Preventing claims – Real estate
Ministry of Finance announces additional property transfer tax effective august 2, 2016
[updated August 23, 2016]
Read more to learn about BC’s additional property transfer tax on foreign entities.
Lawyers who prepare transfer documents and Property Transfer Tax forms in situations where there has been an assignment(s) of the purchase contract resulting in a final increased purchase price should consider carefully the appropriate amount to use in the Item 2b Market Value paragraph of the Form A Transfer and in the Item E portion of the Property Transfer Tax form. Most often, the total consideration paid by the Transferee is the amount that should be used. (Originally appeared in E-Brief, April 2016)
The law of property in BC might not give your clients the result they expect
The recent decision of Lin v. CIBC Mortgages Inc., 2015 BCCA 518, challenges standard practices for real estate conveyancing in British Columbia. Although it remains to be seen how the decision will be applied or interpreted, lawyers are encouraged to read the case and the Law Society’s suggestions on how to protect their lender clients and themselves.
Parking stalls and storage lockers in strata developments
Purchasers of strata units expect to secure one or more parking stalls and storage lockers when buying a unit. If you act on a strata lot conveyance, your client will want to know that each parking stall and locker forming part of the deal is properly capable of transfer or assignment. Either investigate the issue yourself, or make it clear that it is the client’s responsibility to do so. If you act for a developer client wishing to designate parking stalls and storage lockers for various units, review the proposed structure to ensure that each stall and locker can effectively be transferred or conveyed.
Originally appeared in Parking stalls and storage lockers in strata developments, Practice Watch, Benchers' Bulletin, Winter 2012.
Future risks for property developers
The BC Supreme Court's decision in Ulansky et al v. Waterscape Homes Limited Partnership et al has found additional disclosure obligations for developers in relation to property use. New requirements for filing amended disclosure statements were set out in 2009 by the Court of Appeal (see below). As the real estate market is still in flux, future buyers might attempt to avoid completing contracts. Help your developer clients protect themselves by alerting them to their new obligations arising from both decisions. (Adapted from original, which appeared in E-Brief, February 2011)
Although the real estate market made an initial recovery after the 2008 recession, recent developments suggest a second decline may occur - raising the possibility that purchasers may look for ways to avoid completing future contracts. Help your developer clients by alerting them to their new obligations to file amended disclosure statements arising from the Court of Appeal's decision in Chameleon Talent Inc. v. Sandcastle Holdings Ltd. And with the possibility of a “double dip” recession unfolding, all lawyers are encouraged to read "Hard Times: Managing risk in a troubled economy." (Originally appeared in E-Brief, July 2010)
E-filing, picture ID and managing mortgage instructions
The following is a summary of Curbing risk in real estate practice, Insurance Issues: Risk Management, March-April 2006
Commercial and residential deals now move at a furious pace, and BC real estate lawyers work ever harder to complete transactions properly and on time. It is in this heated environment — as lenders make new demands and parties are less tolerant of accommodations — that lawyers are exposed to greater risk of claims.
Some recent insurance reports suggest that lawyers should look carefully at these risk management practices (read more for details):
- LTO e-filing – a good safeguard for meeting deadlines
- Picture ID – keep copies (of course, comply with the client identification and verification rules, as well)
- Manage mortgage instructions from lenders
Common causes of reports in real estate practice
The following is a summary of Risk Management in real estate conveyancing practice, Alert!, March 2004.
Real estate practitioners will want to be alert to the common causes of reports of claims and potential claims in conveyancing practice (read more for details):
- Title search inadequacies
- Troubleshooting failures
- Inappropriate reliance on support staff
- Inadequate review of documents
In addition, remember to review the specific terms of the contract of purchase and sale on each conveyancing file you open, and exercise caution with respect to representations if you are involved in solicitor property sales.
The following summarizes Leaky condo alert: The Owners, Strata Plan LMS 888 v. The City of Coquitlam, Alert!, June 2003.
A special resolution authorizing legal action by a strata corporation is now required before an action is commenced.
Property transfer tax
The following is a summary of Property transfer tax misunderstandings, Alert!, June 2002.
The Lawyers Insurance Fund has encountered several scenarios in which lawyers have misunderstood the operation of the property transfer tax regime. A visit to the Property Transfer Tax Branch of the government website is recommended for anyone practising in the area of real property law. For any lawyer who is unsure about the operation of the Property Transfer Tax Act or its regulations and policies, a review with a senior staff member of the Branch or an advance ruling is recommended.
Lawyers will also want to be alert to the following three areas in relation to the Act (read more for details):
- Subdivisions and related exemptions
- Lease modifications
- Trust transfers of principal residences between related individuals
Value and identity fraud
If you act on any real estate transactions, you must learn about these. Protect your client – and yourself.
Are you concerned that your client may be vulnerable to undue influence by a relative, friend, caregiver, acquaintance, clergy member, accountant or other person? The BC Law Institute's guide can help.
If you are about to witness a signature on a real property transfer form, mortgage or discharge or any other document with legal consequences, keep safe.