Isenberg & Shuman

Barristers, Solicitors & Notaries

June 2013

In This Issue:
Bridge Financing Sellers remorse can be a costly thing. Price Growth Across All Major Home Types in May About Us

Bridge Financing
By Lorne Shuman

Buying a home requires a great deal of planning, both financial and otherwise. All of the hard work and difficult decisions involved in such a purchase eventually culminate in a single event -- the closing. Buyers closing the sale of one property in order to purchase another property on the same day, face an element of risk. One of the ways to reduce this risk and the associated stress is to obtain bridge financing. The risk with selling one property to purchase another on the same day is really a monetary one. Such a risk becomes apparent if the sale transaction is delayed or does not close. Most people need the proceeds from the sale transaction to be able to complete the purchase transaction. If the closing of your sale is delayed, the closing of your purchase also will be delayed. Getting a bridge loan can solve this problem. Simply, it allows a purchaser to buy first and sell their existing home at a later date. Many consumers do not understand the complexities of the home closing process. This process is complicated when the proceeds of the home being sold are needed to close the purchase transaction on the same day. Matters become even more complicated when the sale and purchase are being closed in two different registry offices on a busy closing day.

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Delays in closing are often unavoidable. When this happens, there is little that can be done. Unfortunately, however, a delay in closing the purchase of your new home can cost you time and money. When a delay occurs, movers sit around idle waiting to start work and unable to move your possessions into the new home without a key. Other service providers like telephone or cable employees, as well as tradesmen, may be similarly delayed which will likely cost you money. An even worse scenario can occur if your purchase does not close at all on the closing date because your sale is delayed. If you fail to close your purchase, you may be in breach of your Agreement of Purchase and Sale even if it is not your fault. You may have to pay for additional costs (interest, legal fees, etc.) incurred by the seller of the home you are purchasing as a result of your failure to close. In addition to these costs, you may be faced with having to pay storage fees to the moving company as well as hotel costs. As you can see, this scenario could cause you additional costs as well as a great deal of emotional stress on your moving day.

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One way to relieve closing day stress and the risks discussed herein is to buy first and sell second. This can be done with a bridge loan. Here is how it works: Go to your financial institution to obtain prior approval for a bridge loan. Then, advise your realtor to structure the dates in your Agreements of Purchase and Sale so that you purchase first and sell a day or two later. Then, go to your bank and apply for the loan and sign some paperwork. Like any other loan, your financial institution will charge a fee for bridge financing. The cost of the bridge loan will depend on the amount of money you require and the length of time you need to pay it back. Be sure to advise your lawyer if you obtain a bridge loan. Once aware of this, your lawyer will ensure that the proceeds from your sale are delivered to your financial institution as soon after closing as possible to pay off the bridge loan.

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Sellers remorse can be a costly thing

By: Mark Weisleder Printed With Permission

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5075 Yonge Street Suite 804 Toronto, Ontario M2N 6C6 (416) 225-5136

Selling a family home is never easy. However, once the decision to sell is made, you have to let it go. Putting the family home up for sale can be an emotional experience, but once you've made the decision, stick with it or there could be costly legal trouble

I recently took my kids to see the house in Toronto where I grew up. It had been our family home for 40 years, until my parents passed away. It sat empty for almost a year after they were gone, as it was very hard for me and my siblings to sell it. We sold it to buyers who moved in and did minor renovations. I am not sure whether we would have agreed to sell it to someone who wanted to tear it down. Selling a family home is never easy, because there are so many emotions attached to it. However, once the decision to sell is made, you have to let it go. A new owner can do what they want with the property regardless of your memories as this case shows: In November, 2011 Marsha Kriss signed an agreement to sell her parents home on Ardmore Ave. in Torontos Forest Hill neighbourhood for $1.7 million in a deal that was supposed to close two months later. Her parents had lived in the home for over 50 years and the home had special memories for her. It was important to her that the home not be demolished. The buyers, Barbara and Eric Kirshenblatt, paid a $100,000 deposit and intended to make substantial renovations to the home. They commissioned

Erics brother Stephen Kirshenblatt, an architect, to make the plans. When Kriss found out about the plans, she wanted out of the deal. She knew Stephen Kirshenblatt and sent him an email. It said in part: As I have now heard . . . that my parents home is slated for demolition, I want it verified from you whether you did in fact change your mind, or was it your intention all along. That would change the whole deal. I did not sign on for demolition. Why, that might shred my very soul after 56 years. I could not handle the house being knocked down. That is a DEAL BREAKER. To you it is just another house, and I have given you an alternative equivalent two doors away. To me it is my parents home of 56 years. According to material filed in court, the parties negotiated an end to the agreement and agreed the deposit would be returned. But Kriss refused to sign the release or return the deposit. She considered the agreement over and then resold the property to another buyer in May 2012, for $190,000 more. The Kirshenblatts brought a motion to the court for the return of their deposit In a decision dated November 5, 2012, Judge Robert Goldstein determined that Marsha Kris had breached the agreement and that Barbara Kirshenblatt and was entitled to the return of her deposit. As the judge stated: The promises to sign a release and then fail to sign it, the changing conditions are evidence that Ms. Kriss was either playing a game of some kind or was genuinely distraught over the fate of her parents home. Either way, it would be unjust to allow Ms. Kriss to keep the deposit, especially where she was able to make $190,000 more than she would have had she sold the house to Ms. Kirshenblatt. Toronto lawyer Philip Sutherland who represented the Kirshenblatts on the motion says the case is not over, as the buyers may decide to sue for the $190,000 profit Kris made from the second buyer.
Retrieved from: www.thestar.com/business/personal_finance

Price Growth Across All Major Home Types in May

TORONTO, June 5, 2013 Greater Toronto Area (GTA) REALTORS reported 10,182 sales through the Toronto MLS system in May 2013, representing a dip of 3.4 per cent compared to May 2012. Sales of single-

detached homes in the GTA were up by almost one per cent compared to the same period last year, including a three per cent year-over-year increase in the City of Toronto. The sales picture in the GTA has improved markedly over the past two months. While the number of transactions in April and May remained below last years levels, the rate of decline has been much smaller. A growing number of households who put their decision to purchase on hold as a result of stricter lending guidelines are starting to become active again in the ownership market, said Toronto Real Estate Board President Ann Hannah. The average selling price for May 2013 sales was $542,174 up by 5.4 per cent in comparison to $514,567 in May 2012. The annual rate of price growth was driven by the tight low-rise segment of the market and particularly by single-detached and semi-detached home transactions in the City of Toronto. Average condominium apartment prices were also up slightly in comparison to last year. The MLS Home Price Index (HPI) Composite Benchmark was up by 2.8 per cent year-over-year. The annual rate of price growth in May was not surprising given the competition that still exists between buyers, particularly for low-rise home types such as single-detached and semi-detached houses. We remain on track for a three-and-a-half per cent increase in the average selling price for 2013 as a whole, said Jason Mercer, TREBs Senior Manager of Market Analysis.

Retrieved from: http://www.torontorealestateboard.com

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