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www.Pinskylaw.ca Business and Intellectual Property Law Forum 2019-11-04T14:47:17-05:00 http://www.pinskylaw.ca/forum/feed.php?mode=topics 2019-11-04T14:47:17-05:00 2019-11-04T14:47:17-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=635&p=669#p669 <![CDATA[Offshore Asset Protection • Offshore Asset Protection Trusts]]>
A settlor may also protect his or her assets through a discretionary trust. A discretionary trust will expressly provide that the trustee has the complete discretion to distribute any or all of the capital or income of the trust to or for the benefit of any or all of the beneficiaries as the trustee may from time to time decide. Thus, if a particular beneficiary was at any time subject to a creditor, inheritance or matrimonial claim, the trust assets would effectively be shielded from that claim by virtue of the discretionary nature of his or her interest under the trust and the fact the trustee does not exercise its jurisdiction in favour of the beneficiary.

Although the beneficiary's interest in the trust might be attacked by a creditor, the value of that interest is arguably nominal as a result of the discretionary nature of trust. If an objective is asset protection then this discretion is fundamental, since it is the trustee's right or entitlement not to make distributions to a particular beneficiary which renders the beneficiary's interest of uncertain and incalculable value thereby rendering it unattractive to third party claimants.

Given the potential for challenges to trusts in various legal theories, the greatest asset protection is often available through the use of an offshore asset protection trust. The enormous increase in litigation awards in Canada and the USA has caused many business owners and professionals to establish offshore asset protection trusts. While these vehicles are generally tax transparent, they do ensure assets stay safely away from nuisance creditors in jurisdictions plagued with runaway claims. Typically, these trusts make it difficult for the future creditors or successful plaintiffs to attach their claims or enforce their foreign judgments. To effectively utilize the asset protection trust the circumstances must be such that there are no known creditors and the individual settling the trust must be solvent at the time of the transfer of the assets to the trust. Such trusts are an effective vaccine but not a cure and should be structured before any cause of action arises. The use of an offshore trust in this fashion is effective to safeguard hard earned assets from frivolous and vexatious litigants and unpredictable judicial awards. Such asset protection trusts are becoming a necessary aspect of doing business today.

The asset protection trust by which assets are held outside the jurisdiction of residence enjoys a number of other advantages. The donor may continue to enjoy beneficial entitlement to and perhaps control of trust assets. Assets held in a discretionary trust enjoy enhanced asset protection from third party claims against the beneficiary, such as those arising from matrimonial, inheritance or creditor actions. The assets may be held in a jurisdiction other than where the individual reside, which provides the flexibility to choose the most attractive legal regime. Asset distribution through a trust avoids probate and the application related probate fees and allows for flexibility in establishing the scheme of ultimate asset distribution and avoidance of Wills Variation Act challenges. Continuity given concerns over resignation or incapacity of trustees can be anticipated by the appointment of a protector who has power to appoint and remove trustees. The settlor will often be the first protector. The protector has no power to distribute property. The settlor can resign and appoint a successor in the event of future adversities. Such successor is often a friend or relative of the settlor.

The trust document may provide that the law of the foreign jurisdiction be used to determine all questions concerning the capacity of the settlor and the validity and administration of the trust and the trustee will attorn to the courts of the jurisdiction for any matter affecting the interpretation, enforcement or administration of the trust. The trustee should also reside in the jurisdiction to minimize the risk of being ordered by a Canadian court to exercise his or her power in a particular way or to risk contempt of the court. A typical offshore trust will have foreign trustees, foreign choice of law governing the trust and a foreign situs of the trust assets. the trustees may have the power to transfer assets out of the trust to a new trust within or outside the chosen jurisdiction, to change the proper law of the trust and to prohibit distribution to a beneficiary at a time when he or she is insolvent or on the eve of insolvency.

Foreign asset protection legislation is often aimed at providing protection against creditor and other claims. Such debtor-friendly laws may seek to impose a short limitation period for bringing a claim to set aside a transfer into the trust, define "creditors" in a narrow manner excluding future unascertained creditors from the definition, require a criminal standard of proof beyond a reasonable doubt of an intention to defeat the interests of creditors rather than the usual civil standard of proof on balance of probabilities, refuse to recognize foreign judgments generally or orders related to bankruptcy, succession or matrimonial law, allow a settlor to validly create an interest in possession terminable on bankruptcy, and permit a transfer in breach of a forced heirship provision under the settlor's own law to be nevertheless valid.

Statistics: Posted by Pinskylaw.ca — 04 Nov 2019, 14:47 — Replies 0 — Views 47308


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2019-11-04T10:05:32-05:00 2019-11-04T10:05:32-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=634&p=668#p668 <![CDATA[Offshore Asset Protection • Offshore Business Asset Protection]]> Business Offshore Asset Protection

1. Why

Why is a business client giving consideration to offshore planning opportunities? The primary motivations will likely include the pursuit of profit and opportunity, the overall minimization of tax, the pursuit of the right of privacy in the face of state or societal scrutiny and the pursuit of personal security in the face of risk. The more desperate may face actual or threatened litigation, obligations to creditors which the debtor cannot pay due to insolvency, obligations to creditors which are currently being satisfied but will not be met in the near future and guarantees or indemnities given for debts where it is known or anticipated that the guarantees will be called upon.

The documentation of motivations is helpful in resisting potential claims by creditors or claimants arising from concerns of fraudulent intention. The fact that a transaction may have the effect of insulating assets from future claims does not lead to a necessary inference of a fraudulent intention to do so. The possible non-asset protection motivations could be

- economic diversification;
- the achievement of a low profile or anonymity with respect to wealth;
- the avoidance of forced disposition;
- pre-marital planning;
- the preservation of entitlements;
- marital property planning;
- tax planning;
- planning for the contingency of changing one's domicile or citizenship;
- participation in investments that are not otherwise available to Canadian investors;
- preplanning in anticipation of currency controls or restrictions on ownership of gold;
- liability protection;
- tax planning or strategic advantage in the context of an active trade or business abroad.

There are often specific business, investment or tax reasons and implications for using offshore companies to carry on particular business functions or to hold assets. Domestic rates of return on investment may appear less attractive than foreign opportunities and individuals may wish to pursue asset and investment diversification or otherwise access the international market. There may be trading or service opportunities to be pursued through related foreign companies. Offshore banks and captive insurance companies are established for risk management and other reasons.

Foreign tax havens may offer generous tax incentives to encourage the transfer of wealth. The use of offshore business, investment or holding companies may present opportunities to minimize corporate or personal tax obligations. Indeed, many inquire about offshore initiatives as a way of evading or minimizing income tax. More than a few taxpayers have initiated ill advised tax motivated strategies based solely on offshore professional advice without the benefit of meaningful review by a Canadian lawyer and/or a Canadian accountant. The failure to obtain Canadian professional assistance or second opinion can be dangerous.

There may be a desire to maintain confidentiality and anonymity with respect to personal and business holdings. It is not only the rich and famous who are reclusive or value privacy. Removing wealth from obvious sight and reach may be permissible if done in advance of any known creditors or claimants and without intent to defraud. The pursuit of privacy or anonymity runs afoul of recent public policy demands for transparency. Some believe that their offshore bank accounts are private, confidential and completely secret. Certainly, debtor friendly jurisdictions have legislation intended to limit access to confidential banking information. The creative use of numbered accounts and intervening captive entities or willing agents may obscure the identity of the true owner of an account. International concerns over tax evasion, proceeds of crime, drug activities and most recently, terrorism, have resulted in a number of legislative and treaty initiatives to compel disclosure of banking information in Canada, the USA and in a number of offshore jurisdictions.

Risk concerns are a significant motivation for asset protection initiatives. Success in life may be seen by some as the stimulation that comes from overcoming the challenges of events and competition of others together with the reward of an affluent or at least comfortable lifestyle and retirement. Anticipating and managing risk plays a significant contribution in achieving success. The more altruistic recognize the importance of good stewardship or philanthropic pursuits and prudently seek to preserve capital assets and income for good works and beneficial pursuits of different descriptions. Risk may arise from potential unrest and economic uncertainty. There are lessons to be learned from those who have faced adversity and sought to geographically diversify their assets holdings and provide safe harbours and nest eggs should domestic problems intensify. Risk may arise from potential adverse changes in business circumstances. Business activity can be segregated into separate companies in order to engage in international operation and thereby minimize risk while pursuing opportunity. Some engage in activities which by their nature may carry significant potential risk. Some businesses, for example, carry the potential for significant contamination. Many environmental statutes impose significant potential liabilities on the owners or operators of contaminated sites as well as directors and officers. This liability may be retroactive and absolute regardless of compliance with environmental standards and practices at the time the contamination arose. This liability may only be disclosed long after the underlying property has been disposed of. There is also the risk of evolution in standards to render unlawful what at the time was lawful in terms of permissible activities and levels of contamination. Risk may arise from potential adverse changes in personal circumstances. Some engage in professions which attract the potential for future liability for which liability insurance may be inadequate by reason of coverage limits or gaps. Such professions include accountants, doctors, architects, engineers and lawyers.

2. What

The "what" defines the specific goals or objectives of the engagement or retainer. It may be necessary to prioritize the goals from the more important to the less significant. Is the real concern potential claims or liabilities and, if so, what specific types? Is the goal preservation of a specific asset? Is the goal confidentiality and privacy? Is the goal maximization of profits? Is it minimization of worldwide taxes? Is it estate planning or business succession? Is it asset diversification? It is important to define and rank the goals and objectives in order to properly establish priorities. Different jurisdictions and structures may be more suitable than others for particular objectives. Some risk may have to be assumed or advantage foregone in order to achieve the priorities. No jurisdiction is ideal for all purposes.

3. When

Asset protection planning may be defined as the process of organizing one's assets and affairs in advance so as to safeguard them against risks to which they might otherwise be subject to. It is impossible to overemphasize the importance of engaging in preemptive rather than crisis management. Simply put, the timing of the decision may be as important a consideration as the substance. Potentially effective alternatives may be rendered ineffective by delay. With the passage of time potential risks may become a reality. An asset protection plan should ideally be put in place well in advance of any problems. The best time for planning is before a future possibility becomes a present reality. Some individuals will actually encounter adversity. They may have existing creditors with significant claims and litigation may be contemplated or ongoing. The reassessment of aggressive tax schemes may be on the horizon. Attempting to hide assets from present or known creditors may violate fraudulent transfer laws including section 392 of the Criminal Code.

4. How

There may be a number of ways and means to achieve goals. Each may have relative advantages and disadvantages. The simplest form of offshore planning may be a non--interest bearing chequing account in different jurisdictions with a balance of less than $10,000 which is typically the minimum threshold for reporting requirements. Such accounts are for emergencies.

Offshore asset protection initiatives can be complicated and expensive. Many foreign trustees who operate asset protection trusts refuse to take business unless of a minimum value are invested. The costs of administration of a private offshore trust are significant and may not be justified if the property settled is not valuable. Offshore banks have been plagued by banking scams and may have inadequate reserves to back accounts or even phony deposit insurance companies providing the impression of account support. Thus, there are a number of preliminary matters to be considered prior to providing any recommendations and making final decisions. Performing due diligence requires the individual to consider many issues. In addition to fraudulent transfer, income tax and marriage issues, basic information with respect to net worth and solvency should be sought and obtained.

The individual may engage in a claims review. The individual should investigate his or her motives and financial situation and assess the exposure to civil and criminal liabilities. Asset protection initiatives are inappropriate where they amount to a fraudulent conveyance, preference or settlement. Accordingly, it is prudent to identify real and threatened claims and to be satisfied that the individual is solvent. Asset protection with respect to excess amounts above existing and potential obligations is appropriate absent concerns over criminal activity. A reasonable reserve should be established to meet the claims of all such obligations.

The individual may undertake an asset review. Once the real or threatened claims have been identified and a value placed on such claims, the individual's assets should be identified and valued in addressing the question of solvency. Any assets that would be protected in whole or in part from creditor claims under provincial or federal law should be identified including exempt personal property, life insurance and annuities, retirement plans that qualify for protection from creditors and property held in valid protective or spendthrift trusts for the individual's benefit. To the extent such assets are exempt, they can be removed from the individual's asset list for the purposes of determining solvency. Indeed, exempt assets may be part of the assets transferred. As the result, it is the value of the client's assets less the value of the protected assets less the value of existing and potential liabilities which are considered for the purposes of offshore asset protection.
Confidentiality is desirable with respect to offshore structures. This includes the existence of the structure, its terms, the value and nature of the assets in the structure, the location of the assets, the identity and activities of any trustees, protector, settlor and beneficiaries and associated entities. It is at best the first line of defence. Any structure should be designed to withstand disclosure and legal challenge. Indeed, proper planning should contemplate the potential for early and full disclosure of the structure and its details to suspicious creditors and claimants on terms of strict confidentiality in order to facilitate resolution of their claims.

5. Where

The where is often one of the final considerations in the analysis. The term "tax haven" comes to mind when one thinks about offshore transfers. This is typically a very small country which has deliberately created a virtually tax-free environment to encourage the use of the jurisdiction as a conduit for international transactions. The more generic term "offshore financial centre" is perhaps more accurate in conveying an expanded definition of potential destinations which includes major commercial centres which have peculiarities in their legal and taxation systems that allow them to be effectively used in international planning. Offshore financial centres may have legal and financial systems with relative strengths and weaknesses in providing for asset protection, tax minimization, banking, confidentiality investment and other objectives. Jurisdictions with the strongest confidentiality laws may not offer the highest degree of the asset protection or opportunities for tax minimization.

Selecting the jurisdiction in which an offshore protection trust or other vehicle will be located is very important. Trust work requires the jurisdiction that has the appropriate laws and service providers with credibility and experience. Traditionally, the most well-recognized destinations for asset protection have been the Bahamas, Bermuda, the Cayman Islands, Cook Islands, Gibraltar and the Isle of Man. The Isle of Man and Liechtenstein have been seen as offering superior confidentiality and the Channel Islands and Switzerland superior banking opportunities. Pacific islands like the Cook Islands, Vanuatu, Nauru, and the Marshall Islands are well known. The current laws in such jurisdictions and the comparative advantages and disadvantages must be considered before making the final selection. The general laws of such offshore centres are often hostile to enforcement of foreign judgments, abbreviated status of limitations; restrictive fraudulent transfer laws, an antipathy or reluctance to enforce foreign subpoenas or examination orders, and confidentiality laws prescribing criminal consequences for divulging by financial institutions of customer information absent an order of a court of that jurisdiction.
The costs of establishing an offshore vehicle in a foreign jurisdiction can be substantial. There are the expenses in setting up the vehicle and complying with required formalities. There may be a tax burden associated with the vehicle. The perceived benefits associated with the vehicle must be weighted against these costs. There are a number of factors that effect the selection of a possible country for an offshore trust or assets. They may include political and economic stability, taxes, tax treaties and the potential for future taxation, exchange controls, the business, banking and legal environment, language, location and accessibility, transportation facilities, and likely set-up and maintenance costs and fees. Attractive legal features include trust recognition and asset protection legislation including restrictions on enforcement of foreign judgments and recognition of Canadian bankruptcy court orders.

Legislation is enacted and amended. Treaty obligations are assumed. Foreign legislation and treaties may have tax and asset protection implications. Accordingly, it is important to confirm current and anticipated developments prior to making a decision with respect to a particular jurisdiction. Jurisdictions that may not have historically enjoyed reputations as financial centres or asset protection havens may seek to solicit offshore planning business through enabling legislation. Others may abandon previous protective or tax friendly laws in the face of international pressures. Control is a significant factor in offshore planning. Many individuals resist surrendering control of their assets to a foreign trustee for valid reasons and concerns. However, the greater the relinquishment of control, the greater the degree of asset protection for the individual as a matter of law. The greater the degree of the de facto or de jure retention of control, the greater the risk that the trust will be found to be a sham and the entire structure successfully challenged.

Statistics: Posted by Pinskylaw.ca — 04 Nov 2019, 10:05 — Replies 0 — Views 11462


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2018-03-04T15:56:11-05:00 2018-03-04T15:56:11-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=633&p=667#p667 <![CDATA[Residential Real Estate • Easiments]]> 1. INTRODUCTION

There are basically three kinds of non-express easements created by operation of law. The first is “prescriptive easements", the second is “implied easements” and the third is “easements by estoppel”.

In Ontario there are two ways a prescriptive easement can be created. The first is by operation of the Real Property Limitations Act and the second is by the operation of the doctrine of modern lost grant. The test for creating prescriptive easements under the Real Property Limitations Act and the doctrine of modern lost grant is identical. The test is exactly the same. It is actual use for 20 years combined with acquiescence by the servient owner. The use cannot be secret or hidden, it cannot be by force, it cannot be by permission and it cannot be interrupted. Once established it is as good an easement as an express easement and cannot be lost by non-use but only by release, implied release or abandonment.

The only real difference between the a prescriptive easement under the Real Property Limitations Act and a prescriptive easement under the doctrine of lost grant is the 20 year period runs backward from the date the claim (statement of claim or application to establish the right) is filed for prescriptive easements established under the Real Property Limitations Act and the doctrine of lost grant runs forward for any 20 year period. As such, if there is a break in use at any time during the twenty years before the court proceeding is instituted you cannot use the Real Property Limitations Act. But if you can establish use for any 20 year period, then it does not matter if there has been break in use thereafter.

The tests for prescriptive easements are similar to the test for establishing adverse possession. In adverse possession exclusive and open use of your neighbour’s land for 10 years gives the trespasser rights akin to ownership. These rights arise by operation of the Real Property Limitations Act as well which prevents the real owner from obtaining possession of his property after exclusive use for 10 years by the trespasser.

One difference between adverse possession and prescription is that in prescription, rights are acquired (an easement) but the servient owner continues to own the fee simple subject to the easement but in adverse possession, the true owner’s fee simple rights are lost forever.

The fundamental concepts in easement law have not changed in the last 150 years and no legislative changes have occurred to alter the fundamental concepts. The law is in many ways esoteric, complex, steeped in feudal jargon and very fact driven. While the principles are generally settled, the application to particular facts is unpredictable and often surprising. However, unlike some areas of law, justice often prevails by twisting or massaging the facts to fit the fundamental principles. A solid knowledge of easement law is essential in a conveyancing practice. The following problems occur with surprising regularity

(a)the travelled “road” leading to the property from the public highway doesn’t follow the deeded access;
(b)the underlying servient lands do not reflect the easement;
(c)there is no deeded access only use over a lengthy period of time.
(d)the original owners of adjoining property have an understanding arising out of friendship or family relationships which is disputed by subsequent owners;
(e)wells are shared without documentation;
(f)water pipes run over adjoining property without documentation;
(g)the existence of woods or rugged terrain makes the demarcation of property lines unclear;
(h)cars are parked from time to time on deeded easements or even adjoining property;
(i)seasonal uses may be carried on without knowledge of the servient owner;
(j)absentee ownership or occasional use leads to misunderstandings when the use becomes permanent; and
(k)licenses are miscast as easements or easements miscast at licenses.

2.KINDS OF EASEMENTS CREATED BY COURTS

There are many different kinds of easements that the Courts will recognize in the absence of an express grant. Basically, if the parties could have created the easement by express grant, the Court will recognize the same kind of easements through implication, prescription or estoppel. The following are some of the easements that the Courts have recognized absent an express grant:

(a)access easements, rights of way, driveway easements;
(b)access easements to the water;
(c)parking easements;
(d)easements for waterlines or pipes;
(d)hydro or utility easements;
(e)easements for wells and septic systems;
(f)maintenance easements;
(g)easements for storm or sanitary sewers.
(h)support easements;
(i)telecommunications easements:
(j)recreational easements (i.e. sharing or access to recreational facilities);
(k)fire escape easements; and
(l)facility repair easements.

The categories or kinds of easements that can be created by operation of law are open to meet the changes in society and the needs of landowners. There appears to be no restriction on the kinds of easements that the Courts can create. This is especially true where creative easements are necessary to make projects function properly. Unfortunately, the criteria for determining if a use is an easement or not (as opposed to the kinds of easements once the criteria are met) is fixed and cannot be expanded.

It is fair to say that express easements being creatures of contract can be far more sophisticated and complex than easements created by the Courts. While the Courts can create any kind of easements, it cannot create the complex relationships between dominant landowner and servient landowner that express easements can create. Nor can the law deal with complex issues relating to repair, relocation, maintenance and the termination of easements that can be dealt with in an express grant.

Easements created by the Courts must still contain the four specific characteristics that make a right to use land an easement. If the right does not fall squarely within these four characteristics of an easement, then it is not an easement and does not get the fundamental benefit that makes easements so valuable: the right to bind the land without privity of contract. It should be noted that there is some disagreement in the cases and in the legal texts as to whether in fact the categories of easements are closed or not. While new forms of property interests cannot be created, it is generally accepted that so long as the four characteristics of an easement exist, the categories or kinds of easements are open to the imaginative judge.

3.QUALITIES OF AN EASEMENT CREATED BY THE COURTS

The English Court of Appeal decision in Re Ellenborough Park sets out the four essential elements of an easement whether express or created by the Courts. An easement, whether by implication, prescription or estoppel, must meet each of these criteria.

The tests identified in Re Ellenborough Park are:

1.there must be a separate dominant and a servient tenement;
2.the right claimed must accommodate the dominant tenement, that is, be connected with its enjoyment and for its benefit;

3.the dominant and servient owners must be different persons; and

4.the right claimed must be capable of forming the subject matter of a grant.

If the right claimed does not contain these four elements, it is not an easement but something less than an interest in land that does not bind subsequent owners of the servient tenement. It will likely be a license terminable “with” or “without notice”. Alternatively, if the use granted to the dominant owner is exclusive and the servient owner is excluded, it could be either a lease or even a grant of the fee simple.

4. WHAT IS A RIGHT-OF-WAY AND IS IT DIFFERENT FROM OTHER EASEMENTS ?

A right of way is merely an easement for access to the property. As such, it complies with all of the rules and restrictions discussed regarding easements generally. Rights of way however seem to have a special place in the caselaw arising out of the fact that access to land is of such fundamental importance. As such, a great deal of the caselaw dealing with easements by implication, necessity or prescription involve rights of way. In addition, there is a great deal of caselaw dealing with ancillary rights related to rights of way. Notwithstanding that the following matters relate specifically to rights of way, it is the writer’s position that these factors should also apply to other easements in the appropriate circumstances.

1.The obligation to construct and repair a right of way falls on the owner of the dominant tenement who receives the benefit of the right of way.

2.A right of way includes such ancillary rights as are necessary to enjoy the right of way. For instance, such reasonable access to a right of way must be provided in order to construct the roadway and where necessary, the right to excavate the right of way to a reasonable grade is implied.

3.The servient tenant may maintain gates across the right of way to preclude use by others provided that the owner of the dominant tenement has full use of the right of way. This is generally satisfied by providing a set of keys to the owner of the dominant tenement.

4.On a severance of the dominant tenement, the benefiting rights of way over the servient tenement is attached and benefits each of the severed lots. This general rule, however, may be limited where the benefit of the right of way is intended to benefit some but not all parts of the dominant tenement.

5.The owner of the dominant tenement may increase the use or burden of a right of way provided it is not a radical change to the character or the use of the right of way. However, this rule will only apply once the prescription period has run or the equitable easement has been established. This means for instance, that a right of way for pedestrian traffic may not be used for vehicular traffic. However, a right of way benefiting a single family home may be increased to benefit others using the property although at some point, if access is provided generally to the public or for commercial purposes, the use of the right of way may go beyond what is considered reasonable. The Courts are also more likely to restrict the use of a prescriptive easement or an equitable easement to the actual use which established the right and not permit the same increase in use that might be permitted for an express grant.

6.Where a right of way is created to benefit a residential property, it may not be permissible to tear down the residential building, build a commercial establishment and use the right of way for commercial purposes.

7.The law has taken the position that the right of way benefits the dominant tenement only and therefore cannot be used by any other person other than the owner of the dominant tenement even where the owner of the dominant tenement has granted a right of way over its own property to an adjoining landowner.

8.Where the owner of the lands (“Parcel A”) adjoining the dominant tenement leased part of the dominant tenement for the purposes of parking motor vehicles and constructing a garage, to benefit the use of Parcel A, the Ontario Court in Jengle v.Keetch concluded that the use of the dominant tenement was a bona fide use and was not really intended as a cross-over of the dominant tenement to get to Parcel A and therefore a right of way benefitting the dominant tenement could be properly granted by the tenant of the dominant tenement.

9.As a general rule, the holder of the dominant tenement has the right to improve the easement in order to utilize it. This includes the implied right to enter on the servient tenement to do so.

10.The owner of the servient tenement has the right to do anything on the right of way that the servient tenement owner wishes to do provided it does not interfere with the use of the right of way by the dominant tenement landowner. For instance, the servient tenement landowner cannot construct a building on a right of way which has the effect of preventing the use of the right of way. Even if the use by the servient landowner did not interfere with the use of the right of way if it prevented the right of way being repaired or maintained, the use by the servient landowner would be prohibited.

11.The dominant tenement landowner cannot require the servient tenement landowner to repair an easement. However, if the use by the servient landowner effectively puts the right of way into disrepair, the dominant tenement landowner would be entitled to demand that the easement be repaired.

12.The dominant tenement owner cannot force the servient tenement owner to pay for maintenance of the right of way. The obligation to maintain and repair is solely that of the dominant tenement landowner. Interestingly, the failure of the servient tenement landowner to pay realty taxes cannot give rise to a claim by the dominant tenement landowner even where the failure to pay realty taxes could result in the property being sold free of the easement. In these circumstances, the owner of the dominant tenement has the right to pay the realty taxes and charge them back to the servient tenement landowner or maintain a first charge on the servient lands in the place of the City. The problem of course is in obtaining the information as to the status of the realty taxes on the servient tenement.

13.As a general rule, the dominant tenement landowner cannot block a right of way for his benefit where the right of way is for passage or egress or ingress. For instance, motor vehicles cannot be parked in the right of way. The servient tenement owner cannot be precluded from using the servient tenement. Temporary parking, however, may be permissible.

14.The owner of the dominant tenement cannot require the servient tenement landowner to provide an alternate easement where the easement is blocked or flooded unless caused by the activity of the servient landowner.

15.The owner of the servient tenement does not have the right to substitute another location for the easement where the location of the easement is impractical or where the easement is a burden on the servient tenement landowner. Nor can the dominant tenement landowner require a substituted easement where the easement is impractical.

16.The responsibility for injury to a person on the easement lands falls upon the owner of the dominant tenement as the occupier or user of the easement. This rule, however, should not generally be relied upon and the owner of the servient tenement should ensure that liability insurance is available. In is likely in the event of injury to a person using the right of way that both the Dominant Owner or the Servient Owner would be the subject of a lawsuit. This issue will depend upon who the occupier is. The definition of occupier in the Occupier and Liability Act is a person who is responsible for control over the condition of the premises or the activities therein carried on or control of a person’s use of the premises notwithstanding that there is more than one occupier of the premises. The definition of premises in the Occupier and Liability Act means lands and structures and in accordance with this rule, it would apply to a right of way. The issue then is whether the dominant tenement landowner or the servient tenement landowner is the person responsible for the control of the condition of the right of way. Since the dominant tenement landowner has the obligation to repair, it would appear that the owner of the dominant tenement will be responsible for any damages to occupiers on the easement.

Statistics: Posted by Pinskylaw.ca — 04 Mar 2018, 15:56 — Replies 0 — Views 45490


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2018-03-04T14:27:15-05:00 2018-03-04T14:27:15-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=632&p=666#p666 <![CDATA[Residential Real Estate • Tax Considerations After Purchase of Rural Property]]> 1. Capital Gains

The income tax implications of purchase or sale of cottage properties and farm properties - particularly to family members - can be significant. Such dispositions can trigger substantial capital gains tax liability in the hands of the transferor. The purchaser and/or the vendor should discuss any such consequences or implications with their accountants. The Canada Revenue Agency also supplies Guide, numbered T4003, dealing with farming income and capital gains.

2. Harmonized Sales Tax (HST)

1. Personal use Property

Sales of personal use property by an individual or a trust are exempt from HST. "Personal use property" includes any real property other than a residential complex, capital property used primarily in a business or real property sold or leased in the course of a business. Most vacation properties and hobby farms qualify as a personal use property.

2. Farmland

Generally speaking, sales of farmland previously used by the seller in a farming business are taxable transactions, unless an exemption applies. For these purposes, "farmland" means land that is regularly used by a person for the purpose of gaining or producing income from a farming business carries on by him or her. It may also include vacant land such as a bush area that may not be used directly in a farming business, along with any buildings that form part of the farmland. Where the land is used by the buyer in a farming business, the buyer is eligible for an input tax credit. However, if the land is sold as an ongoing farming business, (and provided both the buyer and seller agree and make an election accordingly using Form GST44 , no HST will apply. In such cases, the buyer must acquire possession or use of all or substantially all (90 percent or more) of the property required to carry on the business being purchased. The election is not available in situations where the seller is registered for HST, but the buyer is not. If the sale of farmland includes a residence or house, then the sale is viewed as two separate sales - (1) the portion that includes the house plus additional land needed for the use and enjoyment of it; and (2) the remaining portion of the land. Because the sale of used residential housing is generally exempt from HST, the rules respecting HST on farmland sales pertains to the remaining portion of the land only.

Under the Excise Tax Act, there are scenarios which are exempted from HST. They are:

- Sale or transfer to a person or former spouse/common-law partner. The farmland must be acquired from a relative who was in the business of farming prior to the transfer, and must have been purchased for the buyer's individual use and enjoyment. The farmland may not have been used in any other commercial activity immediately prior to the transfer. In some circumstances, the exemption can cover sales by individual farmers to his or her spouse, or a conversion of land from its use in the business of farming, to personal use by the same owner.

- Sale by a partnership, trust or corporation to a partner, beneficiary, shareholder or related person. This exemption covers those sales where, immediately prior to the transfer, all or substantially all of the property belonging to the partnership, trust or corporation is used in the business of farming. The purchasing partner, beneficiary, shareholder or child of that individual must be actively engaged in the farming business. For these purposes, "all or substantially all" means 90% or more of the property.

- Sale or transfer of personal use property by an individual or a trust. This exemption only applies where the land that is sold or transferred that has not been primarily in a farming business. The exemption does not apply to land held by corporations or partnerships, or to land previously subdivided or severed into more than two parts, except where those parts were sold to a related person, former spouse or common-law partner for their own personal use and enjoyment.

Assuming the farmland is not eligible for one of the available exemptions, the process for collecting the applicable HST will vary according to the circumstances, Specifically:

- If the farmland is being sold to a person who is registered for HST, the seller is not required to collect the HST generated by the sale. Rather, the buyer will report the HST payable and will claim an offsetting income tax credit in the first HST return after the sale has closed. In such circumstances, it is therefore prudent for the seller to confirm prior to closing that the buyer is officially registered for the HST. Buyers who are using 90% or more of the farmland in a farming business are eligible to claim the full input tax credit.

- If the sale is to a buyer who is not registered for the HST, then the seller must collect and remit the HST to the Canada Revenue Agency. If the land be used in a farming business, the buyer can then register for the HST, and can claim an input tax credit in order to recover the HST that been paid on the purchase and sale. Generally speaking, Canada Revenue Agency will back date an HST registration for up to 30 days in order to facilitate the buyer's recovery of the HST paid in such scenarios.

3. Land Transfer Tax

A with other kinds of real estate transactions, the purchase and sale of farmland is subject to the provisions of the Land Transfer Tax Act, which imposes a tax obligation tied to the value of the property. Previously, different considerations applied so that non-residentbuyers were subject to a higher rate, but this distinction has now been removed. In this same vein, the Non-Resident Agricultural Land Interests Registration Act - which previously required non-residents to file a registration report within 90 days - has been repealed, along with its General Regulation which had authorized the collection of relevant information.

Statistics: Posted by Pinskylaw.ca — 04 Mar 2018, 14:27 — Replies 0 — Views 14562


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2017-09-24T18:26:30-05:00 2017-09-24T18:26:30-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=631&p=665#p665 <![CDATA[Tax & Probate Planning • Principal Residence Tax Exemption]]> 1. Definition of Principal Residence

An exemption can be claimed to shelter a capital gain on the disposition of a principal residence. To qualify for the exemption, the residence must meet the definition of a "principal residence" in the Income Tax Act. A principal residence is defined to include a housing unit, a leasehold interest in a housing unit or a share in a co-operative housing corporation. The housing unit must be ordinary occupied as a residence by the taxpayer, the taxpayer's spouse of former spouse or by a child of the taxpayer. A vacation property that is used seasonally by a taxpayer or the taxpayer's spouse or children will qualify as a principal residence even if it is located outside Canada. However, it is only possible to have one principal residence for each family unit. A family unit consists of a taxpayer, the taxpayer's spouse and unmarried children under age 18. Adult or married children may have their own principal residence. Where there are several properties that could qualify as a principal residence, it is possible to designate a particular residence by filing a designation with Canada Revenue Agency. Usually, a designation need not be filed until the property is actually sold.

2. Principal Residence Exemption Formula

The exemption is based on a mathematical formula. A taxpayer will only qualify for a full exemption if the residence qualified as a principal residence each year that it was owned and the taxpayer was resident in Canada during each of those years. The formula is as follows:

((1 + number of years property was principal residence and taxpayer was resident in Canada)/(Total number of years property was owned after 1971)) X (Capital gain at the time of sale)

The extra year allowed by the formula in the numerator allows for the year in which a residence is sold and another residence is purchased. The most common scenario where a taxpayer might not be entitled to a full exemption is where the property was rented for more than one year while owner lived elsewhere.

3. Change in Use

If taxpayer rents his or her residence while living elsewhere for a period of time, the rental will constitute a change in use which will be considered a disposition of the property for tax purposes. On the change from principal residence to a rental property, any gain triggered by the deemed disposition may be sheltered by the principal residence exemption. The adjusted costs base of the property would increase to the fair market value of the change in use. Any subsequent conversion back to residential use would trigger another disposition for tax purposes which would trigger any gains which had accrued since the last change in use. It is possible to avoid the deemed disposition of the property on a change in use by filing a special election to be deemed not to have made a change in use. The property would then qualify as a principal residence for up to four years following the filing of the election even though it is rented during that time. The four-year limitation can be extended if the taxpayer or his or her spouse is not able to reside in the property because his or her place of employment has been relocated more than 40 kilometers from the property. The taxpayer must subsequently resume occupation of the residence either while employed by such employer or before the end of the taxation year immediately following the taxation year in which the employment ceased.

By filing this election, it is possible to defer the recognition of any gain to a later year and possibly ensure that during all years of ownership the property qualifies as a principal residence. If an individual knows that he or she will re-occupy a residence after renting it for more than a year and there is a potential that the property will increase in value during the period it is rented, it may be wise to file the election. The disadvantage to filing the election is that it precludes the ability to claim capital cost allowance (i.e. depreciation for tax purposes) on the property while it is rented. The tax savings on the potential capital gain must be weighed against the additional taxes paid on the rental income due to the inability to claim capital cost allowance. Since the principal residence exemption is only available for the years during which the taxpayer was resident in Canada, there is no advantage in filing the change of use election if the taxpayer will cease to be a resident of Canada.

4. More Than One Property Qualifies as Principal Residence

The most common scenario where planning is required is the existence of both a vacation property and a residence for year-round occupation. Consider the following fact situation. The taxpayer and his wife own a condominium in Toronto which has appreciated only modestly in value since it was purchased. They also own a cottage in Muskoka which has increased significantly in value since it was purchased in 1975. They are planning to retire to Florida and will be selling the Toronto condominium when they move. Their children live in Barrie and enjoy visiting with them at the cottage during the summers. Therefore, they will probably keep the cottage for several more years. Both properties are held in joint tenancy. There is a modest gain on the Toronto condominium which will be triggered on its sale. They can choose to shelter all or a portion of it by claiming the principal residence exemption. However, since 1981 a family unit is only permitted one exemption, they will be using it up with respect to all the years they have owned it. Those years will then be exposed to a gain in respect of the cottage when it is sold. Should they prepay tax by not claiming the exemption when they sell the condominium and hopefully save more tax in the long run by ensuring that all of the gain on the cottage is sheltered? the risk is that the value of the cottage may drop and their tax savings would shrink. If the gain on the cottage is significantly more than the gain on the condominium, it is probably wise to save the exemption for the cottage.

5. Property Owned Before 1982

Prior to 1982, it was possible for each family member to claim his or her own principal residence exemption. The rule limiting each family unit to one exemption became effective on January 1, 1982. This presents a planning opportunity where spouses own properties which were purchased before 1982. Assume the spouses in our previous example acquired both the condominium and the cottage in 1975. Assume title to the cottage was held by the wife because she inherited it from her parents. Title to the condominium was held by the husband. This would enable them to take advantage of the fact that they each could claim an exemption for years of ownership prior to 1982. Assume further that the gain on the condominium is $500,000 at the date of sale in 2013 and that the property was purchased for $50,000. Its fair market value at the date of sale in 2013 is $550,000. Its value on January 1, 1982 has been established to be $70,000. Their decision is further complicated because the income tax rules offer two alternative methods for calculating the capital gain on properties that were owned prior to 1982.

(a) First Alternative for Calculating Gain on Pre-1982 Property

The first method is to apply the usual formula. This would produce the following results:

(1+7 years [1975 to 1981])/32 years [1981 to 2013] x $500,000 = 8/32 x $500,000 = $125,000 of the capital gain would be exempt.

(b) Second Alternative for Calculating Gain on pre-1982 Property

The second method allows the taxpayer to calculate the gain that has accrued since January 1, 1982. This method required a valuation of the property as of January 1, 1982, which will satisfy Canada Revenue Agency. A professionally prepared valuation by a qualified appraiser would be ideal to substitute a valuation if it were questioned by Canada Revenue Agency. However, a formal appraisal will cost money and few taxpayers like to spend it if they are not certain it will be necessary. If one is able to obtain a record of sale prices of comparable properties in the vicinity of the property being sold, this may be sufficient to establish a reasonable value. If the second method is used to calculate the gain, it would produce the following result:

Proceeds of disposition: $550,000
Less deemed adjusted cost base of $70,000 (the January 1981 value)
Capital Gain subject to tax under the second method $550,000 - $70,000 = $480,000
The first method will exempt $125,000 of the $500,000 gain, subjecting $375,000 of gain to tax. The second method produce a worse result in that only $70,000 of gain will be sheltered, subjecting $480,000 of the gain to tax.

6. Transferring Title From Joint Ownership of Spouses to Sole Ownership of One Spouse

To be able to take advantage of the rules which apply to principal residences owned prior to 1982, title to each of the properties must be held individually by the spouses so that each spouse owns one of the properties. Assume that in the previous example each property was held jointly by the spouses. There is a provision in the Income Tax Act which provides that if a spouse transfers property to the other spouse on a tax-free basis, the transferee spouse will be deemed to have owned the property for the entire period that the transferor spouse owned it, and the property will be deemed to have been the principal residence of the transferee spouse, provided it so qualified while owned by the transferor spouse. The rule will help the spouses in our example because they can simply convey the condominium to one of the spouses just prior to its sale and convey the cottage property to the other spouse. Each spouse is then able to shelter some of the gain on each under the rules related to property owned prior to 1982. However, land transfer tax implications should be considered. With respect to the gains accrued after 1982, a decision will have to be made as to which property should benefit from the exemption. Planning to maximize the principal residence exemption on properties acquired before 1982 can produce results that are in conflict with planning done to minimize probate taxation. One of the common probate planning techniques is to place property owned by a spouse into joint ownership with the other spouse. The probate savings are usually less than the tax savings that can be achieved with the principal residence exemption but some calculations should be done before proceeding to transfer title out of joint ownership.

7. Transfer of Remainder Interest in Principal Residence

Prior to 1994 when subs 43.1(1) of Income Tax Act was enacted, it was possible to transfer a remainder interest in land and effectively transfer future ownership in the land on a tax-deferred basis. While the disposition of the remainder interest was a taxable event, the fair market value was generally low if the individual who acquired the reminder interest was young. This technique would normally be used by parents in favour of their children. Thus, the remainder interest would not fall in for many years giving the remainder interest a low value. It was a technique often employed to pass on the value of a cottage to the next generation on a tax-deferred basis. However, sub 43.1(2) of the Income Tax Act was enacted to prevent this kind of planning by deeming the owner of the property to have disposed of their life interest for proceeds equal to its fair market value and to have reacquired the life estate immediately after at a cost equal to the proceeds of disposition. This resulted in the gain being subject to tax immediately. If the property qualifies as a principal residence, the exemption would shelter the gain from tax. However, when the parents die and the life interest comes to an end, the gain that accrues from the date the remainder interest was created to the date of the parents' death becomes taxable to the individual who holds the remainder interest when he or she subsequently disposes of the property. Because the remaindermen generally do not occupy the property during the years prior to the life tenant's death, the gain that accrues while the life tenants occupy the property is not able to be sheltered by the principal residence exemption of the remaindermen.

In the case DePedrina v. Canada the parents transferred the remainder interest in their home to their two sons and their wives retaining a life interest for themselves. After the second parent died, the sons and their wives sold the property for $1,850,000. They were assessed on the capital gains which were substantial. They appealed the assessment on the basis that it was unfair to tax them on a gain which had accrued when they were not full owners of the property. While the judge was sympathetic, she was constrained by the provisions of sub 43.1(1) and (2). The sons and their wives were entitled to claim an adjusted cost base in the property equal to the appraised value of their remainder interest on the date they acquired it and the adjusted cost base of their parents' life interest. Thus, the gain that accrued since the date the remainder interest created was taxable to them. It is important to be aware of the provisions of s. 43.1 if this type of planning is taken. In DePedrnan, one of the sons had built a house on the property and may have been able to claim the principal residence exemption for that portion of the land. However, it is clear from the judgment that the portion of the land occupied by the parents as life tenants was exposed to capital gains tax which could not be sheltered by their principal residence exemption. Had the parents left the property to their sons by a Will, all of the gain would have been sheltered by the parents' principal residence exemption.  

Statistics: Posted by Pinskylaw.ca — 24 Sep 2017, 18:26 — Replies 0 — Views 40135


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2017-09-23T16:06:52-05:00 2017-09-23T16:06:52-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=630&p=664#p664 <![CDATA[Retirement Planning • Purchase of Cottage or Rural Property]]> I. Access

The purchase of rural property, whether a cottage or a farm, can represent special challenges and problems for the buyer. There are various special enquiries and searched to be made respecting such rural property.

1. Public Roads and Road Allowances

Problems relating to access to and from the property are of primary concern to the buyer, and can significantly impact the land's value. First, the buyer should review the available survey information and should consider additional survey and/or title insurance if warranted. Second, the issues relating to roads should be dealt with in the agreement by way of a condition, or a representation and warranty that there is a legal access to the property. The usual questions which may arise relate to: (1) whether there is a road of any kind to the property; (2) whether it is a public or a private road; (3) whether it is opened or unopened; and (4) who has the obligation to maintain and repair the road. The buyer also should discuss with the seller whether he intends to use the property year-around, or just for seasonal use, and must then make the appropriate enquiries to determine whether the road is maintained during those times.

Notably, after January 1, 2003, land may only become a highway by virtue of a municipality passing a by-law, and not by the activities of the municipality or any other person in relation to the land, including the spending of public money. In some instances a highway may have been used by the public, but has never been opened by the municipality. Such a road would not constitute a public highway, although there would be a public right of passage. Improvement to unopened roads may not be made without the consent of the municipality. A search at the Land Registry Office and the appropriate municipal office should determine whether the road has been opened. The fact that a road has been dedicated a public highway does not automatically give rise to an obligation on the municipality to maintain it. A municipality has no obligation to maintain the surface of a highway unless it has assumed the jurisdiction and responsibility to do so. Moreover, it is also not uncommon to find roads in rural or cottage areas which appear to be maintained by the municipality but may not be public roads at all. In both of these instances, an enquiry to the municipality or Ministry of natural Resources can ascertain the status of the road.

2. Private roads

Although the right to use a private road generally resides in the owner of the land on which the road is situate, the Road Access Act broadens this right in connection with "access roads". Section 1 of the Act defines "access road" to mean "a road on land not owned by a municipality and not dedicated and accepted as, or otherwise deemed at law to be, a public highway, that serves as a motor vehicle access route to one or more parcels of land." Section 2 of the Act prohibits anyone from blocking an access road to the point of obstructing road access to one or more parcels of land or to boat docking facilities, unless: (1) the affected owners have agreed in writing; (2) a road closure order has been applied for an issued by a judge; (3) the closure is temporary. Finally, there are also provisions in s.3 of the Act relating to the conditions that attach to obtaining a court-ordered closure of a road.

3. Right-of-Way/Easements

Where the search discloses that the road is neither a public road nor an access road to which the Road Access Act applies, the owner of the road must be determined. The buyer should review all prior deeds in the chain of title for the property, to determine if the subject property has the benefit of a registered right-or-way. The description of the right-or-way should also be reviewed for adequacy and registrability, and should be compared to the travelled road and any survey to ensure that the right-or-way as described in the deed is in the same location as on the ground. Buyers should take care to note that over the passage of time, the use of rights-of-way often extend to properties that were not part of the original grant. The buyer should also ascertain whether there are any limitations on how or when the right-of-way can be used. Also, if the land is lakefront property, the description should include reference to the 66-foot reserve to the Crown for the road allowance along the lake shore. Also, if right-of-way or easement has been registered on title, it may be possible to establish a "prescriptive easement" for lands located in the registry system pursuant to s. 31 of the Real Property Limitations Act if there has been more than 20 years of uninterrupted, open, and continuous use, with the knowledge of, but without the permission of the owner of the servient tenement. Statutory declarations from prior owners of the property for the 20-year period should be obtained.

4. Access By Water

Many Ontario cottage properties can only be reached by water. In such cases, the buyer make enquiries respecting the availability of parking and boat-docking facilities, and will want to include either a condition, or else a representation and warranty, covering such facilities in the agreement. Access by water will also be governed by municipal by-law in many cases. Some allow for the limited development of waterfront landings abutting the highway; others permit boat launching from an original road allowance that leads to the water. Some municipalities prohibit entirely the use of public docks as access facilities for private properties. The potential buyer will want to ask the seller about these matters, and will want to amend the agreement accordingly so that they are addressed in a satisfactory manner.

II. Waterfront Property

1. Shore Road Allowances

If the property abuts a lake or navigable river, then the buyer becomes a riparian owner with certain additional rights and privileges. Whether a body of water is "navigable" can be determined in common law or by statute (Navigable Waters Protection Act), which includes a canal and any other body of water that was created or altered as a result of the construction of any work. However, the buyer should obtain assurances that the property boundaries do in fact reach to the water's edge or beyond (especially since he or she will likely be paying a higher purchase price based on water frontage). Historically, shoreline allowances were laid out by Crown surveyors along lakeshores and navigable rivers, and measure 66 feet in perpendicular width from the natural boundary, usually the high water mark. The existence of shore road allowances or Crown reserves can come as a surprise to the potential buyer, and can give rise to unforeseen issues. For example, if it is presumed that a shore road allowance exists on the seller's property, but search shows that one was not reserved to the Crown, the seller may be retaining an interest in the abutting land in contravention of the Planning Act. As such, the buyer should ensure that the agreement sets out the buyer's entitlement to this water frontage without interference from a shore road allowance or any other right-of-way or access rights by any other parties. If applicable, an updated building location survey or plan of subdivision will also reveal the existence of an unopened shore road allowance or Crown reserve.

2. Shoreline Boundaries

Generally speaking, because some water boundaries relate to specific natural topographic features, the nature and extent of the boundary will depend on the original description of the property as set out in the original Crown patent. However, the boundary may change gradually due to the natural process of erosion and accretion, both of which involve the slow gradual and natural change over the course of time. If the original Crown patent has defined the property boundaries with reference to the "water's edge" or the high-water mark, then the owner of land bounded by water is presumed by law to be entitled to any extension arising by accretion. However, if the property boundaries are not defined in this manner, they will not vary with the change in the water level and will be unaffected by accretion and erosion. As the result, the buyer of waterfront property should always verify the Crown patent for indications of shorefront land in favour of the Crown. It should be noted that in cases where there is an issue as to the re-tracking and locating of a boundary, and where evidence is used to establish such a boundary, physical measurements are usually given the least evidentiary weight, while monuments in their undisturbed locations are given more weight.

Because the bed of the lake is reserved to the Crown, any deliberate in-filling of land has the legal effect of suspending the legal rights that would arise through normal accretion, and instead constitutes an encroachment on that land, and one which does not give rise to ownership. Both buyers and sellers should review the agreement, as well as an updated survey, to determine whether any infilling has created problems, e.g. part of the cottage or boathouse is actually on filled land rather than deeded land. If so, it may be possible to purchase the in-filled land, subject to the approval of the Ontario Ministry of Natural Resources.

3. Water Potability and Flow


The state of the water on the property can be a significant concern, and a potential buyer should confirm the relevant information with the seller well in advance of closing. Specifically, the buyer should obtain assurance that his water supply and treatment system are adequate both as to potability and volume. This will be mandatory if the buyer is obtaining an institutional mortgage, because lenders will refuse to advance funds unless the proper confirmation has been made. As such, the source of the property's household water supply must be determined. Water may be available from lakes or streams or from ground water, if the buyer is fortunate, it may be available from the township water supply.

First of all, the buyer should include conditions (or alternatively, have the seller make warranties) in the agreement of purchase and sale to the effect that there will be an adequate supply of potable water to the dwelling located on the property. The seller must provide a well driller's certificate as to the adequate flow of water as well as satisfactory test results on the potability of the water from the Department of Public Health. In situations where the water is drawn from a lake or cistern, no reliable potability certificate will be available. Water drawn from lakes and streams must be treated in order to be safe for consumption; it is more likely to be contaminated than water from ground sources. There are numerous treatment systems available which remove bacteria from the water supply, but the water should be tested bacterial content by the Public Health Unit.

Ground water is usually obtained from a well, which can either be dug, drilled or bored. In all cases it should have a water-tight concrete casting to prevent flooding. A drilled well is usually installed by a well driller who is licensed by the Ontario Ministry of the Environment, and who reports to the Ministry and provide a well driller's certificate upon completion of the work. If available, the buyer should ask the seller for a copy of this certificate on closing. Alternatively, the same information can be obtained from the local Ministry of Environment office. Also, private owners may have installed their own wells, in which case the Ministry will likely have no record of it.

A dug well is shallow and therefore more likely to become contaminated, raising significant potential health concerns. it is often advisable to have a treatment system in place for the well water to protect against bacteria and pollution. There is no formalized or mandatory government inspection of wells, so the owner must check the water supply on a regular basis. Water samples can be submitted to the local Public Health Unit for testing.

There are several additional items that should be confirmed by the lawyer as part of any potential purchase and sale. Chemical contamination may occur if the well is located near a road, or near a stream that drains from a road. In these cases testing is usually arranged through a private laboratory. Wells which supply multiple properties may be subject to the provincial Clean Water Act and to easements for pipes which emanate from neighbouring, registered wells. The Ministry of the Environment also keeps owner-submitted well records, containing information on the location and construction of existing wells, which can be searched.

4. Septic and Sewage Systems

Of equal concern to a buyer is the system for sanitary disposal of sewage from the property, which is usually a private sewage system. As of April 6, 1998, these sewage systems are regulated by the Building Code Act and by the Building Code enacted under it. Section 1 of the Act gives definition of "building" and its sewage system. Section 10 of the Act prohibits anyone from operating or marinating a sewage system except in accordance with the Act and the Building Code. Section 15 of the Act deems "unsafe" any sewage system not maintained and operated in accordance with this legislation. Section 15 also prohibits the construction, installation, repair servicing or employing of sewage systems except by qualified persons who meet the requirements of the Building Code.

The agreement of purchase and sale should contain representations and warranties to the effect that the septic system is in good working order and complies with all applicable laws, and that any applicable certificates have been obtained and will be provided on closing. the seller should be obliged to provide the buyer with the following: (1) a warranty attesting to the age of the sewage system; (2) copies of any relevant documentation in his or her possession or control; and (3) information on when septic tank was last pumped, and by whom.

The buyer should also conduct a search with the local office of the Ministry of Environment or the local health unit to obtain a copy of an installation report showing when the septic system was installed, its location specifics, and whether there are any work orders or violation notices on file. However, if a cottage is older, it may have been constructed before modern legal requirements were in effect, in which case there may be no records and/or the septic system may no longer comply with current requirements. Also, if possible, there should be a provision in the purchase and sale agreement allowing the buyer to conduct an independent inspection of the septic and sewage systems. This will usually involve a visual inspection around the boundaries of the system, to look for pools of liquid, damaged vegetation, evidence of leakage and damages, or evidence that the septic bed may be partially located on a privately-owned road allowance.

Statistics: Posted by Pinskylaw.ca — 23 Sep 2017, 16:06 — Replies 0 — Views 44953


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2017-09-23T16:05:13-05:00 2017-09-23T16:05:13-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=629&p=663#p663 <![CDATA[Residential Real Estate • Surveys]]> 1. Introduction

A buyer in a real estate transaction wants to ensure that his or her client receives a good and marketable title to the property purchased. This is accomplished by a search of title. Title consist of two components (a) chain of title or quality, and (b) physical extent of title. A search of title, however, will not reveal the extent of the title i.e. quantity and boundaries of the land. To determine this, reference must be made to a survey which represents the surveyor's opinion as to the extent of the title.

As a preliminary point, vendor should be aware that where doubt exists as to the true location of a boundary, pursuant to the Boundaries Act, an application in the form specified by the Director of Titles may be made for a survey or to obtain confirmation of the boundaries. The application may be made by the landowner, by a surveyor with the landowner's consent, by the relevant municipal council, or by the federal or provincial Surveyor General.

In O'Brien v. Morrison [2002] O.J. No. 1162, the appellant appealed from the decision of the Deputy Director of Titles under the Boundaries Act, confirming the westerly limit of the respondent's property, and the easterly limit of the appellant's property, to be along a former fence rather than in accordance with the courses and distances in the deeds to the respondent and her predecessors. The Divisional Court dismissed the appeal, holding that the findings of fact of the Deputy Director should be accorded a high degree of difference. See also Little v. Serre, [2005] O.J. No. 57, rev'g [2002] O.J. No. 5865 for a discussion of the hierarchy of evidence that must be applied by surveyors to re-establish a boundary.

2. Re-Establishing Original Monuments and Boundaries

The surveyor's objective is to determine the boundaries of the land by obtaining the best evidence possible with respect to the location of the original monumentation. The surveyor must conduct research for the best evidence, including and examination of the title documents for the land and any adjoining lands, reviewing any previous plans of survey and accompanying notes made by the surveyor or other surveyors for the subject land and adjoining lands, and reviewing any other applicable documents. the surveyor must also attend at the property and examine any visual evidence which may be available. In this regard, the surveyor must consider the best evidence and re establish the boundary on the ground in the location where it was first established, and not where it was necessarily described, either in the deed or on a plan. Survey law has developed a hierarchy of evidence from most compelling to least compelling as follows: (1) natural boundaries; (2) original monuments; (3) fences or possession that can be related reasonably back to the time of the original survey; and (4) measurements (as shown on the plan or as stated in the metes and bounds description) Nicholson v. Halliday, [2005] O.J. No. 57.

3. Preparation of Survey

When the surveyor has completed his or her search , field work monumentation and measurement, the surveyor will prepare a plan in accordance with the requirements of the Surveys Act and Regulations, which will show the extent of the title at that point in time. the plan will be a compilation of the surveyor's research. Accompanying the drawing will be a surveyor's report pointing out any anomalies. By regulation the surveyor is obligated to point out on the survey and/or the report all problems and issues which have been revealed, including any encroachments on the property and onto adjoining properties.

Although the term "survey" is not defined by legislation, a survey is generally understood to consist of an illustration prepared by a land surveyor depicting the boundaries of a property. For a document to be called a "survey" - it must be prepared by a qualified Ontario Land Surveyor under Surveys Act, and must consist of two parts: (1) a plan showing the physical improvements on the land and any registered easements in relations to boundary lines; and (2) a written report outlining the property's details. It will be the result of the qualified land surveyor actually attending at the property, conducting through measurements, conducting a search of title, and conducting a search for registered easements and plans relating to the location of the property boundaries. The survey must be embossed with the surveyor's seal to be considered an original survey. Similarly, "cadastral surveying" has been held to include the marking of corners and the staking of property lines.

Although the Surveys Act does not contain a definition of the "survey" or plan that does not meet the requirements set out in the Act is not a survey. Older plans may not meet these requirements or may be a "plan showing", a "sketch" a site plan showing the proposed site of the building or a "compiled plan". What must be kept in mind is that not all drawings are plans, and not all plans are plans of survey. A survey may only show the boundaries of the property and not the location of any buildings thereon. Alternatively, the surveyor may prepare a building location survey, which is not required to show the monumentation of all corners of the property. The surveyor must identify the type of drawing that he or she has prepared and the land registry system in which the subject land is found on the face of the drawing. The surveyor will also show his or her name, the scale of the drawing, a legend, the bearing of the North, and will indicate the reference used for the bearing (currently astronomical bearings are used).

4. Types of Surveys and What they Disclose

The type of survey usually obtained in a purchase of a property in an urban area is a plan showing building location. Although this type of survey is not required by the regulations to include monumentation for all four corners of the property, such a survey should show the frontage, depth and area of the lot, the location of all buildings or other structures on the property and their respective setbacks, the location of any fences or hedges on the property, any encroachments onto the property or to any adjacent properties, any discrepancy between the boundary on the ground and the measurements and distances set out in the deed, any rights-of-way or easements to which the property is subject or of which the property has a benefit.

For vacant property or in rural areas, a plan of survey showing the boundaries of the property and the monumentation of all corners of the property may be of more assistance. What type of survey is obtained will depend on the purpose of which the survey will be used. A surveyor prepares various other types of surveys or plans, including plans of subdivision, reference plans, Certificate of Title plans and condominium plans. Defects that are disclosed by an updated survey allow a prospective buyer to evaluate whether or not he or she wants to conclude the deal. It is intended to supply the potential buyer with information before the deal closes.

Note that a survey is not equivalent to title insurance. The survey is a fundamental tool for informing the potential purchaser whether the deed accurately reflects the property to be purchased. The survey tells the buyer what he or she is getting and - more importantly - not getting. Title insurance may indemnify a party from defects in title, but it does not guarantee title or cure defects that would be revealed by the work of a qualified surveyor. the defects that are revealed by an updated survey allow the prospective buyer to determine whether or not to proceed with the deal.

5. Survey Clauses in Agreements of Purchase and Sale

If the purchaser consults the solicitor prior to the execution of an agreement of purchase and sale, the solicitor must suggest that a provision be added to the agreement requiring the vendor to provide at his or her own expense an up-to-date survey of the property showing location of all buildings, structures and other improvements within a specified period of time. This time period should be sufficient to allow the survey to be reviewed and submitted to the municipality for review and a response to be received prior to the date for submitting requisitions. Note that an increasing number of municipalities do not review any survey submitted to them with building and zoning inquiry.

The purchaser must appreciate the benefits of an up-to-date survey and the risks of not having a survey or of using an old survey. The ramifications can be serious: for example in Holmes v. Walker, [1998] O.J. No. 4725 the purchaser - who had not obtained an updated survey for closing - was not allowed to rescind the agreement even though almost 100% of the cottage she bought was actually located on a municipal road allowance. Note that title insurance is not a substitute for obtaining a proper survey. While title insurance may indemnify a party from defects in title, it does not guarantee title or cure defects that could have been revealed by a qualified land surveyor.

If the agreement does not obligate the vendor to provide an up-to-date survey, the first step is to determine exactly what survey will be provided, if any. The standard wording of the universal agreement of purchase and sale put out by the Ontario Real Estate Association stipulates in clause 12 only that the vendor will provide any survey in his or her "possession and control", and that any survey within the vendor's control will be delivered "if requested by purchaser" as soon as possible and prior to requisition date.

In order for the purchaser to understand the significance of his or her decision whether or not to bear the experience of an up-to-date survey, the purchaser should first understand what a survey is and what it may tell the purchaser about the property. Problems relating to encroachments, boundary disputes, the location of fences, adverse possession problems, the contravention of setback requirements or other violations of the zoning by-laws are just some of the deficiencies or problems which could be revealed by a new survey. If these problems are discovered and requisitioned within the time period for submitting requisitions, the vendor will be responsible for resolving them. However, if the purchaser only discovers the problem at a later date, either in a dispute with a neighbour over a boundary or when the purchaser sells the property, the purchaser will not have recourse to the vendor and may be required to expend monies or make application to resolve the problems or may have difficulty selling the property because of problems revealed in the survey.

An updated survey cannot necessarily be dispensed with simply because title insurance has been purchased in respect of the particular property. Although title insurance guarantees good title as of the date of closing, it does not protect the owner from damage claims resulting from misplaced border fences, party walls or retaining walls. Moreover, without a survey, a title-insured purchaser remains uninformed as to exactly how farther existing buildings are from the property lines, nor whether certain intended additions to the property (such as garages or pools) can be added after the deal has closed.

6. Review of the Survey

The survey, whether old or new, must be examined carefully by the solicitor on receipt. the solicitor should compare the survey with the description in the vendor's deed and with the dimensions set out in the agreement of purchase and sale to determine any inconsistencies. Any other problems revealed by the survey should be noted and requisitioned. The survey has to be reviewed to identify any problems with it. The location of easements and rights of way on the property may effect the purchaser's use and enjoyment of the property and therefore should be noted by the purchaser.

As the purchaser has, in most cases, inspected the property, this survey review should be used as an opportunity to verify what the purchaser is purchasing. In addition, the purchaser may be able to pint out any discrepancies between what is shown on the survey and what he or she saw on the ground. this is especially important when the purchaser is relying on an old survey together with the vendor's declaration that there have been no external additions, alterations, or improvements on the property since the date of the survey.

A careful review of the survey at an early stage may enable the parties to arrive at a mutually satisfactory solution to any problems which may arise. The survey may reveal an encroachment onto neighbouring property, over a right of way, onto the street, or on public utilities easements. An encroachment onto neighbouring property or by the neighbouring property owner onto subject property may signify that the vendor or the neighbour, as the case may be, has acquired possessory title to the strip of land on which the encroachment exists by "adverse possession". Adverse possession may have been obtained where the encroachment has existed for ten years or more with the knowledge of but without the permission of the actual titleholder and where the possessor has used the land exclusively with the intention of excluding the title holder.

Statistics: Posted by Pinskylaw.ca — 23 Sep 2017, 16:05 — Replies 0 — Views 15134


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2017-09-23T11:55:05-05:00 2017-09-23T11:55:05-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=628&p=662#p662 <![CDATA[Will Planning • Will Planning Considerations for Mature Clients]]> 1. Married Couples

This is usually the simplest situation for Will planning, especially if the parties want to leave everything to each other. If both parties to the relationship retain the same lawyer to prepare their Wills, it is usually considered acceptable to prepare both wills without independent legal advice being needed, provided both spouses are fully open with each other, and therefore, and there are no secrets as to the contents of the Wills being made. If, sometime later, one party comes back to the lawyer and wants to change the benefits to the other party, without letting the other spouse know that the change has been made, the lawyer may not be in a position to act for either party. When he or she acted for both halves of the couple, there was no confidential information excluded from one party or the other. The lawyer cannot later continue to be retained by one spouse and take an action that affects the other spouse without advice to him or her as to what is being done. It is wise for a lawyer to insist on written acknowledgement from both spouses or partners that they understand the matter, that they understand that the lawyer cannot later act for one or the other to change the Will to the detriment of the other, and that they still want to proceed with that lawyer.

A. First Marriage

Most married couples who have never been married before tend to each leave the entire estate to the other. Wills for such couples need to address executors, guardians if there are young children involved, and divisions of assets in the event that both spouses die at the same time, or within a short time of each other. It is common for married couples to arrange their affairs by joint ownership and beneficiary designations on insurance policies, RRSPs and RRIFs, annuities, and pension plans. Therefore, on the death of the first spouse, there is often very little actual estate administration to be completed. The administration work and most of the probate fees and tax consequences arise on the death of the second spouse.

B. Second and Subsequent Marriages

Many spouses in second and later marriages have made marriage contracts going into marriage and have made Wills at that time. Some others fail to realize that a marriage invalidates a prior Will, and it takes much prodding and reminding on the part of professional advisors to ensure that the clients actually make new Wills to address their new status. If a marriage contract has already been made, it must be reviewed before making new Wills for either or both spouses. Where one or both spouses have ongoing support obligations to a former spouse or children from the prior marriage, the Will may have to provide that funds are segregated to fund such obligations. Even if there are no ongoing obligations for support, most spouses in second marriages want to ensure that their estates go ultimately to the children from their own prior marriages, after providing for the needs of the current spouse. Sometimes a trust for the spouse to provide income during his or her lifetime, with the capital going to children from prior marriage, is the best way of providing the protection that the client wants. The danger of the trust structure, in the absence of a marriage contract that addresses the issue, is that the surviving spouse, or his or her personal representatives if the spouse is mentally incapable at the time of the death of the first spouse, can elect to take an equalization share under Family Law Act, rather than the benefits of the trust. The solution may be a limited form of marriage contract that deals only with the provisions of the Will. Such a contract amounts to an agreement by both spouses, when they are both mentally competent, to abide by the terms of the Wills each are making, and agreeing not to make any future elections against the Will under the Family Law Act. Such marriage contracts will be much simpler than an overall marriage contract that addresses all aspects of the couple's assets and affairs. However, even though the agreement may be simple, it must still be made only with each spouse receiving independent legal advice.

Individuals who are remarried and have not made new Wills, have to appreciate the amount that a spouse receives if there is no Will. The spouse receives the first $200,000.00 of value in the name of the deceased souse as preferential share, plus one half of the remainder if there is only one child, or one third of the remainder if there are two or more children. If there are no children, the spouse receives the entire estate. This amount is in addition to any jointly held property that passes by survivorship, and designation of benefits under life insurance polices, RRSPs, pension benefits and the like. For individuals with fairly modest estate who want to provide for a spouse, as well as children or other relatives of friends, only a well crafted Will and proper arrangements with assets outside of the estate can ensure that the testator's wishes are accomplished. On the death of the surviving spouse, starting in the 2016 tax year, there will be a deemed year end on the date of death, and all assets in the trust will be deemed disposed of, with the resulting realization of the taxable capital gains into income for tax calculation. All of the resulting income is deemed allocated to the spouse who has just died and is taxable as income for the year of death of the spouse. The consequence of this requirement to allocate the income including the taxable capital to the spouse is to make the estate of the spouse/beneficiary liable for the tax payable on those capital gains in the spousal trust.

Estate planning between spouses, for purposes of avoiding or limiting Estate Administration Tax and for income tax planning, particularly in second marriage situations, has often included the use of spousal trusts. Many of these planning considerations will need to be re-examined in light of changes in the Income Tax Rules relating to trusts. The use of spousal trusts for the purpose of deferral of capital gains, and reduction of Estate Administration Tax (assets held in trust in one estate and not passing outright to the survivor are only subject to Estate Administration Tax on the death of the first spouse, and no further Estate Administration Tax is payable on the death of the surviving spouse) will continue to be worth considering. However, some of the reasons for spousal trusts in the area of allowing a limited degree of income splitting between the surviving spouse and the trust through the taxation of some income in the trust will cease to be applicable. Starting on January 1, 2016, there will be no distinction between inter vivos trusts trusts and testamentary trusts in terms of the tax rates applied to income taxes in the trusts, other than a provision for what is referred to as a "Graduated Rate Estate" or "GRE" for 36 months following the date of death. Therefore, at least after the first 36 months of administration, all income taxed in a testamentary trust, other than a trust for a disabled beneficiary, will be taxed at the top marginal rate with no graduated rates applied. Spousal trusts will undoubtedly continue to have an application for estate planning purposes where there is a need to preserve capital but income splitting will not be one of the reasons for the creation of such trusts. Spousal trusts have also been used to protect capital assets, particularly in the case of second marriages where there is a need to look after the spouse through the provision of income, coupled with a desire to prepare capital for the benefit of the children from the first marriage. Planning of this nature must be revisited due to a further change in the Income Tax Rules which creates deemed disposition of assets on the death of the surviving spouse and a required allocation of all of the income, including the tax arising on the deemed realization of capital gains, to the estate of the spouse. To make the beneficiary spouse liable for the tax on the gains arising in the trust, from his or her own assets, (which under such a planning scenario were probably intended to benefit his or her own children from his or her own first marriage), creates a result that was not intended in the initial planning stages and is unfair to the beneficiaries of the surviving spouse. This obligation on the estate of the spouse and not the original taxpayer creates a large change in the overall consequences of a spousal trust such the viability and practical usefulness of such trusts will have to be re-examined.

Where couples have arranged their affairs so that most or all of their assets are held jointly between them, and one party becomes mentally incapable, it is not then possible to "undo" the joint ownership so that a trust can be established for the benefit of the incapable spouse. Under those circumstances, it may not be possible to prevent the assets from passing to the now incapable spouse if the other spouse dies first. For situations of this sort where assets are held in joint names between a disabled spouse and a spouse who is still mentally capable, a solution may be the creation of a joint spousal or joint partner trust to ensure that management of the assets can continue until the death of the second spouse. However, if the ultimate disposition of the assets at the death of the second spouse is different than would have been the disposition through an existing Will of the disabled spouse or on the intestacy of that spouse, the creation of such a trust may not be effective to control the assets once the second spouse has died, and such a trust would stand a very good chance of being overturned as invalid to deal with the assets at the death of the second spouse.

2. Unmarried Spouses

If the parties in a relationship are not married, the rights of the parties vary. Some benefits are available after one year of marriage. These include Canada Pension Plan survivors' benefits and rollover rights under RRSPs and RRIFs. Pension benefits from plans governed by the Pension Benefits Act are available to unmarried spouses and same sex partners after three years of cohabitation. For unmarried spouses, whether same sex or opposite sex couples, there are no automatic property rights on death. On an intestacy a spouse is entitled to be appointed as estate trustee without a Will, but he or she is not entitled to any share of the property in the same way as married spouses have an automatic right to a share of the intestate estate. Support between spouses and support from the estate of a deceased spouse is provided under both the Family Law Act and the Succession Law Reform Act, but the Succession Law Reform Act in dealing with intestate succession defines spouses as persons who are married to each other. Same sex spouses who have married have the same property rights as any other married couples. For parties who have been living as unmarried spouses, and who subsequently marry, it needs to be emphasized that marriage revokes an existing Will. Therefore, as with second marriages where the parties need to remember to update their Wills, spouses who have been cohabitating and subsequently marry need to revisit their Wills and either do new ones or at least do codicils to confirm that their existing Wills are effectively reaffirmed. Other provinces are beginning at a limited level, to move to the recognition of property rights of common law spouses. No such movement has occurred in Ontario, and testators who are reading and being influenced by the news from other provinces must understand that the property law for common law spouses in Ontario remains as set out above in this paragraph.

3. Never Married or Widowed

Subject to a dependant's claim from children or siblings, the person who has never been married, or is widowed, and is in a common-law relationship, has no legal obligations affecting Will planning. Often people in these positions are also unpleasantly surprised to learn that there are relatively few tax benefits available. An annuitant of an RRSP or RRIF can however designate a charity to receive the funds on his or her death. Such a designation permits the charity to issue a donation receipt for the value of the fund and it can offset the tax liability arising from the income inclusion of the plan in the year of death of the testator. RRSPs and RRIFs and annuities purchased from RRSPs are fully taxable on the death of the initial taxpayer or annuitant. If there is no spouse who can receive the fund on a tax deferred rollover basis, but there is a dependent child or grandchild, who is either under 18 or permanently disabled, there can be a rollover to the child or grandchild by way of designating the child or grandchild to receive the refund of premiums. In the case of RRIF, the amount can be designated to go to a successor annuitant. However, in any case of a child or grandchild, the funds are either taxable in the hands of the child or grandchild in the year that the initial holder dies, or the tax can be deferred to a degree by putting the funds into an annuity. In the case of a child or grandchild under 18, the annuity must be fully paid out by age 18, and the tax is payable as the funds are received. In the case of a permanently disabled child or grandchild, the annuity can be a life annuity, and the tax is paid as the annuity is paid out. In the absence of dependent children or grandchildren, as defined in the Income Tax Act, no deferral of tax is available and the tax is fully payable from the estate of the deceased holder for the year of his or her death.

Statistics: Posted by Pinskylaw.ca — 23 Sep 2017, 11:55 — Replies 0 — Views 43665


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2017-09-21T15:25:16-05:00 2017-09-21T15:25:16-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=627&p=661#p661 <![CDATA[Residential Real Estate • Real Estate FAQ]]> 1. What is an Agreement of Purchase and Sale?

An Agreement of Purchase and Sale is the contract for the purchase and sale of the real estate property you are interested in selling or purchasing. The Agreement sets out the purchase price, the closing date and the length of time the purchaser will have to examine the title of the property to make sure that they are getting a property without any title problems. A purchaser may include conditions in the Agreement of Purchase and Sale such as financing as the purchaser may not have the cash to complete the purchase and will not want to agree to purchase the property until they have obtained confirmation from a lender that they will in fact have the money to complete the purchase. They may also want to have the property inspected prior to waiving their conditions and making the Agreement firm. In making the Agreement firm and binding they are confirming that they will proceed to complete the transaction in accordance with the terms of the Agreement of Purchase and Sale. As indicated above the Agreement of Purchase and Sale may contain conditions such as financing, confirmation that you can insure the property or to have the property inspected. If you have a concern with respect to the property you can make it a condition. Generally the conditions are for the purchaser who has to take steps to satisfy those conditions. If the conditions are not satisfied then the proposed transaction will be at an end and any deposit should be refunded.

2. What is Tarion Warranty?

Where you are purchasing a new home or one that is less than 5 years old the original builder will have had to register the home with Tarion, a government mandated insurance company established to ensure that any problems or complaints with respect to new homes will be remedied in a timely fashion by the builder or if the builder is not able to do the work by a representative of Tarion.

3. Do I need a house inspection?

Whether a building inspector is engaged is a matter of personal preference. There are businesses in this area who, for a fee, will conduct a visual inspection of the property and prepare a report indicating to you what they have observed with respect to the property you are proposing to purchase. Often, an inspector because of their expertise is able to see problems that you may not be able to see. If the inspector can test for moisture it is generally prudent to pay for that testing to be done as moisture behind walls may not be visible. Where there are finished basements it may be wise to have moisture readings taken to determine if there is any water penetration into the basement. It is important to note that such inspections are not guarantees and often inspectors limit their liability so that if there are problems you cannot sue them. It is extremely important to carefully select a building inspector.

4. When can I move in to my new house?

The length of time between entering into an Agreement of Purchase and Sale and the time you move in is variable. It depends on the needs of the purchaser and seller. Generally speaking at least a month is required so that all the necessary paperwork can be completed. It is recommended that if you are selling a property and buying a property that you buy the property before you complete the sale of the property you currently own and utilize bridge financing so that you are able to move from your existing property to the new property in a less pressured manner.

5. Do I need title insurance?

Generally speaking the Law Society of Upper Canada recommends that purchasers obtain title insurance. Title insurance is much like any other insurance except there is only a one-time fee. The title insurance covers problems with the title or with the property subject to certain limitations.

6. Can I sue for basement water leaking?

If water has been leaking into the basement and the seller knows that it has been leaking into the basement and does not tell you then you may be able to sue the seller for the cost of repairing the problem. If the seller does not know that water has been leaking into the basement then you may not be able to successfully sue the seller.

Statistics: Posted by Pinskylaw.ca — 21 Sep 2017, 15:25 — Replies 0 — Views 15127


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2017-09-21T14:57:48-05:00 2017-09-21T14:57:48-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=626&p=660#p660 <![CDATA[Powers of Atrorney • Wills & Estates FAQ]]> 1. What is a Will?

A Will is a legal declaration by which a person provides for the distribution of his or her assets at death. A Will usually appoints a person or corporation such as a trust company to act on their behalf to administer their assets and distribute them in accordance with the instructions contained in the Will of the deceased.

2. What if one dies without a Will?

If you die without a Will, the Province of Ontario has determined that a spouse receives the first $200,000.00 of the deceased’s assets and if there is one child the balance of the deceased’s assets over $200,000.00 will be shared equally between the spouse and the child. If there are two or more children the surviving spouse will get the first $200,000.00 and one-third of the remaining assets and the surviving children will equally share two-thirds of the remaining assets.

3. What is an Estate?

An Estate is comprised of the assets and liabilities of a deceased person.

4. What is Probate?

Probate is a term commonly used to describe the process of having a Will certified by the Superior Court of Justice as the “Last Will and Testament” of the deceased. People dealing with the Estate know, once a Will has been “probated” that the person appointed to act on behalf of the deceased has authority to do so and that the desires of the deceased as set out in the Will are to be completed or fulfilled. The process is now called an “Application for a Certificate of Appointment of Estate Trustee With a Will”.

5. What fees have to be paid to probate a Will?

A fee, payable at the time of the application to the Court, of one-half of one percent (0.005%) on the value of the Estate up to $50,000.00 plus, if applicable, one and one-half percent (0.015%)of the value of the Estate over $50,000.00.

6. Do all estates have to be probated?

No, not all estates have to be probated. Small estates often do not have to be probated. Generally, if there is real estate or investments, probate will be required.

7. How can I find a deceased person's Will?

If the deceased person had significant assets and particularly if they had real estate you may be able to obtain a copy of the Will by going to the Court House in the jurisdiction (County) where the deceased resided at the time of their death. Only those people who are to receive the final portion of an estate (called the residue) are entitled to receive a copy of the Will.

8. What does it mean to make an election under the Family Law Act?

The Family Law Act in Ontario gives a widow or widower six months following the date of their spouse’s death to decide whether they wish to take an interest in the estate of the deceased pursuant to the terms of the deceased’s Will or under the Family Law Act. A calculation must be done to determine which is most favourable/beneficial to the surviving spouse.

9. What happens with the debts of the deceased?

The debts of the deceased are a first charge on the assets of the deceased such that the debts are paid before any individual receives any benefit under the Will.

10. What are the income tax consequences?

Upon death you are deemed to have sold all of your assets. If the assets you hold such as stocks have increased in value then there will be income tax to be paid in respect of the deemed disposition of those assets. If you have an RRSP or a RRIF and no spouse all of the money in the RRSP or RRIF comes into the income of the deceased upon their death and income tax will be due and payable based on the amount of income that the deceased has deemed to have earned from the RRSP or RRIF coming into their income at the time of death. Income tax can be postponed if an RRSP or a RRIF is transferred to the spouse of the deceased.

11. Can an executor charge a fee?

Executors can charge a fee usually 2.5% to 3.0% of the assets brought into the estate and 2.5% to 3.0% of the assets distributed as part of the administration of the estate.

12. How long does it take to administer an estate?

The length of time it takes to administer the estate is dependent on the nature of the assets in the estate. If the assets of an estate consist of a bank account it should not take very long to administer the estate although there may have to be income tax returns filed and Clearance Certificates obtained which may delay the final resolution of the estate. If there is real estate to be sold or a business to be operated then it may take some time for the estate to be administered.

13. What is a Power of Attorney

A Power of Attorney is a document whereby an individual called a grantor appoints another person or persons to act on behalf of the grantor in the event the grantor is not able to act. There are two kinds of Powers of Attorney in Ontario. The first kind of Power of Attorney is called a Power of Attorney for Property and enables the person appointed to do anything that the grantor could do except make a Will. The second kind of Power of Attorney is called a Power of Attorney for Personal Care. The person appointed to be the attorney for personal care can make health care decisions for the grantor. Generally Powers of Attorney are utilized only when the grantor is not capable of making decisions however, Powers of Attorney for Property may be used if someone is not able because of particular circumstances to attend to their personal financial affairs making it necessary for the attorney to act on behalf of the grantor. If, for example, a person is selling their house in Barrie but they have been transferred to Singapore, they may appoint an attorney to handle the real estate transaction in Barrie on their behalf because they are not going to be readily available to sign the necessary documents. Powers of Attorney cease to be valid immediately upon the death of the grantor.

Statistics: Posted by Pinskylaw.ca — 21 Sep 2017, 14:57 — Replies 0 — Views 39891


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