buying cottage property and converting it to residential

[pike slayer]

hey guys, so im in the process of buying my first home. seeing is how im on this site im an outdoors kinda guy and i do not want to live in town. i found this cute house about 20min outside of town at prince lake in prince township. heres the listing....

http://www.hometownrealestate.ca/listings/details.php3?listingID=560

the lake is just to the right out of the picture at the tree line. theres decent smallie fishing with challenging speckie fishing and with a nice sand beach right there. the deal went through for $93,500.

so everything was all approved and the house is suppose to close April 16th.

NOW!! My lawyer calls me today and hes like ummmm the property down as "recreational property" and the township is trying to say they dont want anymore year round homes on the lake, they want just cottages but half the lake is year round homes. Its listed on the real estate listing as a "year round home" and thats what im suppose to be buying. I told my lawyer this and i said well i'll print out the listing to show that and he said he MIGHT be able to fight it but no promises.

I mean i put my down payment on the place, all other paper work is through and its hung up on this. has anyone had to deal with this before? what can i do to get around it? if the deal does fall through would there be some sort of penalty for me? i was misinformed!

its friday and the lawyer called me at 4:20 today while i was still at work to tell me the great news. i have to stress all weekend about it grrrrrrrrr

[cheaptackle]

It's all dependent on the local zoning. I know of people who have to spend at least 30 consecutive days residing elsewheres in order to avoid the higher taxes of year round zoning. They go to Florida for the winter anyhow so no big deal for them. If the township isn't granting any further rezoning/reclassifications you might be in a pickle. Not sure how much impact the original listing will have over the signed agreement of purchase & sale, it usually is the governing document but you MIGHT be able to argue the listing was your motivation to purchase. It gets a little twisted but essentially you agreed to purchase based on beliefs as stated, but if the purchase/sale agreement you signed states otherwise you'd be in for a battle.

Your lawyer is your best bet for accurate information. His saying he MIGHT be able to fight it suggests he's thinking along the same lines- a key expectance from the agreement was not fact in reality, you expected a year round residence only to find at the eleventh hour that it was not the case.

The best you can hope for is cancellation of the sale and return of the deposit (less your lawyers fees probably). The worse is completing the purchase and fighting for rezoning. Again, seek the counsel of your lawyer.

 

Michael

[irishfield]

Seasonal Residential.. doesn't specify what season, or at least it didn't when I lived in one on Farlain Lake here in Penetang. We left in the summer...

[cheaptackle]

You're right in my example too, Wayne. It was simply 30 consecutive days, not specified as to what time of year or month it had to be. It was never an issue if proof of another residence existed ([b]wormdangler you quote me and I'll deny it![/b]), I did know of those who owned property in Toronto but actually lived year round at their cottages (kids lived in the Toronto homes).

 

Michael

[smitter]

Nice house worm dangler, I hope it works out for you.

 

I wanted to buy a house out there but wifey wouldn't go for it because there was no cell phone reception, I think there is now though.

[pike slayer]

so what would be the deal on "seasonal residential" who exactly would come tell me that im not suppose to be in my house/cottage?? what type of power does a township have? what can they even do?? The locals that live there pay so much a year to have the roads plowed and for garbage disposal. is there some way they could be like ohhh to bad no more grades or plows on this road?? if i back out what kinda of penalties would there be? i have only put $500 down so far and expected to put the other $4100 for my 5% down. this is just trying into one big mess and stressing to the max. could they say to bad you already agreed to buying it and i have to put it down and have a mortgage regardless? the realtor put a stack of papers infront of me and told me to sign them and not to worry about anything. ya well i feel like a total idiot now and the worry levels are raising high... urrgggghh i feel i got myself into a real mess and im to the point of just telling everyone to take a hike but ya i know im not going to and try and handle it in a mature manner.

[irishfield]

Have the lawyer hold the realter accountable for the listing. .. "year round home"!

[pike slayer]

thanks smitter i hope everything works out to!

there is currently no cell service out there. out at gros cap and you pick up american signals and the roaming charges are just stupid. my buddy bought a house out at gros cap last year and every month he has to call rogers and get hundreds of dollars taken off his bills because of roaming and he will not use his cell out there. but there is this new gizmo out that i've been researching.

http://www.rogers.com/web/content/internet-mobile/rockethub

its suppose to pick up signal from alot farther distances then your cell phone and you only have to plug it into an outlet. you can use your cell phone, wi-fi internet and use it as a landline connection. i called rogers and they said i should able to pick up the towers with it but it might be a bit weak signal and they recommend buying a $117 antenna attatchment to get that added distance to know it'll never fail. Also in march they released a thing saying that starting march 27,2010 they will start working on adding towers/ cell range all the way from sault ste. marie north to thunder bay, so by the end of the summer all roger clients should have cell service the whole way where as right now telus/bell customers only have small areas where cells work with lots of dead spots. i have the document stating all this, if you want more info Pm me and i'll forward it to you.

[grt1]

here's the way I see it.

 

you have to check the official plan for the township, this is the "official" zoning for your prospective property. It has to go through several layers of approval to get put into place and it costs thousands to the township to get approved . So it your property is listed as R1 (which is normally residential) or R4 (which is normally rural residential) you are probably ok for year round occupancy, but if the property is designated as seasonal then you SHOULD go and apply for a zoning change. However, in my own opinion, I would tell the township if others are allowed year round occupancy on the lake, you expect to be treated the same way and not descriminated against (this could really stir the pot as no politician likes to be called for descriminating).

 

good luck,

[cheaptackle]

I think that's the "MIGHT" part of the lawyer's statement, Wayne & worm dangler. He's (lawyer) possibly going to use the listing as the basis for withdrawing the offer legally as the end "product" is not as originally advertised, ergo misleading. The premises of "offer and acceptance" in law goes back almost to the first laws governing commerce ever written in that there must be a "meeting of the minds" or BOTH parties to a transaction having clear knowledge of what to expect and receive. worm dangler expects a year round home - and he ain't getting one it seems, ergo no meeting of the minds. This is a grossly simplified view of the actual legalese which is why I kept referring worm dangler to the counsel of his lawyer. What I've said in a few lines would run into pages upon pages of legal size paper in fine print.

 

Keep the faith, worm dangler. I hope it will come to bear that what you wanted and what you got were two different things and that your lawyer will be able to close this in your favour, nobody can be reasonably expected to purchase something other than that which was advertised. I hope you were also using a real estate agent to represent yourself and have leaned on him as well.

 

Michael

[irishfield]

Worm.. how many years has this realtor been in business. You never put sold on a listing until closing....

 

I've been down the road before.. dreams are dreams but sometimes you've gotta say WHOA !.. and take your money back for false advertising if there appears to be issues on title search.

Edited April 9, 2010 by irishfield

[JohnF]

hey guys, so im in the process of buying my first home. seeing is how im on this site im an outdoors kinda guy and i do not want to live in town. i found this cute house about 20min outside of town at prince lake in prince township. heres the listing....

http://www.hometownrealestate.ca/listings/details.php3?listingID=560

the lake is just to the right out of the picture at the tree line. theres decent smallie fishing with challenging speckie fishing and with a nice sand beach right there. the deal went through for $93,500.

so everything was all approved and the house is suppose to close April 16th.

NOW!! My lawyer calls me today and hes like ummmm the property down as "recreational property" and the township is trying to say they dont want anymore year round homes on the lake, they want just cottages but half the lake is year round homes. Its listed on the real estate listing as a "year round home" and thats what im suppose to be buying. I told my lawyer this and i said well i'll print out the listing to show that and he said he MIGHT be able to fight it but no promises.

I mean i put my down payment on the place, all other paper work is through and its hung up on this. has anyone had to deal with this before? what can i do to get around it? if the deal does fall through would there be some sort of penalty for me? i was misinformed!

its friday and the lawyer called me at 4:20 today while i was still at work to tell me the great news. i have to stress all weekend about it grrrrrrrrr

 

Does the zoning actually state no year round occupation? If the municipality realizes they may be dealing with litigation because of an arbitrary position they might relent unless it's a clear violation of the bylaw.

 

Did your mortgage lender approve the loan on the basis of it being for year round occupation? If so they might pull the mortgage on you which would make it tough to close.

 

Interesting situation. I'll be watching this thread with professional interest to see how it gets resolved. And no, I'm not a lawyer.

 

JF

[Jer]

 

 

Did your mortgage lender approve the loan on the basis of it being for year round occupation? If so they might pull the mortgage on you which would make it tough to close.

 

 

 

JF

 

 

 

This is what I would be concerned about. Generally, a bank won't offer a 5% down mortgage on what they might consider a "recreational property".

[JohnF]

Worm.. how many years has this realtor been in business. You never put sold on a listing until closing....

 

I've been down the road before.. dreams are dreams but sometimes you've gotta say WHOA !.. and take your money back for false advertising if their appears to be issues on title search.

 

I disagree with your comment about putting up sold signs before the closing. In fact it gets really complicated to put up a sold sign after the close. I've been putting up sold signs as soon as the conditions are all met for 35 years and so have all the realtors I know, and trust me, I know a lot of 'em all over the province.

 

As for the second part you've touched on a few possible issues.

 

JF

[bigugli]

Went down that road 20 years back in Sutton. Put in the deposit and conditional offer on a year round beach community home with full services, regular commuter service to Toronto, 5 minute walk to the beach.

Then found out it was a property with stipulations and no commuter service.

I made the right noises and the cheque was returned the next day. Sadly , one learns to trust no one as your benefit is not what they are out for.

[JohnF]

so what would be the deal on "seasonal residential" who exactly would come tell me that im not suppose to be in my house/cottage?? what type of power does a township have? what can they even do?? The locals that live there pay so much a year to have the roads plowed and for garbage disposal. is there some way they could be like ohhh to bad no more grades or plows on this road?? if i back out what kinda of penalties would there be? i have only put $500 down so far and expected to put the other $4100 for my 5% down. this is just trying into one big mess and stressing to the max. could they say to bad you already agreed to buying it and i have to put it down and have a mortgage regardless? the realtor put a stack of papers infront of me and told me to sign them and not to worry about anything. ya well i feel like a total idiot now and the worry levels are raising high... urrgggghh i feel i got myself into a real mess and im to the point of just telling everyone to take a hike but ya i know im not going to and try and handle it in a mature manner.

 

Explain in very clear terms to your lawyer that you bought on the basis that it was for year round habitation and ask what the seller's recourse is against you. I'm sure he'll tell you the seller could sue for specific performance (close the deal as per agreement) and a court might support that. If you can't get the mortgage money in light of this new information then you could be held responsible for any losses incurred by the seller while the property is put back on the market and sold again.

 

Questions - Did you make it clear to everyone involved you were buying it for a year round place? Did anyone advise you about the restricted use? Did you have a realtor working as your agent for the deal?

 

Obviously the cleanest solution is for the municipality to allow year round occupation. The listing realtor might be helpful in getting that okayed at town hall. Surely his ad was based on solid info. Perhaps he can get some leverage.

 

JF

[ADB]

Explain in very clear terms to your lawyer that you bought on the basis that it was for year round habitation and ask what the seller's recourse is against you. I'm sure he'll tell you the seller could sue for specific performance (close the deal as per agreement) and a court might support that. If you can't get the mortgage money in light of this new information then you could be held responsible for any losses incurred by the seller while the property is put back on the market and sold again.

 

Questions - Did you make it clear to everyone involved you were buying it for a year round place? Did anyone advise you about the restricted use? Did you have a realtor working as your agent for the deal?

 

Obviously the cleanest solution is for the municipality to allow year round occupation. The listing realtor might be helpful in getting that okayed at town hall. Surely his ad was based on solid info. Perhaps he can get some leverage.

 

JF

 

 

You possess a real wealth of information, John. You must be really good at what you do!

 

When I saw this topic I just knew you'd be involved and offering great insight and advice.

Edited April 10, 2010 by ADB

[JohnF]

You possess a real wealth of information, John. You must be really good at what you do!

 

When I saw this topic I just knew you'd be involved and offering great insight and advice.

 

Betcha anybody here will know a lot about their work after they've done it for 35 years.

 

JF

[chris.brock]

If I were you, and really liked the place, I would just close the deal and move in. I would bet you wouldn't have any problems with permanent occupancy from the township. If it came up, and there was a problem, then mention the MLS listing etc, that's just me though

[Chris]

Never believe anything you read in a real eastate listing. Check all info yourself before you put in your offer. My wife and I currently own a few (and have owned a few more) income properties and have used several different agents when buying/selling. For example, we recently purchased a property and the listing had several errors. It listed the roof as ashphalt shingles...it was tin sheeting, listed as gas water heater....it was electric....listed the taxes at one amount...they were several hundred dollars more....and the list went on. But we had checked all that before putting in the offer. No offense to your profession John, but agents want to sell houses and many times they tell you what you want to hear. Every single property we have sold has sold for a significantly higher amount than what the real estate agent suggested listing it for. In my experience if you're selling, the agent wants a quick sale to get his cut, so they lowball it to get a quick sale. If you're buying, they are really no different than a car saleaman.

 

My advice is check everything yourself, and know exactly what you are buying, before you make an offer.

 

You can apply to have your property rezoned and just because the township may not want any more residential year-round homes dosn't mean they won't allow it. The property we just purchased was a laundromat with a two bedroom apartment on the second floor and was zoned as res/com. At first the township stated that they have a shortage of commercial space and they did not want to lose any more commercial space, but once they knew I was spending money to change the usage of the building, they saw development fees, rezoning fees and building permit fees, and the dollar signs started rolling around in their heads, they allowed it to be rezoned as res/com with a G5 exception....which allows us to convert the laundromat into a main floor 2 bedroom apt. It was approx. $1000 to rezone it and $2000 for development fees (which is another bunch of Bull when it's an existing property...but that's a story for another day). Townships are all about collecting money and when they can get a few thou $$$ more of taxpayers cash they can quickly change their tune.

[pike slayer]

hey sorry guys i went out to stag last night and didn't get home till now and i had to jump here right away to see what kinda info was put on here.

Jer and my lawyer were saying the exact same thing. On paper as of right now its listed as "recreational property" and the bank wont allow the 5% down on it because its considered a cottage. But My realtor, the owner(i spoke with him when signing papers at the real estate office when i first put in my offer. he is also the guy with the contract that plows the road and does road repair) and the lawyer all know i want to buy it as year round. The lawyer said the only thing going for me right now is if i can show on paper saying that is year around which was on the listing.Its all about proving it to the bank to give me the mortgage. It was taken off the MLS site well over a week ago but i looked on the real estate site and as you can see its still on there. i printed it out so i have it on paper and calling the lawyer and send him the link and if i had to drive to the office and give him the printed out paper showing it. Boy i hate to say it but i hate the weekend and having to wait until monday before anymore can continue on this.

Thanks to all that posted, this is all great info and i know a little better what i'm up against.

i'll be posting an update probably monday after work.

[danbouck]

Have your mailing address as somewhere else for the government. Then say it is your cottage. Problem Solved

[JohnF]

Never believe anything you read in a real eastate listing. Check all info yourself before you put in your offer. My wife and I currently own a few (and have owned a few more) income properties and have used several different agents when buying/selling. For example, we recently purchased a property and the listing had several errors. It listed the roof as ashphalt shingles...it was tin sheeting, listed as gas water heater....it was electric....listed the taxes at one amount...they were several hundred dollars more....and the list went on. But we had checked all that before putting in the offer. No offense to your profession John, but agents want to sell houses and many times they tell you what you want to hear. Every single property we have sold has sold for a significantly higher amount than what the real estate agent suggested listing it for. In my experience if you're selling, the agent wants a quick sale to get his cut, so they lowball it to get a quick sale. If you're buying, they are really no different than a car saleaman.

 

My advice is check everything yourself, and know exactly what you are buying, before you make an offer.

 

 

I can't disagree with everything you've said but in defence of our industry there really are a lot of safeguards built in for the public. The act that regulates our licensing includes language that essentially reiterates much of what the Competition Bureau expects of all business people dealing with Canadian consumers. One of the things that's directly addressed is misrepresentation in advertising. That makes it a double whammy for us when we do skate too close to the line. Many of us really try to honour the letter and spirit of the law. We know it reflects badly on all of us when a few try to skate. One way to get a good realtor is to talk to friends who had positive experiences. Trust me, if there was anything at all to criticise they probably will.

 

The consumer really should be able to trust information offered in listings and ads as reliable and accurate to the best of the ability of the seller and the realtor to provide it. Anything else is misrepresentation and as I said not tolerated by the law. We are expected to not only pass along any material facts about the property that are provided but in the case of a client (buyer who signs an agreement to work exclusively with our brokerage to find a property) we are expected to go some extra distance to verify the provided information and to ferret out other relevant information about possible hidden problems including some stigmas and latent defects. This doubles your chances of catching mistakes before they bite you in the ass. It's surprising how much information is available to us in the industry when we know where to look. We pay for access to places to find it out as well as relying on our personal training and experience in the market. It's always a nice feeling to be able to fill folks in who've entrusted their home buying to me. Once I know what they want and don't want I have a lot of knowledge, experience and resources to use for their benefit. That doesn't make me smarter or better than the average realtor, just typical of conscientious realtors who make the extra effort to provide the best possible service to our clients.

 

As long as I'm up on my soapbox here I might as well also say that what I've described is what should be expected by any consumers who entrust their home buying and selling to a good responsible realtor. Buying and selling for yourself may work out okay but are you ever sure the price was right (high enough as a seller, low enough as a buyer) and what about the latent defects or even the patent defects that should have been brought to your attention, or that you should have disclosed as a seller? A lawyer friend of mine called me the other day to share a laugh. He read me some language from a client's DIY offer on their property. Of course he didn't mention names or addresses. These sellers were pretty smug about all the money they thought they'd saved until he pointed out that they had agreed to include all their appliances, furniture, clothing and even cars in the agreement. Just one innocuous and legal sounding sentence used the wrong way did that. As it turned out the buyers weren't nasty types who could have insisted on all of it. They agreed that that was not the intent but I've seen a lot of buyers over the years who would have jumped all over an opportunity like that. Another common oversight is to agree to discharge your mortgage without checking to see what penalties are involved. Surprising how many folks aren't aware of that one. Penalties can be tens of thousands of dollars today. I just heard of a girl who was faced with a $20,000 penalty. Zoning issues are another big problem. That's why I keep a copy of the local zoning bylaw at my desk and it gets used regularly. To those of you who insist on dealing without the help of a good realtor at least refuse to sign anything until you've had your lawyer okay it. The lawyer probably won't be able to help you much with value etc but at least he can help you avoid some of the pitfalls. And do you know what constitutes a good survey and how to read a drawing if provided? Do you know if a survey will be required for mortgage purposes or if the one provided by the seller will be acceptable to the mortgagee? And so on and so on.

 

And don't rely on advice from your friends unless they have some credible basis for it. "He said, she said" just doesn't work well in court. Take this thread for instance. There's a lot of good advice has been offered, and some that is close to correct but not quite and then some that just doesn't fly at all. How do you know what to believe? Even relying on a friend's experience with a situation several hundred miles away may lead to trouble. Zoning bylaws and enforcement vary from municipality to municipality. Each community must have it's own Official Plan and must keep it current and in keeping with the Planning Act but no two Plans are the same, nor is the enforcement process. Some communities may use Site Plan Agreements to create exceptions to the written bylaw for specific areas. And the zoning designations aren't necessarily consistent from bylaw to bylaw. My own municipality a few years ago redesignated the whole city. The result was essentially similar to what had existed before so you really have to read the bylaw carefully to catch the changes. Some of them are pretty subtle but nonetheless painful if you transgress. You need to know how all these regulations might impact your property.

 

Since there aren't many members here from my market area I hope this won't be construed as spamming. It's just that it really bugs me when I hear people talk about "slimy" realtors not being worth their fees. Every industry has it's share of black sheep, including mine. Honestly, I'm the one cheering the loudest when those guys get bit by the law. And I'm not gonna touch the commission debate here. You might be really surprised at what I have to say in private though.

 

Respectfully

JF

[fshrgy99]

Make it clear to the realtor(s) and your lawyer that the offer was submitted based on the information provided in the listing re year round home. You do have a responsibility to the seller as you have a contract and may be liable for his additional expenses ... if any. However the law is also very clear re the responsibilities of the agent(s). If you have legal problems as a result of agent misrepresentation you should be able to 'lay them at the door' of the offending agent. BTW the agent is actually the firm who employs the sales rep who sold you the property, that would be the broker of ABC Realty who employs the salesperson. If you no longer trust the 'rep' talk to his broker ...who is the actual 'agent'. Don't deal with the rep anymore. Keep copies of all your paperwork including the listing, make notes of what you were told, when and by who. If you encounter problems there shouldn't be penalties that won't be covered by the agents. If you incur significant costs resulting from agent misrepresentation talk to his/her broker and give them the opportunity to 'reimburse you in full before you file a complaint'. They'll probably bend over backwards. Try not to worry too much, it should resolve itself quickly.

 

Just to cover all the bases, make sure that the lawyer is right! lawyers (like agents) are not perfect! It would be a shame to lose the property because the lawyer erred. I suggest you take your copy of the offer into the planning department at the municipality. A clerk there can pull the file and explain the limitations of permanent occupancy on the property, or reassure you that there won't be a problem. Don't even remotely consider suggestions that you close and try to bluff your way into full time occupancy if it's not 'legal use'.

 

'Broad brush' comments regarding the character, motivation and integrity of real estate agents demonstrate ignorance on the part of the contributor(s).

 

There are 45000 agents and brokers in Ontario who are required to fulfill ongoing training to remain lisenced. Almost all of them are competant. Any agent who does sloppy work for a cheque won't be in the business for long. If you hire an agent, ask friends or family for a referral ... and respect their time. Avoid phone calls before 8:00 a.m. or after 10:00 p.m. unless urgent. Remeber, they might like to get out fishing once in a while too.

 

I earn what I'm paid by working long hours evenings weekends and holidays (including Christmas and Easter). I'm just a guy with four kids who don't turn out the lights like the rest of you. I don't go around looking for a soapbox but sometimes enough is enough....and I don't fish muskie

[Chris]

Hi JohnF, didn't mean to imply that we have bought and sold properties without an agent. We have always used an agent and I would agree that most times a property is sold much quicker if sold thru an agent. I was only pointing out to others that YOU, the buyer (or seller) are the only one ultimately responsible for signing on the dotted line and if you assume that everything is being taken care of by others, you may be setting yourself up for frustration and potential losses. There are lots of good, honest agents and JohnF, according to the character you continue to demonstrate here on OFC I am sure you are one of them.

 

Here is another example of what I'm talking about. Back in 1991 when I was looking to purchase my first home, I went thru 3 real estate agents in a relatively short period of time. I had written a list of "needs" and "wants" and they kept bringing me listings that were no where near what I was looking for, most times even out of my price range. After investigating things on my own I found out that all the listings I was being shown had been on the market for extended periods of time. I took that to mean that they were trying to unload the undesireables on an unsuspecting newbie to the game.

 

In regards to fshrgy's comments

'Broad brush' comments regarding the character, motivation and integrity of real estate agents demonstrate ignorance on the part of the contributor(s).

 

I agree wholeheartedly with your comment....that's why I'm glad that nowhere in my original post do I paint real estate agents with a broad brush. After over 15 years experience I am hardly ignorant on the subject. I really hope that you do not believe that everyone in your profession is infallable. Now THAT would be demonstrating ignorance.

 

There are 45000 agents and brokers in Ontario who are required to fulfill ongoing training to remain lisenced. Almost all of them are competant. Any agent who does sloppy work for a cheque won't be in the business for long. If you hire an agent, ask friends or family for a referral ... and respect their time. Avoid phone calls before 8:00 a.m. or after 10:00 p.m. unless urgent. Remeber, they might like to get out fishing once in a while too.

 

I earn what I'm paid by working long hours evenings weekends and holidays (including Christmas and Easter). I'm just a guy with four kids who don't turn out the lights like the rest of you. I don't go around looking for a soapbox but sometimes enough is enough

 

Don't know exactly what you read into my post, but I will try to word things more carefully in the future so as not to offend anyone.