Closing The Deal

COVID-19 Tips: Part 1

Don

Businessman Holding Model House In Palm Of Hand

 

BRIDGE FINANCING

With the current climate of social distancing, many financial institutions and banks have closed several branches, and reduced hours of operation. For example, the few Scotiabank branches operating have reduced their hours from 10:00 a.m. to 2:00 p.m., Monday through Friday. Banks are also reducing staff and limiting the number of clients allowed in their branches, creating longer wait times. Keeping all of this in mind, it is our strong recommendation that if you have a client who is purchasing and selling, you strongly encourage them to bridge finance, and not close both of their properties on the same day. Bridge financing eases the stress and tension on clients when trying to close two transactions on the same day. Unfortunately, banks have severely limited the ability for a seamless buy and sell on the same day, and depending on the financial institution, the channels in which mortgage funds, etc. need to pass through are also limited. Therefore, separating a client’s purchase and sale with time and bridge financing is key to ensuring a smooth purchase and sale.

MULTI-RESIDENTIAL TRANSACTIONS

With many municipal offices closed or working with a limited team remotely, obtaining building and zoning compliance letters for multi-residential purchases have become difficult, if not impossible during this time. Therefore, we cannot confirm whether a property is legally zoned as a specific type of dwelling. A great tip we recommend is to seek the report and documentation from the seller when they purchased the property! At the time of closing, the seller should have received their own compliance letter from the municipality via their lawyer, confirming the legal use of the property. This is a great tool for realtors representing a seller of a multi-residential property to confirm its current use, and for buyers during the time of municipal office closures.

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 Donald J. Travers, Solicitor with Paquette Travers

Toll-Free:1-877-744-2281    www.paquettetravers.com

COVID-19

Don

covid 19 real estate

At this point in time, we are not sure what the COVID-19 is going to do to the volume of real estate deals. Right now, we are busy; however, with many people wisely following the government orders to stay at home, self-distance and so much of the economy has shut down, we expect to see a market slowdown as a result of the Pandemic.

Unfortunately, many people bought firm just a month ago, because that was the days of no conditions. Now Buyers find themselves in the predicament of not being able to sell their existing home in a COVID-19 market, without the ability to show their homes. New Buyers are obviously very nervous to commit to purchasing homes in these uncertain times.

So, what happens if people do not complete these purchases because they cannot sell their existing home?

Well, there is no general principle of law to my knowledge that would apply to a Pandemic. In this situation, what would govern would be a matter of contract, and the terms of the Agreement of Purchase and Sale would govern the situation. Unless Time is of the Essence is waived, the Buyer would be in breach of the Agreement of Purchase and Sale and would have to close, since no law suspends private contract time periods.

Then there is the question of whether Force Majeure would give the Buyer an out of the contract. Unfortunately, Force Majeure is a matter of contract and is not found in residential Agreements of Purchase and Sale, so would not be applicable to residential deals. It also does not appear to apply to a Pandemic, since no mention is made of it when it has been part of a contract.

The third option would be a claim that the Agreement of Purchase and Sale is frustrated because it can not be performed through no fault of the Buyer. This would be an equitable remedy. However, delay or drop in value, or economic loss, or failure to sell would not be considered conditions which would enable a claim for frustration of the Agreement of Purchase and Sale.

The courts we expect will not take kindly to parties that take advantage of legal technicalities in these trying COVID-19 times. It is important that we all act responsibly and fairly. However, the Pandemic, is not going to get buyers out of their Agreements of Purchase and Sale.

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 Donald J. Travers, Solicitor with Paquette Travers

Toll-Free:1-877-744-2281 www.paquettetravers.com

Real Estate FAQ’s

Don

How To Choose a Real Estate Lawyer

1. How much time do you require to complete a purchase/sale/refinance file?

Depending on the time of year, we require a minimum of 10 business days to complete your transaction. If your time period is shorter, please contact us at 1-877-744-2281 in order to determine whether we will be able to assist you on a rush basis.

2. I just bought and/or sold a home. How do I get started?

If you are using a real estate agent, please inform your agent that you would like to use our law firm, and have your agent email a copy of the Agreement of Purchase and Sale to our office. Alternatively, a copy can be faxed to 1-855-744-8008. If you do not have an agent, or if you are purchasing directly from a builder, please drop off the Agreement for review to one of our four offices, or scan and email them directly. Upon receipt of the appropriate documentation, our staff will be in touch to re-confirm receipt of all documents.

3. How long does it take for my Agreement of Purchase and Sale and/or Status Certificate to be reviewed?

Your documents will be reviewed within 24 to 48 business hours upon receipt of the relevant documents. To top it off, we will review your Agreement and/or Status Certificate, free of charge!

4. What is Title Insurance and what does Title Insurance cover?

Title Insurance reduces the Home Owner’s disbursement costs on the transaction as it provides protection in lieu of a complete survey. Title insurance covers the homeowner for example, if the previous owner had outstanding unpaid property taxes and/or did not apply for building permits and completed extensive renovations on the existing home. We are pleased to offer all our clients insurance coverage through Stewart Title.

5. How is Land Transfer Tax calculated?

When you buy land or an interest in land in Ontario, you pay land transfer tax. Land transfer tax applies to all conveyances of land in Ontario. Please input your purchase price into the calculator located on our website to determine the amount of tax you owe on the transaction. We can also assist you with these calculations as required.

6. How do I qualify for a First-Time Home Buyer Rebate?

Beginning January 1, 2017, the maximum amount of the refund is $4,000. The increased limit of $4,000 applies only to conveyances or dispositions that occur on or after January 1, 2017, regardless of when the Agreement of Purchase and Sale was signed. To qualify for a refund: ▪ The purchaser must be at least 18 years old. ▪ The purchaser must occupy the home as their principle residence within nine months of the date of transfer. ▪ The purchaser cannot have ever owned a home, or an interest in a home, anywhere in the world, at any time. ▪ If the purchaser has a spouse, the spouse cannot have owned an eligible home, or had any ownership/interest in an eligible home, anywhere in the world, while he or she was the purchaser’s spouse. If this is the case, no refund is available to either spouse. ▪ In addition to the above, the person must have sold the home prior to marriage providing proof by disclosing the home’s address and date sold. ▪ The purchaser cannot have previously received an Ontario Home Ownership Savings Plan (OHOSP)-based refund of land transfer tax. Beginning January 1, 2017 eligibility for the first-time home buyers refund program is restricted to Canadian citizens and permanent residents of Canada. You will be required to provide a copy of your Canadian Birth Certificate, Canadian Passport or Permanent Residency Card. Should you have any additional questions, please don’t hesitate to contact our office.

7. What type of identification (ID) is required by my bank/lawyer?

Your lawyer is bound by the mortgage instructions set out by each financial institution to verify your identity via the appropriate forms of identification. Each financial institution has its own requirements for acceptable identification. You will be required to produce two pieces of ID at the time of your appointment. You must have one mandatory piece of ID (valid Canadian passport, Canadian birth certificate or permanent resident card) & a secondary piece of ID (valid driver’s license or social insurance card.) Such documents must be produced and will be photocopied by our staff when you attend our office for your appointment for your transaction to be completed. If you have any questions with regards to appropriate ID, please contact our office immediately to clarify.

Knowledge is Power!  Contact us today to find out more.  We’re here to help!

Kitchener/Waterloo Office
423 King Street North,
Waterloo, N2J 2Z5
 1 (877) 744-2281
TF Fax: 1-855-744-8008
Local Fax: (519) 744-8008
info@paquettetravers.com

What is “First Dealings for Estate Sales”?

Don 0 Comments

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)

Don 0 Comments

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!

Cheri 0 Comments

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

Don 0 Comments

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

Don 0 Comments

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

Don 0 Comments

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