Legalities

Family Law Issues in Real Estate (Part 1)

Don 0 Comments

two-hands-grapsing-a-model-house

A common problem in Family Law situations is when the client sells a matrimonial home and plans to use their share of the proceeds to buy another home. This “Dream Client” can become a nightmare if the agent is not careful. It is not uncommon for spouses to assume they will receive half (1/2) the equity of the house upon the sale. It is important for agents to ensure their client has a separation agreement in place, dealing with the proceeds of the sale of the house, or at least an irrevocable direction to the lawyer acting on the sale for what is required to complete the new purchase, before the spouse commits to a firm agreement of purchase and sale on a new house.

Spouses can get very vindictive, and on a sale, will often insist the proceeds of the sale be held in trust by their real estate lawyer until all Family Law issues are resolved. If the proper caution is not taken as mentioned above, the spouse’s purchase can be thwarted and the purchasing spouse can be exposed to damages for failure to close.

Always make your client aware of this, and do not let them firm up without clarification of who gets what of the sale proceeds. Spouses can never count on their spouse continuing goodwill.

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 each month!

Family Law Issues in Real Estate

Don 0 Comments

commonlaw

I recently gave a seminar for the Kitchener Waterloo Real Estate Board on Family Law issues in Real Estate with my business partner, Barry Paquette, who is a Certified Specialist by the Law Society of Upper Canada in Family Law.

One of the most misunderstood aspects of family law issues in real estate is “What is a Common Law relationship.” A Common Law Relationship is legally defined as 2 people living together for three (3) years, or a relationship which has a child from it. Many people will refer to themselves as common law without meeting these criteria.

It is important to note that even if the parties meet the legal definition of common law, this does not mean that they have any interest in the other persons property. A legal common law relationship can impose support obligations on each other. However, parties must legally be married, before a party acquires any interest in real property. Thus from an agents point of view in common law circumstances, the consent of the common law partner is never required to list or sell the property. This applies even in the case of the matrimonial home. Only if both parties are on the title – would both have to sign, which would be obvious in any circumstance.

Knowledge is Power, which results in more business!

If you have any questions or concerns, please feel free to contact us at your convenience. We would love to hear from you!

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

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

Referrals are the lifeblood of our business. If your clients, family or friends are in the process of buying, selling or refinancing Real Estate, our greatest compliment would be a recommendation from you.

…We are never too busy for your referrals!

If you would rather save some trees, please contact Heather Schmitz at my office and she would be happy to add you to our email mailing list for future tidbits!

Furthermore, you may find all of our previous tidbits on our website for your reference. Go to: http://www.traverstidbits.com/

Stigmatized Properties and Latent Defects

Don 0 Comments

stimatizedproperties1

Agents sometimes run into problems when taking a listing because the Seller is aware of a defect and does not want the Agent to disclose the defect. The problem is that the obligations of Sellers are not the same as the Agent. The Agents have a broader duty of disclosure than do the Sellers. Agents, under the regulations pursuant to your Code of Ethics are obliged to disclose material facts relating to the property.

RECO has addressed stigmatized properties. ‘Stigma’ is not defined, but RECO provided examples, as follows:

1. The property was used in the ongoing commission of crime. (eg. Drug dealing, chop shop, brothel)

2. A murder or suicide occurred at the property.

3. The property was previously owned by a notorious individual. (eg. Organized crime, known murderer.)

4. There are reports that the property is haunted.

5. A former grow-op which has been remediated according to the local health or building authority.

Sellers have only two duties when it comes to disclosure:

1. To disclose a latent defect that renders the premises unfit for habitation; and

2. To disclose a latent defect that renders the premises dangerous in themselves.

The courts have held that Sellers do not have to disclose a death, suicide or murder in the house. A grow-op, haunted house, or murderer’s house, such as Paul Bernardo’s house (although now demolished), would not require disclosure by the Seller, but certainly by the Agent. In the past, the principle followed by the courts was “buyer beware.” The problem with ‘stigmatization’ by definition, it is ephemeral (in the eyes of the Buyers), and their subjective personal preferences.

Agents face a difficult decision in this situation; whether to take the listing or not. If the listing is taken the Agent can face a disciplinary hearing before RECO, if there is non-disclosure of the defect. If the Agent discloses the defect, he or she could face a law suit by their client for breach of their fiduciary duty to the client.  In the RECO v Rybitsky, the failure by the Agent to disclose a previous grow-op that had been remediated, led to a fine of $11,000.00 for breach of the Code of Ethics.

Where this gets tricky is where it is a matter of degree, such as insect or mice infestation. How bad are the bugs and mice? Have efforts to clean up failed? Does it create a contingency health hazard? Agents could lose the deal but disclosure is preferable to a disciplinary hearing.

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 each month!

Well and Water Warranties

Don 0 Comments

warranty

It is extremely important when buying a rural property that the appropriate warranties are granted from the Seller to the Buyer.  The following clause best sums it up:

I/We _______________________, the Sellers in the transaction, hereby warrant to the Buyers with respect to the domestic water supply and domestic water supply system, that:

  • The water supply is capable of supplying an adequate flow (a minimum five (5) gallons per minute);
  • The water provided is potable on a year-round basis;
  • The Seller is not aware of any contamination or impurities in the water;
  • The Buyer will have a reasonable opportunity to enter on the property for purposes of obtaining water samples;
  • The normal water tests will show either a “0-0” reading or an acceptable reading as defined by the Ministry;
  • There are no unsafe contaminants to a level deemed unacceptable under the “Drinking Water Objectives”;
  • The water is completely clear, clean and free of any displeasing colour or smell;
  • The pump, holding, pressure and distribution systems all perform adequately, have been properly maintained and repaired and will be in good operating condition on closing;
  • The well is situated entirely within the limits of the subject property;
  • The well services only the subject premises and is not a communal well; and
  • The well is a dug or drilled well, not from a water source such as a river, spring lake, stream or other surface water.

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

Referrals are the lifeblood of our business.  If your clients, family or friends are in the process of buying, selling or refinancing Real Estate, our greatest compliment would be a recommendation from you.  We are never too busy for your referrals!

Watch for more Travers Tidbits to follow each month!

Grow Ops … and The Usage of “To the Best of My Knowledge and Belief”

Don 0 Comments

indoor-grow

The above term is often used in the Agreement of Purchase and Sale; but what is the effect of it on representations and warranties?

In the Court of Appeal case of “Beatty v. Wei” found that despite a Seller’s representation during the time they had owned a property, that the property had not been used as a grow op, the effective date of the truth of the representation made to “the best of the Seller’s knowledge and belief” was at the time that the representation was made. Without the language in the clause that the representation continued until closing, the representation did not continue, and, in this case, it was discovered that the property had in fact been used as a grow op at some time prior, but that fact was unknown by the Seller and the Seller was not liable.  The emphasis to be placed on representation is the knowledge of the Seller when the representation was given and not on whether the property had been used as a grow op.

The representation given was limited to the Seller’s knowledge at the time given and was not absolute.

If the Buyer wants the representation to apply up to the date of closing, the Agreement of Purchase and Sale should be written to include this timeframe. Since the clause did not reflect “up to the date of closing”, the representation only applied to the date of execution of the Agreement of Purchase and Sale.

We all rely on “to the best of my knowledge and belief” in our agreements, so it is important to realize that without language that makes the knowledge apply to the date of closing, the effectiveness of the representation is limited to the date it is given.  Even if the Buyer finds out prior to closing that there was a grow op, the Buyer does not have the right to terminate the Agreement 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.

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

Watch for more Travers Tidbits to follow each month!

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

Oh Canada! What You Need to Know About Residency Status in Closing the Deal

Bryan Mayes 0 Comments

canada-immigration-flag-and-passport

The introduction of the Non-Resident Speculation Tax in April of this year has made it imperative that Real Estate Agents confirm the residency status/citizenship of their Buyers well in advance of the closing date. We have encountered issues days before closing wherein the Client, as it turns out, has not actually been granted Permanent Residency Status/Canadian Citizenship by the Government of Canada. If the closing date arrives and the Buyer is unable to provide our office with proof of either Permanent Residency or Canadian Citizenship (birth certificate, passport, permanent resident card, etc.) then two options become possible:

  1.  The Buyer pays the NRST which equals 15% of the purchase price and may be eligible for a rebate after closing;
  2.  Extend the closing date of the transaction until the Buyer can provide our office with proof of Permanent   Residency/Citizenship.

Neither of these options will result in a happy Buyer. To avoid this potentially disastrous circumstance from arising, we recommend that all Real Estate Agents confirm the residency status/citizenship of their Buyers (with proof!) well in advance of the closing date. We have found that sometimes clients think that they are Permanent Residents/Canadian Citizens but have never actually been legally granted this status by the Government of Canada. Determining if this will be a problem in advance of the closing date will give the Buyer time to apply to the Government to receive the appropriate documentation before the closing date.

Addressing this potential problem immediately is crucial to avoiding potential issues on closing and, ultimately to cause your Buyer to close their transaction happily and hassle free.

Author: Bryan M. Mayes, Lawyer

Paquette & Travers Professional Corporation

519-744-2281 x 302

 bmayes@ptlaw.ca

 www.paquettetravers.com

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!

Family Law Issues in Real Estate: Part 3 of 3

Don 0 Comments

house-in-hands

Should I Stay or Should I Go Now?!  What happens when a common law relationship breaks down and one party wants to sell the home and the other party is happy living in the house and often is not making much of a contribution to the upkeep?

 The party that wants to sell can sever a joint tenancy by registering a transfer to themselves.  Thus converting the property to tenants in common.  He or she can also force the sale of the property by commencing an “ Action for Partition”.  Parties are not locked into their properties.  The agent can advise the party to seek legal advice on a partition action.  Usually, a letter from the selling party’s lawyer will get the desired results of getting the property listed.  However, if an action is required agents must allow sufficient time to have the action heard.  Talk to the selling party’s lawyer, months are quite often required, but the courts will order the sale and even dispense with the signature of the non co-operating party if necessary.

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

Family Law Issues in Real Estate: Part 2 of 3

Don 0 Comments

homesplitting

A common problem in Family Law Situations is when the client sells a matrimonial home and plans to use their share of the proceeds to buy another home.  This “Dream Client” can become a nightmare if the agent is not careful.  It is not uncommon for spouses to assume they will receive half (1/2) the equity of the house upon the sale.  It is important for agents to ensure their client has a separation agreement in place, dealing with the proceeds of the sale of the house or at least an irrevocable direction to the lawyer acting on the sale for what is required to complete the new purchase, before the spouse commits to a firm agreement of purchase and sale on a new house.

Spouses can get very vindictive, and on a sale, will often insist the proceeds of the sale be held in trust by their real estate lawyer until all Family Law issues are resolved.  If the proper caution is not taken as mentioned above, the spouse’s purchase can be thwarted and the purchasing spouse be exposed to damages for failure to close.

Always make your client aware of this, and do not let them firm up without clarification of who gets what of the sale proceeds.  Spouses can never count on their spouse continuing goodwill.  Be prepared and ready to advise!

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