Category Archives: Real Estate

Ontario Land Transfer Tax

Every person who has acquired a beneficial interest in the land by completing a registration of conveyance is liable to pay Land Transfer Tax under the Land Transfer Tax Act. Land Transfer Tax is payable on each transfer/conveyance of land in Ontario unless exempt under the Act. It is usually calculated based on the value of consideration. According to the Act, any conveyance completed on or after January 1 2017, tax will be calculated in the following manner at the rate of:

0.5% of a total consideration of the conveyance upto $55,000.00

1% of a total consideration of the conveyance that exceeds $55,000.0 upto and including $250,000.00

1.5% of a total consideration that exceeds $250,000.00 upto and including $400,000.00

2% of a total consideration that $400,000.00

2.5% of a total consideration that exceeds $2,000,000.00 and the conveyance of the land that consists of one and not more than two single family residences.

 

Ontario Land Transfer Tax

Every person who has acquired a beneficial interest in the land by completing a registration of conveyance is liable to pay Land Transfer Tax under the Land Transfer Tax Act. Land Transfer Tax is payable on each transfer/conveyance of land in Ontario unless exempt under the Act. It is usually calculated based on the value of consideration. According to the Act, any conveyance completed on or after January 1 2017, tax will be calculated in the following manner at the rate of:

0.5% of a total consideration of the conveyance upto $55,000.00

1% of a total consideration of the conveyance that exceeds $55,000.0 upto and including $250,000.00

1.5% of a total consideration that exceeds $250,000.00 upto and including $400,000.00

2% of a total consideration that $400,000.00

2.5% of a total consideration that exceeds $2,000,000.00 and the conveyance of the land that consists of one and not more than two single family residences.

Forfeit Of Deposits In A Collapsed Real Estate Transaction

The buyer in a real estate transaction pays a deposit at the time when an offer is presented or when the offer is accepted by the seller. This deposit is usually held in the trust account of the listing brokerage or the seller’s lawyer. What is the purpose of this deposit?

The giving and receiving of the deposit confirms the contractual obligation between the parties and is a consideration towards the purchase price. The deposit is adjusted as a credit to the buyer if the transaction is successfully completed. But what happens when the transaction is not completed. The buyer is in default and is in breach of the contract.  The seller is willing, able and ready to close the transaction. The deal has collapsed and the buyer is not in position to close the deal. The buyer now wants his deposit back. What is the treatment of the deposit in a situation like this? Is this deposit immediately released to the buyer or the seller has a right to forfeit the deposit? Ontario’s standard real estate form is silent on it.

What are the remedies for the seller?

In practice the seller has few options if the buyer defaults:

  1. The seller will forfeit the deposit and put the property back in the market for sale. The buyer will have to sign a release form to release the deposit to the seller. This form is usually provided by the real estate brokerage if the deposit is with them. Sometimes it is negotiable between the parties and a portion of the deposit is released to the seller and the balance to the buyer.

 

  1. Apart from the deposit, the buyer is also responsible for all of the seller’s losses. If property is back into the market and the seller does not get the same price and sells for less, the buyer is responsible not only for  the  difference in the price but also for all the other costs incurred by the seller in the sale of the property. He could file a court case for damages against the buyer.

 

  1. The law also provides that the seller could sue the buyer for specific performance of the contract. But litigations are expensive and the seller should be able to financially sustain it.

As the seller has a right to take the deposit, most prudent sellers would go with option 1 and move on.

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January 19 2017.

Statutory Tarion Warranty Coverage-New Homes

When you buy a new home from a builder, the builder provides possession of the home with warranty coverage guaranteed by Tarion.

Section 13(1) of the Ontario New Home Warranties Plan Act provides warranties that every builder is   required to give to the new home buyer.

What are these warranties?

These warranties are as follows:

(a) that the home,

(i) is constructed in a workmanlike manner and is free from defects in material,

(ii) is fit for habitation, and

(iii) is constructed in accordance with the Ontario Building Code;

(b) that the home is free of major structural defects as defined by the regulations; and

(c) such other warranties as are prescribed by the regulations.

When and How to Enforce the Warranties?

These warranties are usually enforced by Tarion after the completion and if there are some deficiencies found pursuant to completion. The new home buyer has to report the deficiencies in writing to the Tarion on the prescribed forms within the prescribed time periods.

The time periods are as follows:

  1. Within one year from the date specified in the Certificate of Completion and Possession for any breach of the Building Code and its fitness for habitation.
  1. Within two years from the date specified in the Certificate of Completion and Possession for any deficiencies with regard to plumbing, electrical an any violations of the Building Code affecting the health and safety of the occupant like insulation, air and vapour barriers, ventilation and heating.
  1. Within seven years from the date specified in the Certificate of Completion and Possession with regard to major structural defects.

 

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February 9 2016.

Pre-Delivery Inspection (PDI)

When you are buying a new home or a new condominium unit from a builder, you are given an opportunity to view your completed home prior to possession. The builder’s representatives will walk you through the newly built property and demonstrates the use of the plumbing, electrical, ventilation and other home systems. It is a thorough inspection of the property.

PDI allows you to note any item that is damaged, incomplete or not functioning properly on the PDI form. These items are fixed by the builder. Any item not fixed prior to completion is listed on a Tarion Warranty Form -30-Day or Year-End Form. Once PDI is complete, you will sign some and the Certificate of Completion and Possession.

So, do not miss your PDI.

 

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February 4 2016.

Two-Stage Condo Closing

When you are purchasing a new condo from the builder in Ontario, you have to follow the two- stage closing procedure.

What is two-stage closing? The two –stage closing means there are two closing dates:

  1. The first stage is an interim closing or occupancy closing- the purchaser is required to take possession of the unit purchased on the interim closing date. The pre-delivery inspection is completed at this stage and the purchaser sigs a certificate of completion and possession under the Ontario New Home Warranties Plan Act. Keys are released to the purchaser by the vendor builder on receipt of the following:
    1. Closing documents including interim occupancy agreement;
    2. Post-dated cheques for the monthly occupancy payments;
    3. A portion of the down payment as agreed upon in the Agreement of Purchase and Sale.
  2. The second stage is the final closing takes place after the condominium’s declaration and description have been registered at the concerned land titles office. The title is transferred by the vendor builder on receipt of the following:
    1. All closing documents;
    2. The balance of the purchase price and other adjustments in accordance with the statement of adjustments.

The interim closing agreement is terminated once the final closing is completed.

 

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February 3 2016.

Spousal Consent

If you own a property alone and has been using that property as a family residence/matrimonial home (as defined within the meaning of Family Law Act), the other spouse whose name is not on the title of the property must provide a written consent to the sale of such property. The non-owning spouse would also sign the ‘spousal consent’ on the Listing Agreement, OREA form- Agreement of Purchase and Sale and any amendment to the Agreement of Purchase and Sale. The non-owning spouse will also sign the spousal consent forms at their lawyer’s office.

The spousal consent would usually apply to the sale of the matrimonial home only and not to any other investment properties that the seller and non owning spouse owns.

Call us for more information @905-290-7205.

March 17 2015

What is Title Insurance?

Title Insurance is an insurance policy that protects the owners of the residential and commercial property owners and lenders against the losses related to the property title up to the face amount of the policy. It provides coverage for the title related risks associated with real estate transactions. Title risks and coverages are specifically mentioned in the policy.

For a onetime fee called premium, title insurance will protect the home owner as long as he/she owns the property and will cover losses to the maximum coverage as set out in the policy. The title insurance is effective at the time of the closing. A property owner has a direct claim against an insurance company if a specified title risk causes a loss.

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March 17 2015

Harmonized Sales Tax (HST) New Housing Rebate

If you are buying a newly constructed home, as per current real estate laws, you will be eligible for a HST rebate. As of July 1 2010, the Province of Ontario implemented Harmonized Sales Tax (HST) which has two separate components:

–      The federal GST of 5%;

–      Province’s Retail Sales Tax (RST) of 8%.

The purchase price of newly constructed homes is subject to HST of 13%. Although, the GST rebate remains in effect, a Purchaser Rebate Program has been implemented to allow reduction of the RST component of the HST payable.

What is the GST Rebate?

New home buyers can apply for a 36% rebate of the federal portion of HST applicable to the purchase price to a maximum of $6,300.00 for homes with purchase price of $350,000.00 or less. The rebate on the federal portion of HST would be calculated proportionately if the purchase price is between $350,000.00 and $450,000.00. There will be no rebate of the federal portion of the HST if the purchase price is more than $450,000.00.

What is the HST Rebate?

New home buyers can apply for 75% rebate of the provincial portion of the HST applicable to the purchase price to a maximum of $24,000.00. This rebate applies to the first $400,000.00 of the purchase price. For purchase price above $400,000.00 this rebate is $24,000.00.

The HST rebate is only applicable to new homes. Resale homes are exempt from HST.

Check with your Real Estate Lawyer for any change in regulations.

The author of this article, Balvinder Kumar is a professional and reliable Real Estate Lawyer in Mississauga, helping you in your Real Estate matters in Mississauga, Brampton, Milton and GTA.

Reach us @905-290-7205 for more information.

Joint Tenants and Tenants in Common

When you purchase a real property with spouse or another person, you have to register your title as joint tenant or tenants in common. There is a difference between the two forms of ownership. What are they?

Joint Tenants: The characteristics of joint tenants are:

  1. Each joint tenant has the right of ownership in the whole property
  2. The essential benefit of joint tenancy is the right of survivorship which means that if one joint tenant passes away, his or her interest in the property diminishes and the surviving joint tenant becomes the sole owner of the real property. Spouses usually take title as joint tenants.
  3. All joint tenants own identical and equal portion in the real property and acquire title from the same document at the same time.
  4. Joint tenancy is often utilized for estate planning purposes.

Tenants in Common:  The characteristics of tenants in common are:

  1. Each owner holds a percentage of interest in the real property.
  2. Each owner possesses a separate and divisible interest in the property and is the owner of his or her share in the real property separately.
  3. The tenant’s share can be transferred to anyone, a friend or a relative in the Will or sold to anyone. If there is no Will, the interest in the real property becomes owned by the estate of the deceased tenant and the share is transferred to the beneficiaries of the estate.
  4. There is no right of survivorship and a tenant in common can deal with his or her share in the property according to their wish.Call us @905-290-7205 for more information.