en-us Q. We purchased our home in 2007 and at the time, my partner was not working and had limited resources to contribute to the downpayment or the ongoing household expenses.

We were counselled by our real estate lawyer that we might want to consider a co-habitation agreement.

We seriously considered this document but felt the added costs were prohibitive considering we were already stretching our budget to make the down payment and to cover closing costs. 

Now, five years later, we are re-financing our mortgage and the issue has come up again.

Luckily, our finances have changed and my partner is on much more stable footing and is contributing on an equal basis.

What do you think we should do on a going-forward basis?

A. As one might say, ‘you dodged that bullet.’

The use of co-habitation agreements is most applicable and important when there is a difference between the contribution of the parties that purchase a property together. 

This is even more significant when you are common law partners because there are less stringent property division rules (although this is a moving case by case target). 

I think the approach you should take at this time is to attempt to document the historical contributions and both parties acknowledge that if the relationship were to break down in the future that there would be some form of equalization based upon the numbers.

In terms of co-habitation agreements, and in more general terms relationships; although we don’t want to over-analyze, over-document and suck the life out of exciting and often romantic events, one should always keep and eye on the ‘what if’s’ because your story could easily be one of conflict rather than congratulations.

Jeffrey Cowan is the principal of Cowan Law and can be reached by email at jeff@cowanlaw.ca.

]]> http://www.metronews.ca/toronto/comment/article/1092637 Wed, 08 Feb 2012 20:16:36 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1092637 I rented a town house in Mississauga in June of 2010 and in August of the same summer during a rain storm, water seeped into basement through the drywall.

I reported the incident and the management fixed the problem. 

However, once again a year later, the same seepage happened and then re-occurred in September. 

The management agreed to fix the matter but nothing has happened. I wrote to the property manager but there is no fix in sight and a significant portion of the space that I rent and pay for is unusable. 

Can I reduce my rent by the amount of space I am not able to use until there is a fix?

Funnily enough, although this may seem a question that a real estate lawyer should be able to answer, there is a specialization in law that deals directly with landlord and tenant law. 

In Ontario, there is the Landlord and Tenant Board (ltb.gov.on.ca) which deals with all of these matters.

Although your natural tendency is to simply reduce your rent by the estimated amount of rental space you can’t use, I would consult this user-friendly agency to get the answers on how to address this issue. 

I would hate for you to be found in default of your rent because you hadn’t paid the full rent and were now subject to eviction proceedings.

Tread carefully.

Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1080773 Wed, 25 Jan 2012 21:20:18 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1080773 Q: We purchased our first home three months ago and there was an expensive water filtration system installed in the home that was not included in the Agreement of Purchase and Sale. 

We had a lengthy time before we closed for the vendors to remove the system but on the closing date, it was still there. We contacted the vendors repeatedly and they put us off as to when they were going to come and take the system. 

Finally, they sent a workman who indicated that they would have to rip the kitchen counter apart to retrieve the kitchen portion of the system. 

We absolutely stopped the process and contacted the vendors who then slipped in to inappropriate language about who we were and nasty words ensued. What should we do?

A: Call your lawyer. There is some precedent that if a fixture is left on the property after closing, it becomes the new owner’s property.  That being said, you may not want to enter into a nasty legal battle for a filtration system that you never contracted for and want to get rid of it from the property. At the very least, the vendors could possibly retrieve their system but not without putting the kitchen back into the shape it was in before the system was removed.

At the very least, you should shield yourself from the negative communication by ‘filtering’ the communication through their lawyer and yours.

Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1074912 Wed, 18 Jan 2012 20:58:56 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1074912 Q: I recently bought a three-bedroom townhome that is approximately 14-years-old.

I instantly ran into two issues as the sellers had made very minimal upgrades to the home.

As a result, the carpet was in extremely poor condition. Also, the stairs throughout the house were soiled terribly.

Upon removing the carpet on the stairs, the contractors pointed out that four of the 20-plus stairs were built out of scrap so they weren’t any particular kind of wood (i.e. pine).

The management asked that I liaise with the builder directly.

The builder, who coincidently won a prize for the architecture, refused any responsibility and said that not only is the warranty period over for this establishment but it would be my responsibility to touch base with the City inspector who inspected this property 14 years ago.

They also mentioned how they couldn’t take responsibility based on the fact that I may have altered the stairs myself.

It actually surprises me as the builder is a big organization and still had this response.

Could you advise whether I can do anything about this or must I go on my merry way like the builder has suggested?

A: The issue of the stairs is extremely problematic. 

Your recourse to the builder is basically extinct unless you could link it back through the present vendor. 

However, the seller to you may have had no knowledge of the subgrade stair construction and if they did, good luck proving it. 

The City inspector would probably have no notes for a home of that age. 

Even if you had a home inspector prior to your purchase, they may not have uncovered the defect in the stairs, which I take was under carpet.

You could pursue all the parties involved from 14 years ago until the present day but the reality is that you probably would spend more on that battle than it will cost you to fix the faulty stairs and move onward and upward.

Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1050853 Wed, 14 Dec 2011 22:02:57 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1050853 Q: We are purchasing our first home from a vendor and on the morning of closing, our real estate agent is informed by the seller that when they removed items packed into the back of a bedroom closet, there was some mould on the back wall, which was not apparent when we did our home inspection. I am nine months pregnant and worried about the health issues of mould.  What would you suggest we do?

A: This could potentially be a very serious problem for you as an expectant mother as well as for the property as a whole. 

The house and any problems that may develop are at the risk of the vendor up until the new deed is registered and you pay them the monies for the property. 

The vendor has now exposed a potential problem and it needs to be addressed immediately.

Hopefully, you still have a visit left so you can obtain access to the property prior to the closing to see how far spread this problem is. 

Unfortunately, you will not be able to determine if the mould has spread throughout the structure without the house being inspected by a professional mould inspector.

Your lawyer needs to draft a covenant for signature by the vendor clearly addressing this issue and having the vendor take responsibility for investigating the problem and any costs involved in remedying the mould issue.  You may want to consider requesting a holdback from the proceeds because mould problems can be quite costly.

Fingers crossed that the problem isn’t widespread.  In the meantime, I would avoid any contact by yourself in the exposed area because mould and babies are not a good combination.

Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1044804 Wed, 07 Dec 2011 21:07:01 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1044804 Q: After five years of marriage, my husband and I are parting ways.  We have more or less decided that I would stay in the house with our trusty dog and that I would buy him out of his portion. What do I need to do?

A: The first step you will need to address is setting out your terms of separation in what is known as a separation agreement. 

Most couples have this spelled out by their family law lawyers, however, it has been known in amicable situations that the parties come to terms on their own. 

Regardless of how it is done, it is a good idea to put this in writing.

You will then need to approach your financial institution in order to apply for mortgage financing on your own. 

Hopefully, you are given the ability to re-finance the property with funds left over so that you can pay your ex-husband (or soon to be) the equity that is due to him out of the new mortgage funds.

If the separation is not entirely adversarial, one real estate lawyer can be hired to deal with the transaction. 

Otherwise, if the two of you want to kill each other, you may need two lawyers to act on each of your behalves.

This is a stressful and time-consuming process and you should engage a real estate lawyer who is familiar with separation agreements, dealing with parties who are often going through a very emotional time in their lives with a degree of compassion and understanding.

Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1038671 Wed, 30 Nov 2011 22:17:08 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1038671 Q: I have purchased a home in a rural area and am moving from the city for a quieter life.  I have retained a lawyer in town to assist me with the sale of my city home and the purchase of my country house. Everything has gone very smoothly however, on closing, the keys for my new property were supposed to be left with the realtor out of town.  My real estate agent who found me the new property is not being very co-operative and I have a moving van full of furniture waiting to be unloaded.  What should I do?

A: The question of keys is a somewhat complicated one when it comes to real estate transactions. 

Usually, the keys are given to your lawyer so that when the transaction is complete, they can provide them to the purchaser. 

However, in cases where people are moving long distances alternate arrangements are often made. 

In this instance, the realtor was holding the keys because he or she was local and it made the most sense to pick those keys up from them.

If your agent is being unco-operative, perhaps you can get your lawyer involved in order to insist that they provide keys in a timely manner.  After all, you have paid for the home, your agent has earned a commission on their efforts and the issue of providing a key should be the least of your worries.

Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1032896 Wed, 23 Nov 2011 21:24:42 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1032896 Q: I sold a property almost a year ago and my lawyer insisted that she hold back $3,000 because the property taxes had not been assessed and the purchaser’s lawyer was trying to make sure there was adequate money available to pay the tax for the time that I owned the property. 

I have contacted my lawyer recently to see what the status of this is and her assistant has indicated that the money is still being held in trust pending the tax bill.  

This is ridiculous after a year.  What should I do?

A: Your situation is quite familiar and happens fairly often to property that is being re-assessed. 

Unfortunately, municipalities are working against the clock to get their tax systems and assessments up-to-date but there is a time lag (sometimes up to two years). 

Your lawyer would have given what is known as an ‘undertaking’ to the purchaser’s law firm and purchaser to hold back the $3,000.00 pending the assessment of the property. 

She cannot release that money until such time as the municipality has the time to value your former property and determine what the outstanding taxes are.

Until such time, that money is tied up and cannot be released by your lawyer. 

I realize it is frustrating but the funds are earmarked for unpaid taxes which the municipalities take very seriously.

Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1026690 Wed, 16 Nov 2011 20:34:06 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1026690 I recently applied to the City to put a back deck on my two-year-old home. 

The municipality indicated to me that the builder had not obtained a final inspection for the property and there was a minor change that they noted on their file that needed to be addressed. 

I thought when I bought the property that all of this type of paperwork would be closed off. 

I have gone back to my lawyer and she said that it is unusual for there to be an outstanding permit, but it is probably only some red tape. 

Regardless, I assumed when I bought the house that everything was complete.  What would you suggest I do now?

The answer to your question is not so straightforward. 

Generally, when a builder transfers a property to one of its customers, the permits are closed off and the house is ready for occupancy. 

Quite a number of municipalities no longer actually issue occupancy permits. 

Regardless, the builder guaranteed that the house was ready for occupancy.

Your first line of engagement should be with the builder (if the company still exists).

Your lawyer relied on this implicit guarantee. 

In the not-so-recent past, your lawyer would have done a building permit search and would have uncovered the fact that there was an outstanding permit. 

This system of due diligence has been replaced by the purchase of title insurance policies that cover off deficiencies. 

If the problem is something that is not minor in nature, you may have to apply for assistance from title insurance. 

However, your lawyer should be involved in this process. 

You may also question if this is an issue for Tarion which is the government sponsored warranty program.

On first glance, I think you should find out what the outstanding issue is so you can best approach it with the appropriate resources at hand.

Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1020510 Wed, 09 Nov 2011 21:29:03 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1020510 Q. We purchased a 50-year-old house in the summer. There was a very heavy rain in August and we found that the roof above the family room leaked. Upon closer examination of the ceiling, we saw the drywall had been patched and painted over to match. The underpad for the carpeting was also stained in the spot where the leak was happening. We have now had a roofing company in and since the roof is flat, they are quoting several thousand dollars to repair it. It seems like the former owners knew about this problem but did not reveal it before closing. What are our options?

A: This is an all too common problem that I have written about before but it is worth repeating myself.  The issue you are facing is what is called a latent defect: a problem that is not readily apparent upon inspection but ‘rears its ugly head’ when something like a heavy rain occurs. 

The whole core of the matter is can you prove that the vendors knew about the existing problem and did they not reveal it? Certainly, the sellers must have been aware of the leaking problem because the signs are there for all to see.

However, the problem with this scenario is that the vendors may have addressed the issue and felt that it had been solved (as a matter of fact, I am sure this is what you would hear from them if you made an inquiry). The whole matter of responsibility then revolves around being able to prove this was an existing and ongoing problem that had not been properly fixed and furthermore was covered up by the vendors.  This could cost as much as your roof repairs to fight about in court.

Unfortunately, you have purchased a problem that has no easy solution. The forced solution from the vendor may be more costly to pursue than the expensive roofers invoice. I suggest you consult with your lawyer before you commence any repairs or lawsuits.
 
Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1013977 Wed, 02 Nov 2011 20:00:50 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1013977 Q: I have been attempting to sell my house privately and had an offer on the property that was conditional on the purchaser obtaining financing. 

She had seven days to waive (agree to) the condition in writing or the deal was dead. 

By the seventh day, I had not heard from her so I assumed the transaction was finished and I went about finding another buyer. 

Little did I know that the initial buyer had tried to contact me with the written waiver and when she found out I was entertaining another buyer, she hired a lawyer to write me a letter stating that we had a ‘deal’ and I had better ‘govern myself accordingly’. 

I am a little unsure of how to proceed and wonder if you could give some advice?

A: The first thing you should do is contact a lawyer to explain the situation to them. On first glance, it seems as though you were correct in assuming that the transaction was at an end as the buyer missed the written notice period for a waiver. 

However, this can be a very complex situation and you should not be forging ahead without some solid advice from either a lawyer, or a realtor.

I realize that an ever increasing number of vendors approach the sale of their home without the assistance of a realtor. 

Many of them regret this initial tactic because what they are lacking is the front line experience and advocacy that a realtor can put forward on your behalf in the case of something going wrong. 

Certainly, supported by a real estate agent, you would have understood upfront that the deal was good to go or dead.

Up against a lawyer’s demand letter, you have no choice but to engage another lawyer on your behalf.

They can give you guidance, which will hopefully lead to a happy outcome but this could have been avoided entirely. 
 
Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1007856 Thu, 27 Oct 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1007856 Q: I am unmarried and own two houses that I have willed to my two sisters individually.  What are the taxes that should be considered if I pass away and the houses go to my sisters?

A: Although I don’t profess to be an expert on taxes (you should consult an accountant for a definitive answer), you will need to consider the following taxes:

1. On the death of an individual who owns a property that is not their principal residence (only one of your houses can be a principal residence), there is a deemed disposition of the property and capital gains taxes are due on the increase in value from the date of purchase to the date of disposition.  
This is only applicable to the one house and should be included when the estate accountant files taxes for the deceased.

2. If a property is left to an individual in a will, then once it is transferred to the estate it can subsequently be transferred to the beneficiary without land transfer tax because it is exempt for the purposes of administering an estate.

3. The third tax that must be considered is estate administration tax (also known as probate fees). 

The estate must be valued which will consider the value of both properties and a tax will be due and payable before anything can be transferred. 

This amounts to approximately 1.5 per cent of the value of the estate (houses, bank accounts, investments, etc,…). 

This is one of those taxes that must be paid up front.

Just remember, two things you can’t avoid: death and taxes. 
 
Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/1001774 Thu, 20 Oct 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/1001774 Q. My mother is 87 years old and owns a house valued at $450,000 to $500,000.

My brother is currently living with her in order to help her out with day-to-day living. There are five siblings in total.

My mother’s will specifies that her assets are to be divided equally amongst her children. 

We had considered transferring ownership to our brother but are worried about estate taxes and the ownership of the house after our mother passes away.  Can you give us some guidance?

A: One of the most common methods of estate planning is to place one of the children of an elderly parent on joint ownership of the home. 

In this case, your brother presumably does not own another residence and therefore there are no capital gains issues as he can declare it his principal residence. 

As a joint owner, the property will automatically change ownership to that of your brother upon the death of your mother and will not become an estate asset.  This should save approximately $7,000 in estate administration taxes.

The only real issue is your brother’s honesty and how he approaches his ownership after your mother’s death. 

If he has no issue selling up and splitting the proceeds then it may be a possible estate planning strategy. 

However, if this potential situation may lead to family problems and strife, you may want to consider this transfer to your brother very carefully.

There is nothing worse than a family torn apart by a battle over a late parent’s estate.
 
Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/995418 Thu, 13 Oct 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/995418 Q. We are a family of three (me, my wife and our 11-month-old baby). 

As we are first time home buyers we spent three months looking for the perfect condo to match our current and next five-year budgetary needs.

With the ongoing increases in rent and hydro we decided to purchase a condo, as the mortgage will be far less than paying rent/parking/laundry and hydro. 

Our main criterion were a safe neighbourhood and the condo fees to be all inclusive utilities and hydro.

We were successful in our search, but in mid-July, we received a post-purchase shock as the property management posted a notice that they will start installing sub-meters by the month of August 2011 to charge each unit owner for their consumption of hydro. 

I contacted the management company and they provided me a copy of the document — dated April 26, 2011 — circulated to all owners.

The seller did not inform us nor our realtor and nothing was presented to my lawyer from the property management.

A. I do not know the timing of your purchase but I assume it occurred after April 26, 2011. 

The problem here is that the status certificate that is reviewed by your lawyer and would reveal such a change may have been silent with respect to this new development. 

The Board of Directors would have decided this; presumably after you had made your purchase decision.

Regardless, the decision was made for the cost of hydro to be passed directly on to the individual owners.

This is a very frequent change for older condos as many condominium corporations do not want to bear the costs of increasing utilities. 

The reality is that you would have paid for the increase in utilities any way because the cost would be transferred to the operating budget of the condo and probably would result in an increase in your condo fees.

At the end of the day, you would end up paying more for your utilities — either way. 

Lo and behold, the cost of home ownership.
 
Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/982852 Thu, 29 Sep 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/982852 Q: I am getting older and thinking of my kids and their inheritance. My house is my most valuable asset and it was mentioned to me by a friend that to avoid estate taxes on the value of my home when I pass away, I can transfer the ownership to my children and myself. Is this a good suggestion?

A: There is no problem doing the actual transfer to one or more of your children and yourself, which when held jointly, allows for a ‘right of survivorship’ thereby transferring your ownership to the remaining owners when you die without becoming an estate asset. 

This of course means there is no estate tax payable on the value of the house.  However, there are some concerns that you need to consider before you take this step.

1. If you place one or more of your children on the title to your house and they have their own home, the increase in the value of the property from when they were transferred onto title to the date of your death is taxable on their portion under capital gains tax (it is not their primary residence).  If you plan on living a good long time from now, this could lead to some serious tax consequences for your kids when you die.

2. If there is any outstanding mortgage or line of credit on your home, you must pay Land Transfer Tax on the portion attributable to your child’s ownership.

3. If you are transferring the house to just one of your children, you should specifically state in your Will that the home should be sold and the value of the transaction be split between your children, otherwise, the owner/child may be tempted to claim it as their own and cause huge strife amongst your beneficiaries.

Indeed, transferring the title to your kids and you is a form of estate planning that can be effective in reducing the estate tax burden but it should be entered into with care and proper tax/legal advice.
 
Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/976046 Thu, 22 Sep 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/976046 Q. In mid-August, the owner/tenants in the unit above my condo had a problem with their bathroom faucet and a substantial amount of water leaked through my bathroom ceiling and walls. 

There was significant damage to the floors in my condo, the repair for which is covered by my insurance. However, the moisture in the walls and ceiling is actually an issue that needs to be addressed by the condominium corporation. 

The condo corporation sent a technician who determined that there was no mould by cutting out portions of the ceiling and walls.  How can I be sure that everything is fine?

A: Your situation is quite common due to the proliferation of condo dwellers.  The condo corporation has determined that the damage did not develop into a mould problem.  The question is: do you rely upon their technician?

I would be inclined to personally hire a licenced mould inspector. 

If they came to the same conclusion then that should be the end of the issue (who pays for this is a matter between you and the condo corporation). 

However, if the inspector does find mould, there will be a need for rehabilitation which can be a costly and time consuming process. 

The interior state of the walls in a condo is generally the responsibility of the corporation but they may have a potential claim against the unit owner above your condo because the leak may have been caused by negligence (simply running the tap).

This is why that is extremely important for all condo owners (and apartment dwellers) to have an insurance policy that covers this type of problem.  Good luck and let’s hope there is no mould.
 
Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.


]]> http://www.metronews.ca/toronto/comment/article/969532 Thu, 15 Sep 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/969532 Q: We recently purchased a home and our lawyer was quite efficient and managed to close the transaction by mid-day on the day of closing. Anxious to go see our new place, we picked up the keys from our lawyer and proceeded to the house.  When we arrived, we found the former owner was still moving out and refused us entry (with our contractor).  We called our lawyer who stated that they should be out and certainly should not be refusing access. What should we have done?

A: There is a great amount of confusion about possession of a new home.  
In the pro forma contract, it states the parties have until 6 p.m. on the day of closing to complete the transaction and so many people assume this is when you have to be out of the sold home. 
However, the vacant possession technically should occur when the money and the keys have changed hands and the transaction is registered by your lawyer. 

So, if you had your keys, your transaction had been registered and you had the right to enter the property. That being said, there is very frequently overlap if someone is buying and selling the same day and people move from their old home to their new home. 

We advise clients that if you get there during the day and they are still vacating the premises, be patient and let them get on with their work.  However, they should not be refusing you access to the home because technically you own it. 

If they insist you not enter, I would not be adverse to having the client call the police as technically, they are trespassing.  This of course is a last resort and co-operation is a much better approach.

Jeffrey Cowan is the principal of Cowan Law and can be reached by email at jeff@cowanlaw.ca.

]]> http://www.metronews.ca/toronto/live/article/962959 Wed, 07 Sep 2011 20:39:04 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/live/article/962959 Q:    I run an office-based business and I am interested in purchasing a property from which I can operate.  There are lots of commercial buildings out there but I had thought I might buy a commercial condo. What should I be aware of when considering this type of real estate investment?

A: Many people consider owning the property that their business operates from so that they are not paying often expensive commercial leasing rates to a landlord. 

However, there are some definite issues that you must consider before you make an offer.

- Typically, if you are financing the property, the type of financing is quite different from obtaining a residential mortgage and the downpayment requirements are often substantially larger.

- You may have to guarantee the loan personally depending on the financial state of your business.

- If you are purchasing a condo, the requirement for a status certificate and review of all the condo documents by your lawyer will more than likely be a condition of the financing.

-Careful consideration must be given to the G.S.T./H.S.T. that is applicable to the purchase of a commercial property (unlike resale residential properties that do not require G.S.T./H.S.T. to be paid) as to whether it is included in the purchase price or in addition to the purchase price.

- If you are purchasing the property for your business, you should sign the Agreement of Purchase and Sale in your capacity as an authorized signing officer of the corporation.

Basically, the purchase of a commercial condo by a business is an entirely different type of real estate transaction than purchasing your home. 

You will definitely need the advice of a qualified lawyer to guide you through the issues.

Jeffrey Cowan is the principal of Cowan Law and can be reached by email at jeff@cowanlaw.ca.

]]> http://www.metronews.ca/toronto/comment/article/957421 Thu, 01 Sep 2011 05:00:36 -0400 Jeffrey Cowan, Legal Matters http://www.metronews.ca/toronto/comment/article/957421 I am in the process of purchasing my first property and my lawyer has been told by the title insurer that the property used to be a grow-op’and is on a list of homes that are so designated by the police. They will not title insure the property unless my lawyer performs other searches to make sure the home has not continued to be used for that purpose. My lawyer stated that the searches need to be done at a cost of a couple hundred dollars in order to obtain a title insurance policy. I am at a loss as what to do. She also indicated that if we didn’t have title insurance, the mortgage funds would not be advanced and the whole process could unravel and I would be without my first home.  What can I do?

Wow, you have found yourself in the middle of a big problem. Generally, when people hear a property used to be a grow-op they run screaming in the other direction. You would be surprised at the number of homes that are actually used for these purposes. The properties usually have a number of problems with back taxes, bad maintenance, and the worst, mould. I assume in your case that mould is not a problem as you would, as a prudent first-time homebuyer, have had a home inspection that revealed no mould.

Regardless, once a property has that stigma attached to it, you have a big problem re-selling the property, even after many years. I wonder if you were told the former status of the property by the vendor? Also, you have a positive obligation to reveal this problem to the company that is providing you with your financing.

All in all, not a nice situation for you as a first time homebuyer to find yourself confronted with. At this point, it serves no purpose to not disclose this information to all parties as it will only lead to further complications for insurance, title and future sales. You definitely need to consult with your lawyer on this matter.

Jeffrey Cowan is the principal of Cowan Law and can be reached at jeff@cowanlaw.ca.



]]> http://www.metronews.ca/toronto/comment/article/952096 Thu, 25 Aug 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/952096 Q: I recently sold a condominium and the following month I realized that the utility company continued to remove the monthly charge from my bank account. 

They are now refusing to refund the money even though I proved to them that I do not own the property any more. 

I contacted my lawyer who indicated that they do not handle utilities for clients.  What should I do?

A: The very first thing that should have been done is for you to put a stop payment on any pre-authorized payments that are withdrawn from your bank that are associated with a property that you are selling. 

Your lawyer cannot be privy to all of your billing/invoice requirements. 

As a matter of courtesy, our firm contacts the utility company to inform them of the sale but due to privacy issues and personal information that needs to be provided, we do not take responsibility for a client’s utilities.

If approached by a client with a problem such as this, we will endeavour to contact the purchaser’s lawyer with proof of payment and request that their client reimburse our client. 

However, the basic responsibility for utilities always lies with the individual; whether they are buying a property or selling a property.

Jeffrey Cowan is the principal of Cowan Law and can be reached by email at jeff@cowanlaw.ca.

]]> http://www.metronews.ca/toronto/comment/article/945650 Wed, 17 Aug 2011 19:54:06 -0400 Jeffrey Cowan, Metro http://www.metronews.ca/toronto/comment/article/945650 Q: I recently purchased a commercial condominium and my realtor filled in the Agreement of Purchase and Sale with H.S.T. being included in the purchase price.  This was duly initialed by the vendors and the transaction was considered firm (without conditions).
 
Come the closing, the vendors realized that they were on the hook for paying $26,000.00 in H.S.T. to the government from the purchase price.  They are refusing to close the transaction unless we get an H.S.T. number but our lawyer is saying that this condition is not part of the Agreement.  What would you suggest?

Unfortunately for the vendors, if their agent allowed them to sign a contract for the sale of a commercial condo with H.S.T. included in the purchase price then they are on the hook to pay it.  
Under tax laws, H.S.T. is applicable to the sale of all commercial property.  Often if both parties are H.S.T. registrants, they can perform what is known as self-assessment and the selling party does not have to remit the applicable tax. 

However, if the Agreement is silent to H.S.T. status, an individual who is purchasing a commercial property does not have to register and self-assess at the time of purchase.

In this case, if the transaction has no other conditions attached to it, your lawyer should be advising you to get your purchase funds together, and on the day of closing provide a full closing package to the other side stating you are ‘ready, willing and able’ to close.  

This process, known as tendering, basically preserves your rights with respect to the transaction and puts the vendors on notice that you will be pursuing your legal remedies with respect to their lack of ability to close the sale.

Best of luck with this contentious issue.

Jeffrey Cowan is the principal of Cowan Law and can be reached by email at jeff@cowanlaw.ca.

]]> http://www.metronews.ca/toronto/comment/article/940095 Thu, 11 Aug 2011 05:00:00 -0400 Jeffrey Cowan http://www.metronews.ca/toronto/comment/article/940095 I recently had an appointment with my lawyer to sign the papers on the purchase of a property.

I have completed several purchases with my lawyer over the past two decades and all of a sudden, she requested that I provide photo identification. 

I admit I do not carry photo ID as I do not drive and my passport is safely put away at home and apparently, my Ontario Health Card is not acceptable? 

I had to return to the office with ID and get it copied which was a real hassle.  Why is this necessary all of a sudden?

A couple of outside influences have required that all clients provide photo ID.  The Law Society of Upper Canada that is the governing body for lawyers in Ontario has implemented far-reaching policies that we must proactively identify our clients with the use of proper photo ID. 

Even though you have dealt with your lawyer over the span of many years, the Law Society still requires we obtain proper ID for the opening of each file.

Second, and even more important in real estate files is the requirement to obtain this ID to make a primary attempt to avoid identity theft and potential mortgage fraud. 

With the increase in people assuming other’s identities and engaging a lawyer to register a fraudulent mortgage, financial institutions now require valid photo ID from all clients who are placing any type of financing on a real estate transaction.

This positive identification may seem like a huge and irrelevant requirement but it is entirely necessary from at least two if not more parties.

Jeffrey Cowan is the principal of Cowan Law and can be reached by email at jeff@cowanlaw.ca.

]]> http://www.metronews.ca/toronto/comment/article/934076 Thu, 04 Aug 2011 05:00:51 -0400 Jeffrey Cowan, Metro http://www.metronews.ca/toronto/comment/article/934076 We recently purchased an older home that was advertised as having all new electrical wiring. When we entered the offering process, we were told by our agent that there were going to multiple offers and we should put our ‘best foot forward’. 

We had considered including a condition in our offer for a home inspection because the house, like many in the centre of the GTA, is close to 100 years old. Our realtor firmly stated that if we entered the bidding process with any conditions we were probably not going to be considered, even if our offer was competitive. In the end, we offered and were successful in our attempts to buy our first home. Trouble is, when we finally bought our dream we found that the wiring was not totally new and required several thousand dollars of upgrades to get rid of the knob and tube wiring. Who do we hold accountable for this?

In this overheated market, your problem in not that uncommon. The issue is that there are not enough houses out there for the demand, so consumers are making decisions based upon the market as opposed to their comfort level. I would always suggest a home inspection when you purchase a house because you can't rely on the items listed in the M.L.S. listing (look at the bottom of the sheet) and you need to do your own homework on the house.

Unfortunately, in this instance you were swept away by the instance and are now paying the price for your eagerness to get the house. Always remember there are hidden problems lurking around the corner with a 100-year-old house and care should be taken when purchasing one.


]]> http://www.metronews.ca/toronto/comment/article/927858 Thu, 28 Jul 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/927858 Q:    I had a meeting with my lawyer with respect to a new home I was purchasing and was informed that I needed to contact the utility providers to set up my accounts. My real estate agent had told me that the lawyer will do this for me and I didn’t need to worry about this. Now at the eleventh hour, I am running around trying to figure out how to contact the utility providers and make sure I have power and gas at my new home.  How could I have avoided this?

A: Unfortunately, you realtor steered you sideways on this one.  Your lawyer is not able to speak on your behalf when it comes to setting up utility accounts.  Due to privacy concerns most utility companies won’t even speak to myself or any of my employees who phone on your behalf.  The suppliers may need confidential information we are not privy to in order to set up your accounts.  They may also require a deposit or other requirements which you are uniquely qualified to provide.  Utilities are one of the few items that your lawyers cannot guide you through.  There is nothing to be done but pick up the phone and dial away for power for your new pad.

Jeffrey Cowan is the principal of Cowan Law and can be reached by email at jeff@cowanlaw.ca.

]]> http://www.metronews.ca/toronto/comment/article/922348 Thu, 21 Jul 2011 03:00:08 -0400 Jeffrey Cowan, Metro http://www.metronews.ca/toronto/comment/article/922348 Q:    I purchased a condo last week and when I went to my lawyer’s office to pick up the keys, I received one key to the living unit. 

It was indicated that the rest of the keys are usually in the property on the kitchen counter or some other place that is obvious. 

When I went to the building, the security guard had to let me in to the lobby and when I went into my new home there was only one key for the mailbox and no entry fobs or extra keys.
 
When I phoned my lawyer, she indicated that they had no control over the keys and that I should speak to the building management. I did just that and they indicated that they could provide entry fobs at a cost of $50 per fob and extra keys at the same cost.  What are my options?

A: Generally, when I advise clients who are selling a property, I instruct them to provide entry keys to our office and then leave ALL extra copies in the property.  The same instructions apply for a condo or a house. 

However, most condo corp’s charge a fee for their entry fobs and keys for common area entry.  Therefore, the vendor will sometimes return their fobs for a refund (personally I think this is unnecessary when you put the entire cost of the transaction into perspective). 

That being said, all you are basically entitled to is access to your new home: extra fobs and keys are just that, extra.

I don’t understand why if you are paying hundreds of thousands of dollars for a property, that the vendor would not leave all of the access devices but just as your lawyer stated, we have no control over what is or is not provided above basic access.

Jeffrey Cowan is the principal of Cowan Law and can be reached by email at jeff@cowanlaw.ca.

]]> http://www.metronews.ca/toronto/comment/article/910404 Thu, 07 Jul 2011 05:00:51 -0400 Jeffrey Cowan, Metro http://www.metronews.ca/toronto/comment/article/910404 Q. We purchased a home approximately four months ago with very few hassles or problems. 
Everything went smoothly until about a week ago when our lawyer contacted us and informed us that the furnace we thought we owned and had bought with the house was actually on a rent to own program and still had around $1,500 left to pay on the original contract. 

The sellers had been paying the monthly installments since we took possession of the house but were now wanting us to assume the contract and finish paying for the furnace; or have it removed at which time we are free to install our own system.  What would you suggest?

A. Normally, when you purchase a property, the heating system is included in the purchase price unless excluded under the ‘fixtures’ section of the contract.  You had no way of knowing that the furnace was not fully paid for unless it was revealed in the negotiating process when you submitted your offer to buy the property. My position as your lawyer would simply be that you purchased a home with a heating system and so either the sellers must immediately pay for the entire furnace. Otherwise, you may have to take them to small claims court (unless they continue along with their payments).

One way or the other it is definitely the ultimate responsibility of the vendors to make sure your furnace is yours.

Jeffrey Cowan is the principal of Cowan Law and can be reached by email at jeff@cowanlaw.ca.

]]> http://www.metronews.ca/toronto/comment/article/904413 Thu, 30 Jun 2011 05:00:02 -0400 Jeffrey Cowan, Metro http://www.metronews.ca/toronto/comment/article/904413 We are purchasing a new condo and have been informed that our interim occupancy date is coming up next month. Our lawyer has informed us that one of the conditions of taking interim occupancy is that we must carry $2 million liability insurance for our unit. Presently, we live in an apartment and only have contents insurance because the building is separately insured for fire and liability. Why do we have to bear the cost of this insurance and how can the developer make this mandatory?

While you are in possession of your condo during interim occupancy, you do not own the property. In fact, the developer still owns the whole building and while they have insurance if the building were to burn down, or if someone slips and falls while in a common element, they have no control over what happens in the individual unit. So, say a guest of yours slips in your shower and injures themselves. The harmed individual would have a potential cause of action against the owner of the unit: the developer. This is why the builder insists on proof of liability insurance for the premises.

Once you own the condo, it is your choice if you wish to continue with this insurance but from a risk perspective, you would be leaving yourself wide open for a nice big lawsuit with no protection.


]]> http://www.metronews.ca/toronto/comment/article/890642 Thu, 16 Jun 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/890642 Your recent article on contributing to the reserve fund as a condominium owner made good reading. We recently purchased a condo and made the offer conditional on the review of the status certificate. Would there be some indication in this document about the reserve fund?

First, let me explain reserve funds for condos. They are kind of like a savings account for homeowners who put a small amount of money away each month for repairs to the roof and other items around the house.  

Reserve funds for condos are contributed to in order to address large upkeep issues for the building such as roofs and parking. Under the statute, a condo must keep a certain percentage of their operating budget in reserve.

When you order a status certificate, it will indicate if the reserve fund is adequate for the coming fiscal year and if the board of directors has any thoughts of increasing the fund through a special assessment.  

Typically, this statement is reliable for the fiscal year but you cannot rule out the possibility that half way through the year, a large repair becomes necessary and therefore the board may have to reconsider the adequacy of the reserve fund.

So really, new purchasers cannot rely on the status certificate past the point in time that it was issued because like all of us, condo owners and boards do not have crystal balls to see the future.

]]> http://www.metronews.ca/toronto/comment/article/897691 Thu, 16 Jun 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/897691 I recently purchased a condo and I have just received a notice of a special assessment by the Board of Directors to the tune of $3,000 in order to bring the reserve fund up to date and in line with legal requirements. When I bought the property eight months ago, nothing indicated that this may be coming in the future. What, if anything, can I do about this?

Just to bring our readers up to date, a special assessment is a charge the condo management can demand from each owner to address deficiencies and possible shortfalls in the reserve fund. This fund is savings set aside by the condo corp to deal with large structural issues such as new roofs, redoing parking garage surfaces and other common elements. If a condo corp needs to make major repairs, they can draw from these savings. Then it needs to replenish the fund with either a special assessment against each owner or regular increases through the monthly common expenses.

In your case, it would seem that for reasons unknown to me, you have been required to top up the fund with a special assessment. If this charge comes very shortly after you purchased the condo, you may have had an opportunity to uncover this upcoming charge by reviewing the status/estoppel certificate. Generally, the certificate will indicate if there is a possibility of a special assessment and potentially the amount chargeable against the specific unit you are buying. This is why many offers to purchase have a condition for the review of the status certificate. However, eight months have passed and this probably puts you outside of the time frame for having been able to uncover this financial problem at the time of the offer.
 
You are required to pay the assessment, otherwise the potential extreme result of the Board placing a lien against the title to your condo. Often, the management will spread the payment out over a number of months in order to lessen the financial pain. However, one way or another the charge is yours.

]]> http://www.metronews.ca/toronto/comment/article/877086 Thu, 02 Jun 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/877086 Q: My parents have decided they need to downsize and have offered to transfer their nicely-sized home to me and my husband. We have been told that they can gift the property to us for one or two dollars, which effectively allows us to not pay land transfer tax. Can we legally do this?

A: The concept of gifting between close family members is a well conceived notion that is possible but needs to be clearly examined. 

The government under the Ontario Land Transfer Tax Act wants to make sure that there is no money changing hands under this type of transfer. 

For example, if you are paying off a mortgage your parents may have on the property when the home is gifted, then there is ‘consideration’ and land transfer tax must be paid on that outstanding amount because there has been value received. 

In another instance, if you are providing any money to your parents for their home, then it is not a true gift and you must pay tax on this consideration.  Only true non-monetary gifts qualify for the exemption of this tax.

You should be careful about this issue as you must be aware that the tax man always gets its man.


]]> http://www.metronews.ca/toronto/comment/article/871324 Thu, 26 May 2011 00:00:00 -0400 Jeffrey Cowan, Metro Canada http://www.metronews.ca/toronto/comment/article/871324