This is a topic we like to repeat-blog on from time to time, but with good reason. When you take on a new client, especially in the case of a new listing, you have to vet your new client. You may take steps to verify that your client is the legal owner of the property, or you may perform sales history and ownership history searches on the property. There are many ways that you can perform due diligence.
In addition, you can also go one step further and verify a property’s financial standing. How can you do this? By purchasing a Parcel Register. In addition to revalidating home ownership information, the Parcel Register will give you insights into a property’s financial standing.
A Parcel Register will tell you a number of things – here is a short list and why each one is relevant to you:
- Any mortgages registered on title, when they were registered and the amounts registered – this will enable you to avoid clients who don’t have enough equity to cover your commission.
- History of title transfers – you can see when the property was last purchased and for how much in correlation to your client’s expected list price.
- Any liens on the property – you can identify a property tax lien, a condo lien or a tax lien from the Canada Revenue Agency. Canada Revenue Agency tax liens have been known to prevent deals from closing because often they will exceed the equity available in the property.
Knowing a property’s financial standing helps you do a better job. If issues show up on the Parcel Register you are in a position to ask your client for more information. For example, sometimes mortgages are paid off but don’t get discharged – this can prevent a deal from closing. Knowing this at the point of listing enables you to educate your client about how they can go about gathering the proof to show you the mortgage was paid and also how to go about getting it discharged before you have a deal closing.
- If you see that there are mortgages registered that you think are too close to the value of the property, but your client thinks they are less, ask your client for a mortgage statement to confirm the current values.
- If there is a condo lien – this would have come up with the Condo Status Certificate. If there is a lien from the condo corporation your client has to get you a discharge statement indicating the amount to pay the lien in full.
- If there is a property tax lien you can ask your client to obtain the current balance by requesting a tax certificate from the municipal tax department.
- If there is a tax lien from the Canada Revenue Agency the balance will have to be requested by them directly.
Taking the steps to validate a property’s financial standing will save you time and money because no more time will be lost on deals that have underlying issues.
For more information about how you can research a property’s financial standing please visit www.geowarehouse.ca.