Tag Archives: calgary property

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].

Purchasing The Property You Expected

Date: November 6th, 2019
By: Ron Thibeault

The proverbial “Wolf in Sheep’s Clothing” is what we all want to avoid.

We all make assumptions based on what we see or what we think we see. Buying a property is no different. We look at the fences surrounding a property and assume that they outline the property lines; we look at a beautiful greenhouse and assume it was built properly and in the right location. The reality is that our assumptions are often not correct.

An example of this is where a property backs onto a green space. You assume the back fence is on the property line but it actually goes 15 metres back into the green space and the yard is actually smaller by that amount.

You bought the property assuming that the yard was massive and now it turns out that the City requires that the fence be relocated to the property line.

Are Real Property Reports A Solution?

The current contract requires that the Seller provide the Buyer a Real Property Report (“RPR”) at least 10 days prior to the closing day. The problem is that even if that contract term is adhered to, the transaction is typically unconditional at that point and there is little time to deal with the relevant issues. There are questions of what your rights are should a problem be discovered at that point.

Ultimately, standard real estate industry practices are responsible for these problems. When a Seller lists a property with a real estate agent, the Listing Agreement stipulates that the Seller has a RPR that reflects the current state of the improvements on the property.

Effective agents will check on this and follow up knowing that the RPR can become a significant problem. Unfortunately, some real estate agents still don’t follow this most basic of requirements and you are left at risk as a result.

Making Your Offer

Before you submit an offer on a property, make sure that your agent is aware of your concerns. Have your agent make the necessary enquiries and seek to obtain a copy of the Real Property Report prior to submitting your offer.

If it isn’t available, ask why and structure your offer accordingly to ensure that you know what it is you are purchasing.