Tag Archives: Calgary

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].

The Risk & Rewards Of Buying A Foreclosure

Date: November 23rd, 2020
By: Ron Thibeault

Understanding The Ins & Outs Of Foreclosure/Judicial Sales

Often when we get calls from clients wanting information on buying a foreclosure, the background information they have is out of the US. In Canada, each province has its own set of rules and procedures and understanding how the process works in Alberta will help you decide whether the risk is worth the reward.

What Is The Difference Between A Foreclosure And A Judicial Sale?

There aren’t big differences in the end result of these two processes, but a Judicial Sale is a bit of a strange duck to be perfectly honest. In the case of a foreclosure, you are buying the property from the lender who has obtained title. In a Judicial Sale, technically, the original owner still has title but now the Court has imposed a sale process to secure a final sale that can compensate the lender whose mortgage is in arrears. The key point in a Judicial Sale is that right up to the last hour, the Owner has the right to do what is called “redeem” the mortgage – to bring in all the arrears and costs, etc. and if they do that the whole foreclosure process is halted. Any offers are put aside, and we are back at square #1.

The Risks Of Foreclosure Properties

When clients consider purchasing a foreclosure property they receive a draft offer from the Listing Realtor that looks very different. There are large parts of the standard contract crossed out because either the Court or the lender will not give the standard warranties that a Seller has to give – that is because they have never truly owned or resided at the Property – they are simply there to facilitate the foreclosure process. That means there are risks for you as a Buyer which include:

1. You must conduct your own due diligence and be thorough about it;
2. The Property might have serious compliance issues
3. There might be serious hidden defects in the Property;

4. There may have been criminal activities in the Property that render it uninhabitable;
5. The appliances may not operate or even be in the Property;
6. The Owner may have sabotaged the Property on purpose;

7. There may not be permits in place for development;
8. The Property may be further damaged between the time of your Offer and the closing; and
9. The endless list of other potential issues.

Can You Avoid the Risks?

As a Buyer you are very limited in your ability to avoid all of the risks of a foreclosure, but you can certainly minimize them. Amongst the things you can do include:

1. Reviewing the title with your lawyer;
2. Complete as many inspections as you can or are permitted;
3. Confirm whether the owner is still in possession or is the property tenanted;
4. Contact the City to determine if there have been any permits applied for and whether they are completed;

5. On closing, ask your lawyer to obtain title insurance for you;
6. Make sure your Realtor is well aware of the foreclosure process;
7. Employ legal help sooner than later; and
8. Don’t assume you have any protections whatsoever. This is a dangerous pitfall that can cause your nothing but harm

Understanding the Ins and Outs of buying a foreclosure/Judicial Sales is where we can step in and help you out. Don’t hesitate to contact us for assistance and advice. Understanding your risks right at the start can make this an option for purchasing that you wouldn’t consider otherwise. Call us at 403 245 3500 or email us at [email protected]