The problems are inherent before you even pick up the phone.

And time and time again, I see issues with people who either try to save a few bucks on a lawyer, or want to use their family friend to review a Toronto condominium’s Status Certificate.

My most recent experience was somewhat frustrating, but more sad than anything.  I felt bad for the buyer (who wasn’t my client), whose dreams of living downtown were crushed for no good reason.

Call me biased, but here’s my account…

When I wrote the now-infamous post on “The Printing Factory Lofts,” I mentioned that previous to that experience, I had only ever had one deal fall through on the review of a condominium’s Status Certificate.

One.

More often than not, any potential issues that arise (of which there are rarely any; the Status review is almost a formality), can be rectified.

In the case of my ONE deal that fell through, it was never going to pass regardless.

My buyer-client was from Oakville, and inherited a very, very large sum of money from her mother.  The mother’s entire estate was left to her, and none to her brother.  When she purchased the condo, at 33 Mill Street in The Distillery, her brother objected profusely, and insisted she rescind the purchase.

I always felt that he wanted to get at her money…

When it came time for a lawyer to review the Status, she chose a lawyer from Oakville, who was in fact her brother’s best friend!

That lawyer objected to the Status Certificate, suggesting that the reserve fund was insufficient (I believe they had $2 Million or more), claiming, “A Toronto condo should have millions and millions and millions of dollars in their fund!”

There was nothing I could do at this point.  I think there was a LOT more going on here than I was ready to take on, and when that deal fell through, I let the client go.  I didn’t want to get involved in some estate dispute, and the whole situation was shady.

The deal was lost, and it was the first and only deal I had ever fall through on the review of a condo’s Status Certificate, until the ill-fated purchase at Printing Factory this past January.

Well, add a third to that list, and it happened much like the first.

I recently sold a condo (I’m going to hold-back the address, just to protect my client, and the buyer-agent’s client, since he was a really nice guy and I don’t want to call anybody out) in a very nice, very reputable, very popular, very low-maintenance building.

I listed the condo, and sold it for almost full-price after two days on the market.

I had about a dozen showings in two days, and it seemed like the usual course of business for an entry-level condo around the $300K mark.

The building is quite popular, and is about 4-years-old.

The maintenance fees are incredibly low, the amenities are spectacular, and units sell there every day, quite routinely.

When I received the Status Certificate, the buyer agent asked me to email it to the lawyer, since he wasn’t based in Toronto.

“He’s not in Toronto?” I asked.  “Who buys a condo in Toronto and doesn’t use a Toronto real estate lawyer to review a Status?” I asked.

“He’s in Quebec,” the buyer agent responded.

I knew right then and there that we had a problem.

Look, if your dad’s best friend is a real estate lawyer based in Milton, and he’s been in the business 35 years, and has closed a thousand condo deals throughout Southern Ontario, then fine – go ahead.

But 95% of the time, buyers looking to use a real estate lawyer in Ajax are just trying to save $600 on the fee.

I wonder why somebody would risk a massive financial purchase – $300,000 or $1.5M, to save $600.  But I digress…

I’m sure that some of the people reading this have used lawyers outside Toronto, and I’m not saying ALL of them are going to screw up EVERY deal out there.  But in my experience, many of them don’t know the Toronto market.  Many Toronto condo lawyers have deals come across their desks for the same buildings, over and over, and they know them inside and out.  The same cannot be said for a lawyer who is closing six deals for farmland in rural Ontario one day, and a downtown Toronto condo the next.

This lawyer, who was in Quebec, but claimed to be in Ottawa (just on the other side of the Ottawa River, in fact), was going to review the Status for this cute 1-bedroom condo in Toronto, and I had a bad feeling from the get-go.

I know, I know – you’ll say I’m biased.

I just said “cute 1-bedroom,” so you can blame me for not presenting an impartial account of what transpired.  But take my word for what it’s worth, as an honest guy, who has written 1,300 blog posts with brutal truth in mind.  Then decide…

On the second day of the three-day condition, the buyer’s agent called me and said, “We have a problem, David.”

Just one?

“The buyer’s lawyer doesn’t like this condo.  He says it’s having financial problems, and he’s advising his client not to proceed.”

Financial problems?  Like what?

“He says the maintenance fees are too high, and that they shouldn’t be at that level after four years.”

And folks – THIS is where I believe that the Quebec lawyer was either: a) out of his league, or b) had an agenda.

The maintenance fees for this 520 square foot condo were $259.01, including ALL utilities, except hydro.

That’s $0.50/sqft.

And if you know Toronto condos, you know that this is lower than 99% of the condos in the downtown core.

Some background on maintenance fees, perhaps?

I’d estimate that the “average” maintenance fees in downtown Toronto are about $0.66 – $0.68/sqft.

I would define “low” to be anything below $0.60/sqft.

I would define “high” to be anything above $0.80sqft.

Buildings like 50 Lombard Street have fees approaching $1.10/sqft, which is exceptionally rare.  And of course, the new “luxury” buildings, like Trump Towers, have exorbitant fees, as do any hotel-condos.

But any time I see fees in the $0.50’s per square foot, I tell my clients, “These fees are VERY low!”

So when this Quebec lawyer suggested that the maintenance fees were “too high,” I knew right away that this deal was going to be lost.  There’s no convincing these guys once their mind is made up, and I honestly don’t know if this guy was just inexperienced, or if he had some sort of motive.  But I believe it turned out to be the latter, once the next “problem” was raised…

After I spent some time digging through the history of the maintenance fees in the building, to show that maintenance fees were set at about $0.40/sqft through the developer (they are always set low), and increased gradually through the first four years of the condo’s existence, the lawyer found another issue.

He said that there was a problem with the budget, since the condo corporation ran a $25,000 budget deficit in 2011.

How is this a problem?

Isn’t that what a BUDGET is for?

A budget is an estimate of future expenses.  You can estimate low, or estimate high.

And as luck would have it, there was a $27,000 surplus in 2012.  Wouldn’t that more than make up for the deficit?

But the lawyer wasn’t listening.  He believed, “No building should have a budget deficit.”

Hard and fast rule.

The City of Toronto has had budget surpluses and deficits in the last few years, right?  It’s totally normal…….right?

I just couldn’t understand.

The lawyer was making issues of things that really weren’t issues.

This building had among the lowest maintenance fees in the downtown core, and he said they were catastrophically high.

The building had a very good reserve fund, great management, and a budget that was reasonably in line with expenses (two deficits, and two surpluses in four years), but he found this to be a problem.

The buyer’s agent kept saying, “I don’t understand this guy.  I don’t get it.”

Then he told me something that made a LOT of sense:

“David, this lawyer was referred by a Realtor I know out in Ottawa.  The Realtor says that he’s lost THREE deals with this lawyer!  He keeps killing deals for no reason.”

Oh.

That makes perfect sense.

So if I had to put my psychologist hat on for a moment, I’d suggest that perhaps this lawyer has three children, all of whom he’s estranged from, and he needs to re-assert his dominance and importance in other arenas in life.  Maybe he’s taking out all his inner demons on his clients.  Maybe he’s trying to find problems that don’t exist so he can look like a hero.

I don’t know.

But I do know that this Quebec lawyer cost his client a great Toronto condo, and it’s really sad.

The young 20-something buyer was gung-ho, but his mother was footing the bill, and she trusted the lawyer.

I dunno.  Maybe the mother didn’t want her son to move from Ottawa to Toronto.

I always think there has to be more to these situations, like the Oakville story I described at the onset.

But maybe this was just a case of an out-of-town lawyer reviewing a Status Certificate for a condo in Toronto, and not having any clue what he was doing.

Any way you slice it, I refuse to accept the argument, “David, if this lawyer believed that there were problems in the building, then there were problems in the building!”

I don’t need a law degree to know that $0.50/sqft maintenance fees aren’t a problem, especially in a popular building, where there are 15-20 routine sales each year.

And either this Quebec lawyer knows something that 15-20 Toronto lawyers miss, each and every year, or he’s just completely out of his mind.

I’m not suggesting that all buyers should pay $4,000 for a top Toronto real estate lawyer to handle their deals, but for Chrissake – don’t use somebody from out of town.

You don’t take a tennis racquet on the golf course…

Update: I re-sold the unit in less than one day on the market, for $2K more than the original deal.  My seller is happy, and the original buyer should be crying.  Goddam Quebec lawyer…