The allure of cottage ownership knows no bounds, even as
many Canucks prepare to winterize their country homes.
As many as 24 percent of Canadians are willing to spend more on
a cottage than the house they call home, according to a
recreational property report released by Royal Lepage earlier
this year.
Compared to the average cost of a home, this translates to
$380,000 for that coveted pied-a-terre in the country. With
that heavy price tag in hand, buyers-more than ever-need to do
their homework.
"Buying a cottage is usually a milestone moment, even for
people who can afford it. Buyers always manage to work out the
basics - mortgaging the property, considering the cost of up
keep, what it will take to add that extra dock, and so on,"
says Lorne Shuman, director, Legal Services, First Canadian
Title, Canada's leading title insurer. "They should also be
questioning things like where is the water coming from, is the
property accessible all-year round, and if so, what can you
expect from the cottage as a winter getaway."
Cottage properties can also come with unknown issues, says
Shuman. Consider rights-of-way: if part of the property is used
by the public inadvertently to get from one end of the property
to the other or to access the waterfront, for example, new
owners may find themselves stuck with strangers legally making
use of their property.
"If a survey fails to disclose a right-of-way, a new owner
could find himself having to fight the municipality to deter
the public from using their property," said Shuman. "Not only
is this difficult to fight, but it can also get expensive."
Title insurance companies will assume many of the risks
associated with buying a cottage. Shuman offers four tips to
make sure your decision to purchase a cottage is safe and
secure.
First, purchase title insurance. Even if there is an
up-to-date survey of the property, which reveals the dimensions
of the lot, location of structures and easements, as well as
any encroachments onto the property or onto adjoining
properties, simple things can be overlooked which can come back
later. For around $300, title insurance provides peace of mind
and mitigates many of the risks associated with a cottager's
title.
Second, find out about the water supply. Many cottagers
depend on wells, rather than municipal services for their water
supply. Before making your purchase, conduct a potability test
at the local public health department to confirm that the well
water is safe for human consumption. Failure to take this
precaution can lead to the devastating discovery that the local
drinking water is contaminated and unsafe. And don't forget to
verify that there is sufficient water pressure for normal
residential use.
Third, ensure that there is appropriate access to the
cottage. In many cases, access to cottage properties is not by
a municipal road, but by a private road that is used and
maintained by other cottage owners. As surprising as it may
sound, it is vital to ensure that you have legal access, as it
could be argued at a later date that you are, in fact,
trespassing in order to access your cottage. Title insurance
companies will often assume the risks associated with access in
return for a modest one-time premium.
Finally, take into consideration the zoning by-laws.
Municipalities have the authority to pass zoning by-laws that
can place restrictions on how you use your cottage. For
example, the zoning by-law may not allow you to build a deck or
a boathouse, or may require that you obtain the approval of a
municipality before doing so. More importantly, some cottage
properties are zoned for seasonal use only. So, if you intend
to live in your cottage year-round, you need to know that there
are no restrictions.
"As with any major purchase, knowing what questions to ask,
doing your homework, and ensuring that you are protected will
lead to greater enjoyment and return on your investment," says
Shuman.
According to the Royal LePage report, as many as nine
percent of Canadians owned a cottage or recreational property
in 2005, and another nine percent are planning or considering
to buy. The report also found that Canadian recreational
property prices will continue to increase in most markets
across the country, as demand remains strong and inventory
remains scarce. These tight market conditions are expected as
current cottage owners plan to stay put and young professionals
enter the market in droves.
