The Edmonton Real Estate Blog

Please visit our new location for new posts.

Sunday, August 27, 2006

New homes in Edmonton, a safe investment?

Many times as a real estate agent I've been told by prospective buyers "we're going to build." This is a desire I completely understand, however I've often had mixed emotions about this. In certain cases I've been convinced that is the best alternative for my clients due to their needs and their ability to pay and understand the building process. In many cases though - especially with young couples building their first home - I've had some reservations. Take for example that they really don't have a good reference point for what they want and how that will work for them over time, especially when it comes to materials and layout. When I bring forward this reservation most young couples look blankly at me and then hurt and then that's about the last time I hear from them until they go to sell. This is where most of them realize they need a professional to assist them with all the intracasies involved, the least of which is colour choices ect.

The reality is the very helpful sales person in the showhome is the employee of the builder and for that reason they owe you no fiduciary duties. This means they owe you no loyalty, full disclosure or confidentiality (among others). In the greater Edmonton area there are approximately 32 builders who will pay your agent's fee so that you are represented. Many buyers however feel that this means they would pay more. This is incorrect. The agreement outlines that the buyer will pay the same price even if they didn't use an agent (in fact I believe the buyer receives so much beneift that even if they agent's fee was added to the price they would still receive benefits outweighing those fees).

The following story in the Edmonton Sun outlines one of the dangers of self representation. Using an agent may not have prevented this problem but a knowledgeable agent could have precautioned their buyers about the contract they were signing as well as given options of other builders ect. As a buyer you certainly want to be aware of your limited rights when dealing with the builders lawyer and agent as well. Nothing beats being represented by somebody who is trained and has your best interests in mind.

Sun, August 27, 2006
Couple lose chance at dream home
Developer returns deposit after project stalled over permits


Alana and Brian Halliwell worry they may never get to live in their dream home.

The Edmonton couple signed an "affordable" purchase agreement with Reid-Built Homes Ltd. in January to have the house built on Blackmoor Close in Stony Plain.

They also put down a $4,000 deposit.

Six months later, the developer cancelled the $287,000 agreement and returned the downpayment.

Now the Halliwells, along with 12 other families, are preparing to launch a lawsuit against Reid-Built Homes over the mess.

"We're in our 40s. This was our one kick at the can," Alana, 42, said. "This was going to be our dream home.

"To be honest, we don't think we can afford to build now."

Shane Parker, lawyer for Reid-Built Homes, said his client did nothing illegal.

That's because under the Alberta New Home Warranty Program, a developer is able to opt out of an agreement if certain criteria cannot be met within 60 days.

In this case, the company was unable to obtain the necessary building permits. Stony Plain would not issue the documents until the lots were serviced, and that work is still ongoing, Parker said.

"Other municipalities are more flexible, but there's certainly nothing improper about what the town of Stony Plain has done," Parker said.

"It's the municipality that sets the rules; builders have to follow those rules."

According to Edmonton's Real Estate Weekly, the average single family home in this city now costs $303,304.

Since January, the average new home price has increased by an average of 10%, said Re/Max realtor Terry Paranych.

Alana, who speaks for everyone involved in the lawsuit, said all 13 properties were purchased between November 2005 and May of this year.

She said a short letter was sent later citing the cancellation clause, and deposit cheques were returned.

However, Alana said she's received no written explanation why Reid-Built backed out of the deal.

Alana said two members of her group tried purchasing their properties twice, only to have the deals fall through on both occasions.

"How many times does the agreement need to be signed for it to be valid?" she said. "How many times are we expected to purchase the same lots and homes?"

Alana said she and Brian will continue to live in their west-end home, at least for the time being.

Parker declined to say whether Reid-Built Homes sold the properties too early.

"Hindsight is 20-20," he said. "It's a matter of builder acting in good faith with an understanding of when lots would be available. That didn't happen."


  • At 9/20/2006 05:03:00 PM, Anonymous Anonymous said…

    I agrre with Alana 100%. This has happened to us two weeks ago. We were building with Homexx homes and they asked for huge amount money more orthey will canvel it. You guys are lucky to have all together, I will say pursue this to the fullest extent of law. I wish I can find my people and do the same. Good luck to u guys.

  • At 10/02/2006 10:30:00 AM, Anonymous Anonymous said…

    A Tenant’s Guide to Renting

    The first challenge every tenant faces is finding an apartment for rent that suits their individual needs. For today’s tenant, the most effective apartment search can be done using an online apartment finder. Tenants should decide what they require in an apartment or house rental before beginning their search. For example: the number of bedrooms, location or distance from public transportation and how much the tenant can afford to pay in rent, furnished or unfurnished apartment, etc. By making these important decisions first, tenants can avoid renting an apartment or house only to regret it later. Many tenants today are taking advantage of the convenience of the internet to locate apartments for rent as opposed to the traditional print publications.

    Once a possible apartment or home has been found, it is the tenant's duty to thoroughly inspect the premises making a commitment in the form of a security deposit. A tenant should not rely on the landlord or the landlord's agent to tell the tenant if anything is wrong with the property. The tenant must inspect the property carefully and ask questions about it.
    Inspecting the condition and functionality of the following areas/features of the apartment before committing yourself as a tenant is highly recommended.
    1. Kitchen appliances in working order.
    2. Water pressure strong, plumbing without leaks.
    3. Electrical outlets and wiring working.
    4. Walls and ceiling painted or papered without cracks
    5. Ventilation or air conditioning accessible.
    6. Floors, railings and bathrooms in good repair.
    7. Fire escape easy to use.
    8. Stairs safe and well-lighted.
    9. No rodents or insects.
    10. Heating system in working order.
    11. If furnished, check and write down condition of all furniture.
    12. Windows and doors operable and weather-tight; screens provided.
    The tenant should also check the security of the building to find out if there is a dead-bolt lock, security chain, or through-the-door viewer.
    BEWARE OF EXISTING DAMAGES: In order to avoid being blamed for damages that already exist in the rental unit, the cautious tenant should take every step for self-protection. Before moving in (or as soon as possible thereafter), the tenant should make a list of all existing damages and repairs that need to be made. A copy of the list should he presented to the landlord and attached to the lease This way the landlord cannot blame the tenant for damages caused by others and the tenant will know what the landlord intends to repair. If the tenant keeps good records the landlord will not be able to keep the tenant’s security deposit for damages that were actually caused by others. Taking pictures before moving in is also strongly recommended.

    ABOUT THE AUTHOR: Paul Rossano, associated with who “Conveniently Connects All People with All Spaces in All Places” has been dedicated to the Real Estate rental market for over 8 years. He has assisted over 25,000 tenants with their renting needs. Any questions about renting apartments, houses or other rentals, feel free to visit or email him at

  • At 11/01/2006 10:54:00 AM, Anonymous Anonymous said…

    I have to say, I agree with the builders on this one. If there is a cancellation clause in the contract that the purchasers signed, then it is within the builder's rights to cancel the contract if he is within the terms specified in the contract.

    Today's world is 'buyer beware'. When you sign a contract, you have to know what you are signing because you are bound by that contract.

    And practically, how is the builder supposed to do the work if the municipality will not allow them to get building permits? If I were the builder, I would opt out of the project by using the cancellation clause too! It is within his rights, it isn't under-handed and it most likely was the only viable thing to do.

    It sucks for the people who will not get there homes but they should have informed themselves at the begining of the process so they would not have been disappointed.


Post a Comment

Links to this post:

Create a Link

<< Home