Setting the Stage: 3 of 3

Does Home Staging Works?

Feel free to click below and leave us your thoughts under comments.

Setting the Stage: 2 of 3

Does Home Staging Works?

One more episode to come...

Setting the Stage: 1 of 3

Does Home Staging Works?

Well, watch and find out...

UFFI ~ Urea Formaldehyde Foam Insulation

UFFI’s origins can be traced back Europe where in the late 1950’s it was developed as a means to insulate difficult to reach cavities in house walls.

The ingredients typically consist of a mixture of urea formaldehyde resin, a foaming agent and compressed air. When this mixture is injected into the wall, urea and formaldehyde unite and “cure” into an insulating foam plastic.

In Canada, UFFI was approved for use in exterior wood-frame walls only. It has a good R value rating which is used as a measure to evaluate the insulation’s ability to resist heat flow.

Formaldehyde is colourless, but has a very strong odour. Formaldehyde is both a naturally occurring chemical and an industrial chemical. It can be found in diapers, cosmetics, paints, cigarette smoke, dry cleaning chemicals, gas appliances, wood stoves, fireplaces, no-iron fabrics, paper products, exhaust from fans and glue from particle board and plywood.

Typically formaldehyde levels in houses are .03 to .04 parts per millions. By contrast, typical levels in a smoking section of a restaurant would be .16 parts per million. Houses with new carpeting can also reach these high levels.

The rate at which formaldehyde gases are released from materials into the air depends largely on the temperature and humidity. The higher the temperature and humidity, the more gas is likely to be released.

Urea formaldehyde foam insulation was used primarily in the 1970’s in Canada. This was a period where there was a push to have more energy efficient homes. During this period there were financial incentives offered by the government to improve the insulation levels in homes across Canada. The government program was called CHIP (Canadian Home Insulation Program) and UFFI became an important insulation product for existing houses. There were an estimated 100,000 homes in Canada that were insulated with UFFI.

UFFI was also used throughout the United States during this same period. It has been used for over three decades in Europe and is still considered today to be one of the best insulation solutions for existing dwellings.

UFFI was banned in Canada in December, 1980.


Why was UFFI banned?

During the insulation process, there would be an excess of formaldehyde added to ensure complete “curing” with the urea to produce the urea-formaldehyde foam. That excess was given off during the curing almost entirely within one or two days of injection. If the UFFI was properly installed there may have never been any problems. However, there were instances where UFFI was either improperly installed or used in locations where it should never haven been. One of the first problem cases stemmed in the United States. This involved an inadequately ventilated, air-tight mobile home with a poorly mixed, half-formed UFFI.

A lab study in rats which produced nasal cancer in a formaldehyde environment where there was high levels added to the concern. There were numerous home owners that reported respiratory difficulty, eye irritation, running noses, headaches and fatigue.
The Canadian health authorities became concerned about the possible health risks and consequently banned the use of UFFI in December, 1980.

The Federal government set guidelines to remove UFFI where the formaldehyde gas was .1 parts per million or greater. This was a very conservative figure. The interesting challenge became apparent as houses were being tested, they couldn’t find any UFFI insulated homes with gas levels above .1 ppm. In reviewing several thousand files, there was not one house with levels of formaldehyde that remained above .1 ppm. (If there was an atypical reading that was over .1 ppm another reading was taken and invariably would produce a result of less than .1 ppm).
The presence of UFFI does not affect the level of formaldehyde in the house. However, if UFFI comes in contact with water or moisture, it could begin to break down. In these instances, UFFI should be removed by a specialist and the source of the moisture problem should be repaired.
In one of the longest and most expensive civil cases held in Canada, which took eight years to settle, it was concluded by Quebec Superior Court, that not only was there no basis for a settlement but the plaintiffs were required to pay the majority of the costs.

It appears that urea formaldehyde foam insulation has not been the health concern that it was initially thought to be. However, anytime there is a health risk, it is best to err on the conservative side.

When I first began my real estate career, UFFI was a much debated and controversial topic. Concerns of cancer and other health issues made it very difficult to sell a home which was insulated with UFFI. Even if the UFFI was removed, fetching market value because of the perceived problems was very difficult. Most buyers shied away from these homes. It was mandatory prior to 1993 for a mortgage insurer to have the seller sign a declaration stating that to the best of their knowledge and belief there was no UFFI used to insulate the home. Since 1993, a UFFI declaration has not been required.

Although, the focus on UFFI isn’t nearly what it used to be, as a seller the stigma may still hinder marketability. If your home does have UFFI you should enjoy your home and be assured that it is not the problem it was once feared to be.

Understanding Foreclosures, Power Of Sales, Tax Sales, And Tax Liens

We are a team of real estate agents and we get numerous calls from buyers looking to buy properties at prices substantially below market values.

Many buyers inquire about power of sale properties believing it will be sold at deeply discounted prices. One of the fallacies or misconceptions about a power of sale purchase is that the lender is only interested in selling it at a price that will allow them to recoup all mortgage and legal costs.
This article will help you better understand the various government initiated property sales and what opportunities exist as a potential investor.

There have been many television programs, seminars, and books that teach investors how to buy properties significantly below market values. Typically, these properties are either foreclosures or tax auctioned properties. These opportunities are mostly found in the United States (although there are tax property sales in Canada).

Foreclosures

In the United States, the lenders typically foreclose on the rights of the previous owner if they are in default on their mortgage. Once this process is completed, it enables the lender to sell the property at any price they desire. This is in sharp contrast to the power of sale process, which I will discuss later in this article.

Tax Sales

Tax sales allow the tax department to sell the properties in order to recover outstanding tax bills. There is usually a public auction held and the highest bidder is awarded the property. Typically, a deposit is required and the balance is due within a two week period. This procedure varies from municipality to municipality.
Quite often these properties are vacant land (such as bush lots and timberland), farms, cottages, houses and commercial or industrial properties. Whilst it is possible to buy these properties at well below market values, they are usually not located in highly marketable neighbourhoods. In Ontario, an individual would have to be at least two years in arrears before the local government could force a tax sale.

Tax Liens

A tax lien is an government program that allows investors to pay back taxes on properties in tax arrears. The property owner than has a certain amount of time to pay back the taxes plus a very high interest rate or forfeit the property. If the money is paid back, all the money is sent to the investor (usually with a very high return on their investment). If the owner does not pay, the investor can foreclose on the property and receive it free and clear. Typically tax liens are not exercised in Canada.

Power of Sales

As eluded to earlier, in Ontario most lenders utilize the power of sale remedy as a means of enforcing a sale against a mortgagee (borrower) who is in default.
I will outline the duties of the mortgage holder in Ontario when a property owner has not made his required mortgage payments. It is important for a mortgage holder to do the following once in possession of the property:

Provide an accounting to the borrower

Ensure that the property is being reasonable managed and maintained

If a property is being sold under power of sale there are some duties that a mortgage holder has to adhere to. The seller must try to attain a reasonable offer. Reasonable implies an offer that is representative of market value. The reason for this requirement is that in contrast to the foreclosure process any funds, after all costs have been adjusted for, will be returned to the mortgagee (borrower). If there is a shortfall after the sale, the lender can proceed to sue the borrower for any deficiency. The lender before putting the property for sale will typically obtain three independent appraisals. This will provide them protection should a mortgagee (borrower) later decide the property was sold substantially below market values.

Additionally, all lenders sell properties in an “as is”, “where is” condition. They are not in the business of selling homes and as such do not make any expressed or implied warranties about the state of the property. The buyer is required to do their own due diligence which includes hiring a professional home inspector to satisfy themselves of the structural integrity of the property.

It is surprising to see so many people who wait until the bank is knocking on their door before they take initiative. Usually, at this point in time, it is too late.
If you have equity in your home and you are experiencing financial hardship, I would advise moving decisively with a plan of action so that you minimize any unnecessary costs. This can include either selling or refinancing your home. Once it is in the hands of the banks, costs can be sizeable.

If you are a buyer looking for a deal, power of sale properties should be included in your search but understand the limitations.