When a non-resident Seller disposes a real property in Canada, the profit from the sale of the property is, in most circumstances, subject to capital gain.  If the Canadian Revenue Agency (CRA) cannot collect its fair share of tax that is supposedly remitted by the Seller, then the Buyer is on the hook and becomes liable for any tax owed by the non-resident Seller.

In order to avoid such situation in a purchase and sale transaction, the Seller’s legal representative must holdback 25% of the sale price for personal use property, or 25% of the land value and 50% of improvement value, prorated from current assessed values to actual price, for income generating property, until a clearance certificate is issued by the CRA.  In order to obtain the clearance certificate, the non-resident will need to retain the service of an accountant to apply such certificate.  The accountant will work closely with the Seller’s legal representative to ensure that the tax resulted in the disposition of the property is paid to the CRA from the holdback amount.  This process can take up to 4-6 months.
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Complication can arise if there is a mortgage on title.  Since the holdback amount is quite significant, there is a chance that the sale proceeds after the holdback is not enough to pay off the mortgage.  In such cases, the non-resident Seller will need to come up with extra funds from other sources to pay off the mortgage.  To minimize the chance of this happening, the Seller can apply for the Clearance Certificate prior to the completion date, however, this can only be done if there is a subject free contract of purchase and sale.  Since the process of obtaining the certificate can take up to 4-6 months, so in an ideal situation there would be a 4-6 months lead time between subject removal and the completion date.   In most cases that we see nowadays, subject removal and completion is only a few weeks apart, sometimes days.  Therefore, if you foresee such issue happening, please discuss with your lawyer or notary, and your accountant about your situation to ensure you have sufficient funds to pay off your mortgage on completion.

An online survey (done on behalf of B.C. Notaries) found that 66% of 800 BC parents of children 18 or younger do not have a Will; only 44% of BC adults have a Will in place and only 57% of homeowners have a current Will.

The survey was done in March 2018 in preparation for the “Make a Will Week” (dated April 8 to 14, 2018). This “Make a Will Week” was implemented to encourage individuals and families to discuss the topic and future planning. A lot of people put off creating a Will, and this can create stress and conflict amongst family members after a person’s death regarding the custody of any children under 18 and property distribution.

If there is no legal Will in place, or if the Will was not completed properly the cost of administering your estate can also be higher.

​Creating a Will is not a complicated process and can mostly be done through two short meetings. First meeting will consist of discussing general overview of the assets and the intentions for their distribution and the second meeting will finalize the plan and the paperwork.
It is also important to remember to update your Will every five to ten years with the most recent and current plan for your assets and your intentions.

If you want to discuss your needs, please don't hesitate to contact us via email: [email protected] or via phone: 604 266 6644

In British Columbia, a Power of Attorney is effective when it is prepared in accordance with Power of Attorney Act of BC. While there are pre-printed Power of Attorney forms available from websites or legal stationers, these forms are not tailor made to be suitable for all situations. When it comes to dealing with real property using Power of Attorney, the Land Title Office has requirements before accepting documents signed by way of a Power of Attorney. If the Power of Attorney does not meet the requirements of the Land Title Office, it will not be accepted for registration and therefore not effective for land purposes.
 
Some of the common mistakes of Powers of Attorney are:

1. The Land Title Office requires the name in the Power of Attorney and on the property title to be exactly the same.  Best practice is best to obtain a title search for the property and check the exact name on title before preparing the Power of Attorney. If the owner has different versions of their name for different titles, more than one version of Power of Attorney may be needed.
2. If a Power of Attorney contains alternate, or "also known as", names for the attorney, the Land Title Office will decline to register the Power of Attorney.  A Power of Attorney with an "a.k.a." name for the attorney will not be accepted by the Land Title Office for registration purposes.
3. According to the section 26 of the Property Law Act of BC, the attorney cannot execute a transfer to him or herself without the Power of Attorney authorizing it. The Power of Attorney must specify the Attorney has such power to do so.  
4. If the Power of Attorney is applicable only after the occurrence of some specified events, any documents executed by Land Title Office must be accompanied as evidence that the Power of Attorney has occurred in the specified event.

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It is important for the Power of Attorney to be prepared correctly in the first place and that mistakes stated above will result in Power of Attorney being rejected for registration at the Land Title Office.

Joint Tenancy vs. Tenants in Common
Property owned by more than one person must be owned in one of two ways: Joint Tenancy or Tenancy in common.  When a property is owned in a joint tenancy arrangement, the interest of a deceased owner automatically gets transferred to the remaining surviving owner(s), meaning the surviving owner(s) has the right of survivourship.  On the other hand, if the property is in tenants in common, the interest in the property becomes owned by the estate of the deceased and is transferred to beneficiaries by the estate.

Joint Tenancy:

• On the death of one joint tenant, their interest in the land passes to the other joint tenants by the right of survivorship and the process continues until there is but one survivor, who then holds the property as sole.
• Each tenant holds common (or undivided) interest. If one owner dies, the remaining joint tenant(s) automatically inherits the property in equal proportions. This does not form part of the estate on one’s death.
• All joint tenants always own an identical and equal portion – for two tenants, 50% each and for four tenants, 25% each.
• Joint tenancy can avoid probate fees and delays. Shares are automatically passed on without probate court interference which can be a major advantage to Joint Tenancy.  
• All names of the group who are joint tenants will show up on the title of the property evenly.
• It is the most common way for a couple to own real property.
• The mortgage of a joint tenancy property requires the unanimous agreement of all joint tenants.
• A joint tenant in certain cases and geographical areas, can apply to the courts to have the land severed and provide each owner with a separate and distinct piece.
• For joint tenancy, approval for co-owner is not needed to break up a joint tenancy.
• All tenants can occupy and manage the property:
  • Can be problematic if one joint tenant refuses to pay their share of the property expenses.
  • If one pays ALL the expenses, they can ask for reimbursement for necessary costs e.g. Property Tax

Tenants in Common:

• Each tenant holds a percentage of interest in the property. If one of the owners dies, their interest in the property passes to their estate to be passed on according to their will.
• Tenants in common is usually used when tenants own the property in unequal shares, i.e. in different percentages.
• “Agreement between Tenants in Common” may be entered into which could override the rights which tenants would normally have under law.
• The tenants can hold equal or unequal shares: Every tenant owns an undivided share in the property therefore is free to possession of the whole property.
• Holder of tenancy in common desires, either to sell of mortgage their interest in the property, that can be done by them without the consent of other tenants
• Does not carry a right of survivourship: if one tenant dies, their interest does not go to the other tenants, but goes to the estate of the deceased. If there is a will, it’s distributed accordingly. However, if there is no will, there are provincial legislations and the person’s assets (including tenant’s interest of property) would be distributed to relatives according to that legislation.
• If an individual is purchasing properties for investment purposes with people that are not relatives, tenants in common would be appropriate as then their shares will not automatically go to the remaining tenants.

 
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As real estate values continue to rise across the province, the B.C. government is raising the threshold for the homeowner grant to $1.65 million for 2018.

The basic homeowner grant is $570 and will be automatically calculated based on property tax notices. The amount rises to $770 if the home is in a northern or rural area; up to $845 for seniors and people with disabilities; and up to $1,045 for people who meet a combination of those criteria.

​Only homes used as an owner's primary residence are eligible for the grant.

​As Spring Break approaches, a lot of families are planning to travel out of the country with their child/children. If your travel plans do not include the other parent, a travel consent form signed by the other parent and notarized or a court order signed is advised.

​The Canadian Government recommends that you have the following documents when travelling with a minor:
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• Their birth certificate (or a copy - although a copy can be acceptable, it is best to carry the original document)
• A notarized letter from the other parent with their address and phone number; and
• A copy of the other parents’ passport (with signature)
• Separated or divorced parents should also have copies of their legal custody documents.
• If the child’s parent is deceased, a copy of their death certificate is recommended.

Although a consent letter and copy of the non-accompanying parents’ passport is not a legal requirement, it can still be requested by border security or an airline agent when leaving the country or re-entering.  It is recommended to air on the side of caution and have all the paperwork on hand to prevent delays or even a refusal to allow you to enter or exit a country.

In terms of homes in B.C, Budget 2018 primarily focuses on increasing house supply and improving security for renters in B.C. This year they have introduced a housing plan to increase the overall quality of life in B.C.

One of the plans for Budget 2018 is to ease housing affordability challenges by implementing the tax changes property-transfer-tax-for-homes-in-bc-2018.html.  This tax change will target foreign and domestic speculators who don’t pay taxes in B.C. By increasing and expanding the foreign buyers tax, it will:

• Help stabilize the housing market, making the houses in B.C more affordable for other purchasers by increasing the PTT for the wealthiest homeowners who own/will purchase homes valued higher than $3 million.
• Help reduce tax fraud and close loopholes including:
  • ​Stop tax evasions – illegal nonpayment/underpayment of taxes
  • End hidden ownership – properties under a non-related individual to avoid additional taxes
  • Strengthen provincial auditing and enforcement powers

Budget 2018 also includes a plan for building homes people need and to improve security for the renters. They plan to:

• Invest over $6 million in affordable housings such as: homes for growing families, homes for seniors, housing options for women and children fleeing violence, and student housing.
• Increase rental assistance for the low-income working families by $800/year and for seniors by $930/year.
• Increase supports for renters and strengthen rental laws, so that the renters have a deeper understanding of their rights as renters.
• Create new Housing Hub through BC housing to make sure affordable homes are available to those in need.