaldehyde levels, if any. Although it has gained a significant amount of bad press in the past, the indoor air quality in a home containing UFFI should not be assumed to be poor.

UFFI does have a potential to begin breaking down and releasing formaldehyde if the insulation gets wet. If water leaking has occurred and it is suspected that the UFFI insulation has come into contact with moisture, the UFFI should be removed.

Q: Is it true that I may have trouble getting insurance or a mortgage for a house that contains UFFI?

A: After the initial UFFI ban and for some years later, lending institutions, insurance companies, and Canada Mortgage and Housing Corporation (CHMC) required a UFFI disclosure prior to a homeowner getting a mortgage, supplying insurance, or getting mortgage insurance. Since 1993, CHMC has not required a UFFI disclosure for mortgage insurance and most lending institutions also no longer perceive there to be a great risk associated with lending money for a home that contains UFFI. Although most home insurance companies have recently provided coverage for homes with UFFI, it is best to check with the company prior to purchase to be sure.

Quoted from REM Magazine
May 2005


"All's Not Well That Ends Well"

Most homes in urban Ontario (being towns and cities) are fortunate in that they are provided with access to municipal water systems. The odd failure aside, Ontario has amongst the world's most safe and secure sources of water from both long-existing aquifers and abundant fresh water in our many lakes and rivers. Still, a significant portion of the Province does not have access to municipal systems. Homes in these areas must provide their own water sources through filtering systems, chlorinators and wells and springs. The very notion of well or spring water conjures up purity and abundance, but often this is not the case and the wary agent should be on guard to ensure that representation he/she makes about a property are accurate and not misleading.

Typically, when faced with a rural sale, the goal of buyer and seller is to determine whether water present is drinkable and in sufficient quantity to allow for a family to live without need of importation of other water or the securing of a new source.

Water fit for human consumption is called "potable". Potability is generally determined in Ontario by having water tested at a municipal or county health office. Water is collected in a clean plastic jar and submitted to a lab for microscopic testing. The test itself searches for the presence of fecal choliforms in a fixed amount of water. Fecal choliforms are tiny bacteria that are part of the decomposing process. Some arise out of the natural decay of vegetable matter. Others have a human or animal origin associated with the other bane of rural real estate, the septic tank. It is these latter organisms that for the most part cause problems as they produce toxins that taint water and make it unhealthy to consume.

When selling rural property, beware of the following indicators that may signify water problems and litigation that may arise out of them.

Essentially a water storage and collection devise, the cistern is a telltale sign that a well system does not produce enough water for instant and continuous flow. The cistern is constantly filled with water from a well by pump so that a sufficient amount is always on hand for use. Cisterns are often augmented by collected rainwater and sometimes water delivery tanker trucks, however, rainwater is not always pure or consumable. Cisterns must be regularly cleaned lest they become filled with algae or dirt. Cisterns are also prone to tampering. Some unscrupulous sellers have been known to "shock" a cistern system before a test by pouring in bleach to kill present choliforms without addressing the source of those choliforms.

The big issue with wells, apart from the same contamination issues that plague cisterns, is their ability to provide decent water flows. Some are self-evident when a tap is turned on for several minutes. If flow cannot be maintained, the well may be "sanded-up" or require cleaning. Inconsistent flow is evidence that a well does not have access to sufficient water. Pumps are also a big issue. How old is the pump in question? What is its flow rate? Is it sufficient to supply a house? What shape is the pump in? If the pump is submerged it will be difficult to access.

This system consists of a long intake pipe set outward into a lake. Water is drawn in through the pipe and filtered and treated in a tiny on-shore system. This system is complicated and may require significant maintenance. A failure in the system will allow untreated lake water to enter a home, which brings with it the unpleasantness of polluted water.

While not common in Ontario, there are areas of the Province where water sources are contaminated by salt. There is no test for salt commonly used in Ontario other than by taste. Salt water is not only bad for drinking, but can affect the ability of a septic tank to digest sewage. Salt water is also corrosive.

Mark R. Frederick and Denis Rivard
Quoted from AON Bulletin Vol.1 Number 1
December 2004



There has been growing concern in the real estate industry about the escalating cost and availability of property insurance. Realtors have provided anecdotal evidence that insurance companies have refused to insure homes that have been previously covered. In other cases, companies have decided to raise insurance premiums by a considerable amount. Some properties involved in insurance coverage issues have real or perceived environmental problems, such as oil tanks or mould. Other insurance issues develop because of outdated wiring or heritage status.

If you're involved in a home transaction these days, you have to think about insurance. It could affect whether or not your clients get the home they want.

Home insurance companies have tightened their underwriting criteria and they're reluctant to take on risks that may not have bothered them in the past. What's at stake for your clients is not just the insurance, but mortgage financing as well. Banks won't approve a home loan unless there is proof of insurance.

A number of home insurance issues have been identified that can impact the transaction process. Those issues can include:

* aluminum wiring- demands to retrofit and /or change completely to copper.

* 60 amp electrical service- not deemed to be sufficient regardless of the size of the dwelling.

* knob and tube wiring.

* gas furnaces more than 20 years old

* oil tanks

* wood burning appliances- WETT certificate is being measured against current building codes.

* first time buyers without prior home insurance history.

* insurability point system now used by insurers which may be detrimental to first time buyers. This included "red zoning" because of the location of the property.


In most cases, a mortgage lender will require property insurance as a condition of borrowing. No active policy in place, no mortgage.

For this reason it is recommended that the application or request for a homeowner policy be filed as soon as possible after an offer has been accepted. Realtors should make sure their clients know this, and ensure it is at the top of the "to do" list to complete the transaction.

Insurance companies will review a variety of factors in determining both the availability of property insurance, including the personal records of the applicant. They will review the age of the home, it's "insurance history", and look for any of the issues identified in this article such as certification of the fuel tank and the type of wiring. In rural properties, insurance companies may also review the certification of the well and septic system.

There have been occasions in Canada in the past five years when an insurance issue has delayed closing. This is usually because the buyer has not allowed enough time to work through the issues raised by the insurance companies, or has not allowed enough time to get competing quotes from different brokers.


A homeowner needs insurance because there are dozens of dangers that threaten their home every day. Depending on the coverage, home insurance will reimburse the owner for the loss of (or damage to) the home and belongings due to an accident or theft.

Everything from fine china to the lawn tractor can be covered under some insurance policies. Others provide coverage only on the building itself. It's important to know what kind of policy to have and what it covers if an accident should happen. There are three basic types of home insurance:

* Comprehensive coverage applies to both the building and its contents (excluding items named specifically in the policy).

* A basic or named perils policy covers your property only against dangers that are named in the policy, such as fire or earthquake.

* A broad policy provides comprehensive coverage on the building, and named perils on the goods inside. It is usually cheaper than a comprehensive policy.


Landlords are not responsible for the possessions of a tenant. If your client is renting an apartment or living in a condominium, it's a good idea to get insurance. Renters and condominium owners can get coverage for both the contents of the apartment and for any improvements they have made.


In addition to the rise of property values, home reconstruction and replacement costs are also climbing at a steady rate. With a healthy rise in new construction, recent natural disasters and ongoing trade disputes, the cost for lumber, plywood and other building materials continue to rise...many homeowners may be forced to pay these extra costs if their insurance policies do not cover them.


Many owners consider their cottage a home away from home and should consider insuring it in the same manner. Even if they only use it occasionally, or if it's "too rough" to be a home away from home it should be insured. Cottages can be covered within a house insurance policy or separately. However, there are a few differences between cottage insurance and home insurance. For example, burglary can be covered, but not theft. This means that the owner must prove there was forcible entry in order to file a claim. Also, the collapse of a roof due to the weight of accumulated snow in winter may not be covered.


Some insurers are refusing to cover, or renew policies on residential properties with 60 amp electrical service, aluminum wiring or knob and tube wiring. Provincial safety codes do not impose a legal requirement to upgrade or replace these services. A 60-amp service or a service with knob and tube or aluminum wiring is not necessarily a problem, as long as it was properly installed and maintained.


Knob and tube wiring, also known as open wiring, was used in homes in Canada for almost 50 years, starting in the early 1900's. Parts are still available for maintenance purposes. Knob and tube wiring that was installed properly can provide many more years or service. The issue starts with changing lifestyles. Most old homes do not have as many electrical circuits as a new one. To get around this, some homeowners have installed additional outlets or new circuits and tied it into the old wiring, rather than starting a new circuit at the electrical pane.

Some problems also occur because if a circuit became overtaxed and 15 amp fuses were constantly blowing, homeowners put in 25 or 30 amp fuses to stop the problem. Having 25 or 30 amps in a wire not designed to handle it causes the wire to overheat. The wire and the insulation become brittle, and that is when the safety issues begin.

Some homeowners also did their own renovations, adding outlets but connecting them into the old wiring without making proper connections. Knob and tube wiring, on its own, is not inherently a problem. Some argue it does not have a ground conductor, but that is true of any wiring installed between 1950 and 1960. The ground conductor - or "third prong" - is necessary if you are plugging in appliances that have a 3-prong plug. If the knob and tube wiring is restricted to rooms without major appliances, this creates no special hazard.

If the home involved in your transaction has knob and tube wiring, it is recommended that you follow these guidelines:

Have a qualified electrical contractor check the knob and tube conductors for sign of deterioration and damage. Some insurance companies may ask for a specific electrical contractor report. The general inspection report will also identify visible electrical safety concerns in the electrical wiring. Knob and tube conductors should be replaced where exposed conductors show evidence of mechanical abuse and or deterioration, poor connections, overheating, or alterations that could result in overloading.


Aluminum wiring was used in homes between 1965 and 1976. Problems have been reported from the overheating and failure of aluminum wiring terminals. The signs of these problems are the discolouring of the wall receptacle, flickering lights, or the smell of hot plastic insulation. Aluminum wiring in the home will operate as safely as any other type of wiring if the proper materials were used, installed and maintained as per the manufacturerís instructions and the provincial safety code. If the home involved in your transaction has aluminum wiring and you suspect problems may exist, it is recommended that a qualified electrical contractor inspect the electrical system, including connections.

Not all aluminum wiring is hazardous. The safety issues involving aluminum wire usually involves home built from the late 1960s through the early Ď70ís, and may involve the 110 volt circuits used for outlets and lights. The safety issues usually do not involve the major 220-volt circuits for baseboard heating or major appliances (such as a dryer). In some cases connections worked loose and the wire overheated, which sometimes caused a fire. Consequently, the use of 110 volt aluminum wiring was abandoned, and older homes with this type of wiring typically warrant upgrades at connection points or boxes.

The use of aluminum wiring is common and acceptable for 220-volt circuits, such as those serving heating equipment, air conditioners, and electric stoves. As long as the connecting hardware is rated for aluminum wire, and as long as the wire ends are protected with a corrosion resistant compound, concern over the presence of aluminum wire may not be justified. In fact, the majority of electrical utility companies use aluminum cable for their main service lines. In all likelihood, the power lines to your home includes aluminum.

To confirm the safety of the aluminum wire in the home involved in the transaction, recommend having a home inspector and electrician meet at the property to confer and to compare findings. The insurance company may insist on a complete electrical inspection by a certified electrician, rather than a report from a home inspector.


Oil leaks and spills from residential fuel tanks have cost Canadian insurance companies and homeowners a lot of money in recent years. Insurance companies now balk at insuring homes with older fuel tanks, and some provinces have passed strict new regulations governing when the tanks must be replaced.

Real estate transactions can be put at risk if a client purchases a property with an underground fuel oil tank and is denied homeowners insurance. If a client finds that an existing tank has not been registered, remedial action may cost them thousands of dollars.

Homebuyers have also expressed concern over home insurance policies being denied or being unable to obtain home insurance because of the age of both under and above ground oil storage tanks. A home with an exterior oil tank older than 15 years, or an interior tank older that 25 years, usually will not be insured.


The problem is that many oil tanks are corroding from the inside out, so that failure is not readily visible. This often occurs from condensation that builds up inside the tank. Since oil is lighter than water, the water goes to bottom of the tank and causes corrosion. The first sign of a bad tank could be an odour of oil in the air. There might be rust or corrosion where the legs are welded to the tank. It could also be the fuel filter that begins to leak or a nozzle plugging that could be a symptom.

Insurance companies are concerned that an old oil tank will leak and spill hundreds of litres of heating oil into the home, or into the ground. Spilled oil can quickly contaminate soil and groundwater. If the leak finds its way into a sump pump or floor drain, the spill will undoubtedly make it a very expensive cleanup. With outside storage tanks, where rust and corrosion are more common, a spill can contaminate the soil or make its way into nearby streams or rivers.

The most commonly used tanks for heating oil are steel containers that hold about 1,000 litres and weigh close to 1,000 kg. when full. Their odd shape, which means they can be moved through doorways, also makes them unstable unless they are properly secured from tipping over.


Many home oil tanks are designed and built for indoor use. Indoor oil tanks will generally last longer and improve the efficiency of oil-fired appliances. Indoor storage tanks are less likely to spill and do not emit an odour.

An indoor oil tank should be installed where it can be easily inspected but will not be damaged by normal household activities. If possible, the tank should be surrounded with a curb and dike to contain any leaked oil. The tank should never be place tight against a wall as this can cause the tank to rust.

The fuel supply line should be covered and filtered to protect them from damage. Storing objects on top of the tank could potentially lead to damage.


Outdoor ranks should be placed at least 15 metres from any well. To prevent rust, the tankís exterior should be covered with enamel paint. The tank should also be supported properly with a non- flammable base of concrete or patio stones to prevent it from shifting or falling over. Wood is not recommended as it can burn, rot and retains water, which causes the tank to rust. The tank should be sloped slightly toward the drain, and should never be in contact with a wall.

To allow for changes in ground level, the oil burner supply line should have a horizontal loop before entering the building. The line should be sloped toward the building to prevent water collection.

If possible, the oil filter should be placed inside the home because collected water can freeze and cause splitting. The supply line can be installed through the top of the tank to protect against breaking the line and draining the tank. If frost heaving or ground settling causes a tank to move, it should be leveled properly.


There is concern many underground fuel oil tanks have reached the end of the useful lives and beginning to corrode, rust and leak. Increasing homeowner insurance claims resulting from leaking fuel oil tanks are very expensive and can lead to high insurance rates, or even refusal of coverage.

It is a homeownerís legal responsibility to properly maintain the oil tank and clean up any spills or leaks that may occur.

Under current Ontario legislation all underground oil tanks had to be registered with the Technical Standards and Safety Authority by May 1st 2002. Those still in use had to be upgraded with specific leak and spill prevention equipment, or be removed by a registered fuel oil contractor within two years of if being taken out of service, and the surrounding soil carefully tested for contamination and cleaned.

Regulations in Ontario stipulates only licensed installers can install or replace tanks in homes, and tanks must be replaced every 15 to 25 years depending on the tank design and steel thickness. In Ontario, fuel oil distributors may not supply fuel oil to an underground tank unless it is registered with the provinceís Technical Standards Safety Authority. Tanks that are in the basements of homes, or aboveground, do not have to be registered.

An underground tank is tougher to inspect, but the biggest tip-off it may be leaking is if your home is using more fuel than normal. Just one litre of leaked oil from an underground tank can contaminate one million litres of drinking water.


Prior to closing, contact the fuel oil supplier for the home and determine if the basic or comprehensive inspections of the tank and oil-heating appliance have been completed. The fuel oil supplier will have information about the service/inspection program that is in place for the home.

Selling a home with an oil tank???? Vendors should expect questions regarding the age of the tank, location and proof that the tank installation meets safety requirements. Purchasers should expect to be asked, by their insurer, to provide this type of information when applying for insurance.


According to the Technical Standards and Safety Authority of Ontario (TSSA), if the underground fuel tank was installed:

25 or more years ago- the tank must be removed or upgraded by October 1, 2006
20 to 24 years ago- the tank must be removed or upgraded by October 1, 2007
10 to 19 years ago- the tank must be removed or upgraded by October 1, 2008
Less than a year to 9 years ago- the tank must be upgraded or removed by October 1, 2009
Underground tanks that are 25 years or older, or of an unknown age, and not specially protected from corrosion are required to be removed by October 1, 2006. Underground tanks with a storage capacity greater than 5,000 litres will need to be leak tested annually. Unused underground tanks are required to be removed and any contamination cleaned.


Although mould is a constant presence in any indoor environment, homeowners and tenants across the country are paying more attention to any impact mould may have. The extreme cases involve major renovations where mould has weakened or damaged the structure of a home or condominium. As a result, Realtor liability is a concern. In addition, some insurance companies are taking steps to limit coverage for mould damage.

However, scientific research on the relationship between mould and health problems is inconclusive. Currently there are no established standards for acceptable levels of indoor mould. Despite the lack of standards, mould is the latest environmental health issue generating public attention. Realtors are potentially liable for failure to disclose an environmental hazard. The best advice to a seller is to disclose any water problems or presence of mould up front. The best advice to buyers is "beware"

Mould is viewed by insurers as an inevitable risk, and something inevitable is not insurable. Mould is excluded under the category of deterioration. Mould is not a new phenomenon in the insurance industry. Some insurers are offering mould coverage in separate environmental insurance policies under the umbrella of indoor air quality. According to the Ontario Real Estate Association (OREA), the premiums for environmental insurance are quite high- about $10,000 for $1 million of coverage-which is expensive for residential property owners.


There is now an official code that specifies exactly how wood heat appliances should be installed, and there could be insurance coverage issues if the code has not been followed. Itís one of the things a home inspector will usually pay a lot of attention to. If you are preparing to list a home with a fireplace or wood stove, your client should have it inspected first. There are a variety of professionals who are trained in wood unit safety, including the local fire department, building inspector, a wood heat retailer, and chimney sweep.

If the plan is to install a new chimney or wood-heating appliance, or replace one wood stove with another, many municipalities require a building permit. If thatís the case, the building inspector may automatically inspect the installation as part of the service.

Comprehensive insurance is part of wood heat safety, and making the wood heat system safer means the best possible premium for insurance coverage. Your client should also inform their insurance company or broker whenever any change is made to the wood heat system. This includes adding or changing a wood stove, modifying a chimney-anything that may influence the safety of the wood heat system.

There are four points the insurance company will be concerned with:

* Is it an approved unit? It should be certified by Underwriterís Laboratories of Canada (ULC), The Canadian Standard Association (CSA) or Warnock Hersey.

* Was it installed by a professional? Again, many "do-it-yourself" installations may be OK, but there are many where short cuts have been taken and the unit may not be safe. If a chimney is installed it usually requires a building permit.

* Are the clearances up to the latest Building Code and Fire Code? There is no "grand fathering" of this requirement. The complete details professionals follow is in the Canadian Standards Code CSA-B365 "Installation Code for Solid Fuel Burning Appliances and Equipment" from the Canadian Standards Association. Unless there is special shielding the required clearance is 1200 mm (48") from a combustible material to the sides and rear. There must also be 1500 mm (60") clearance above the unit. For a stove with a sheet metal jacket or casing, the clearance is 900 mm (36"). The floor pad protects flooring from hot embers that might fall from the stove or fireplace. The pad must extend al least 200 mm (8") beyond the sides and rear and 450 mm (18") in front of the loading door. The floor pad must be continuous, no-combustible surface and must not rest on the carpet unless it is strong enough to resist bending or cracking.

* Is the venting system proper? Ideally there should be no elbow in the stovepipe and it should be as short as possible.


Older or heritage homes usually have a number pf areas of concern for insurance companies. One of the major concerns will be the roof. Very few insurance companies will take on a new piece of business if the home has not had the roof updated within the past 20 years.

A heritage home will also draw attention if it has a wood heat system. Some insurers are asking that not only should the stoves have an approved label, but that they also be installed by a professional.

The insurance company may also be concerned with the oil tank that was installed at the back of the house 20 years ago. This may require an immediate replacement not only to meet the insurance requirements, but to have a certified tank that the local fuel oil dealer will agree to service.

Other areas that can require upgrades for older homes are plumbing, heating and electrical. If galvanized pipe is used inside a house, most companies will require that it be replaced. As for wiring, most companies wonít insure homes with less than 60 amp service. As described in this article, insurance companies also have concerns with aluminum or knob and tube wiring. In some cases they may insist these be replaced as well.

Because many of these older or century homes are in rural areas without municipal services, insurance companies will also want to know about septic and well installations.

Whatever the issue, insurance coverage is almost always available. Clients who have had insurance and are renewing policies will not likely be declined coverage. First time buyers may have to go temporarily with a specialty market insurance provider, where premiums are higher.

An older home, or a heritage property, may require additional time to arrange for the required insurance. Recommend your clients begin shopping for insurance as soon as possible after their offer is accepted, or recommend a conditional offer that provides for approved insurance coverage.


If your client is buying a condominium, there is a unique insurance relationship with the condominium corporation. Your client as owner should insure their belongings and the structural parts of the building that they own (kitchen cabinets for example) under their own insurance policy. The condo board will need to have an insurance policy to insure the overall building, including each unit.

To be sure that the buyer is adequately insured, and has included the structural components that belong to the owner they should read the condominium corporations insurance policy carefully. This area-what the individual owns versus what the corporation owns- can be a very grey area. The more the buyer knows about the condo corporationís insurance the better they can tailor the coverage for their specific unit. For example, some condominiums contracts go so far as to specify the individual buyer owns the paint on the wall.

Condominium buyers can also get a special type of insurance coverage against "unit assessment". This provides protection against a one-time per unit assessment the condominium corporation decides to charge in addition to the regular condo fees. This "special assessment" usually occurs when major repairs or renovations are required. For example, if there is a fire in the lobby of the condo building, the insurance for the condominium corporation will pay for most of the damages. But if the policy is only for actual cost as opposed to replacement cost there will be an amount that must be covered by the corporation. That is when the corporation may decide to add a unit assessment, which could be a very large amount. Condo unit assessment coverage will protect the buyer if this occurs.

Condo owners will also need liability coverage, and they may also want to consider title insurance.


Title insurance was introduce in Canada just over a decade ago, and is now an accepted part of the home-buying process. Title insurance protects buyers against problems that may slip past a title search.

The title to a property describes who has the rights of ownership to it, and there can be a variety of issues in determining "clear title". These could include liens on the property because taxes or contractors havenít been paid. The previous owner may have done renovations without a permit or ignored work orders from the municipality. Part of the property such as the backyard deck or roof eaves could also be encroaching on a neighbourís property.

There are several reasons why title insurance has become popular. It primarily offers broader ownership protection, especially from mortgage fraud.

Whatís the most common claim made under title insurance policies? Property taxes not paid by the previous owner. There are fewer claims involving repairs done without a work permit. Fraud is also involved in a small percentage of claims, representing about 2.5 per cent of claims filed in 2004.


ALL RISK OR ALL PERIL: The term "all risk" or "all peril" describes insurance for losses due to a wide range of causes. Instead of listing each insured peril, such as fire, lightning, and so on, the policy covers all loss or damage to insured property that is the result of any "risk" that is not specifically excluded. "All risks" is a confusing insurance term and does, in fact, incorporate numerous listed exclusions, allowing coverage to be priced more fairly. Perhaps a better description would be "all common risks".

BY-LAW ENDORSEMENT: When construction codes and zoning bylaws change, existing building are usually exempted. But when a severely damaged building has to be substantially rebuilt, the entire building may have to comply with current standard. The "by-law" endorsement covers any additional expenses to bring the building up to standards.

COMPREHENSIVE POLICY: The term used to describe a policy providing broad protection. This is sometimes also referred to as "All Risk".

COVERAGE LIMITS: In addition to overall dollar limits for liability, there are sub-limits on the amount that can be claimed for some items. Some items typically subject to coverage limits include negotiable securities, cash, garden tractors, computer software, bicycles, jewelry and gems, watches, or collections (coin, stamp, card, etc.).

DEDUCTABLES: Most insurance claims are subject to a deductible- the initial amount of every claim that is paid by the policyholder. Deductibles help make insurance more affordable for everyone by eliminating minor "nuisance" claims.

DIRECT LOSS: The term used to describe the loss or damage of insured property or goods. The term does not include other losses or expenses incurred as an indirect result of the damage, such as having to rent a video camera if one is destroyed by fire shortly before leaving on a trip.

DISCOUNTS: Some insurers offer discounts or other incentives for policyholders who install smoke alarms, sprinkler systems, and monitored intruder alarms. Some reduce premiums for seniors. Some insurers offer discounts to loyal, long-term policyholders. The insurer may also be willing to offer a discount if they insure both the car and home with them.

DWELLING: Your "dwelling" coverage applies to you home and "attached structures" such as a garage or carport. Permanently installed outdoor equipment on the premises, such as a swimming pool and the equipment attached to it, is included. Building materials for use in construction, alteration or repair of the insured dwelling or related structures on the premises are covered as well if they are on the site or adjacent to it.

GUARANTEED REPLACEMENT COST ENDORSEMENT: This endorsement will make up a shortfall in the event that the replacement cost of the home is underestimated.

NAMED PERIL COVERAGE: This is a policy that covers losses that result from causes specifically listed. This is the opposite of an "All Risk" or comprehensive policy.

PERSONAL LIABILITY: The personal liability portion of home insurance applies at home, or anywhere in the world for bodily injury you may unintentionally inflict on others- often referred to as "third parties"- or to accidental damage you may do to their property.

PERSONAL PROPERTY: A home insurance policy will cover the contents of the home and other personal property that is owned, worn or used (including clothing, cameras, furniture, etc.) while on your premises. It may even cover uninsured personal property of others, excluding roomers or boarders who are not related to you.

RISK: Term used to describe a chance event that is unexpected and accidental as far as the policyholder is concerned.

SUBROGATION: The term used when an insurer tries to recover some or all of its costs in settling a claim by suing others responsible for the loss. The effect is roughly the same as if you sued the responsible party, except that you are compensated faster by your insurer.

UNINSURABLE PERILS: Home insurance is generally intended to help policyholders cope with the financial consequences of unpredictable events that are "sudden and accidental". Predictable events such as flooding of a home built on a flood plain, or preventable events, such as frozen indoor pipes, are not covered. The perils that are generally uninsurable include water damage caused by floodwaters, or damage caused by the freezing of indoor plumbing.

Quoted from The Canadian Real Estate Association
Publication dated 2005


Q and A about building permits

Q: When is a building permit required?

A: The need for a building permit is based on federal and provincial building codes, local zoning by-laws and other applicable laws and regulation. The requirements vary depending on the municipality. However, based on a review of building permit information for a number of municipalities/cities across the country, the following construction items were identified to generally require a building permit:

*Construction of a new building including a garage, carport, or utility shed that covers an area over 10m2.

*Demolition of all or a portion of a building.

*Renovation, repair, or addition to a building, including:

  • Finishing a basement for personal or tenant usage,
  • Installing or changing interior walls (both load bearing and partition),
  • Making new openings for, or changing the size of doors and windows,
  • Building a balcony, porch or sunroom, or enclosing an existing deck,
  • Modifying central heating and air conditioning systems.
  • Installing fireplaces, fireplace inserts and woodstoves,
  • Modifying/addition of plumbing system component, including irrigation systems,
  • Reconstructing chimneys,

*Building a deck. Some areas require this only if decks are greater than a certain distance above grade(i.e. two feet).

*Installing a pool or hot tub (some areas don't require permits for portable pools less than a certain height/area) including associated safety fencing.

*Installing retaining walls (over a certain height; usually about 1m).

*In addition, some older houses have been classified as "heritage" sites, which require additional approvals. For example, if you are the owners of a property designated under the Ontario Heritage Act, you may be required to obtain additional approvals prior to obtaining a local building permit.

Q: What can happen if I start a renovation without a building permit?

A: It is unlawful to construct a renovation without a proper building permit. If construction starts without the necessary permits, your local building department may order you to cease work, order you to uncover work already done, or potentially even prosecute you. It is important to confirm building permit requirements with your local building department before starting a project.

Q: Does a home inspection determine if a building permit was obtained for an inspection?

A: It is not in the scope of standard home inspections to evaluate whether building permits were obtained to complete renovations or whether renovations were completed in accordance with permit/building code requirements. Some home inspection companies may provide a service, over and above a standard home inspection, that may include investigating permits for historic renovations, (including researching local building code requirements at the time of construction, uncovering finished surfaces to allow inspection of concealed construction details, and having relevant discussions with the local building department). However the costs for providing this type of service can often escalate into thousands of dollars, making it cost prohibitive for most home owners. For further information on the scope of a standard home inspection, see the Canadian Association of Home and Property Inspectors Standards of Practice website at


Quoted from REM Magazine
October 2005



A rise in "For Sale" property inventory has halted or slowed housing price appreciation in many markets, and sent prices down in others.

But analysts say home sellers are often slow to make price adjustments in a down market, clinging to overly optimistic estimations of a propertyís worth. Sellers who are under pressure to unload property are willing to make adjustments, but those who can afford to ride out the downturn may stick with their asking price, even if they arenít getting offers.

The tendency of prices to be "stickyí in a down market can create headaches for Real Estate Agents and Brokers, who can find it challenging to get sellers to set a realistic price when listing, or make downward adjustments when thatís what the market dictates Many say that if sellers wonít get real about pricing, itís best to send them packingÖa seller with unrealistic price expectations and a weak Realtor is a "recipe for disappointment and disaster," says Steven B. McWilliam.. " The weak Realtors, in desperation in order to obtain the listing, will contract to list the property for the sellerís unrealistic price. When it does not sell, and in some cases it does not even get shown, they suggest lowering and lowering and lowering the price" McWilliam says.

An experienced Realtor has the knowledge to assess the market and will provide a comprehensive comparative market analysis, which is the best gauge as to what price the house ultimately will sell, McWilliams says.

"We present these numbers to the sellers and if they refuse and demand more money, we simply suggest that they deal with another Realtor," McWilliam says. "We want to sell their home, not just list it. You have to be able to walk away from these bad deals".

Broker Christine Forgione of Carollo Real Estate in Queens, N.Y. says if she is listing a home that will require renovations, sheíll factor in the cost of work that buyers will need to have done when pricing the house. After holding an open house, sheíll use past sales from the MLS system and buyer feedback to decide if a seller needs to make a price adjustment.

"If my seller will not adjust the price- and I feel that I cannot sell it at that price, because honestly everything sells if it is priced right- then I will give back the listing," Forgione says. "I cannot stress enough that taking an overpriced listing is like taking a car with no engine- it wonít go anywhere."

Sheryl Vogel, a Rockland County, N.Y. broker allows sellers to choose an asking price with her guidanceÖ." If they wish to ask higher than my suggested range, I will ask them to sign a letter stating that they have opted to start at a range that was not suggested my me, the professional," Vogel says.

If a house has been listed for 21 days without any offers, Vogel says itís time to reevaluate the asking price. "If nobody is showing their home, that is an indication that the buyer pool and Realtor community have not accepted what they are offering,í Vogel says.

Every seller needs some prodding, she says- nobody wants to feel like they are losing money.

But McWilliam advises against allowing sellers to set an initial price thatís higher than the market will bear.

"Sellers ask us, "Canít we at least test it?" I tell them no, I am in the market every day. I know what itís worth," Mc William says.

The problem with starting out with an inflated asking price as a starting point for negotiations is that some buyer who might be interested in the house will never bother to look at it, because they think it is out of their price range, McWilliam says. At the same time, the same house will not compare favourably with homes in the same price range that have been truly valued.

"When you list a house thatís worth $300,000 for $325,000, the person who comes to look at it is comparing it to the really truly priced $325,000 house," McWilliam says. "The people looking to buy a $300,000 home are not looking at yours because itís too expensive. Youíre being seen by the people that donít want you, and the people that do want you arenít seeing you because itís not priced right."

Once the house has been on the market for weeks, the seller may agree to lower the price- only to find that time is not all thatís been lost.

"When youíre on the market 60, 90 or 120 days and you start marking the price down, every buyer asks "Why it has been on the market so long?" Whatís wrong with it.?" McWilliam says" We say, "Nothing- itís because it was priced too high." They say, "Really? I wonder what the bottom is."

Some sellers will decide to wait until the market catches up with their asking price, and remove their homes from the market.

"When they want to sell, theyíll sell it," McWilliam says. "When all that stuff shifts away, weíll have true inventory- not just people that are going on a fishing expedition."

Understanding a clientís motivations for selling is important in determining whether they can be persuaded to set a price that reflects the realities of the market.

"When you really consult with a seller instead of trying to sell them and you find out why they are really selling and if now is the best time, objections are easy to overcome," says Marguerite Crespillo, the founder of Realty First Real Estate and Mortgage Services in Roseville, Calif.

Unrealistic sellers are often "part of the generation who has not seen a fluctuating market," Crespillo says. "They have been able to move up a couple of times and put money in their pocket. It was easy and homes sold quickly, but that was not realistic."

That makes pricing a home tricky, because "the comparables for the last three months are really irrelevant," Crespillo says. "The price you put on a home has to assume a declining market, and must be priced accordingly or everyone will be frustrated."

Like sellers, many newer Realtors have only experienced good markets, and donít know how to explain pricing in a down market, Crespillo says.

"When explained properly most sellers understand," she says, but many Realtors have been taught to get a listing at any price to attract buyers. So, "they let the seller dictate the price instead of using their own knowledge and experience to guide them."

The end result is often frustration all around, ending in an expired listing and the seller moving on to another Realtor who gives them better advice on the asking price, Crespillo says.

"I think the reasons sellers are stubborn have more to do with the reason they are selling than the actual price," Crespillo says. "If they still remain stubborn after all has been explained to them, then I simply tell them I am not the best Realtor for them, and I would be happy to refer them out to someone else. I would rather bow out gracefully than be kicked out later for circumstances I cannot control."

Morgan Hill, Calif. based Realtor and broker Robert Whitelaw have similar views.

"I personally believe that the only time you lose in real estate is when life forces you to sell, such as death, divorce, job loss and/or job relocation," Whitelaw says. "We have a whole generation of people who have not seen a challenging market. Meaning that those who entered the market in the last seven year have been able to purchase a home and sell it two years later for a substantial increase. This is not, nor ever was realistic for any considerable period do time."

Whitelaw says that if a client insists on an inflated asking price, he will first try to sway them with numbers, including comparable sales and local market analysis.

"If they continue to insist with the "We can always lower the price later" argument, I will consider taking the listing, but only if they agree -in writing- to a schedule of price reductions over the course of the listing," Whitelaw says.

Inman News
REM Magazine
December 2006



With the residential real estate market clearly at a high, home sellers are more assertively securing the highest valuations for their real estate investments, while at the same time assuring smooth transactions. Realtors are creating new strategies and are working even more closely with home sellers to sell homes quickly for top dollar. The biggest development in this area is Realtors advising sellers to schedule a home inspection prior to putting their home on the market. Realtors who require or recommend prelisting inspections Ė a home inspection that is paid for by the seller, or in some instances by the selling agent, before a house is put on the market- give their clientís home a marketing edge. These inspections also give the discriminating buyer up-front information on the condition of the home.

The prelisting inspection educates the seller about the positive attributes of the home along with any areas that might need repair or upgrades. In addition, the prelisting inspection report itemizes all repair costs, with the home inspector serving as a trusted third-party advisor. After the inspection is complete, the seller can determine what may require repair. At this point the house is ready to sell in its best possible condition, with a home inspection report available to inform all parties about the home.

Selling and buying a home may be one of the most exiting events a person faces in his or her lifetime. If the seller provides detailed information on the home to prospective buyers, a more trusting environment is created between the sellers and the buyers. The prelisting inspection reduces the stress inherent in such a major transaction as all parties quickly gain a thorough knowledge of the home through a full written home inspection report.

Some of the multiple benefits of recommending that a seller conduct a prelisting inspection include the financial advantage for home sellers to make important repairs. Should a buyer request a specific repair as part of the sale agreement, the seller could easily be placed in the position of having that repair done at the last minute at a higher cost.

If that buyer opts to negotiate the price downward due to a repair left undone, typically for every $1 of identified repairs, the buyer asks at least double or triple that in a price reduction. Savvy home sellers who, for example, learn through home inspection that portions of the roof need repair may opt to repair that section immediately. Paying $5,000 for the repair is far more enticing that reducing the asking price by $10,000 or more.

More and more Realtors are recommending that home sellers conduct prelisting inspections in order to help transactions go more smoothly. In addition, a prelisting home inspection is a great learning opportunity for the Realtor, as he or she gains significant information about the house that may be used in marketing it.

Even a newer home with marble counter tops and hardwood floors may have areas that need improvement. Buyers very much appreciate the added touch of a prelisting inspection that is included in the homes marketing materials, showing repair costs estimates and receipts. This level of detail and information ultimately facilitates the most efficient sales transaction possible.

Much of the increase in prelisting inspections has been driven by real estate practitioners who have seen a positive outcome on how much more quickly and easily they can sell homes with that information available.

Dan Steward
REM March 2008



While trying to advise and inform consumers and clients on general real estate matters and concerns, please be advised that all information displayed in this web site is for informative, and educational purposes only. While striving to present concise, pertinent and accurate information from many sources, this information should be verified from experts or professionals in that applicable field.


Designed by Eminence Multimedia