It’s been a awhile since i posted anything, mainly because I was busy and as real life has a habit of doing, forces you to deal with it. While I was dealing with life, I had spoken with a neighbor who asked that I sit in with a group of neighbors on the street to hear their story. The people involved are homeowners who received their homes via Habitat for Humanity.
I’ve always thought of Habitat for Humanity as a good charity who helps people get a home, that they otherwise wouldn’t get. And that was as a far I as I saw it. I never went through the process they have, and didn’t dig much into how they operate. I assumed like most that this charity was good and my thoughts never went past that.
So I went and sat with the ten families on my street who “own” Habitat Homes and listened. They have been arguing with Habitat for about a year now. Some of them have owned their homes for four years now, some only one or two years. Habitat has been pressuring them to sign brand new contracts forcing them to pay $100 per month for two parking spaces.
This is a problem for them. Now after looking and speaking with them, I found out a few things. Habitat was supposed to supply them (according to a print out from the website), that they were to provide the following:
1. 2 Parking Spaces per unit – (home owners would own these spaces)
2. Four major appliances – Fridge, Stove, Washer, and Dryer.
3. And each home would have a warranty.
4. All maintenance on the common areas were to be cared for by habitat for humanity.
Now, these people had been told verbally that they would be freehold home owners. In case you don’t know what freehold means, here is a legal definition of it.
An estate in land or other real property, of uncertain duration; that is,either of inheritance or which may possibly last for the life of the tenant at the least, (as distinguished from a leasehold;) and held by a free tenure, (as distinguished from copyholdor villeinage.)
Basically what it means is it is your land and not the land of someone else. That you own it. Which is fine and dandy to me. If I want to buy a house as most who do, they want to own it, So now we come to how Habitat operates.
I spent the weekend researching how they operate and with everything I read this sounded more and more like a scam, albeit a legal one. Here is how it works:
First and foremost the target. The criteria of the target has to be someone who is of low income. There are many reasons for this. The public knowledge one, everyone understands. These low income people would never otherwise be able to afford to buy a home. Sounds nice doesn’t it? But what happens if there is a problem? Another criteria is that the potential homeowner must make a certain amount of money. If your on social assistance they won’t help you (the people who in many cases need it the most). And they also tend of approve newcomers to Canada. People who fled their country of origin, who don’t understand Canadian laws, and don’t understand contracts. And the last criteria. They must have at least one kid. The more kids the better.
These are the people they choose. After reading almost a hundred stories online from people who dealt with Habitat, I realized this was a common theme. Many who caught on early enough in the process before they signed their mortgages, who asked some legitimate questions, would all of a sudden find themselves “deselected” from the program and left in the dust after spending their “sweat equity” building their future home.
Those were the lucky people.
The ones who didn’t ask questions, trusted this “christian charity” and believed everything the board members would tell them and followed their instructions step by step would then find themselves with a new home, and then the nightmare begins.
Here is some background on how they operate.
When a Habitat, chooses to a group of families, they apply for government grants. These grants can be up to $50,000 for each unit. So in the case on my street, there are ten units. That equals $500,000.00. That money is supposed to go directly into building the homes. Instead they obtain city land at a cost due to their charity status which means they get plots from old city land like community centers or schools for a cheap price, and they build on them. They get companies like Home Depot to donate materials to build these homes. And next they get volunteers and the families of the home owners, and the home owners themselves to put in “sweat equity” into the home. They must do at least 500 hours into this. In behind the scenes the homeowners are signing mortgage agreements, not with a legitimate bank, but with, you guessed it, Habitat for Humanity.
The only money I’ve found that is actually spent towards the home is the land purchase itself. Zero money is put into the home, not in materials or labor. And what makes matters worse is the labor is done by unskilled labor who never built a home in their life, guided by someone who allegedly has.
I’ll let that sink in for a moment. Do you think that these houses are going to be problem free new build homes? The answer is a big no. There will be mistakes made and problems will happen, which I will get into further down.
For the money side of things, there is another issue. Habitat almost always uses the number $160,000 for the value of these new build homes. The number starts around $145,000 or so and they tack on other numbers to get the $160,000 value. In almost all cases I read, in every part of the world where people have written about their experiences, that number pops up like a red flag. If you are reading this and don’t understand why, let me break this down.
Real Estate markets are different from city to city. It is impossible to have the same appraised value of any new build home, in so many parts of the world. Some areas are depressed markets and some are inflated. So the numbers shouldn’t be the same, but they are. And that sends up big red flags and alarm bells for me.
So I asked myself how much of the money are they getting. So I will list out the money.
1. $50.000 x 10 = $500,000.00
2. 10 mortgages for $160,000 = 1,600,000.00
Now the above amounts total over $2,100,000.00 approximately. (Two Million, One Hundred Thousand dollars). And because they are a charity, they get less taxed if at all for these numbers.
Now some costs are involved, so I in the case of my neighbors I would guess the land costs was under $400,000 if that. Since it was a local non for profit community center selling to a charity. So that leaves us with $1,700,000.00
That money goes directly into the charity coffers. None of it goes into the properties themselves.
Are you seeing the problem yet? Then we get into the home ownership deal. When I did my research I found that in places that have a buyers market, they will buy up old run down homes at depressed values and fix them up and those go to the potential home owners. That to me is okay. Those are freeholds.
However, in areas where it’s a sellers market, meaning the property values are expensive and there are bidding wars going on, then they buy land, and not at full price but get it at a reduced cost and sometimes given to them by city governments.
In real estate law, a lawyer cannot represent both parties. This is a blatant conflict of interest. The reason being is your lawyer is supposed to be working for you and your best interests. And one cannot do that when they are working for both sides of the deal. However, in Ontario, there is a loophole. And that is if they give written disclosure to both parties and both parties sign a consent form to agree to the lawyer representing both parties and acknowledging the conflict and are okay with it.
This takes me into the other part on how Habitat Operates. These low income families are unable to afford real estate lawyers of their own or find the idea daunting. So Habitat steps in and graciously offers their lawyer to handle the paper work. And why not? These are trust worthy Christians aren’t they? Working gods good deeds. So you can trust them.
And so what happens in because the lawyer from Habitat is being paid from Habitat, the lawyer will allegedly do this “pro bono” for the low income family’s but because his time is valuable, will usher the folks into a room one by one to sign the documents, giving them less than five minutes to sign and not answer any questions or make sure they have a chance to read what they are signing.
None of these families I’ve read about nor spoken with felt that or had a lawyer work on their behalf. When they had questions after they signed they would call this lawyer who they believed to be legit and working for them, and would ask for follow up questions on the contract or complain about disrepair would be met with the phone slamming down and a return phone call from a board member from the local Habitat Chapter, making a threat to evict them.
How can you evict someone who owns their home you ask? Oh this is fiendish. They own the mortgage, and they registered a condo corporation to manage the common elements of the land. They built the homes on the land and so the homes are owned by the homeowners, (on the inside) and the outside is all owned by habitat.
In the contracts Habitat is supposed to be responsible to repair and maintain the properties, That means, snow removal, grass trimming, maintaining the roofs of the homes etc. There are even stipulations in these contracts that they cannot build additions etc without express permission from the condo board.
So now you have an idea on how they operate and understand a tiny bit of what happens. If you are confused I will summerize.
1. They get a profit of almost two million dollars plus from these homes.
2. They don’t honor the warranties.
3. They are the land owner, bank, and condo corporation all in one.
4. They false advertise.
5. They use intimidation tactics when you try to complain.
6. They use fraudulent methods to trick desperate low income families to sign contracts.
I have you ask you, does this sound like a good christian charity? One that you would trust? I don’t, and I urge you not to trust them. Save your money, hire your own lawyer, if you are trying to get your own habitat home. Otherwise you will get fleeced.