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Incidents of real estate fraud are increasing in Canada and homeowners and lenders are proving to be irresistible targets for fraud artists. Homeowners and lenders can protect themselves by obtaining a title insurance policy. The coverage provided in residential title insurance policies helps protect both innocent homeowners and lenders who might otherwise face huge financial losses resulting from title fraud.


What is Title Insurance?
The purchase of a home is for most people the most important financial transaction of their life. With an increasing number of fraud claims, more and more homeowners are protecting themselves with Title Insurance.

House Insurance protects homeowners from the physical damage or loss resulting from a fire or break in. Life insurance protects homeowners in the event of a death. Title Insurance protects the owner against losses incurred as a result of undetected or unknown title defects.


What does Title Insurance cover?
A title defect arises in a number of ways, but the defect that causes the most concern is real estate fraud. British Columbia has perhaps the most efficient land title system in the world (a “Torrens” system) but there are an increasing number of situations where fraud is committed. This can happen in a variety of ways.
With identity theft on the rise, it is not difficult for a fraudster to obtain legitimate identification claiming to be the true owner. The fraudster then deals with realtors and lawyers as if they were the owner, and proceeds to sell the property. Since the fraudster has legitimate identification, the realtor and lawyer are unaware of the fraud. Alternatively, the fraudster may work with a lender or mortgage broker, again with identification, to place a new mortgage on the property. In either situation, the true owner is unaware of the fraud and the fraudster absconds with the sale or mortgage funds.
Other typical examples include spousal impersonation and lawyer fraud.
In most cases the Assurance Fund of the Land Title Office may reimburse the true owner, but this may take several months and thousands of dollars in legal fees. Title Insurance may be quicker and less expensive.
In addition to protecting against title fraud, Title Insurance may cover violations of municipal by-laws, encroachments onto an adjoining property, realty tax arrears, existing work orders, lack of legal access to the property and unpaid strata assessments.

 

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What is a pre-sale?

Example scenario: When the developer intends to build an apartment building and applies for financing, the bank will grant financing under certain conditions. One of them will likely be a certain percentage of pre-sales the developer will need to secure before receiving the funds.
It is common practice for a developer to approach several real estate investors and offer them an opportunity to purchase units of the non-existent building at a discounted price, and on good terms.

Once the number of pre-sales is accomplished, the developer goes ahead with the construction, which will likely take two years or longer to complete. During construction, their marketing team offers the remainder of the units for sale at market value to the public.

If you are a RE investor, you know that it is preferable to be buying at the pre-sale prices, not market value prices.

The question is, how do you get the invitation to buy a pre-sale?
In the past many years, investors have made substantial income by buying at wholesale prices and selling at retail prices even before they needed to complete their purchase. I saw many of them lining up and sometimes even camping overnight in front of the sales center to get a chance to buy at lower prices, but not everyone was lucky enough. You needed to be well-connected to get an opportunity, and you had to act fast.

Today is a bit of a different story. Several projects in the Lower Mainland and Fraser Valley offer really good prices and incentives to secure a unit now and complete the purchase two or three years later. The list of incentives varies from one project to the next. Besides attractive prices, you can get low deposit amounts (5-15%), low or no assignment fees, free updates, a mortgage rate buy-down program, extra parking and more.

A month ago, I helped a few of my clients purchase a presale in Surrey that sold out in 2 days, and I know of another good developer that will be offering a few units for sale as well.

If you would like to know more about these opportunities, I would encourage you to call or email me, and I’ll be happy to send you details on those projects.
 
Kind regards,
 
Tibor Bogdan
Century 21 Creekside Realty Ltd.
45428 Luckakuck Way #190, Chilliwack, BC V2R 3S9
cell: 604-855-2521
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