The new GeoWarehouse for 2009 was supposed to be a huge improvement over the old 2007 version and was intended to make Title Searches easier, more accurate, and provide more information.
The new system has its pros and cons, but there is one huge issue that is wrecking havoc in the resale condominium world…
The moral of the following story is, “Many Realtors don’t do their homework, and then when bewilderment sets in, the hit to their ego causes an argument that nobody is going to win.”
This has happened to me three times in the past few months, ever since the new Land Registry system was launched via our Realtor-version of Toronto-MLS.
Perhaps some background is needed…
In the past, there were two paper-bases systems of land registration in the Province of Ontario: the Land Titles System and the Registry System. Registration of real property is done under either the Land Titles Act or via the Registry Act, and there are fifty-four different Registry Offices in the Province of Ontario that register, store, and manage documents such as deeds, mortgages, and plans of survey.
Over the last few years, there has been a movement towards the automation of all land registration under a program called POLARIS (Province of Ontario Land Registration and Information System). During the automation process, the old registry records are converted into the land titles system which is a more organized and simplified method of recording land.
Believe it or not, the Province of Ontario is the first jurisdiction in the world to provide electronic registration of land-related documents. This innovative system is the result of a strategic alliance between the government and a private sector company called Teranet Inc.
Teranet also oversees the registration of documents under the Condominium Act, 1998.
The end result is GeoWarehouse 2009which Teranet launched a few months ago for Realtors to use through the Land Registry system online.
At the basic level, this is an online database of information that is otherwise available to the general public (although the public has to go down to the Land Registry office on Dundas Street and fill out a paper-form), such as the name of the person(s) on title, the registration date (when they purchased), past owners, the consideration for the property (purchase price), the legal description, etc.
At a more advanced level, GeoWarehouse can provide mapping, historical sales, demographic reports (age, race, gender, income, etc), and some incredible aerial photos of just about any site in Ontario.
However as I mentioned, there is a major issue that is creating issues in the real estate industry, more specifically within the realm of new condo sales.
Take a look at this graphic below:
This is the basic report on a condominium at 205 Frederick Street that I happen to own.
Note the price – $211,024.
I actually paid $216,900, but the builder paid GST to the Ontario government so they deduct it from the sales price. This is somewhat misleading, but it’s not my issue.
My issue is with respect to the registration date, which reads “04/15/2009.”
That is when the building, 205 Frederick Street, was registered, and thus the date appears in Land Registry as the effective sale date.
However, that is not the date that I purchased this property!
Case in point – an issue I had recently with a listing I had downtown.
My seller had purchased his property back in late 2005 when the building first started selling units in pre-construction. He paid $292,000 for the condo, and it was completed in late 2008.
He took possession of the unit, waited for the building to become registered in January, and then put the unit on the market for $389,000 in February.
However, under the new GeoWarehouse 2009, it showed that the last “Sale Price” occurred on January 10th, 2009 for $292,000.
This wasn’t when the unit was first sold – it was first sold in late 2005!
But since the building wasn’t registered until January of 2009, the Land Registry and GeoWarehouse doesn’t recognize the sale until January 2009!
This caused a lot of issues during the course of our listing…
I received a call one day from a Realtor who clearly didn’t do his homework. He said to me, “David, what’s going on here? This guy is trying to flip this property for $100K after a month on the market? What gives? I mean, my buyer likes the unit, but we’d only give you a slight premium over what he just paid.”
First of all, this Realtor clearly didn’t know anything about the building or the area, since he had no idea when it was built, completed, possessed, and when units were first offered for sale.
But more importantly, he had no idea how the new GeoWarehouse worked!
He didn’t know that the price a buyer paid during pre-construction two, three, four, or ten years ago would show up as the “sale price” when the building was registered!
I tried to explain this to him, but he didn’t want to listen.
He told me, “That makes no sense.”
Well, maybe not to you, but to somebody with half a brain and a foot in the door of calling real estate a “career,” it might.
That was the first of THREE phone calls I received from Realtors asking why my seller was trying to “flip” his property at a huge premium. People wanted to know why he’d only been living there for one month. They wanted to know what was wrong with the building if he was moving already!
I couldn’t believe what I was hearing. And the worst part is: where there’s one, there’s many.
I don’t think this issue is going to disappear anytime soon. I think a lot of Realtors are going to check the “history” of properties and think that the first registered price and the first registered date actually transpired at the same time.
The issue is this: when you “purchase” a property during pre-construction, you haven’t really bought anything; you’ve only contracted to buy something. When you take possession of the unit, you still don’t own it; you go through what’s called the “occupancy phase” as the builder works to register the building as a condominium corporation. Once this happens, you “close” your deal, and become the owner of the unit.
This is the date that GeoWarehouse recognizes in Land Registry, which is totally fair. After all, that is the date that you became the owner.
But the price you paid, or contracted to pay three, four, or five years ago, doesn’t accurately reflect the market value of today.
To have the price from five years ago associated with the registration date of today is highly misleading.
But there’s really no other way to go about it.
The only thing to do, as a Realtor, is to actually know what the hell you are doing, and know enough about each condominium to identify which are new buildings that have just been registered and which “purchase prices” are actually five years old!
As I sorted through TEN lock-boxes today outside 18 Stafford Street, even though there is only ONE unit for sale, it occurred to me that many Realtors are lazy and forgetful, and just as they have no problem leaving a lock-box at a building in which they listed a condo last year or last decade, they also have no problem in not doing their homework on things like the new GeoWarehouse…
Who says the automation and computerization of all our records and data is supposed to make things easier?