• I thought they will pay GST ! Turn out I need to pay these huge expense

             GST is payable on new home, but there are possibilities that there is GST implication for second-hand transaction if the home has never been used.  If you see new properties, it’s always safe to put in either “$xxxxxxxx plus GST”  or “Sxxxxxxxx include GST”  on contract.  Do not assume the other party responsible for such.  Also, there is GST rebate for buyer-occupied property under certain price range.  Usually, tje contract need to specify that seller will remit GST and buyer assign the right to rabate to seller.  Your contract should have similar term, ask your realtor.   For further info, visit  http://www.servicecanada.gc.ca/eng/goc/gst_new_housing.shtml

• I lost all my deposit for buying the property just because I was only 1 day late in remitting money to close the deal

             I personally think it’s not fair in this scenerio, especially buyers try to remit from oversea, and most of the time the remittance timing is beyond their control.  However, time is of essense on closing and seller need to be protected too, and item 12 in purchase and sale contract specify clearly that “the amount paid by the Buyer will be absolutely forfeited to the Seller in accordance with Real Estate Services Act, on account of damages, without prejudice to the Seller’s other remedies” .  There is a way to prevent this tragedy to buyer while protecting and being fair to seller.  Ask your realtor, or email me, or write a comment.

• I am a seller and not living in Canada (I am non-resident)  How come instead of receiving proceeds, I need extra cash to close the deal?

            I can’t give you tax advice, but just let you know that there is withholding tax of 25% to non-resident.  There are lot of tax implications, e.g. how would a person considered as non-resident ? 180 days rule.  What if I bought it in year 1 , moved out in mid of year 2, convert it to rental property in year 3?  When does ‘deemed disposition’ happens? Is this property having a capital gain or re-capture? I am not supposed to answer, and neither is your REALTOR.  Ask an accountant or tax expert.    All I can tell you is an example that the property was sold at say $380k,  have a mortgage outstanding say at 350K, with a withholding of 25% = 95K, seller need to have this amount to close the deal ($350K + 95K + commission + legal fee ), which is greater than the sales proceeds of $380k, and in this case, seller need extra cash to close.  However, there is some tips you shouldn’t ignore 1.there is a Clearance Certificate will relieve the 25% holdback requirement 2.  File the form T2062 as soon as possible to apply for the Certificate, or you will suffer.   Penalties will be assessed if later  10 days after closing.  3. Even tax is withheld, it’s “capital gains treatment” which means only 1/2 of th gain taxable.  and the tax rate is your progessive rates.  Depending on your income in that year, you may have a tax refund.  I am recommeding www.lamlonishio.ca to handle your tax need.  BTW, remember to ask them the advantage of using NR6 for your rental property if you are non-resident, they will show you the tax saving.

•  I don’t want to buy the property any more?  I shouldn’t have a binding contract for purchasing the property. I want my deposit back, how come it’s not returning to me.

             The brokerage is holding money as “stakeholder” only, i.e.not in favor of buyer or seller.  To get back your deposit, there is a need for a “trust release” signed by you and the seller such that both parties agree to terminate the contract and release each other and the brokerage from claims, causes of action, suites, demands and damages.  Usually, seller refuse to sign the release because he is upset with buyer’s remorse.  You need get seller to release it, and litigation should be against seller not the realtor/brokerage. Don’t waste your time on unnecessary legal action on realtor

• I intend to live in the property that just bought.  But the tenant from previous owner has not moved out.  it’s their tenant, not mine.  I don’t have a place to live in now!

           When you purchased the property that you intend to live in, you need to have a request to seller that you intend to occupy the property for residential use in good faith, and request landlord to give notice for tenant vacating the property.  Your realtor should help you with the written request. Allow at least 2 full tenancy months (usually calender month) for tenant to move out.  If seller did not do his part for the tenancy, you have a right against the seller.

• I bought a strata property and lived there for few months, and then decided to rent it out for income.  But just found out that I am not allowed to.

             You probably missed out an important part, check the by-law.  I always remind my clients to check by-law for restriction, strata-plan for measurement, minutes for any levy nightmare, financial statement for contingency fund and form-B for special concern.  Always communicate with your realtor.  Or you can use strata document review service with  http://www.mystratacorp.com/cms/

• I am selling my property, and have 3 offers.  I selected  the one with the best price, and later on buyer remorsed.  This would never have happened if I chose the other 2. 

          You should have the other 2 offers made as back-up offer, subject to the collapse of the first offer.  This will  bind the other 2 buyers psychologically and possibly legally.

• I bought a property from owner in “for sale by owner”, I lost my deposit, and then later on found out there is lien, restrictive convenent on title.  How could this happen?

        This could happen when a ‘unrepresented’ buyer thought they got a good deal by approaching the owner directly.  (BTW, you may not even know whether that person is the true owner)  First, get a realtor, authorise him to get a reasonable commission so that he/she will fight for your interest.   Deposit will be paid to buyer’s agent’s brokerage trust account, as ’stakehoder’ to safeguard your money instead of favouring seller.  Your agent will conduct title search, review of strata documents, property disclosure statement for you.  He/she will make sure the seller is the owner on title.  If owner is a corporation, conduct a company seach.  Ask the REALTOR is there any lien, convenants, right of way or other encumbrances on title.  Remember to have home inspection.(BTW, just a quick note such that if you bring your buyer/seller for the property and request only above paper work service, I charge only small reasonable amount to help you close the deal.  )

• I am buying a new strata property from builder.  How can I get info of the property to make purchasing decision?

           You should get a Disclosure statement (NOT property disclosure statement) for new property.  This statement gives you lot of info e.g voting, by-law, limited common property, management, insurance, encumbrances, legal notations, outstanding litigations and liabilities, and much more.   Remember to ask the builder or your REALTOR

How to flip?

 When you have a contract of purchase and sale of the property, the property price increased substantially before completion date, you can assign the contract to a third party to realise the gain.  You enjoy the profit on hot market before the downturn of property price and save on closing cost. 

What is assignment 

the transfer of rights held by one party—the assignor—to another party—the assignee

When is the opportunity to flip?

§         When you buy property with intention to flip, make sure you have the buyer with you name and “assigns”.   There was an old version using “nominee” but this is prohibited because that could allow buyer to escape the responsibility on contract.

§         A long possession period for market price to elevate for your flipping gain

§         If the property is a new property, you may need to developer’s consent to assignment before closing.  Ask the builder first, before you buy.  BTW, it’s usually the assignor pay the assignment fee to the developer

Understanding the Risk? Minimizing the Risk

 If you are assigning or buying an assignment from a New Development, you may have these questions in your mind.  Clarify it!

•  What if the developer does not complete construction of the building?
• What if the developer elects not to proceeds?
• What if the construction is faulty or the units are smaller than expected?
• If you are the assignor, what if the assignee does not pay the increased deposit?
• If you are the assignor, what if the assignee does not close?
• What if the market has a correction?

What is my legal right and obligation?

Understand your legal position, are you an assignor (have a valid purchase of the property and intend to sell it to another buyer) or an assignee (a purchaser intend to buy from a person who as a valid purhase of the property)

Make sure the assignor has the right to assign and the assignee has the right to receive a valid assignement  by referring to the orignal contract.

The Seller(or Developer) has been given notice in writing of the assignment, and eventually obtained the developer’s consent to Assignement of the contract.

If either parties are corporate entities, make sure the individual signing on behalf of the corporat eentity has the authority to bind the coporation.  (company search and a copy of corporate resolution)

Proper photo id  of both parties be clear and verified. (your realtor would work on this)

Deal with the initial deposit made by assignor under the original contract.

Discuss when to release the assignment amount.  Choices are 1) on submission for Registration in appropriate Land Title Office, which favor assignee’s interest, 2) on subject removal, which favor assignor’s interest, or compromise at choice 3) such that a Portion release on subject removal and balance on submission for registration.

Assignment Contract - what to look for