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British Columbia introduces Canada’s first registry of beneficial property ownership

Blog

On April 2, 2019, Finance Minister Carole James introduced two bills creating searchable public registries of private company ownership and beneficial land ownership. Every private company in British Columbia will be required to identify, in the public register, individuals with significant control over the shares of the company. The registry will include the name, date of birth, last known address and residency of any individual who controls, directly or indirectly, and/or is the registered or beneficial owner of:
(i) 25% or more of the issued shares of the company; or
(ii) issued shares of the company that carry 25% or more of the voting rights at general meetings,
as well as individuals who have direct or indirect control or direction over such shares.
The introduction of the Land Owner Transparency Act (the “Act”) will require every company, partnership or trust holding or acquiring an interest in land in British Columbia to file a disclosure statement identifying the individuals who own or control them. The names will be placed in a searchable, public registry of all land owners in British Columbia – the first registry of its kind in Canada. Failure to disclose beneficial ownership in the registry can result in fines of up to the greater of $100,000 or 15% of the assessed property value.
The new public registries will shine a light on who owns or controls companies who in turn own land. The intention is to crack down on crime, money laundering and tax evasion by eliminating the ability to hide ownership through trusts, shell corporations and numbered companies.
Krystin Kempton 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.

April 11, 2019
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What are we going to do with you?

Wills and Estates, Blog

It is unfortunately common for family disputes to arise over the question of how to deal with the remains of a deceased loved one.  These disputes can arise due to religious disagreements within a family, disagreements over the status of particular relationships, or by competing ideas of what the deceased would have wanted to be done.  Ultimately, the control over who gets to make the decisions is determined by statute and common law.
There is no requirement for people to provide instructions to their loved ones as to what ought to be done with their own remains.  Oddly, a person’s remains do not even form part of their estate.  It is sometimes open to question, though, as to whether instructions left behind by a deceased person are, or ought to be, binding on those left behind.  In other words, does the deceased person have the right to control what happens with their own remains?  At common law, the answer appears to be “no”.
The case of Lajhner v. Banoub, [2009] OJ No. 1327, involved the death of a Canadian-Serbian.  A dispute arose between the Greek Orthodox parents of the deceased, and his Bosnian-Muslim spouse whom he had married in an unofficial muslim ceremony a short time before his death.  The deceased had no will.  Both the parents and the spouse claimed the right to determine what to do with the remains.  The parents wanted the body cremated and the remains sent back to their native Serbia.  The spouse argued that the deceased’s Muslim beliefs demanded that the deceased not be cremated at all.  The Court determined that the real question was not whether the deceased’s rights and beliefs ought to be followed, but rather, who had the best claim to authority over the deceased as a potential administrator of his estate.  Since the “spouse” was not a legal spouse, and since their relationship (which was fraught with problems) appeared to have been over for some time prior to the deceased’s death, the Court decided that the deceased’s parents had a better claim for authority – irrespective of what the deceased’s own view of the matter might have been.  When considering the rights of the deceased to control the destiny of his remains, the court said this:

 “There is no legal right in a corpse.  Rather than rights, there are only obligations.  This is an obligation that the law places on the estate administrator… Even in circumstances where religious beliefs prohibit cremation, such religious law has no bearing on a hearing of this nature. “

In other words, the right to determine what to do with the remains is vested in the administrator of the estate.  The deceased’s own opinions on the matter were irrelevant.
In British Columbia, the authority to make decisions is codified in section 5 of our Cremation, Interment and Funeral Services Act, which provides that the right to control the disposition of remains devolves on these people, in descending order of priority:

1.       The executor or administrator of the estate;

2.       Spouse of the deceased;

3.       Adult children of the deceased (oldest first);

4.       Adult grandchildren of the deceased (oldest first);

5.       The deceased’s guardian;

6.       The deceased’s parents;

7.       Adult siblings of the deceased;

8.       Adult nephews or nieces;

9.       Adult next-of-kin;

10.   Government appointed trustees; and

11.   Any other adult person with a personal or kinship relationship with the deceased.

However, in British Columbia at least, the deceased does maintain some influence over the destiny of their own remains.  Despite that they do not have any specific right to control what happens to them, under section 6 of the same Act, the person who is in charge of the remains is bound to follow the wishes of the deceased, provided those wishes were set out in writing in a will or a funeral services contract, and provided that those instructions are otherwise lawful and would not be “unreasonable or impracticable or cause hardship”. 
In other words, your executor will have to listen to your wishes, but will not be bound to follow any elaborate and expensive instructions to turn your ashes into diamonds or shoot them into space.  And you have no right to demand that they do.

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.

March 27, 2019
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Recent ICBC Changes

Personal Injury, Blog

We have all been hearing in the news, and from politicians and representatives of ICBC, that the Corporation is in a financial mess. I have been a personal injury lawyer practicing at Nixon Wenger LLP for over 27 years, including for many AIM members. This is not the first time ICBC and the government have made such claims. The current rhetoric says ICBC is in financial ruin, that claims costs are killing the corporation bottom line etc. It always seems to be the injured people from motor vehicle accidents that get blamed for the financial issues that the corporation complains about. It is always the same story in the over 27 years I have practiced; its easy to blame the people that get hurt because insurance companies in Canada spend millions of dollars in ad/propaganda campaigns trying to convince us all that people that have motor vehicle accident claims really “aren’t hurt”.
The latest from ICBC represents the same theme. Blame the average person that gets hurt by the negligence of another driver. Even though we all pay for the insurance coverage to ensure that a person is properly compensated if we are negligent and cause injury and loss. It always seems to be the fault of injured people and the lawyers that the corporation is losing money and has to raise premiums. We don’t see ICBC taking responsibility for mismanagement of claims and inefficient business practices.
Starting April 1, 2019 ICBC will have an injury cap system in place, along with a host of changes to limit recovery by people injured in motor vehicle accidents. The government and ICBC justify the changes saying the focus will be on helping people get better by increasing no fault medical benefits. But what will be in place is a more bureaucratic system with more forms and limitations on coverage; more like a workers compensation system. These changes in effect reduce the third party liability coverage we pay for, but does ICBC tell us that it is going to lower the third party liability component of your insurance premiums (by far the largest portion of your insurance costs)? No, of course not. ICBC also isn’t telling us that only a tiny fraction of all claims on an annual basis will ever come close to using up the notional increase in health and medical benefits that they now offer up to try and smooth the effects of an injury cap system. And of course ICBC isn’t telling us that it helped create a big financial loss in 2018 to justify drastic change to a cap system by re-reserving claims (all behind closed doors) so that the risk side of the claims went up creating the prospect of greater financial loss. Smoke and mirrors.
We all need to understand that ICBC actually made a profit for many years when it had a local, adjuster driven claims management model. However this changed in part because respective governments, both NDP and Liberal, took the profits and spent that money to look better in the public’s eyes. In addition, ICBC has been downloaded many governmental type costs with respect to vehicle licencing etc, and in effect has become a secondary form of taxation for the citizens of British Columbia. Neither political party that ends up in power wants to discuss those types of issues because they both want the dollars to still flow from ICBC so that they can spend it on their own agendas. All the while the average person pays increasing insurance rates and gets blamed for the financial performance of the corporation.
The blame game continues as the Minister responsible for ICBC, David Eby, recently unilaterally made changes to the Supreme Court Rules and use of experts on the basis that injury claims in the courts and the costs associated with it had to be managed better so that it cost ICBC less money. There was no consideration for how ICBC created the extra costs by its hardnosed conduct with claimants, and there was no consideration of the impact on the system as a whole and the rights of injured people. There was little or no consultation with even the parties in the system, either lawyers or judges. Around the same time a representative of ICBC was telling the public that it wasn’t in financial ruin and that in essence the complaints of ICBC as a “dumpster fire” is just politics. So what is going on?
It’s what I alluded to at the outset of this article. The average citizen in British Columbia who unfortunately suffers an accident due to the fault of another person gets blamed for being injured and it being too costly for them to be fairly compensated. ICBC doesn’t ever complain about the hundreds of thousands of claims they have settled well below what is even remotely fair compensation based on the applicable law. ICBC never mentions the various times they have changed their claims management policies, like they have recently, to supposedly “get tough” which directly results in significant extra costs, and in many cases significant wasted costs. Ask any lawyer working in the Okanagan that does personal injury work and he/she will tell you of many examples where ICBC refused what was a reasonable offer on a claim and consistent with the law of the land, yet they were forced to go to trial and ended up getting more than was even asked for in the first place. ICBC never seems to take responsibility for those instances, and of course never mentions them to the public or to the politicians that do their bidding to change rules and change legislation to make it easier for them to deny or limit claims.
Now with the above said, I have worked for many years with good people inside of ICBC (for example, many claims adjusters) that know what they’re doing, are good at their jobs and they do their best to treat claimants fairly. When we had local claims centres, with local adjusters who looked you in the eye and understood how you were injured and how it impacted your life, I believe claimants were treated more fairly. It doesn’t mean that they just handed over a bunch of money to every claimant, but it was a lot fairer. For the last many years ICBC changed to a centralized authority system and the local claim centres and local adjusters were no longer trusted to do the job they were hired to do. This more than anything is what has caused the Corporation to incur substantially greater claims costs. On top of that the experienced claim adjusters working for ICBC have been leaving en masse.
I saw a recent survey, from both sides of the political spectrum, which noted that over 80% of British Columbians want ICBC sold off and auto insurance privatized. Some say that is the only way the system can really be fixed because people are tired of all the politics being played with ICBC as a Crown Corporation and average citizens being blamed for its financial woes. Having competition in auto insurance seems to make sense to a lot of people and it certainly could mean better, more efficient claims management and more choice for British Columbians in terms of auto insurance. The only way we can make this happen is by telling our MLA’s and the politicians around us, whoever is prepared to listen, that we want ICBC privatized and that we won’t put up with this anymore.
Finally, we have to call the politicians and the insurance companies like ICBC out on their blaming the people that get hurt. We all need to ask ourselves, why do we even buy insurance in the first place and why should we keep paying these high rates just to get told that the benefits of it keep getting narrowed and limited so that a Crown Corporation can supposedly save itself from losing money due to its own practices. It’s a political shell game and we need to say enough’s enough.

Michael Yawney, Q.C. is a senior litigation partner at Nixon Wenger LLP, the North Okanagan’s largest law firm. He has been a member of the Association for Injured Motorcyclists (AIM) for many years, on the Board of Governors for the Trial Lawyers Association of British Columbia, is a member of the Canadian Bar Association and has represented many personal injury clients. The opinions expressed herein are the opinions of the writer and are based solely on his views and experience over the many years he has practiced personal injury law in British Columbia.

March 7, 2019
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Small Business Week 2018: Director Liabilities

Blog

Written by Krystin Kempton, Associate 
Directors have to comply with fiduciary duties and fulfill the duty of care. Fiduciary duties require directors to act in good faith and in the best interests of the company, to avoid conflicts and potential conflicts of duty and interest, and to not take advantage of company opportunities. The duty of care requires a director to exercise the care, diligence and skill of a reasonably prudent person. A director can be held personally liable for losses suffered by the company if these duties are not followed. 
Directors are also held to statutory liabilities, including:

• the failure to deduct, withhold and remit money to the federal government;
• unpaid wages of employees under the Employment Standards Act – a director may be
   personally liable for up to 2 months’ unpaid wages for each employee if he or she was a
   director at the time the wages were earned or should have been paid;
• pollution offences;
• failure to maintain a safe work environment;
• misleading consumers; and
• insider trading.

To avoid liability, directors need to show that they exercised the appropriate standard of care and skill to prevent that failure. It is important to carry out director duties diligently. Good practices include, but are not limited to the following:

  •    • Be informed about your company. Keep up to date with the company’s affairs,
         constating documents policies and risks. 
  •    • Be prepared for and attend all board meetings. If you have special knowledge or
         expertise, apply those skills when making decisions. Read all reports and minutes.
         Have shareholders ratify director decisions. 
  •    • Do not vote in favour of any transaction without understanding it. If you disagree with
         a decision, register your dissent. If you don’t have your dissent registered, you’re
  •      deemed to have consented to a corporate activity. Don’t turn a wilfully blind eye to
         offensive action.
  •    • Establish good policies to mitigate risk and delegate duties. Ensure these policies are followed.
  •    • Be informed about revenues and expenditures. Follow the money!
  •    • Avoid putting the company at financial risk. 
  •    • Be aware of your duties:
    •        – Act in the best interests of the organization, not your own.
    •        – Disclose all conflicts of interest.
    •        – Do not use company property for personal benefit.
    •        – Be aware of and familiar with legislation setting out duties and liabilities of directors.
       

   • Appoint good officers and ensure the company has effective staff under the direction
      of the officers. Maintain open channels of communication between the board and the 
      organization’s officers.  

October 19, 2018
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Small Business Week 2018: Director Duties

Business Law, Blog

Written by Krystin Kempton, Associate
Directors are elected by shareholders of a company to manage or supervise the management of the affairs of the company. Directors set the company’s overall direction and goals and directors appoint officers to carry out those goals. Directors of Canadian companies are required to fulfill certain duties, which can be broken down into two types: 
1. fiduciary duties, which are duties that result from being in a trust position; and
2. the duty of care, which is the expectation that a director will perform his or her duties in accordance with a certain standard.
Directors have duties imposed on them regardless of whether that person is a director of a company or a not-for-profit organization – there is no immunity for volunteers. 

Fiduciary Duties
A director is a fiduciary of their company. Fiduciary duties exist to provide protection to shareholders. There is a duty to act in good faith and in the best interests of the company, a duty to avoid conflicts and potential conflicts of duty and interest and a duty to not take advantage of company opportunities. A director is not permitted to act in his or her own self-interest or those of other people – the interests of
the company must be put first. A conflict of interest exists when there is the potential to favour personal interests, or those of other people, over the interests of the company.
Examples of conflicts of interest include:

  •     • any contract between a director and the company which could result in profit for that director,
          or which furthers the interests of that director’s relatives or friends;
  •     • accepting a gift as a token of friendship from an employee of the company before a vote about 
          that employee takes place;
  •     • disclosing confidential information about the company for personal use;
  •     • and taking part in a decision to terminate an employee of a company who has had personal issues 
          with that director’s child or spouse.
So what happens if there’s a conflict?

  •    • disclose the interest to the other directors;
  •    • leave the meeting when the matter is discussed and voted on;
  •    • don’t do anything that might influence the discussion or vote; and
  •    • ensure the conflict has been recorded in the meeting minutes.

    The other directors may approve a transaction that involves a conflict for a director, but the interested director must abstain from voting.

Duty of Care
The duty of care requires a director to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Directors with special knowledge and experience are expected to apply those skills when making decisions.
In practice, a director fulfills this duty of care by making informed decisions. Directors should always spend the time necessary to make reasonable decisions. This includes attending board meetings, learning about the issue, seeking input from the company’s officers, asking necessary questions and assessing the implications of a decision before voting.
October 16, 2018
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Seller Beware!

Real Estate, Blog

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. 

September 28, 2018
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Deaths in the Home, Hauntings, or Possessed Properties: Do you have to tell?

Real Estate, Litigation, Blog

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

September 21, 2018
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First Time Home Buyer Checklist

Real Estate, Blog

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!

June 20, 2018
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Dying Without a Will

Wills and Estates, Blog


Written by: Krystin Kempton, Associate
Most people think they have plenty of opportunities to write a will at some point in the future, but what if you don’t get the chance? 
If you die without a will, it’s called dying “intestate”. Without a will, someone (usually a close family member) will have to apply to the court to be appointed administrator of the estate if probate is needed to release and distribute your assets. If you have minor children and the other parent is not alive, the court will also have to appoint a guardian. 
Assets are distributed according to an established formula under the Wills, Estates and Succession Act.

If you die leaving:

  1. a spouse and no children, your entire estate passes to your spouse;
  2. a spouse and children, where your children are also the children of your spouse:

    a. your spouse receives

    i. the first $300,000;
    ii. ½ of the residue of your estate;
    iii. household furnishings; and
    iv. the right to acquire the spousal home (if it was not held jointly at the time of your death) to satisfy his or her spouse’s interest in the estate (i.e., $300,000 + ½ of the residue of the estate). If the value of the home exceeds your spouse’s share of the estate, your spouse may purchase the balance of the interest in the spousal home from the estate; and

    b. your children receive ½ of the residue of your estate, in equal shares;

  3. a spouse and children, where your children are not the children of your spouse, the distribution is the same as 2(a) above except your spouse will only receive the first $150,000, plus the balance of the items under 2(a)(ii) through (iv);
  4. no spouse, but children and/or descendants, the estate passes equally among your children. If a child has died before you, their share passes equally to their children, if any;
  5. no spouse and no children, the estate passes equally to your parents or your surviving parent; or
  6. no spouse, no children and no parents, the estate passes equally among your parents’ descendants (i.e., their children, grandchildren and great-grandchildren). 

There are further formulas to deal with situations where the individual dies leaving no surviving spouse, children, parents or descendants of parents.
There are some obvious problems with dying intestate:
• Maybe you want your entire estate to pass to your spouse. A “spouse” includes a person married to the deceased and a person who lived common-law with the deceased for at least 2 years. If the value of the spousal home exceeds your spouse’s preferential share of your estate and your spouse can’t afford to pay the difference in value to your children, your spouse may lose the family home.
• Maybe you don’t want that much of your estate to pass to your spouse. Is it a relatively new relationship? Do you your children to receive a larger share?
• If you die leaving minor children and no living parent, the court will need to appoint a guardian without your input.
• A child’s share will be held in trust until they reach the age of 19. The child’s parent or guardian will have to apply to the Public Guardian and Trustee for any money needed for the child’s care, maintenance or benefit, such as living expenses or tuition.
• You lose the ability to set a later age for a child to receive a share of your estate, like 21 or 25 when the child may be more financially responsible or mature.
• Death is stressful enough on a family. Hunting for a will that does not exist adds undue stress.
• An intestate distribution is often more time consuming and costly.
• A court-appointed administrator may sell off items that you otherwise would have kept in the family.
You don’t know when you’re going to die. Every adult who owns assets or has a spouse or young children should have a will. Planning ahead can save your loved ones a great deal of time, stress and money.
See https://www.nixonwenger.com/blog/article/preparing-for-your-estate-planning-meeting.html for more information on estate planning. 

May 7, 2018
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Things to Consider When Incorporating Your Business: Part II

Blog

Written by: Krystin Kempton, Associate

So you’ve named your company. Now what?
Determining your share structure and shareholders is a key consideration. The ownership of a company is dividedinto shares. Shares can then be divided into classes, which can be used to give shareholders varying rights. Therights and restrictions of a share class include or exclude the right to vote, the right to receive dividends if declaredby the directors, and the right to receive the remaining property of the company after it is dissolved. A company can be incorporated with one class of shares, or multiple classes of shares with different rights and restrictionsapplying to each class, or multiple classes of shares with identical rights and restrictions, or a combination thereof.
All shareholders within one class of shares must be treated equally when dividends are paid out. So if there aretwo class A shareholders – for example, Bob with 25 shares and Mary with 75 shares – and the company declaresan aggregate $100 dividend on the class A shares, Bob will receive $25 and Mary will receive $75. However, if Bobis the only class A shareholder (with his 25 class A shares), and Mary has 75 class B shares, then if the companydeclares a $100 dividend on the class A shares, the $100 is received exclusively by Bob. Having multiple classes ofshares in a company with identical or similar rights and restrictions therefore gives directors the ability to paydividends to some shareholders but not to others as directors “sprinkle” dividends differently across the classes. Itis always important to obtain tax advice from an accountant with respect to determining share structure andpaying out dividends – particularly in light of recent tax changes.
A company has to have at least one shareholder. A shareholder can be a person, a trust, a mutual fund or acorporation. Rights of shareholders include the right to vote at shareholders’ meetings (provided they hold votingshares), the right to receive a share of the profits of the company, the right to examine and copy corporaterecords, financial statements and directors’ reports and the ability approve major or fundamental changes of thecompany. The larger the number of voting shares a shareholder holds, the bigger the impact the shareholder canhave on the company’s major decisions. If you wish to retain control over your company, consider limiting othershareholders (if any) to non-voting shareholders.
Voting shareholders elect the board of directors. Directors are in charge of the overall management of thecompany and must act in the best interests of the company. A company must have at least one director. Officers(i.e., President, Secretary, Treasurer) are appointed by directors and manage the company’s day-to- day operations.Under the Business Corporations Act (British Columbia), officers are optional.
Entering contracts and endorsing cheques on behalf of the company requires the signature of a duly authorizedcompany representative. Consider who should have signing authority for the company – i.e., any director, alldirectors, a specific officer?
Once incorporated, a company is obligated to maintain proper records and meet ongoing reporting obligations byfiling an annual report with supporting resolutions kept in the company’s record book. The British ColumbiaCorporate Registry may dissolve a company if the company fails to file its annual report for two consecutive years.All companies also must file a corporation income tax return every year even if there is no tax payable.
We recommend seeking legal advice to discuss setting up the company’s articles, ensure the incorporation iscompleted properly, understand continuous disclosure requirements in British Columbia and to discuss a potentialshareholders’ agreement to set out the relationship among shareholders if the company has more than oneshareholder, particularly as investors are brought into the company.

January 2, 2018
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