Wednesday, May 5, 2010

Independent Legal Advice Clause

Okay so I just finished all the last paperwork for the house (May 4th,2010). I got the papers emailed to me from my lawyer in Regina Monday afternoon (May 3rd, 2010). I emailed them off to my real estate lawyer in YK. I then took a quick glance at the paperwork and found two clauses that made me pause.

1) Insurance Confirmation to be completed by insurer on or before possession date.
2) Certificate of Independent Legal Advice.

I quickly emailed my insurance broker in Regina about this and she gave me a letter saying that a policy was on it's way, but that they don't create the policy till closer to the policy date. She assured me that was enough.

The second clause was a bugger for a couple of reasons. For one I was the one who put this deal together so I'm not sure why I'm the one needing to seek independent legal advice while my Joint Venture partner did not? This was written into the Scotia Bank mortgage. Next time I'm going to have to make sure that clause is left out. I'm not saying getting independent legal advice is not a good thing. I'm saying it should not be a clause that stops you from getting a mortgage. The second thing is that my real estate lawyer in Yellowknife was going to be our Notary Public (the guy that watches us sign basically) so he wasn't independent to the transaction anymore... so now I had to scramble to find another lawyer who would give me independent legal advice (which I didn't need). Luckily my Real estate lawyer was able to help me find another lawyer who could just run me through the basics and sign on the dotted line.

Basically...the "advice" was a mortgage means you owe money to the bank and have to pay them back. If you don't they can foreclose on you. Thanks, and here's $105 bucks for your signature. Ugh... then another $52.50 for the notary publics John Henry. (Though having a lawyer be your Notary is very useful here... he actually went through each clause with us as we signed to make sure we understood). There were 3 copies of the mortgage papers to sign. Many lawyers must get carpal tunnel.

This whole transaction was a bit rushed since the lawyer in Regina wanted everything back to them by the 7th of May (but only got it to me the afternoon of the 3rd)... since the closing date is on the 10th of May. Next time I think I'll make sure they get those damn papers to me more than just a couple of days before the possession date =P And from Yellowknife even with Priority mail it is only guaranteed to be there within 2 days. Imagine if my lawyer was not available right away? How about that independent legal advice trap? Anyways we did luck out... Learn something new each time right?

Hope you all learned from my experience and followup with everyone early on yourselves... no one cares about your transaction as much as you.

Monday, May 3, 2010

Why Regina?

I seem to get asked this question a lot. I did promise to answer this question on this blog so here goes. I don't think many people usually go and buy property outside their home town unless they have some sort of other connection to it apart from investment. (Family lives there, retirement property, used to live there). I generally give everyone a very quick and simple answer using the 3 F's. Namely Food, Fertilizer and Fuel. This generally describes most of Saskatchewan, but it is a quick way to answer this question that gets asked repeatedly.

What do I mean by this for those of you who still don't understand. All three (Food, Fertilizer and Fuel) are necessities for the people of the world. These are things the world will continue to need (and demand) for the foreseeable future and Saskatchewan has them in abundance.

Food: Saskatchewan being a prairie province is a major food producer with many people making their livelihood as farmers.

Fertilizer: It is also the location of a very large chunk of Potash deposits which is a fertilizer... the price of Fertilizer was bid up to like a $1000 a tonne before it came crashing down. Current spot price is about $400 a tonne... but still way higher than what it had dropped to ($150 a tonne)... at the end of the day farmers might be able to go a year or so without fertilizer, but eventually they need to fertilize to keep crop yields up. Potash Corporation was at one time the darling of the stock market and had the highest market cap of any corporation in Canada. They are headquartered in Regina. (Woohoo stable jobs).

Fuel: Saskatchewan also has oil, gas and uranium deposits. Oil from tar sands, but also from oil shales (Estimated to have about 25 billion to 100 billion barrels of oil in the bakken formation alone). Also Saskatchewan is currently the largest uranium producing region in the world. Think of all those new Nuclear power plants coming online in China and elsewhere in the world. While prices for all types of fuel are still on a major uptrend (apart from the hiccup for the great recession)

For those that have a little more time I also explain how Regina currently has one of the lowest vacancy rates in the country. (In the May 2010 issue of Canadian Real Estate Magazine there is a quick write up on Regina in the "Top rental markets" section. 0.6% overall vacancy rate is what is listed there.) Of course that means you don't have much worry renting out your property and with lower vacancy rates also means rising rent (basic supply and demand) which will turn into better and better cashflows through the life of your property.

Meanwhile average house prices are still about $100K below Canadian average. Granted markets like Toronto and Vancouver tend to skew the average upwards, still there are significant deals to be found in Regina. Definitely much easier to cashflow on a cheaper property than a more expensive one.

Net in-migration forecast for between 0.5% to 1.8% in the next five years in Regina. New comers usually rent for awhile first before buying and an increasing population will keep demand high before new housing stock comes into play, putting pressure on rents to rise. Saskatchewan also seems to have a relatively lucky place in the age of their population with a nice little bump in the 15-24 age category that allows them to in a sense replace the baby boomer population a bit compared to the rest of the country. (Less labour shortages)

Other things going for Regina:
- RCMP Headquarters... again a stable workforce and amount of people
- Provincial Legislature. Public Sector again diversifies the workforce with another stable employer. (This contrasts with Saskatoon which is more tied to the resource sectors ups and downs)
- New 2000 Acre Global Transportation Hub that Loblaws and CP Rail will use which will provide construction jobs and permanent jobs as it gets underway

The question should really be... Why not Regina?