Reduce Risks in the Home Staging Business

Home Staging and Risk Management

By Brian Madigan LL.B.

(Ontario Real Estate Source)

The Home Staging industry is still unregulated, and to some extent it is still in its infancy.

As society becomes somewhat more litigious, it would seem to be wise that those in the home staging business take some precautions on their own to reduce their potential liabilities.

In the real estate business, the home staging industry is placed in the forefront of disclosure, concealment, repair, rectification of defects, and renovations.

And, it is the home inspection industry which is in the forefront of having to discover problems. As an industry, it is also unregulated.

Home stagers are at risk for covering something up, and home inspectors are at risk for not finding them.

However, none of this really helps the individual practitioner. So, let me make some recommendations for risk management:

1) Have a website. Make sure it is full of information for the consumer.
2) Have a business services model. Make sure that the nature and type of services that are available are outlined.
3) Carry professional liability insurance. Ensure that it covers errors and omissions made in the ordinary course of business.
4) Maintain other insurance additional coverages as may be required.
5) Draft a Code of Ethics and publish it for the consumer.
6) Draft a standard form contract that provides protection from liability.
7) Specify the client, ensure that the client is protected and that your first obligation is to the client and not someone else. This should not be vague.
8) Clarify roles of referral agents.
9) Clarify the role of contractors.
10) Outline the obligations of the homeowner in terms of disclosure.
11) Outline the obligations of the real estate agent in terms of disclosure.
12) Limit liability by agreement to a refund of fees paid.
13) Encourage the owner to deal directly with the contractor, if possible.
14) Require a deposit on account of a retainer.
15) Provide a written report and recommendations.

Some of these steps will go a long way to reducing and limiting liability.

They will never eliminate every potential risk. If you are going to be sued, you might be, simply because you took on the wrong project.

However, if you follow some of these steps you will enhance your professional image while you await accreditation and regulation of the industry in some more formal way.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Retaining an Insurance Policy ~ For How Long?

How Long Should You Keep an Insurance Policy?

By Brian Madigan LL.B.

In 2007, it was discovered that it was raining marble at the single best location for real estate in Canada, the intersection of King and Bay Streets in Toronto.

Canada’s tallest and certainly one of its most prestigious office buildings is First Canadian Place. It is owned by Brookfield Properties and was named after its prime tenant, the Bank of Montreal.

The office tower was completed in 1974 by the developer Olympia and York. At that time O&Y was one of the largest developers in the world. It held massive real estate holdings in Toronto, New York and London. But, like some other big names at the time it bought a little too much property on credit. A worldwide recession was basically enough to turn most of its empire over to the banks and other financial institutions.

First Canadian Place was to be its flagship venture. It occupied the northwest corner of Toronto’s financial district’s best location King and Bay. The Toronto Dominion Bank was the first to redevelop its properties at the southwest corner. The Canadian Imperial Bank of Commerce followed suit at the southeast corner. Most recently, The Bank of Nova Scotia built its two new twin towers at the northeast corner. So, this intersection hosts billions and billions of dollars worth of real estate. And, the fringe area isn’t too bad either, there’s real gold in the windows of the Royal Bank Plaza located one block to the south.

All in all, this is truly what is meant by the expression “location, location, location”.

1974 was a major year for building in Toronto. There was a building boom underway in all types of real estate. The Reichmans who owned O&Y wanted something really different for their best office tower. It was to be clad in marble. And, who knew more about marble than O&Y. The full original name of the company was Olympia and York Tile Company. This name was retained for the tile company but thought too cumbersome and too pedestrian for a world renown real estate developer.

In any event the Reichmans decided that their new tower was to be clad in the finest marble that one could obtain, the same soft Carrara marble that Michaelangelo used to sculpt his famous figures. This was good for sculptures and lasted for centuries but maybe its not quite so good as exterior cladding. It now seemed to be shot after 33 years.

In 1974-1975 little seemed to be known about the use of this type of marble for exterior cladding. Nevertheless, for 33 years the marble certainly looked nice. Albeit, the 15th of May, 2007 was rather windy, so maybe it was no surprise that a 250 pound piece of marble flew off the 51st floor and plunged to the ground below (actually a rooftop, so maybe that doesn’t count).

This great real estate location in Toronto is no longer pedestrian friendly, nor car friendly either. Right now, the area is closed off to traffic while inspectors thoroughly examine the entire building for flaws.

So, what about the liability here? Whose fault is it? Who is responsible? And, ultimately, who has to pay? Just finding the records related to a construction project that took place over 33 years ago is going to be hard enough.

However, let me speculate. The original parties probably no longer exist, from architects to engineering firms to the various contractors and their sub-trades. But, their respective insurers may still be around, and their policies did not have time limits in most cases. There were two types of polices “claims made” and “occurrence”. If there were an old claims made policy in effect during construction it would respond to the claim within the policy period. So, by perhaps the end of 1975, if there were no claims, it would expire. But, an “occurrence” policy would respond at any time in the future. You just have to prove that the negligent act took place during construction.

Now, if you were the property manager for Brookfield Properties, wouldn’t it be nice to have a copy of that old policy? And, they tell you to throw things out after 7 years!

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal Lepage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

Tree Thieves and the Law of Adverse Possession

Tree Thieves and the Rules of Adverse Possession

By Brian Madigan LL.B.

Now,you might think that I’m talking about people who steal trees. I’m not. I’m talking about trees that steal property for you!

Obviously, these are good trees to have! What they do is this. They take property that belongs to your neighbour and give it to you. They don’t do it overnight, it takes a decade, but it works.

It doesn’t work with a dog or cat. If you have a pet that goes next door and brings something that your neighbour owns back to you, you’re stuck. You have to give it back. Your neighbour still owns whatever it was.

So, tree thieves can come in handy!

It takes a little bit of time, but they go next door, and basically stay there. After 10 years, while your neighbour is enjoying the shade, provided sureptitiously by the tree thief as a “foil”, you acquire ownership rights to a portion of property that formerly belonged to your neighbour.

Here are the rules:

1) open,
2) continuous, and
3) undisputed.

These rules relate to “possession” of the property. As the tree leans over into your neighbour’s yard, it can’t simply take up air space. It has to interfere in some way with the boundary of the property at ground level.

So, let’s assume that it knocks over the fence, or pushes the fence back out of its way at ground level. What happens here? Most of the time, people like trees, so no one objects. No one moves the fence back to its proper original position. It is an issue that is simply ignored. It happens so gradually that no one really pays that much attention.

However, after 10 years, the rights of adverse possession (squatter’s rights at common law) apply and you would be entitled to make an application to the Court to have the new property line as established by your tree thief, confirmed. All you have to do is prove that the possession of the land was open (in full view of your neighbour), continuous (uninterrupted for 10 years) and undisputed (no lawsuits).

In the Middle Ages, animals could be charged with criminal offences. So, if your dog stole someone’s property, your dog might be charged with theft, and on conviction might be sentenced to some form of servitude or even executed.

But, according to the common law, a tree is a plant, and although it is indeed a living thing, it cannot be charged with a criminal offence. So, it really could never be punished in any way, unless you were to consider chopping it down and turning it into a hardwood floor “punishment”.

Nevertheless, as society matured, it was determined that animals really should not be charged with criminal offences. Now, some people might say, particularly the animal rights activists that that was a step backward. After all, they are now being treated just like “plants”.

I really don’t want to get into a debate over whether plants and animals should both be charged with offences under the criminal code, or whether they should both be above the law, and completely exempt and immune from prosecution.

However, all I can really say is look at this picture. Here are some great tree thieves. It took them over thirty years to steal the property from the next door neighbour, but they did it. First they sought out some sunlight, then their limbs grew bigger, then their trunk grew bigger, then they knocked over the fence and moved the boundary line of the property over to the furthest point they could possibly toss the fence.

You know what would be neat? A tree thief that could throw things!

That would be a good project for a botanist. I’m sure that would qualify for a government grant.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
www.OntarioRealEstateSource.com