Coming Through COVID-19 – Maybe a Marriage Contract is in Order?

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I was driving recently and a song came on the radio that caught my ear.  It was the 70’s soft rock hit “Make it With You” by Bread.  The song starts as follows:
               
“Hey, have you ever tried
                Reaching out for the other side
                I may be climbing on rainbows
                But baby, here goes …”
 
The chorus goes “I want to make it with you … I really think that we can make it, girl.”
 
This might sound cheesy, but all relationships are about expectations – including marriage.  Even if your marriage is on the rocks, it may be possible to get things back on track.  
 
There’s lots of news lately about the anticipated rise in divorces and separations as we move through the COVID-19 pandemic.  There could be a number of reasons for this, such as families having less income due to one or both spouse losing employment, or the sudden shift in family dynamics when spouses and children are cooped up at home. 
 
This is where an experienced family lawyer can help, namely in drafting up a marriage contract, otherwise known as a post-nuptial agreement.  These agreements are written contracts made by spouses (after marriage) that set out how they want to move forward, as well as the legal rights and duties of each spouse if the relationship ends.  Examples of things that might go into such a contract are:
•    Domestic responsibilities
•    Parenting responsibilities
•    Management of finances (e.g., who uses certain back accounts)
•    Division of property and debt if the marriage ends
•    Spousal support if the marriage ends
So, before deciding you need to end your marriage ask yourself if it is worth sitting down with your spouse to talk about expectations.  A family lawyer can help you condense your expectations in writing to make a legally binding marriage contract.
If you have questions about drafting a marriage contract, or any other family law matter, our experienced team of family law lawyers are available to help you assess your specific situation and provide trusted advice on how to move forward during this uncertain time. 

Darren Schmidt maintains a broad practice in family law including divorce, common law separation, division of assets, parenting, custody, mobility/relocation, and child and spousal support. His diverse litigation background serves him well when acting for clients in more complex family law disputes. Darren always strives to provide tailored, down-to-earth advice for his clients.  

Preparing for Your Estate Planning Meeting

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Estate planning is an important part of protecting your family and loved ones in the event of your death or loss of capacity. It is always a good idea to consult with a legal professional who can advise you on your rights and obligations and help you prepare your Will and incapacity planning documents. Below are some things to think about before meeting with a lawyer or notary:

Will:

1.     What are your general objectives? What do you want to achieve? What do you want to avoid? For example, you may wish to ensure your spouse and children are looked after and reduce the impact of taxes.

2.   Who do you want to appoint as executor of your Will? This is the person who will administer your estate. Often spouses are appointed as executor since your spouse likely has the most knowledge of your assets. Make sure to speak to your intended executor(s) in advance to make sure he or she is willing to act. Being an executor is not a fun job and naming a person as executor does not mean that person is obligated to take on the role. Consider who you would like to appoint as an alternate executor if your first choice is unable or unwilling to act as your executor.

3.     Consider whether you will gift any specific assets or cash to a particular beneficiary or beneficiaries – for example, a cash gift of $1,000 to a close friend or your jewellery to a granddaughter. Please keep in mind that assets will change over the years.  

4     The residue of your estate is everything that is left after payment of debts, funeral expenses, executor’s fees, taxes, legal and other expenses incurred in the administration of your estate, and following any gifts of specific assets or cash, if any. Consider how you want the residue of your estate to be distributed. You should also consider whether you want your beneficiary or beneficiaries to reach a certain age before they receive their share of your estate. Are any beneficiaries disabled and receiving government benefits? If so, it is important to develop an estate plan that does not inadvertently disqualify the beneficiary from receiving those government benefits. 

 5     If your beneficiary or beneficiaries have died before you, what happens to their share? Will it go to that beneficiary’s children, if they have any children alive on the date of your death? Will it go to a different beneficiary? For example, you may wish to leave everything to your spouse if they survive you. If your spouse has died before you, you may state that his or her share will be evenly distributed among your children (if any). What happens if one or more of your children have died before you? Do you want that child’s share to pass to his or her children or do you want that child’s share to be divided among his or her siblings who are still alive at the time of your death?

6.      How would you like your estate distributed in the event of a family tragedy where all of your beneficiaries have died before you or at the same time as you? Will your estate go to your parents? To your siblings? To a charity? To a friend?

In British Columbia, the Wills, Estates and Succession Act (“WESA”) is the governing legislation about wills and estates. Under WESA, spouses (both legal and common law), as well as natural and adopted children, can apply to court to vary the Will of a deceased spouse or parent if the Will does not make adequate provision for his or her proper maintenance and support. The court may disregard the wishes of the deceased if the reasons for disinheritance are not rational or reasonable. The court may amend the distribution to one that it thinks is fair in the circumstances. 

Power of Attorney

A power of attorney grants someone else the right to act on your behalf with respect to your financial and legal affairs. It is important to appoint someone you trust because the power of attorney is basically like a permission slip for that person to manage your assets. Once you grant someone power of attorney, they become known as your “attorney.” The scope of the authority can be as broad or as specific as you like. You may allow your attorney to manage all aspects of your financial and legal affairs indefinitely, or you may wish to restrict it to specific tasks or dates. The right to act as your attorney may be effective immediately or only in the event you have lost mental capacity and are incapable of managing your own affairs. It is important to include language in the power of attorney that the authority continues despite your loss of mental capacity in order to make it an “enduring” power of attorney.

Consider who you would like to appoint as your attorney and who you would like to appoint as an alternate attorney if your first choice is unable or unwilling to act. Consider whether you would like your attorney’s authority restricted in any way and when you would like the attorney to be able to start acting on your behalf.

Representation Agreements

A representation agreement is a legal document appointing someone to assist you or act on your behalf for health care and personal care matters. This tool gives someone the right to give consent or refuse to give consent on your behalf, if you are unable to do so yourself, to minor or major health care (including decisions about medication, tests, surgery and end of life comfort care) and the right to make decisions about your personal care, such as living arrangements, diet, clothing, exercise, taking part in activities and personal safety issues. Enhanced representation agreements include end of life decisions and give your representative the authority to refuse life support under certain circumstances.

Having a representation agreement ensures that someone you trust will have legal authority to carry out your wishes if you are incapable of giving or refusing consent. By setting out your end of life decisions in the agreement, you may provide comfort and ease the emotional anguish of those who have to decide whether life support measures should be continued or withheld.

Consider who you would like to appoint as your representative and who you would like to appoint as your alternate representative if your original representative is unable or unwilling to act. Consider whether you want life support measures continued or withheld (i) in the event you are terminally ill with no chance of recovery; and (ii) in the event you are in a permanent vegetative state with no chance of recovery. Consider whether you would want medicine administered to you in your terminal state even if it hastens your death.

Krystin Kempton is a Partner at Nixon Wenger LLP where she has a general solicitor’s practice, advising corporate and individual clients on corporate and commercial transactions, lending and borrowing, wills and estates and real estate matters.

How does Occupiers Liability apply during the COVID-19 pandemic?

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In British Columbia, the Occupiers Liability Act, RSBC 1996 c 337, sets out the legal obligations that occupiers owe to people visiting their premises.  Occupiers can be individuals or businesses who are in physical control of the premises, or those who have responsibility for, and control over, the condition of the premises, the activities conducted on the premises, and who is allowed to enter the premises.  This can include business owners, landlords, tenants, and home owners. 
Occupiers owe a legal duty to ensure visitors are reasonably safe in using their premises.  This duty applies to the condition of the premises, activities on the premises, or conduct of others on the premises.  It is important to note that there are many factors to assess when determining where the responsibility falls in the event of injury or loss.  How far this duty extends will depend on the circumstances of each situation.
You may be wondering: how does this apply during a pandemic and the current context of COVID-19?
Generally, the liability of occupiers remains the same.  However, be aware that occupiers may be found liable for the spread of the virus at their premises.  If an occupier fails to take reasonable care to respond after a person known to have been infected with COVID-19 attended the premises, the occupier may well have breached its legal obligations under the Occupiers Liability Act. 
Reasonable response efforts to ensure the safety of visitors may include:
•    immediate sterilization of the premises;
•    closure of the premises during sterilization efforts; and
•    clear and timely warnings to visitors and employees.

It is important for occupiers not to ignore applicable privacy laws in these circumstances.  While appropriate information may need to be shared, specific names should not be released.

Occupiers should also consider having a formal COVID-19 plan in place that sets out response efforts in the event of virus exposure. 

We stress that all cases are fact specific.  The information above is intended to provide some guidance during these uncertain times.  You should obtain legal advice specific to your situation if you have had a potential exposure at your premises or if you have been exposed to the virus while attending premises.

Allison is an Associate in the Civil Litigation practice group at Nixon Wenger LLP.  She has a general civil and commercial litigation practice, with an emphasis on tort related disputes, contract disputes, personal injury litigation, employment matters, and maritime, shipping, and environmental law.  Allison has represented clients at all levels of court in British Columbia, and works with her clients to find solutions that work best for them within the litigation process.    

What is a Power of Attorney and Why Do I Need One?

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What Incapacity and Estate Planning Documents Do I Need?
We recommend you have a Power of Attorney, Representation Agreement, and Will.
What Is a Power of Attorney and Why Do I Need One?
A Power of Attorney is a legal document that you can use to appoint a trusted person(s) to make financial and legal decisions for you, in the event you are incapable of doing these things yourself while you are alive.  The person you appoint is called your “attorney”. You can give your attorney broad powers to step into your shoes as needed to deal with your finances and your real estate or your business and legal matters, OR you can place limits on the power that you give them. A Power of Attorney is a valuable part of your estate and incapacity planning.
Who Should I Choose as my Attorney?
You should appoint someone you trust because a Power of Attorney is a powerful document. Many people choose their spouse, a close family member or friend. A person does not have to agree to act as your attorney, so you should talk to them ahead of time and make sure they are up for taking on the job.
You can appoint more than one attorney, with different or the same authority. If you appoint more than one, they must act unanimously unless you state otherwise.
What Are the Duties of My Attorney?
The Power of Attorney Act of B.C. confirms that an attorney must act honestly and in good faith, must exercise the care and skill of a reasonably prudent person, keep proper records for inspection, keep your assets separate from your attorney’s assets, and always act in your best interests.
Does a Power of Attorney Allow my Attorney to Make Health Decisions For Me?
No. If you want to appoint a legal representative to make personal and health care decisions for you if you cannot make these decisions on your own, you will need to make a Representation Agreement.
Can I Cancel my Power of Attorney if I Change My Mind?
Yes. As long as you are mentally capable, you can revoke/cancel a Power of Attorney.

We at Nixon Wenger LLP specialize in estate and incapacity planning. Please contact us and we would be happy to help you prepare a Power of Attorney as part of your complete estate and incapacity plan.

Elise Allan is a Partner at Nixon Wenger LLP who works extensively with individuals, assisting them in such matters as the purchasing and selling of real estate, preparing Wills, Powers of Attorney and Representation Agreements as well as obtaining Grants of Probate.

Force majeure: Can Covid 19 release you from your contract obligations?

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Under general principals of contract law, a party has a defense against performing under a contract where that performance becomes impossible due to unforeseeable events outside of the parties’ control.  If disaster strikes, a non-performing party can resort to a claim of “force majeure”, sometimes called “acts of God”, to forgive them from living up to their responsibilities.

A pandemic can be one of those events. Some commonly listed force majeure events include natural disasters such as floods, earthquakes, or hurricanes; war; terrorist acts; government action such as expropriations or changes in laws; union activities such as strikes and slow-downs; shortages of necessary materials… and, if the contract provides for them, also epidemics and quarantines.  

General economic conditions are not force majeure events.  Governmental restrictions may qualify, if directly related to the force majeure event, and if they directly relate to the alleged breach of contract, but reduced demand and business are usually found to be more a fact of life than an act of God:

While relatively few cases have interpreted the impact of pandemic on force majeure clauses, previous cases do offer some guidance. Courts have found that generalized economic hardship or increase in expenses, without more, does not constitute a force majeure event. As a result, it will be difficult to avoid an obligation to purchase goods or services merely because customer demand has decreased. Also, even if an unforeseeable and extreme disaster occurs, a contract’s force majeure provision will still control with regard to the parties obligations and may override other common law defenses used to avoid performance. For this reason, it is imperative that companies read contracts closely, or consider engaging counsel, to determine what rights they have before acting (or not acting) on a contract. Finally, courts are split as to whether intervening governmental acts (such as changes of regulations, emergency declarations, etc.) will excuse performance under contract, but the contract itself will still likely control as to which party bears the risk of the nonperformance.

National Law Review: COVID-19: Force Majere Event? March 19, 2020

If a contract’s force majeure clause includes terms such as “epidemic” or “quarantine” or “pandemic”, then the clause can be invoked during the current Covid-19 crisis to avoid living up to contractual responsibilities that have been rendered impossible.  Even if a contract has a force majeure clause that does not include such terms, it may still be possible to defend against an action for breach relying on the force majeure clause, if the language of the clause is broad enough to encapsulate disasters such as pandemics.  

However, in any case where such a clause is invoked, in order for the defense to work, the party invoking it must also show that they took steps to mitigate the damage and that full performance was truly impossible – together with any other contractual obligations that might be necessary to adhere to when invoking the clause.

If there is no force majeure clause at all, or if there is no reasonable way to bring the COVID-19 pandemic within the terms of the force majeure claus, then there still will be defenses to breach or non-performance on the commonlaw bases of impossibility or frustration of purpose.

All of these defenses are pretty strict.  The general principle of contract law is that the parties to an agreement assume the risk of their own non-performance unless the contract itself says otherwise.  In order to claim impossibility or frustration, the defending party has to show that the event offends, in a way that was unforeseen to the contracting parties, a foundational assumption of the agreement.  For instance: if the subject matter of the contract turns out to be non-existent, then the contract will be impossible to perform.  However, it is not a basic assumption of the parties that market conditions or financial situations will remain favourable to the parties.  

In this case the event is a global pandemic.  The problem with pandemics (well, one of the many problems with pandemics) is that they only indirectly affect businesses.  A pandemic is not that kind of natural event that destroys infrastructure or physically prevents businesses from operating.  Instead, it is the social and governmental response to the pandemic that has the effect of interfering with business viability.  Laws that are changed to address it are laws of general application that only affect your ability to live up to your contracts.

At the end of the day: contracts are enforceable.  Rent is payable. If rent is not paid, that is a breach of contract.  Force majeure is a defense available to a claim for that breach.  As identified above, general economic effects do not constitute a force majeure event.  

Unless the contract specifically defines pandemic as a force-majeure escape hatch, it seems unlikely that it would be considered one.  

However, the global nature of the coronavirus crisis lends itself to other practical considerations.  Unless there are particular circumstances that are quite significantly different than those being faced by most businesses today, it may not be in anyone’s business interests to force strict compliance with contracts right now.  After all, if all contracts are strictly enforced, that may have uncomfortable effects on the very parties who insist on strict enforcement:

As the COVID-19 pandemic continues to develop, businesses should take proactive steps to ensure continuity of operations sufficient to meet existing contractual obligations and evaluate whether their counterparties are doing the same. If companies expect that COVID-19 may result in their own or their counterparties’ inability to satisfy contractual obligations, they should assess the viability of either force majeure or common law principles of nonperformance excusal. This assessment may also be rendered more complicated by the fact that many companies will be on both sides of this issue, as the performing party in some cases or the receiving party in others… Businesses may wish to avail themselves of a force majeure clause or the common law principles in connection with certain contracts, but resist such a claim by their counterparties to other contracts. Companies will therefore need to be mindful of the broader implications of asserting these provisions and principles.

P.Weiss: Force Majeure under the coronavirus Pandemic: March 16, 2020

COVID-19 related contract breaches will cut in all directions.  If you insist on strict compliance with others, they may insist on strict compliance with you.
Andrew Powell practices a wide range of civil litigation with a focus on business or commercial disputes, including breach of contract, lease and land use issues, corporate disputes including liquidations and shareholder issues, and realization and enforcement. Andrew also practices estate litigation, including wills variation claims.

Seller Beware!

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Written by: Krystin Kempton, Associate
A recent case in the British Columbia Supreme Court allowed a buyer to back out of a contract to buy a $6.5 million house in West Vancouver based on a standard contract clause dealing with permitted encumbrances. 
The contract stated that the land would be transferred “free and clear of all encumbrances” except for “restrictive covenants and rights of way in favour of utilities and public authorities.” Title to the property contained an old restrictive covenant that imposed restrictions on the use of the property and alterations to the property. The restrictive covenant was in favour of a developer. 
The seller was not able to obtain a release of the restrictive covenant and the buyer refused to close. The seller sued the buyer for the $300,000 deposit. The seller argued that the buyer was aware of the restrictive covenant and approved a title search of the property, and therefore should not be able to back out on that basis. 
The court ruled in favour of the buyer. The buyer was allowed to rely on a literal reading of the contract which did not include the restrictive covenant as a permitted encumbrance since it was not in favour of a utility or public authority. 
As a seller, it is important to carefully draft purchase and sale agreements to set out every encumbrance which will remain on title following closing. 

Deaths in the Home, Hauntings, or Possessed Properties: Do you have to tell?

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Written by: Andrew Powell, Partner
People often ask if there is any obligation on the part of the seller of a house to advise potential buyers that someone has died in the house; there may even be a sincerely-held belief that the house is haunted by a deceased person, or that the property is subject to a malevolent supernatural presence.  If so, do you have an obligation to disclose it?
Legally, probably not. 
Disclosure obligations relate to defects or qualities of a property that are fairly objective.  Patent defects require no disclosure, because they are obvious; latent defects are those that are not discoverable upon a reasonable investigation by the buyer.  If there are latent defects that directly relate to the intrinsic quality of the building or property which, objectively, materially affect the property’s use or value, then those must be disclosed.  Material defects are those that affect whether a property is dangerous or unfit for habitation. 
And therein lies the question.  There can be several qualities of a property which are not immediately apparent upon investigation, but which can nevertheless possibly affect the value of the property.   These qualities are called “stigma”.  
 Despite being subjective, stigma can be significant.  In order to lessen the stigmatic effect, for instance, the house in St. Catharines, Ontario, in which Paul Bernardo committed his assaults and murders had to be demolished by its owners.  A new home was constructed and was given a different street address, all in order to eradicate its association with Bernardo.
So stigma is real — but does the fact of a death, even a reported haunting, count as a latent defect, such that it must be disclosed?
The question has come under the consideration of the Courts a number of times, and the courts have usually held that stigma need not be disclosed.   In 1784773 Ontario Inc. v. K-W Labour Assn Inc, [2013] ONSC 5401, the Ontario Superior Court of Justice directly addressed the question:  if a property is haunted, does that fact need to be disclosed to a purchaser?  According to that court, it turns out the answer is “no”.  Having a ghost in the house is not a latent defect.
The case was appealed:  [2014] ONCA 288.  The Ontario Court of Appeal agreed with the Superior Court, adding: “there is no direct evidence of economic loss or damage as a result of the stigma of a haunted property, nor is there any direct evidence from anyone who observed any strange occurrences in the property.”  Hence, it may just be a question of having enough evidence.  If you can prove that the stigma, in that case a ghost, is actually causing or threatening harm, then you need to disclose it like any other latent defect.  If on the other hand it is friendly or harmless, you don’t.
 In the Real Estate Council of British Columbia’s Professional Standards manual, duties of disclosure are considered for “stigmatized” properties; these properties include (but are not limited to):
• Properties located in neighbourhoods where a sexual offender is reported to live;
• Properties formerly occupied by a member of a criminal organization or gang; and
• Properties that are reportedly haunted.

According to the manual, stigma do not affect the “appearance, function or use of the property”, but rather affect the psychological value of it based on the beliefs or background of the property owner.  Stigma are therefore not material latent defects.  However, the manual acknowledges that existence of certain stigma may still have serious impacts on the value of the property to certain buyers.  Therefore the manual advises that although there is no direct obligation to disclose stigma, the best practice for an agent is as follows:

— When asked by their client, a buyer’s agent must make the appropriate inquiries.
— When asked about the possible existence of stigmas that might affect the property the seller, or licensees representing the seller, may:
a) answer the question directly; or
b) decline to answer the question and advise the buyer to conduct their own investigation.

Sellers and their licensees who choose to answer such questions are expected to use reasonable skill and care to ensure the accuracy and completeness of the information provided to buyers.
It seems though that despite the lack of a specific legal obligation, a safer practice and one which would avoid risky lawsuits would be to err on the side of disclosure, especially if there is any concern that the particular buyer would be sensitive to the particular stigma associated with the property

First Time Home Buyer Checklist

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Written by: Tracy Knight, Associate

The process for purchasing property can be complicated, but do not panic. This post is for you as the purchaser to give you an overview of what you will need to do.  First, the disclaimer:  There are hundreds of parts to a real estate transaction.  This means there are hundreds of ways your purchase could go sideways or fall under one of many applicable rules and regulations.  So, use this checklist for reference, but do not forget to call us – usually the earlier the better – so we can keep the transaction on track.   
It is as easy as 1-2-3…  (sort of). 

  1. Contract.  This is a crucial document for your purchase.  If you are working with a realtor, they will help you with this contract.  If you have sketched out an offer and are planning to do this on your own, please call us.  It is imperative that this piece of paperwork be correct, as it is the road map for the whole transaction.  The devil is in the details.  Your contract should clearly set out who is doing what and who is getting what, when, where, and how.  Conditions are an important element of a real estate contract.  The contract is not a document that should be signed without a review.   

  1. Due Diligence.  This means checking into what you are buying to make sure (a) that you are purchasing what you mean to be purchasing; and (b) that you are able to fulfill your obligations (i.e. to pay the money) under the contract. If your contract is correctly prepared, it will allow for you to carry out a number of due diligence steps, including, for example:    

    Title Review. Check the title of the property to see what is registered and make sure there are no surprises.  There may be an easement granted to your neighbour allowing your neighbour to walk across a certain portion of your property at any time in order to access something on the other side. There could be a restrictive covenant that gives a laundry list of all the things not allowed on your property.  There may be bylaw infraction notices on title.  There may be builder’s liens (someone was not paid).  The potential issues are too extensive to list.  Call us for this step.  We can obtain a copy of the registrations on your title, let you know what is there (in plain English) and you can decide whether you are comfortable with restrictions on title or if it warrants getting out of the purchase. 

    Zoning/Bylaws. Check the zoning and bylaws that may apply to the property and your intended use of the property.  For example, if you are purchasing a home with a carriage house for short-term vacation rentals, check into the rules and regulations about the vacation rentals.  Kelowna is in the process of developing regulations.  Other cities and towns considering similar steps.   You should start by asking questions about the property at City Hall.  If you require further direction or questions arise, talk to your lawyer.

    Inspection. Get a home inspection.  The inspection report will alert you to visible deficiencies or areas of concern within the home.  Home inspections have limitations on what is disclosed and so it is important to speak candidly to the inspector about those limitations.  If you suspect structural defects in the home, for example, you will likely want to have a qualified industry professional give you their opinion.  Ask questions and obtain the information you need to ensure you know the state of the property you are purchasing.  

    Other Possibilities. Have special amenities, tanks, and appliances checked.  For example, if your home-to-be uses a well for water, have the water and water levels tested.   If the home uses a septic tank, make sure it is functioning and find out if it needs to be emptied.  You may also want to ask about heating, hydro, and other utility bills.  

Insurance. Make sure you can get insurance on the property. Call an insurance broker and make the inquiry.  Keep in mind that your mortgage lender will not approve the financing if there are issues with obtaining home insurance. 
Financing.  Be certain you will have the funds required to complete the purchase. This means you need your financing approved or you need the cash in hand.  

      a. See your mortgage person in advance, so that you understand how much time it takes and so that you know your budget.  Make sure you have a financing approval and commitment from a lender before removing the financing condition of your contract.

      b. Have the down payment in an accessible form so that it can, at the  right time, be transferred to your lawyer.  Your lawyer typically requires a bank draft.

      c. Understand the closing costs.  When you buy a home, there are a number of extra expenses that often are left out of the calculation and can result is shortfalls:

1. GST.  If you are buying new, there will be 5% added to the purchase price for GST.   There are other circumstances when GST is payable, so it is an expense to watch for and find out about.   It may seem nominal, but remember that a $500,000 new home would have GST payable in the amount of $25,000.00

2. Property Transfer Tax. If you do not qualify for an exemption, you will pay Property Transfer Tax, which we commonly refer to as PTT.  Very generally, PTT is 1% on the first $200,000, 2% on the portion of value between $200,000 and $2.0 million, and 3% on any amount higher than $2.0 million.  There are certain classes of exemptions or partial exemptions, including one for first time home buyers if you meet certain conditions.

3. Adjustments.  Your purchase price will take into account expenses that flow with the property.  An example of a common adjustment is property taxes (not to be confused with PTT) that are paid every year.  The property taxes are paid in July but they are for the whole year, from January to December.  So, if you move in after July, the seller will have paid the property taxes for the whole year even though you might own the home for almost half of that same year.  To address this unfairness, your lawyer will calculate an adjustment. Your portion of the property taxes (from possession date onward) will be added to the amount you have to pay the seller.  *Keep in mind that the reverse is also true – if you move in prior to July, you will have to pay the property taxes for the whole year but you will have received a credit from your purchase price for the amount the seller ought to have paid. Other adjustments may be a city utility account, strata fees, or rents if there are tenants in any portion of the property.
4. Legal Fees.  Talk to your lawyer or notary about the fees to complete the property purchase. 
All of the previously noted due diligence is contained within your (properly drafted) contract as “conditions” or “subjects”.  There is a deadline to either satisfy the conditions or waive them.  If you do nothing prior to the condition removal date, the contract simply dies.  If you are satisfied with the conditions, or not quite satisfied but going to “live with it”, then you have to remove the conditions in writing by the deadline, at which point you have a binding contract.  Sometimes, there is some negotiation or tweaking of the terms of the contract in order to satisfy the conditions.  This part of the contract is technical and you should consult with your realtor or a lawyer.  Use your real estate professionals to ensure your contract becomes binding after the due diligence is complete.    

  1. Pay the Purchase Price and Complete.  For the lawyer, this is the most complicated part of your transaction.  For the client, it is usually as simple as confirming home insurance, bringing in funds, and signing documents.  Your lawyer will work with your lender, your realtor and you in order to obtain the financing terms from your lender, calculate all of the closing costs, obtain strata documents, prepare land transfer documents, and prepare mortgage registration documents.  When acting for the purchaser, the purchaser’s lawyer also prepares the documents for the seller to sign with the seller’s lawyer.

    The legal documents to transfer the property into your name have to be signed with a lawyer or notary and so it is generally not a good time to leave the country.  To prepare for your signing meeting with the lawyer (likely to be a few days before closing):

         a. You will need two pieces of identification.  One must be government issued with a photo.  The other should be government issued or a credit card.

         b. You will need to have spoken to your lawyer’s office in advance so that you know the amount of money to bring in a bank draft (it is the amount after we calculate the down payment and adjustments needed to pay to the seller)

         c. Be prepared to spend 30 – 60 minutes with your lawyer for signing.  

Finally, we reach the closing day.  The legal steps on closing day are complex.  The purchaser receives the funds from a lender.  Lenders require their mortgage be registered on the property title and want the purchaser to pay the price when the land is transferred.  The seller, however, needs the payment to remove the seller’s mortgage from the land before transferring.   The exchange of funds, documents, registrations, and releases occurs hurriedly on the closing day in a particular way to address the standoff that would otherwise occur.  Usually by mid-afternoon on the closing day, your lawyer’s office or the realtor will call you to confirm that the purchase is complete.  Congratulations, you are a homeowner!

Airbnb & GST

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Written by Krystin Kempton, Associate.

Airbnb is a website connecting people searching for short term accommodation with homeowners wishing to rent their homes or spare rooms. An increasingly popular alternative to hotels, Airbnb may bode well for many of us living in here paradise, as vacationers come to town for ski vacations in the winter and cottage life in the summer. Short term rentals—that is, rentals for less than 30 consecutive days—can lead to some extra pocket cash. However, that extra pocket cash leads to taxes.

First of all, rental income is added to regular income and is taxed at the same rate. It is in the homeowner’s best interest to put aside reserves to avoid unwelcome surprises when income taxes are due. Homeowners also need to be aware of goods and services tax (“GST”) implications. If rental income exceeds $30,000 in one year, the homeowner must register with Canada Customs and Revenue Agency. As a GST registrant, the homeowner is obligated to charge and remit GST and file returns. The homeowner may recover GST paid on operating expenses and capital improvements by claiming input tax credits (“ITCs”), based on the extent to which the property is used for taxable rentals.
If a homeowner uses his or her property for short term rentals and wishes to sell the property, it is important to determine whether GST will apply to the purchase of the property. GST is payable if:

 – the seller has claimed ITCs for GST on the purchase of the property or improvements on the property;

– the property is used less than 50% of the time as the seller’s place of residence and all or substantially all (90% or more) of the rentals of the property are for periods of less than 60 days;

– the property is capital property (i.e., not designated as the owner’s primary residence and therefore subject to a capital gain or capital loss on disposition), and the property is used primarily in a rental-income business carried on by an individual or a personal trust with a reasonable expectation of profit and the owner is not a GST registrant; or

– the property is capital property and the property is used primarily in making taxable short-term rentals by an individual or a personal trust that is a GST registrant, even if that owner is not engaged in a business carried on with a reasonable expectation of profit.
If any of the above apply, the purchase contract for the property will need to specify whether GST is added to the purchase price or included in the purchase price to ensure the price has been negotiated properly by the buyer and seller and avoid lost revenue by the seller. If the purchaser is a GST registrant and intends to use the property for short term rentals, an ITC may be available to offset some or all of the GST payable on the property purchase. If the purchaser uses the property primarily (more than 50%) for personal use, that individual is not eligible to claim an ITC for GST paid or payable on the property purchase, even if there will be some taxable short term rentals of that property. Also, if the purchaser changes the use of the property to his or her personal use, the purchaser may be required to account for the GST.
Provided the homeowner is aware of tax obligations and implications of short term rentals on an eventual sale of the property, Airbnb offers a lucrative option for homeowners to offset mortgages and join the sharing economy.

Electronic Signatures: Are they legal? Are they safe?

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Written by Nixon Wenger Lawyer, Dan Poulin.


Not all contracts need to be written down or signed, an oral or spoken contract can generally be enforced by our court system, as long as there is enough evidence to convince the court that a contract actually existed. However, there are certain types of contracts which require that the parties sign the contract in order for it to be enforceable by our court system, such as Real Estate contracts. You may wonder whether a signature requirement means a person needs to put pen to paper, or if some kind of electronic signature would have the same effect. Further, you may wonder whether an electronic signature would be any more or less persuasive in court as proof that there actually was a contract.
First, electronic signatures have the same legal effect as handwritten signatures. Most provinces in Canada have passed legislation which clarifies that electronic signatures may be used, including the Electronic Transactions Act in British Columbia. This Act defines an electronic signature as “information in electronic form that a person has created or adopted in order to sign a record and that is in, attached to or associated with the record”. Therefore, an electronic signature does not need to look like a traditional signature, although sometimes images that have the appearance of a traditional signature are used.
The next question is whether an electronically signed document would be better or worse than a traditional signature if you needed to prove in court that a contract was signed. The answer is that neither electronic or traditional signatures are inherently better than the other, it depends on the circumstances in which the signature was made. For example, you may receive a contract document that appears to be signed by a person you expected to enter a contract with from a public fax service number. Alternatively, you may have the other party come to sign the contract document personally and also bring some other people to witness his signature. In the second scenario you would have much stronger proof that the other party entered the contract, as you would have the original document and people that could confirm the document was signed by the right person.

Similarly, some electronic signatures would be much better proof in court than others, as they can range from simply typing your name at the end of an email (which may not be very strong evidence, particularly if other people have access to your email) to verifiable digital signatures that can only be attached to electronic documents after the signor signs up for the digital signature service and passes verification procedures such as entering a password before signing. In fact, with the use of digital signature services like AuthentiSign or DocuSign some real estate agents and lawyers may not require a witness signature, as the digital signature service itself acts as a type of witness.
There is no need to be afraid of electronic signatures with respect to legality. However, just like regular signatures, you should ensure that if there would be significant consequences to a signature being challenged, there are safeguards in place that will provide you the evidence you need to enforce the legal document.

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