What is “First Dealings for Estate Sales”?

Dream house.

Recently I have had several agents raise questions on a clause in an Estate sale which referred to first dealings and the fact that probate might not be needed. So what is a “First Dealings for Estate Purposes.”

The requirement in Land Titles is that upon the death of an owner, the estate trustee must obtain probate. The conversion of properties from the old registry system to Land Title has lead to an exemption from the requirement for Probate for these converted properties to Land Title Qualified.

The First Dealings Exemption is applicable if the deceased acquired the property while it was registered under the registry system and was subsequently converted to Land Title Qualified and the deceased still owned the property, then the owner will be exempt from the requirement for probate. This First Dealings Exemption will still apply as long as the dealings do not transfer title, such as mortgages and discharges.

The exemption will still apply if a joint tenant has died on the registration of a survivorship application will not vitiate the first dealings exemption for the survivor. Inter-spousal conveyances due to the dissolution of a marriage will not disqualify the owner from the First Dealings Exemption. This exemption is only available where there is a Will and where the property is in the Land Title Qualified.

Knowledge is Power, which results in more business!  If you have any questions or concerns, please feel free to contact us at your convenience. If you have any suggestions for future topics please let us know.

Prepared by Don Travers, Solicitor with Paquette & Travers

Contact toll free: 1-877-744-2281 Online: www.paquettetravers.com

Watch for more Travers Tidbits to follow each month

Closing the Deal for Common Element Condominiums (POTL’s)

condo

We have experienced problems recently with agents not using the proper form for the condominium POTL sales and purchasing nor using the proper terms. The Agreement does not mention the condominium corporation at all.  Some Agreements refer to monthly fees without stating what they are for, while some agents do not think that they need to refer to the review of the Status Certificate and make the transaction conditional on lawyer review.  All of the above can prove fatal to the transactions and to the agent.

Purchasers have refused to close transactions because it was not disclosed that they were buying into a condominium corporation. The monthly fee can be very small, as little as $15.00 a month, but if not disclosed as a condominium, the purchaser can walk because even though the fee is small, there is always the potential liability of the condominium corporation which is unknown.

A few closings were delayed because the purchaser refused to close unless the seller paid the condominium fees for 5 years due to the failure to disclose there was a condominium corporation fee. Therefore, it is imperative that there be full disclosure of the status of the property and any condo fees, to ensure that agents are not having to reach into their own pockets.  The deal only closed when the agents agreed to pay the condominium fees for the next 5 years.

Purchaser’s agents must provide for the review of the status certificate on these condos as well.  Failure to do so could result in the purchaser being saddled with unpaid condominium fees, pending special assessments, or possible lawsuit costs pending against the corporation.  The agent would be negligent for not making the offer conditional on review by the Purchaser’s lawyer – obviously a lawyer not obtaining the Status Certificate would also be negligent.

So be sure you get all the facts on the property you are selling and buying, because many properties are now being developed as Common Element Condominiums (POTL) and sellers do not always appreciate what they are selling. The sellers naturally blame their agents when these problems arise.

Knowledge is Power, which results in more business!

If you have any questions or concerns, please feel free to contact us at your convenience.  If you have any suggestions for future topics please let us know.

Prepared by Don Travers, Solicitor with Paquette & Travers.

Contact toll free: 1-877-744-2281                                                      Online: www.paquettetravers.com

Watch for more Travers Tidbits to follow each month!

Here Today, Gone Tomorrow – The Risk of No Conditions!

Sold

In this very hot market, we are seeing most deals without any conditions, and in particular, no financing condition.  However, this is not necessarily a blessing for the Seller. Sales not being completed because of the Buyer cannot get financing.  The Seller believes they have a firm Agreement of Purchase and Sale act upon that information to buy a new home. Unfortunately, the Seller finds out when they get close to the closing, that the Buyer cannot close because the price paid for the house is not justified by the bank’s appraisal.  The Seller is left in the inevitable position of not being able to complete their purchase.

To make matters worse, there was a multiple offer, and unfortunately the seller selected the perceived best offer, which turned out to be the wrong offer.  The offer had only the minimal deposit, so the seller does not have much to fall back on for their damages.

In order for Agents acting for the sellers to protect their clients, the Agents should be making sure that the accepted Agreement of Purchase and Sale have larger deposits.  If buyers can not come up with a larger deposit, they probably cannot make up any shortfall in the bank financing either.

If you sold your home in 2016, you will have to report it to the Canadian Revenue Agency in your tax form that deals with Capital Gains, even though any gains remain tax free if you have lived in the house as long as you owned it. The basic information related to the transaction must be filled out on the income tax form including the year of purchase, the proceeds of the sale, and the description of the property.  The penalty for not reporting the sale of a home and not having your tax return amended if necessary is up to $8000. This change in reporting will make it easier for the CRA to catch taxpayers who try to claim the principle residence exemption on more than one property for the same period.

Knowledge is Power, which results in more business!

If you have any questions or concerns, please feel free to contact us at your convenience.  If you have any suggestions for future topics please let us know.

Prepared by Don Travers, Solicitor with Paquette & Travers

Contact toll free: 1-877-744-2281    Online: www.paquettetravers.com

Watch for more Travers Tidbits to follow each month!

Buyer Beware! How to Avoid Being Trapped by Misrepresentation

house in mousetrap. Isolated 3D image

Remedies for Misrepresentation before Closing

Rescission (termination) is available where a material misrepresentation in the Agreement of Purchase and Sale was an inducement to the Purchaser to enter into the Agreement is established. This misrepresentation must be material and must have served as an inducement to enter into the Agreement of Purchase and Sale.

A representation which amounts to a statement of opinion, probability, expectation or exaggeration goes for nothing and although the statement may not be true, a Purchaser is not justified in placing reliance on it. Such statements have no legal significance and would not enable the Purchaser to terminate the Agreement.

Representation can be classified as an innocent misrepresentation, a negligent misrepresentation, or a fraudulent misrepresentation. A Purchaser is entitled to terminate the Agreement if the representation is material and in the Agreement, whether it is innocent, negligent, or a fraudulent misrepresentation. A misrepresentation is fraudulent when the Seller makes a false statement of fact knowing it is false, or recklessly, without caring whether it is true or false, intends to induce the Purchaser to enter into the Agreement and the Purchaser relies on it.

The “entire Agreement clause,” paragraph 26 in the standard form, will protect the Seller from an innocent misrepresentation made outside the Agreement. However, that clause will not protect a Seller for a fraudulent misrepresentation made by the Seller or the real estate agent outside the contract.

Whether the clause excludes negligent misrepresentation made by a Seller or agent and not included in the Agreement is unclear. In the case of Hayward v Mellick, a statement by the Seller’s agent described a farm contacting 65 workable acreage when in fact it was only 51. The Court of Appeal said that a negligent misrepresentation not included in the Agreement could not be relied upon by the Purchaser because it was excluded by the entire Agreement clause. However, in a subsequent case, Bear v Townsgate 1 United, casts doubt on whether the clause excludes pre-Agreement negligent misrepresentations.

Faced with a decision to close or not close, the lawyer must depend on how a court classifies the misrepresentation made by the Seller. Unfortunately, the distinctions between each class of misrepresentation is often tenuous.

If the statement in the Agreement is labelled a warranty and that statement is not true, even if discovered before closing, it does not give the Purchaser the right to terminate the Agreement. It only gives the Purchaser the right to sue for damages after closing.

If the misrepresentation is an innocent misrepresentation, and the Purchaser decides to close, the Purchaser must be made aware that they will not be able to sue for damages after closing.

Unfortunately, there is not always certainty in the law.

Knowledge is Power, which results in more business!

If you have any questions or concerns, please feel free to contact us at your convenience.  If you have any suggestions for future topics please let us know.

Prepared by Don Travers, Solicitor with Paquette & Travers Professional Corporation

Contact toll free: 1-877-744-2281                                                             Online:www.paquettetravers.com

Watch for more Travers Tidbits to follow!

 

The Hidden Details Behind New Condo Agreements

condos

Things to remember: Pre-closing Agreements of an Assignment of Purchase for New Condos

When the agreement is assigned, consent is almost always required and charged for by the Builder. Need to determine the cost of consent and who pays it.

  1. Does the Purchase price for the assignment cover (i) The Assignment fee (ii) The Deposit and the extras already paid by the Assignor.
  2. Who will pay the H.S.T on the Assignment and what amount is it on, if payable; just the assignment fee or the assessment fee as well as the deposits.
  3. It is key to remember that the property must never have been occupied prior to closing to get the HST rebate on closing.
  4. The Assignee needs confirmation, that the Builder will credit him/her the HST rebate on closing.

The Key to many of these HST questions is what was the intention of the Purchaser/Assignor at the time of entering into the Purchase Agreement.

  1. If the Purchaser/Assignor’s intention was to resell/assign the agreement the Purchase Agreement will be a Builder under Tarion, and will have to register as much.
  2. The intention also determines if HST is payable on the Assignment. If his/her intention was to resell, HST is payble on the Assignment.
  3. The good thing from the Assignee’s point of view is that regardless of what the purchase agreement states, the Assignee can claim the HST rebate if he/she otherwise qualifies for the rebate.
  4. Unfortunately the OREA forms of Assignment Agreement for condos does not deal with the fundamental questions of intention of the HST. The phrase “included in” does not address the issue of “HST exempt/HST taxable”.

Prepared by : Donald J. Travers of Paquette Travers & Deutschmann

Toll Free: 1-877-744-2281 Email: Don@PaquetteTravers.com

The Importance of Communicating the Realtor Commissions Process

realtorcommissions

These days agents are having clients sign Buyer Agency Agreements, usually providing for the payment of commissions at 2.5 %. Unfortunately many of the transactions involved for sale by owner deals, or deals with discounters, do not provide for the Buyer’s agent to get the 2.5%.  As such, the Buyer will be responsible for any shortfall in the commission that the agent receives as a result of these types of arrangements.

However we are not expecting commission statements on purchases. On a sale, if we do not have a commission statement, we would naturally call to get one.  On purchases, we would not, so it is imperative to not only fax or email the statement, but to also follow up to ensure it has been received by us. It is preferable to email us but please always follow-up to ensure we have the required commission statement by phone.

It is advisable to inform the Buyers of the likely situation that commission might be payable, so they are not overwhelmed or surprised during their signing process with our offices.  If and when a clear line of communication is addressed between all parties (Buyers, Agents and the Law Firm), the ability to obtain and remit commission to the brokerages is far easier.

A Buyer’s hesitancy to assist Agents throughout the transaction is due to the fact that they could be paying commission which was not contemplated in the situation.  As a result to avoid any miscommunication or delay, it would be prudent to explain all possible scenarios to the clients in light of the Buyers and Sellers communicating directly.

Prepared by : Donald J. Travers of Paquette Travers & Deutschmann

Toll Free: 1-877-744-2281 Email: Don@PaquetteTravers.com