Thursday, June 18, 2009

Native Land: Trust Completion Dates

In the province of British Columbia, leased lands on native reserve are now sold by a new RECBC contract which contemplate both a Trust Completion Date and a Final Completion Date.

The Trust Completion Date is the date where the Buyer deposits the Purchase Money with his or her lawyer. The Final Completion Date is the date following actual registration in the Indian Lands Registry.

Buyers should note that these days can often be as much as 90 days apart, and therefore it is important that appropriate escrow provisions be in place to ensure:
a) that the Buyer has occupancy of the home when desired;
b) that transfer and mortgage documents are appropriately registered; and,
c) the Seller is able to i) payout prior mortgages, and ii) receive the balance of the purchase price within a reasonable period of time. Title insurance may be helpful in this situation to provide "gap" coverage.

IMPORTANT: these consideration do not apply to Westbank First Nations Lands, for these property please consult the WFN Contract prepared by Peter Borszcz and Barry Porrelli.

Friday, June 12, 2009

Home Inspections

The home inspection industry in British Columbia has grown rapidly in the last 15 years, from fringe service, to mainstream acceptance. What is seldom explained to Buyers is that there a limits to what a home inspection can do.

Most home inspectors are "problem spotters" not "problem solvers or quantifiers". Usually a home inspection will say "I think you have a roof issue" or "you may want to get the deck checked out". Often new buyers will take this advice as something to look into AFTER purchase. This is often a mistake.

If a home inspector spots something, even if the home inspector does not think it is a critical issue, it is best to then look into it further by calling in a qualified expert. Therefore if there a roof issue, get a roofer in to look at the property, if there is a structural issue, get a structural engineer. A few dollars on spend investigating a home purchase is money well spent.

Buyers should also note that there are limits to the liability of home inspectors. Usually the contract you sign with the home inspector limits their liability to problems they can see without moving furniture, ceiling tiles ect....

Real Estate Agents: Dual Agency

A "dual agent" is an agent who acts for both the buyer and the seller in a single real estate transaction. Often this occurs on "sign calls" where a prospective buyers drives by (or "surfs by") a home they like and calls the agent associated with the property.

Dual Agency places the Real Estate Agent between both clients, and the Agent owes a duty to act in the bests interest of both parties, which naturally conflict. Therefore, dual agency is only allowed in very limited circumstances. As a Dual Agent, realtors must secure the consent of both parties, disclose all material facts to both parties, but must keep secret the buyers or sellers motivation or their own thoughts on pricing or negotiation strategy.

Monday, June 8, 2009

Strata Property: Special Levies

Where there is an outstanding or, contemplated special levy (as found in the minutes), Buyers and Sellers need to clearly state WHO is responsible for paying the levy. Ideally, a sharp realtor has considered the issue and stuck in a clause in the contract but, in the event it is forgotten:
1) ensure you get a copy of the resolution authorizing the special levy to see if it contains an acceleration clause; and,
2) look to s.109 of the Strata Property Act: the SELLER owes if the special levy is payable prior to the CLOSING DATE, whereas the BUYER owes if the special levy is payable on or after the CLOSING DATE.

Friday, June 5, 2009

Buyers Need to Get Insurance by 12:01am on Closing

Under the standard contract of purchase and sale, used by most Realtors, the RISK of the property passes to the Buyer at 12:01am on the CLOSING DATE. Therefore Buyers are well advised to ensure that their insurance policy is effective at 12:01 on the CLOSING DATE.

Often Buyers will obtain insurance to be effective the POSSESSION DATE (or moving date), this can leave the property uninsured for a period of time and, may, in the event of a fire/ flood/ or other insurable event happening at this time, cause great loss to an uninformed Buyer.

Buying a Home with Existing Tenants

Buying a home with existing tenants involves a few additional obligations on buyers and sellers as 1) there is another party involved (the tenant), and 2) there are additional provincial laws that appy (the Residential Tenancy Act).

Prior to considering the purchase of a rental property buyers should ensure a) that the suite is a legal suite (as opposed to the commonly marketed "inlaw suite") and b) that there are no strata bylaws which prohibit the rental.

If the new Buyer is planning to Move In to the Property:
**** Ensure the Tenant is given property notice to vacate - the notice can only be given a) once the Purchase Contract is subject free, and b) the tenant must have 60 days from day before the next rental payment date. This means, if rent is due on the 1st for a periodic monthly tenancy, and you give notice to the tenant on April 15th, the tenant does NOT have to move out until June 30 (60 days following April 30, the effective date of notice)

If the Tenant is staying resident on the Property
*** the Buyer should review the residential tenancy agreement to ensure that a) it is valid and enforceable and b) that the rent and damage deposit is properly adjusted on closing (note interest adjustment is required here under the Residential Tenancy Act)

Monday, June 1, 2009

Non-Resident Sales

When a non-resident of Canada is the Seller of real property special considerations apply to ensure that the government of Canada is paid all applicable taxes on sale.

s.116 Income Tax Act - provides that the BUYER must withhold between 25-50% [depending on the nature of the property] of the Purchase Price from the Seller until the Seller provides the Buyer with evidence that they have obtained a s.116 clearance certificate from the Canada Revenue Agency.

Currently these certificates are taking up to 8 months to process, therefore, Vendors are advised to apply early, and ensure that they can clear financial charges from title without the entire purchase price prior to entering into a binding contract

Estate Sales

Unfortunately, there are only two universal truths in life, death and taxes...

When the former arises, an estate sale is usually the result. As the heirs of the deceased, a binding contract for the sale of the home can only be entered into once the estate has done the following:
a) obtained a grant of probate or letters of administration;
b) disclosure of affairs to mortgage lenders; and,
c) filing of transfer of property into the name of the estate.
Therefore, any contract should be written as "John Doe, as executor of the estate of Jane Deceased" and should be "subject to the grant of probate or letter of administration in favor of the Vendor"