Due Diligence - Legal Factors

Every property in Canada (that I know of) is somehow registered with a local government. Let's assume it's a province.

In BC, there's a piece of data called "Legal Name". It's kept by the Land Title and Survey Authority of British Columbia (LTSA). It's the ultimate name a property has for legal purposes. It's the kind of data that you don't want to fool with. It points back to the results of a survey map of the property. All legal contracts must have this field on it or it's not legal IMO. If you misspell it on a document, the document it worthless. You'll see it on the Contract of Purchase and Sale. Don't EVER misspell it, it's too important. If you're using a realtor, get them to deal with it.

Every property has a title. "A title is evidence of the registered owner's interest in the lands" I stole that directly off the BC LTSA website. The title is stored on the Automated Land Title Office System (ALTOS) in BC. Anybody can get a title report on any property in BC. There's an automated retreival system call BC-Online which anybody can get an account with, and for a small fee, get title reports. The title contains REALLY IMPORTANT information about the property. The important data is: Registered Owner, Taxation Authority, Description of Land, Legal Notation, Charges Liens and Interests, Mortgage and Easement.

As an investor, I want to know if the property I'm looking at is real and if anybody besides the owner has an interest in it. From the above we can see that a taxation authority wants taxes paid or they can take the property away. As well there may be liens against the property and the lien holders can influence things. If there's a mortgage then the mortgage holder is in first place to get paid if the property is sold. Easements are things like rights-of-way that governments have legally registered against the property. They can invoke their right-of-way any time they want. It's a little burden that comes along with owning the property. If you can't interpret the Title report, find someone who can. Your lawyer should be able to give you all the details. Your realtor can get you the report and interpret most of it. If you don't have a title report, you haven't been diligent.

When you want to talk to the local government (city perhaps) about a property, you merely have to mention the Property Id and they can get you all kinds of information about local taxes, utilities, location, etc. The property id is on the Title Report. Some local governments keep a file on a property if there has been complaints, inspections or whatever about it. If you ask nicely, down at city hall. they may tell you if there is a file and what's in it. This historical information can be pricelss when deciding things like - what amount to offer, are the upgrades legal, is the property a nuisance, etc.

BC-Online can get you a report of who's owned the property over the years. The reason an investor might want to see this is to check if the buyer is telling the truth about their ownership. Also, if the property has been sold every year for the last five years then there must be something fishy about it. Follow your nose and find out what's going on.

The above data is easily obtained and is a must have for every investor.