Would You Buy A Home Without Lawyer?

Date: November 21st, 2023
By: Geton

It is an exciting time to buy a brand-new property whether it’s a house, townhome or condo. What seems to be even better is that the salesperson said that legal fees are included as long as you use the Builder/Developer’s lawyer. This seems too good to be true… and it is!

Saving On Costs

The first point is that you may only be saving on the actual legal fees and not on all of the registration costs and disbursements. The legal fees are surprisingly only 50% of the total invoice when you buy a home. Government costs to register the transfer and the mortgage take up a big portion of the costs. These “hard” costs are normally passed on to you by the builder’s lawyer. So, the big saving you thought you were getting is really only 50% of what you thought your were saving.

Representation In Homebuying

There is an important point to understand that when you purchase a home normally your lawyer acts for not only you but also your lender if you are putting a mortgage on that property. Technically, this is what we refer to as a “conflict” where as lawyers we answer to two or more clients. In those cases, there is no confidentiality and if there is an unresolvable dispute between the parties we simply cannot act for either of them. Each party is treated equally and without favour.

This situation gets turned on its head when your buy a new property and agree to use the builder/developer’s “lawyer”. The quotation marks are important here because you will not have a lawyer. In fact, the lawyer will only be acting for the builder and will have you sign off that you are only hiring them as an “agent” for the purposes of closing. And further, that if there is a conflict between you and the builder, it is you that has to find a new lawyer but the builder’s lawyer gets to keep working for the Builder.

Conflicts With Your Builder

Imagine if you have an issue during the building phase of your new property or closer to the closing. Who is acting for you to argue with the Builder? The lawyer you thought you had is now referring you out of their office to go find your own lawyer and this can be at the last minute. The costs you thought you were saving are now likely dwarfed by the legal fees with your new lawyer.

Things get even more fun when you have a mortgage because the Builder’s lawyer agrees to work for your lender as their lawyer in addition to the builder (the banks will not accept being represented by an “agent”) so if there is a conflict between you and your mortgage company there is the distinct possibility that the lawyer must disclose everything to the lender but not to you.

Seems crazy but that is how conflicts are resolved. In the end, you really do not have a lawyer when you use the Builder/Developer’s lawyer. The actual savings of $1,000 on a home that you have spent your life savings on really aren’t enough to justify being left on your own to deal with any issues you have or might have. Things really aren’t a problem… until they are and in this case all of the consequences of that fall solely onto you.

For more information regarding real estate law, we are Calgary’s leading legal real estate team to help you. Contact us today, 403 245 – 3500, or email us at [email protected].

Things To Think Of In Drafting Your Will

Date: November 8th, 2023
By: Geton

We often get asked some of the same questions and concerns from clients interested in getting their Will(s) done. These considerations come up time and time again so it’s important to discuss them to help you understand some of the basic concerns.

1. My kids are under the age of 18. Can I name them as Personal Executors?

Unfortunately, the answer is no. You can’t even make them becoming personal representatives contingent to being a certain age before they could become it (ie. If my son/daughter is 25 at the time of my death). Your kids have to be over 18 to be named in your Will as your Personal Representative because they technically must be able to consent to it and if they are under 18 they don’t have the legal capacity to do so.

2. My potential personal representative lives outside of Alberta. Can I name them?

Yes, you can but there are some concerns. If your PR is in Alberta they will be bonded automatically against errors and omissions which gives them a safety net when acting as a PR. If they are in Canada but outside of Alberta your estate should pay for bonding to ensure coverage so this is a cost that should be accounted for. In addition, if your potential PR is outside of Canada there could be potential tax implications for them which can’t truly be accounted for. That would clearly not be your intention so be very cautious.

3. I have young children – why should I name potential grandchildren as beneficiaries?

We usually get very strange looks when we suggest naming potential grandchildren as beneficiaries even though your own children are very young. As lawyers we are tasked with thinking of potential situations and one of those situations is you not revisiting your Will over a number of years or being incapable of redrafting your Will at some time in the future. We have seen clients probating wills from 40-50 years earlier where the person drafting it did not include future generations. This could cause a situation where you are deemed to die intestate (or without a will) if there are no survivors named. Out of an abundance of caution we go this extra step.

4. I have had some issues with some of my family – do I have to name them as beneficiaries?

Unfortunately, this happens – life comes at us from a series of angles and not always in a pleasant way or the way we would hope. You are absolutely free to make arrangements as you see fit but there are some pieces of legislation that you could run offside of so these need to be accounted for in making decisions. If you draft your will without being aware of these situations your plans could be overridden and you could end up with unintended beneficiaries. We can and do help clients work through these issues in the best possible manner.

Ultimately there are a number of factors to consider when drafting a Will and you can’t be and shouldn’t have to be aware of them all. This is where we can step in and help you sort through the endless pitfalls that can catch you off guard.

For more information regarding real estate law, we are Calgary’s leading legal real estate team to help you. Contact us today, 403 245 – 3500, or email us at [email protected].

Does Joint Tenancy Save Probate Costs?

Date: November 8th, 2023
By: Geton

We get asked by clients on occasion to transfer property from 1 or 2 names into 2, 3 or more so as to save on probate costs. People have read horror stories about this and are hoping to avoid those issues.

Alberta Probate Fees

The good news is that Alberta’s probate fees are amongst the lowest in the country and are not based on a percentage of the estate. In fact, they top out at $525 once the $250,000 level is reached. In other provinces like Ontario and BC there is a percentage charged so that is certainly a bigger consideration.

That means for Alberta the question becomes whether it adds to the convenience of the process. In some cases it certainly can but then there are other factors that come into play. For example, where there are multiple beneficiaries under a will, putting a property into joint ownership with one of them can cause a serious problem. When something is held jointly the title to that thing passes outside of the estate to the surviving person or persons. It means that any other person who is not on title has not benefited from the estate.

This can be dealt with in your Will but that is a complex situation that has to be specifically addressed in your Will. We can establish specific gifts to specific people to offset this situation but that is also a potential problem if your estate does not grow in the way you expect.

Presumption Of Resulting Trust

There are some side notes to this whole debate which focus on what is called the “presumption of resulting trust” rule that Canadian courts have established.

Effectively, this rule states that there is an assumption that transfers of title to non-spouses to be jointly held create a “trust” and the other party added only holds that title as trustee for the original owner. In a nutshell, the courts have ruled that sometimes a joint account really wasn’t intended to be truly joint and that it was done for convenience only.

A good example of this is where mom or dad are elderly, they have 3 or 4 kids and they add 1 of them (who lives close by) to their bank accounts to make it easier to deal with bills, etc. There was no real intention to have that 1 child get all of the money from that account if mom or dad pass away – the intention was just to make it easier to administer so the account was not truly “joint”.

This can be overridden by evidence to the contrary so you have to be very careful to ensure that what you want to happen is actually going to happen with the property.

In the simplest of terms, establishing a joint tenancy can be a minefield based on intentions and actual steps taken and why it is best to consult us prior to making or executing on any decisions.

For more information regarding real estate law, we are Calgary’s leading legal real estate team to help you. Contact us today, 403 245 – 3500, or email us at [email protected].

Can I Leave Something To Charities?

Date: November 6th, 2023
By: Geton

People often ask whether they can and how to leave part of their estate to a charity of their choice. The answer is, of course, yes and it is an important piece of the puzzle of funding for some very worthy organizations.

Giving can come in many forms but the vast majority of organizations used bequeathed funds to help stabilize funding which is often subject to the winds of change. This is a very viable option no matter how big your estate is and depending on whether you have fewer people in your own direct list (spouse, children, siblings) or where the potential list of beneficiaries are well taken care of.

What To Consider

There are some basic considerations to take into account when deciding this:

  • Make sure that you have the correct legal name of the charity. This seems obvious but there are often acronyms used (the World Wildlife Fund or WWF) for example so making sure your money goes first and foremost in the right direction is step #1
  • Make sure that there is or isn’t a specific branch that you want to donate to – if the charity operates by a branch system then that may influence how you give;
  • Try to find more information on how the charity collects donations. You can look through their website or call them directly to get more information and pass this on to us when drafting the Will;
  • What should be done if the charity no longer exists? Do you have a back-up organization or do you want to leave some discretion to your personal representative(s) to find and give to a similar charity if the listed charity doesn’t exist; and
  • Try to decide whether to leave a specific amount to the charity or a percentage of your estate. Both of these have their pros and cons so it is important to discuss it with us.

Leaving A Percentage vs. A Specified Amount

With regards to the last point, there have been situations where some charities have developed a reputation for seeking accountability when they are left a percentage. This can not only be upsetting for your other beneficiaries but also cost your estate significant sums in trying to deal with this. The simple answer is to leave specific amounts to any charity but this has its own pitfalls:

  • Your estate might be smaller than you expected due to a significant financial event (illness, market crashes, etc) so the set amount you leave might be a bigger percentage of your estate than you imagined; and
  • Your estate might be significantly larger than you expected and now the other issues rears its head and you could have made a bigger impact without impacting your other beneficiaries.

In the end there is no easy solution but there are options that we can discuss.

For more information regarding real estate law, we are Calgary’s leading legal real estate team to help you. Contact us today, 403 245 – 3500, or email us at [email protected].

Is Now the Time to Lock In Your Mortgage Rate?

Date: May 9th, 2023
By: Ron Thibeault
Mortgage Rate Main Image

This is the question that many find themselves asking. With what seemed to be an unrelenting rise in interest rates resulting in mortgage payments and other debt obligations no doubt becoming more difficult for an increasing number of individuals and families to meet, many wonder if now is the time to consider converting that variable rate mortgage to a mortgage with a fixed interest rate?

Understanding the difference between a fixed rate mortgage and a variable rate mortgage is key when making the decision that best meets your needs. Everyone’s situation is different, and this is not where a one size fits all approach is appropriate. Your circumstances and financial situation will play a large role in the decision you make.

What Is A Fixed Interest Rate?

A fixed interest rate is just that. The interest rate remains the same for a set length of time; typically, a 3-year term or 5-year term. With a fixed interest rate there is security in knowing what your payments will be and how much of that payment will go toward interest and how much toward principal. A potential downside is that with a drop in interest rates you will not be able to take advantage of the drop without incurring a penalty for breaking your existing term.

What Is A Variable Mortgage Rate?

A variable rate mortgage offers flexibility. Where there is a drop in interest rates, more of the payment is applied toward the principal, allowing you to potentially pay off your mortgage quicker. Conversely, with a rise in interest rates, more of your payment will go toward interest and less toward principal. Most variable rate mortgages provide for an option that allows you to convert to a fixed rate mortgage. So, while variable rate mortgages offer flexibility, they do not have the same budgetary security as a fixed rate mortgage.

How To Decide The Right Choice For You

Something to keep in mind when considering whether a fixed rate or variable rate mortgage is the right choice for you is the penalty your lender will charge if your mortgage is closed to early repayment, and you break your mortgage before the end of the term. With a fixed rate mortgage, your lender will charge a penalty of the higher of 3 months interest at the current interest rate on the remaining balance of your loan or the interest rate differential (IRD).

The IRD is determined by the calculations outlined in your mortgage documents. It can be significant, so it is important to understand that calculation prior to making any decisions or taking any actions to pay out your mortgage. With a variable rate mortgage, your lender will charge 3 months worth of interest on the remaining balance.

Consider Your Risk Tolerance

Currently, variable interest rates are higher than fixed interest rates which is a relatively rare occurrence and there are indications that interest rates will begin to drop throughout 2023 so whether you are looking to refinance, step into the real estate market as a first time home buyer or you are already in the market, when considering the type of mortgage that best meets your needs, you will want to know what your risk tolerance is as well as what your goals are. Consider whether it is budgetary security or flexibility that best helps you achieve those goals.

For more information regarding real estate law, we are Calgary’s leading legal real estate team to help you. Contact us today, 403 245 – 3500, or email us at [email protected].

Why Making An Enduring Power Of Attorney Protects You

Date: May 5th, 2023
By: Ron Thibeault
Enduring power of attorney main image

A regular Power of Attorney ceases to exist when the Donor (the person giving the power of attorney) ceases to have mental capacity to give directions to the Attorney (the person appointed in the power of attorney to take care of financial affairs). That said, an Enduring Power of Attorney (“EPA”) ceases to exist when the Donor passes away. Should there be a need to deal with financial matters of the Donor, the Attorney can do that.

Why An Enduring Power Of Attorney Makes Sense

Many couples have everything in joint names and may not consider having EPA’s. Here are a few examples of why it makes sense to have one. A husband and wife are on the title to their house but do not have EPA’s and want to sell, however, one of them, since they originally bought the property has lost their mental capacity to act for themselves because of a stroke, dementia, or other illness.

An application to the Court would be required to have the owner without capacity declared a Dependent Adult which would cost approximately $4,000 to $5,000 compared to the cost of an EPA of about $300. The same would apply to a situation where there is only one owner who does not have mental capacity but has no EPA.

How An EPA Can Protect You

Here is a situation we encountered lately which further illustrates the point. The owner of a business has heart bypass surgery which through a series of complicating factors left the owner on a tube ventilator and sedated. The owner had no EPA. We did not act for the owner, but the bank has raised concerns about the owner’s partner who is not an officer, shareholder or director of the company doing anything. Needless to say, this has caused significant problems for the company to be able to conduct its business.

The EPA is a potential answer to these issues. There are two types of EPA’s: One which takes effect immediately in that the Donor has mental capacity but wants the Attorney to have immediate powers and the second, the “springing EPA” where it is initiated when the Attorney either one doctor or two doctors confirm the Donor does not have capacity.

The main point to consider is that the EPA is an extremely low cost, yet effective way of being proactive rather than reactive.

For more information regarding real estate law, we are Calgary’s leading legal real estate team to help you. Contact us today, 403 245 – 3500, or email us at [email protected].

Buying Property In BC

Date: May 5th, 2023
By: Ron Thibeault
Buying property in BC. Main image.

A number of Albertans vacation in BC and eventually decide to either buy a recreational property or, in the alternative, decide that they want to live in BC. Of course, the opposite does hold true as well. However, for the Albertan moving to BC there are some significant differences in the process that create a bit of mystery for the experienced Buyer.

1. You Need A Lawyer Licensed In BC

This is sometimes a shock to clients but your lawyer in Alberta must be licensed to practice in BC. If you don’t have a local lawyer able to practice you will have to find a lawyer in BC. Fortunately, we are licensed and can do this for you to save time and money.

2. BC Provincial Transfer Tax Is A Shock

Saving money on your house and car insurance can be done in a variety of ways. One of the easiest ways is to ensure that you are getting what is called “multiple rider discounts”.

One of the biggest surprises for people buying in BC is that the BC Government collects what is called the PTT. This is calculated on the sale price of the property based on 1% of the first $200k and 2% of the next $1.8M and then 3% after. Doesn’t seem so bad but on a $700k property it is a $12,000 bill. In Alberta the cost is $50 + $40 per $100k which is $470. Yes, Alberta’s registration system is slow but at that price difference there are not many people who are that impatient.

3. Possession Dates vs. Completion Dates

BC property buyers from other provinces are sometimes shocked that the Completion Date and the Possession Date might not be the same. In fact, it happens quite often that the transaction closes the day before possession. In Alberta, these are normally one and the same unless something has materialized that might delay the closing. Also, for BC transactions the end of the day usually creates the deadlines whereas in Alberta it is 12 noon.

4. Real Estate Purchase Deposits

The standard BC Real Estate Association (BCREA) contract requires deposits within 24 hours of acceptance of the offer but this is often changed to within 24 hours of the final condition removal. The interesting part here is that various areas within BC treat that differently. The standard in Vancouver and area seems to be tied to the conditions whereas in other areas it is tied to acceptance. Either way it is important to discuss this with your agent in advance. In Alberta, the deposit is normally supplied when the offer is accepted.

5. The Property Disclosure Statement

In BC the Property Disclosure Statement is a standard document that is included in normal circumstances. It is a series of warranties and representations made by the Seller with regards to the property. From the Buyers’ end this is a useful and handy document to have. However, from the Sellers’ perspective it is certainly something that should be taken very seriously as it can and does create potential liability. In Alberta, the disclosure statement is rarely used as it is more of a caveat emptor situation where the Buyer is to beware.

6. Strata Document Review

In Alberta we refer to the condominium documents whereas in BC we refer to them as the strata documents – same sort of documents but a different name. The differences don’t end there, however, as it also comes down to the review process. In Alberta it is virtually the standard now to hire a condo doc review specialist to go through the documents to provide some guidance. This is not the standard in BC but it is starting to happen. Be aware of this issue and plan accordingly.

The key take-away is that there are some important differences. We can not only help you understand those differences but, as a lawyer licensed in Alberta and BC we can also help in your purchases and sales in BC as well as Alberta. There are some significant savings in having us help you in your home jurisdiction. Please feel free to contact us at any time with any questions.

For more information regarding real estate law, we are Calgary’s leading legal real estate team to help you. Contact us today, 403 245 – 3500, or email us at [email protected].

Quick Tips From Real Estate Lawyers

Date: November 24th, 2020
By: Ron Thibeault

Providing our viewers with Quick Tips from Real Estate Lawyers here in Calgary. We never want you to be left confused so follow these insider suggestions to help you get by with less stress.

QUICKTIP #1 – A Great TIPP!

January is a great time of year, daylight is getting longer, spring is around the corner and the local municipalities will set you up on monthly taxes without issue.

Most Municipal Districts and cities have a monthly tax payment option called TIPP (Tax Installment Payment Plan). Property taxes run from January to December each year. You can pay yearly, usually mid-way through the year, in full or through these monthly direct debits from your account.

It is usually simple to set up as a phone call to the City (Calgary is 403 234 7480) and they will email you an application form which you fill out and send back in.

TIPPS – it is simple to do and simple to help with your budgeting!

QUICKTIP #2 – Subtraction Through Addition!

Saving money on your house and car insurance can be done in a variety of ways. One of the easiest ways is to ensure that you are getting what is called “multiple rider discounts”.

Some of our clients use 2 or more insurance companies for their insurance coverages. Sometimes this happens because two people in a relationship have loyalty to their existing insurance provider.

By combining insurance coverage for your house(s) and vehicles with 1 provider you can obtain savings for each insurance policy you bring in addition to your current coverage. Make sure to ask for these discounts and to shop around as these discounts will vary by company.

QUICKTIP #3 – Get in Lock-Down Mode

Just bought a home? An important question to ask is, who do you know that has keys to your new home? More importantly, who may have keys that you don’t know?

We always advise home buyers to have the doors to the home rekeyed after they take possession. Make sure to do it sooner, rather than later. The Seller may seem like a friendly sort but there may be people they know who have been given keys but haven’t given them back yet. Who knows maybe the Seller isn’t as “friendly” as you think!

By rekeying the locks in your new home, you can rest assured that you are now fully in control of the home and that you have helped reduce a major risk for yourself.

For more information regarding real estate law, we are Calgary’s leading legal real estate team to help you. Contact us today, 403 245 – 3500, or email us at [email protected].

Why You Need an Enduring Power of Attorney?

Date: November 24th, 2020
By: Bill Leclair

Things To Consider While Estate Planning

What Is An Enduring Power Of Attorney (EPA)

One of the documents we include as part of our Estate Planning package is an Enduring Power of Attorney. The EPA (as it is known) is a relatively inexpensive legal document yet very effective. The donor is the person who gives the EPA to the person appointed (referred to as the “Attorney”) which lasts until the Donor dies.

The Disadvantages Of Not Having EPA

Why is an EPA considered an extremely useful part of an Estate Planning package? The Attorney has the authority to deal with real property the donor owns, deal with necessary expenditures required on behalf of donor, deal with the CRA and appoint lawyers, accountants or other persons for such compensation and length of time as the Attorney considers advisable. The most common examples of the use of an EPA is the sale of the donor’s house or dealing with monetary assets of the donor.

The Importance Of An EPA

Why is an EPA considered an extremely useful part of an Estate Planning package? The Attorney has authority to deal with the property the donor owns. This means they deal directly with the necessary expenditures required on behalf of the donor. They work with the CRA and appoint lawyers, accountants or other persons the Attorney considers advisable for the necessary compensation and length of time. The most common examples that EPA’s are used for are;

  • The sale of the donor’s house;
  • Dealing with the monetary assets of the donor.

When Drafting An EPA, There Are 2 Options:

First, it can take immediate effect without a trigger or make it conditional on incapacity.

In the second case, the EPA only becomes effective if the donor is mentally incapable or mentally infirm of making reasonable judgements in respect of matters relating to all or part of the estate. We need a written declaration of the Attorney and medical physician practicing in Alberta that the donor lacks mental capacity. It is conclusive proof to ensure the EPA becomes effective.

The other way is if the donor having mental capacity declares in writing that the EPA is effective.

The Difference In Cost & Time

The reason for getting an EPA is the difference in cost compared to having to get a Court Order plus the length of time required to get said Order which can take six weeks or longer depending on the circumstances. That time frame may present problems when there is a desire to sell a house or have monetary assets attended to on a more urgent basis.

In the end, the Enduring Power of Attorney (EPA) is a vital document that should certainly be considered as part of any Estate Planning you undertake. If you would like more information or are interested in an estate plan don’t hesitate to contact us, call us at 403 245-3500.

Avoiding Mortgage Payout Penalties

Date: November 24th, 2020
By: Ron Thibeault

How Mortgage Payment Penalties Work

What we find most surprising when dealing with Sellers is that they rarely know how a mortgage prepayment penalty works. Either it was never explained to them. By either the mortgage broker, their bank, or their lawyer. Or, they never took the time to understand this important factor of mortgage payout penalties, when they first mortgaged their property.

In today’s interest rate environment, our clients are seeing some very severe penalties. This is due to a little-known clause on prepayments. The mortgage penalty is  applied on the basis of the greater, of the payment of 3 months of mortgage interest. Or applied as the interest rate differential – the IRD.

Closed Mortgage

When you elect to have a closed mortgage there are limited prepayment privileges. Which range anywhere from 5% to 25% of the principal of the mortgage on an annual basis. Typically there is also the option to increase your mortgage payment by a maximum amount each year. If you go above these limits you will likely incur a mortgage penalty. We typically see mortgage penalties being incurred either from a sale or a refinancing of the property.

Interest Differential

Understanding 3 month interest is simple enough to do. However, the interest differential is a little more difficult and of greater concern. Essentially, this is the difference in the amount of interest you would be paying for between the balance of the term of your mortgage and the amount of interest you would be paying if the interest rate were equal to the bank’s current posted rate for the balance of that term.

Seems innocent enough, except for the fact that we have seen interest differential penalties in the tens of thousands of dollars. This can and will potentially affect your return on your property. In some cases has resulted in Sellers having to pay money in order to sell their properties.

What Can Be Done About Mortgage Penalties?

What can you do about mortgage penalties? First, understand what the mortgage penalties are for the mortgage product you are contemplating. Second, understand what your purpose of buying a property is. Are you intending to sell the property relatively soon or hold on to it for longer? Match your term and mortgage product to your intentions. Third, engage your banker or mortgage broker in a full and frank discussion of what your needs are and how prepayment costs can be minimized.

Maybe the best advice of all is to understand what your penalty might be BEFORE you decide to sell or refinance your home.

We can help you understand your mortgage payout penalties and whether or not you will have to pay a penalty. Don’t hesitate to get in touch before you sell or refinance your home. For any questions or concerns contact us today by emailing us at [email protected].