Realtors are often brought into estate sales with the assumption that once a grant of probate or administration is issued to an executor or administrator, they have authority to sell any real property in the estate in the course of estate administration.

But this can be a costly mistake if the real property is specifically gifted in the will. This month’s newsletter features important info from our wills & estates lawyer Naz Khodarahmi about navigating estate sales.

• Specific Gift vs. Residue

• Why It Matters

• What Can Go Wrong in Practice

• What to Watch For

Specific Gift vs. Residue

Gifting specific property in a will means leaving a particular, identified asset to a named beneficiary or beneficiaries.

Gifting the residue of an estate means leaving whatever remains of the estate after all debts, taxes, expenses, and specific gifts have been paid. The residuary beneficiary or beneficiaries receive the balance of the estate, which can increase or decrease depending on what assets are left and what liabilities must be settled.

Why It Matters

Under the Wills, Estates and Succession Act, an executor or administrator of an estate cannot distribute the estate until 210 days after the grant of probate or administration is issued unless they have the written consent of all beneficiaries to do so. However, the sale of estate property isn't a distribution. It's a conversion of property into cash, and therefore does not require the written consent of the beneficiaries.

So if a homeowner passes without a will, or leaves a will saying: "I gift the residue of my estate to my children A, B, and C", then the personal representative has the authority to proceed with a sale without asking for the specific written consent of each of A, B, and C.

However, if a homeowner passes and leaves a will saying: "I gift my house at 123 Main Street to my children A, B, and C":

• The executor does not have unfettered authority to sell the property

• The property is not simply converted into cash for distribution

• A, B, and C each receive a beneficial interest in the land itself, not just its value

This means the executor must obtain the written consent of A, B, and C to sell before listing or selling the property, unless the will clearly authorizes sale despite the specific gift.

What Can Go Wrong in Practice

We see this issue arise when:

• A listing is signed without confirming the nature of the gift in the will

• A buyer later questions the executor’s authority

• A beneficiary objects mid-transaction, delaying or collapsing the sale

• The executor is exposed to personal liability for acting outside their authority

What to Watch For

Before accepting an estate listing in BC, it’s worth confirming:

• Does the will specifically gift the real property, or does it fall into the residue?

• Does the will expressly authorize the executor to sell despite a specific gift?

• If the will does specifically gift the real property, have all beneficiaries with a beneficial interest in the property consented in writing to sell?

These questions can save delay and protect everyone involved in the transaction.

Questions? Contact our wills & estates lawyer Naz Khodarahmi today!

🤔 Did You Know?

We offer real estate agents and mortgage brokers complimentary short phone consultations. Message us on WhatsApp, or call us.

A reminder that Arora Zbar LLP has 6 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning & administration.

We offer services in English, Punjabi, Hindi, and Farsi.

We’re transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely, Eli Zbar Lawyer

Check out some previous newsletters:

In 2026, Arora Zbar LLP added 2 lawyers. Rather than bore you with a long announcement, here's exactly how each can help you:

Naz Khodarahmi Wills, Estates & Trusts · Real Estate · Corporate

Naz Can Help You With:

Vinay Verma Civil Litigation · Associate Counsel

Call Vinay when:

No mortgage broker or real estate agents wants to navigate a BC Financial Services Authority (BCFSA) regulatory investigation or disciplinary process.

Recently, Robert Peake and Ravneet Arora of Arora Zbar LLP successfully appealed a BCFSA penalty in Manjot Khunkhun v Registrar of Mortgage Brokers, 2025 BCFST 3, reducing the broker's penalty by 80%, from $37,500 to $7,500. This decision underscores how critical it is to seek experienced legal guidance as early as possible.

In 2018, Ms. Khunkhun created certain falsified commitment letters. Ms. Khunkhun admitted to creating and presenting the false documents and cooperated with the BCFSA. The BCFSA imposed an administrative penalty of $37,500. Mr. Peake and Mr. Arora represented Ms. Khunkhun in her appeal of the BCFSA penalty to the BC Financial Services Tribunal (BCFST).

This month's newsletter goes through the important lessons from the Khunkhun decision, and how anyone regulated by the BCFSA can better protect themselves.

• You Can Admit Liability and Fight the Penalty

• The BCFSA Overweighted Certain Factors, and Underw …

• Mitigating Factors Matter, Raise Them Properly

You Can Admit Liability and Fight the Penalty

A key lesson from Khunkhun: even if you've done something wrong, the BCFSA must act reasonably in handing down a penalty. Further, you need not deny wrongdoing in order to dispute the penalty. You can admit liability, cooperate with the investigation, and only dispute the penalty. The sooner you get legal advice, the sooner you can determine how best to engage with the BCFSA right from the start, including deciding what exactly to dispute.

The BCFSA Overweighted Certain Factors, and Underweighted Others

The BCFST found the BCFSA focused too much on “specific deterrence” which is aimed at preventing the specific person from reoffending, and downplayed significant mitigating factors:

The reasonable application of specific legal tests to the facts of a given case is a complex and nuanced exercise. A lawyer will understand the applicable legal tests, and present your case within their parameters. We can help you respond to allegations in a way that maximizes your chances of a fair and reasonable outcome, right from the start.

Mitigating Factors Matter, Raise Them Properly

Personal circumstances, such as mental health challenges or extraordinary pressure, can and should be part of your defence. A lawyer can help prepare this evidence and present it to the BCFSA at first instance. Engaging a lawyer as soon as you become aware of a BCFSA investigation or disciplinary process ensures your side of the story is presented clearly and persuasively.

The BCFSA was found to have failed to consider the following mitigating factors:

• acknowledgment of misconduct and cooperation with the regulator in arriving at the penalty;

• seeking assistance for her mental health; and

• removing herself from the industry related solely to her mental health issues. (para 112).

📌 What You Should Do

If you hear from the BCFSA, don’t panic, and don’t try to handle it yourself. Get legal advice early, let the lawyer do their job so you can focus on doing yours!

A lawyer will help you:

1. Gather and present evidence that actually moves the needle;

2. Make sure your side of the story is heard (not just the BCFSA's version);

3. Push back if the BCFSA is overreaching or missing the real context, including appealing their decision to the BCFST if needed; and

4. Protect your license, your reputation, and your future.

🤔 Did You Know?

We offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

A reminder that Arora Zbar LLP has 5 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, Hindi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely, Eli Zbar Lawyer

Check out some previous newsletters:

Posting exaggerated claims of success on social media is a primary marketing strategy in many industries. However, not all marketing is subject to regulatory scrutiny like real estate agent’s marketing in British Columbia.

This newsletter highlights a recent BCFSA decision to reveal important lessons and reminders for all real estate agents - don't ignore the BCFSA advertising rules.

• Recently Issued BCFSA Administrative Penalties

• The Case of Mehrbod (Re), 2024 BCSRE 93

• Real Estate Advertising: Tips to Stay Safe

Recently Issued BCFSA Administrative Penalties

Recently, the BC Financial Services Authority (BCFSA) issued administrative penalties against several real estate agents based on some obvious mismatches between their social media claims, and reality. The BCFSA is sending a clear message: real estate agents can face penalties for misleading social media content, gaps in information, and outdated posts. 

The BCFSA has little difficulty fact checking claims made by real estate agents. When a "life coach" makes claims of financial success, there's usually no way to fact check. But, most every real estate transaction shares information with the LTSA, BC Assessment, and the dozens of real estate data aggregators, in a public and permanent fashion.

The Case of Mehrbod (Re), 2024 BCSRE 93

The decision in Mehrbod (Re), 2024 BCSRE 93 highlights some particularly egregious "false or misleading" social media activity. In dismissing Dr. Mehrbod's appeal of his $6,000 administrative penalty, the BCFSA provides a veritable laundry list of contraventions.

It's illuminating due to the exactitude and depth of their findings; they compared Dr. Mehrbod's social media claims to the actual figures of at least 8 transactions over at least 3 years, discovering discrepancies from as little as $1,000 to over $500,000. Paragraphs 107–108 summarize the difference between an approximation and a misrepresentation:

The BCFSA also found general claims which turned out to be false or misleading when Dr. Mehrbod promoted himself on Instagram as part of a real estate "team", but no registered team existed and when he described himself as a "Top 1% REALTOR in Van" with only an email offering him such a title as evidence. At paragraph 82, the decision finds:

The decision wraps up with a succinct cautionary note at paragraph 138:

Real Estate Advertising: Tips to Stay Safe

Don't end up like Dr. Mehrbod - finding out the rules from the BCFSA at a hearing. Take the time to learn, and relearn the rules, now.

Every real estate agent must ensure they understand sections 40 and 41 of the Real Estate Services Rules, BC Reg 209/2021. Importantly, these sections do not require intent to mislead. You can face penalties for content you reasonably ought to have known was false or misleading.

You need not directly make the posts, as the definition of "publish" includes causing, or permitting, real estate advertising to be displayed. The broad definition of "publish" can hold you responsible for old accounts, bios, or websites linked to your name, regardless of who manages them. A reminder that "real estate advertising" means any form of identification, promotion, solicitation or representation, including a sign or other notice, relating to real estate.

1. Real estate agents must take responsibility for everything published under their name, whether they wrote it, approved it, even if they forgot it existed.

2. Regularly audit your online presence for inactive or legacy platforms.

3. Avoid publishing anything false or misleading, even by omission. This includes claims about awards, rankings, team affiliations, or price results unless you clearly explain or support them. Support claims with dates, sources, data, qualification criteria for awards as appropriate.

4. Use the full legal name of your personal real estate corporation (PREC). Do not abbreviate it. Here's our previous newsletter all about how to properly use your PREC name: PREC: 4 letters between you and personal liability.

5. Use team language carefully. Don’t refer to yourself as a team if BCFSA has not registered you as one.

6. Review the BCFSA advertising guidelines

7. Use the BCFSA advertising checklist

8. When in doubt — ask a lawyer! We have lawyers with specific expertise in BCFSA regulatory defence.

🤔 Did You Know?

We offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

A reminder that Arora Zbar LLP has 5 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, Hindi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely, Eli Zbar Lawyer

Check out some previous newsletters:

Another year, another new tax on real estate to contend with: the BC “Home Flipping Tax”

When the law changes, many law firms, along with the BCREA, BCFSA etc. issue detailed guidance. This month’s newsletter highlights a crucial component, not covered by the existing resources we reviewed: How to actually file the Home Flipping Tax return.

We’ll walk you through the Home Flipping Tax filing portal (as it looks at the time of writing in March 2025), and provide examples of how much tax would in fact be payable in a few scenarios.  

(note for e-mail readers: this newsletter contains many images, if it’s not displaying correctly, click “Read Online” on the top right)

• Why Does The Tax Return Matter?

• Filing The Home Flipping Tax Return

• Deductions: Reducing the Tax Payable

• How To Pay The Tax Owing

Why Does The Tax Return Matter?

This Home Flipping Tax return requires a lot of information buyers and sellers may not think to keep on hand, much of which directly impacts the total tax payable.

Realtors and mortgage brokers should familiarize themselves with the portal, document requirements, and permitted deductions to help clients calculate the net sale proceeds destined for their pocket.

Filing The Home Flipping Tax Return

Go to the BC government website

Figure out how many you need to file – usually, one per owner. This table breaks down common ownership structures:

Review the instructions and begin filling out the BC Home Flipping Tax Return

1..Before you begin, make sure you have the following information

2..Choose Your taxpayer type

3..Enter Taxpayer Information

4..Enter Property and Ownership Information. Note: you cannot forward date a return!

5..Enter Acquisition and Disposition Information

6..Enter the Deductions

Determine The Total Home Flipping Tax Payable

After you enter the Deductions, the portal shows the total tax payable

—

The result is the same tax rate, but for half the property, as deductions are split in half, including the Primary Residence Deduction

Deductions: Reducing the Tax Payable

Certain deductions are available, which will reduce the tax payable — for example, when you’re buying, keep detailed records of all this information and be prepared to back up details like the “cost of appliances”.

There are two categories of deductions:

✔ Costs to Improve the Property

• You may deduct expenses related to improvements of an enduring nature, including:

• The cost of any range, refrigerator, washing machine, dryer, or other major appliance that you replaced and is included in the property sale

• Costs to assess the feasibility of substantial renovation of existing property

• Costs related to constructing or placing a new housing unit on the property

✔ Costs to Purchase the Property

• You may also deduct:

• Property Transfer Tax and GST (excluding interest and penalties)

• Legal and related closing costs, such as registration fees, title insurance, and a home insurance binder

• Costs for inspection, survey, and appraisal

Prohibited Deductions

❌You may not deduct the following costs:

• Costs of annual, recurring or routine repair, maintenance or service

• Financing costs of an improvement

• Financing costs of a major appliance

• Any cost paid or payable at the time of filing which has been or will be reimbursed by way or grant, forgivable loan, or similar inducement.

• Unreasonable costs, illegal payments

• Costs are attributable to commercial property

• Fines or penalties related to the purchase, sale, or improvement of the property.

How To Pay The Tax Owing

You must pay in Canadian funds, even if you're paying from outside Canada, via one of these methods:

1. Through your bank or financial institution

2. In person at a Service BC Centre

3. By mail to the Minister of Finance

Did You Know? 🤔

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

A reminder that Arora Zbar LLP has 5 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, Hindi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely, Eli Zbar Lawyer

Check out some previous newsletters:

Why do people tend to travel around their closing day?

This phenomenon means we often need to answer the same question: how can BC land title documents be signed if the person isn't able to physically come into our office?

Table of Contents

• 📌A Note on the former COVID Rules

• 🧠Understanding the Affidavit of Execution

• 👉 Acceptable Uses for an Affidavit of Execution

• ⚠️Pitfalls of Affidavits of Execution

• Alternatives to In Person meetings and Affidavits of Execution

📌A Note on the former COVID Rules

An affidavit of execution is not a silver bullet, or something to use for convenience, rather, it:

• is used when in-person witnessing is not feasible.

• must provide a specific, legitimate reason for waiving the standard officer certification requirement.

• must be sworn under oath by an individual who can affirm the authenticity of the signature and explain why the signature was not witnessed in person.

• is evaluated by the LTSA on a case-by-case basis.

🧠Understanding the Affidavit of Execution: Land Title Act Section 49

Affidavits of execution are governed by Land Title Act section 49, with key parts highlighted:

👉 Acceptable Uses for an Affidavit of Execution

The key to using Section 49 is ensuring the "affidavit of execution" will be accepted in “the opinion” of the LTSA registrar.

Affidavits of execution must state facts, not opinions or generalities. Here are some commonly accepted reasons:

• The signatory is located outside British Columbia, a reason which is routinely accepted by the LTSA without further justification.

• The signatory is unable to appear in person due to a disability, including a reasonable amount of specifics as to why. 

• The signatory is in a remote location due to work or residence. For example, specifying the signatory is a farmer and it is harvest time, rather than just stating their unavailability.

• Time-sensitive transactions where signing in person is impossible or impractical. For example, a mortgage discharge required to close a sale, where the mortgagee is on vacation in a rural area, far from any lawyers or notaries.

⚠️Pitfalls of Affidavits of Execution

While remote signings are convenient, they come with certain risks:

1. Lenders may not accept it: Even with LTSA acceptance, many lenders and banks do not accept remotely executed documents or require special advanced permissions.

2. Higher risk of defects: Affidavits of execution are accepted at the LTSA’s discretion, most other land title documents are accepted so long as they’re in registrable form. If the stated reason on the affidavit is not accepted, you will have only 30 days to correct it or the transaction will be reversed.

3. Potential for fraud: Anyone who insists on remote signing or refuses to provide a reason why they are unable to meet in person should be treated as high risk.

🗺️Alternatives to In Person meetings and Affidavits of Execution

1. Find or Appoint a Commissioner for Taking Affidavits. Organizations in BC that frequently execute land title documents (mortgage investment corps, developers, etc.) can appoint an internal Commissioner for Taking Affidavits, who is authorized to witness land title documents.

2. Use a Power of Attorney. A power of attorney allows the attorney to execute documents on the grantor's behalf. Strict compliance with the Land Title Act is required to ensure a POA can be used for this purpose.

3. Visit a Local Notary. The LTSA considers any Notary Public anywhere in the world, an "officer", so long as they provide the requisite information. We often handle transactions where clients sign with a local notary, but we do everything else.

More info:

1. Our previous newsletter explaining when and how to use digital signatures in real estate.

2. LTSA guidance on witnessing and execution 

3. Land Title Practice Manual for affidavits of execution

🤔 Did You Know?

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

A reminder that Arora Zbar LLP has 5 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, Hindi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely, Eli Zbar Lawyer

Check out some previous newsletters:

Story time...

In 2020, the seller, Sally, purchased a Vancouver apartment that featured in-suite laundry. She lived there for several years before deciding to sell, listing the property with the same realtor who had originally represented her on the purchase. The MLS listing, consistent with the original sale, advertised the unit as having in-suite laundry.

Listing, showings, offer, and subject removal proceeded as normal, everything seemed fine until about 2 weeks before closing when I get a WhatsApp message (yes, realtors, if we're closing a deal together you can WhatsApp me to solve problems) from the listing agent, on behalf of my client, the seller, saying the strata board has a problem with her in-suite laundry.

Despite the 2020 MLS listing showing in-suite laundry, they had now taken issue with it, and by closing day had issued a formal demand to have the washing machine either removed, or approved through an onerous and complex process involving an engineer’s report and strata approval. I had sympathy for the buyers who were about to take possession then immediately go to war with their strata.

While we're trying to sort the situation out, the buyer's agent does something which has a technical legal term - it’s called "incredibly stupid." He texts the listing agent saying "if the washing machine has to be removed, the buyers are prepared to withdraw the offer."

Realtors, if you learn one thing from this newsletter, it's to run this kind of text by a lawyer before you send it. Or better yet, don't even think about sending a text like this.

After subjects removal, a contract of purchase and sale is legally binding and cannot be “withdrawn.” Realtors, and all parties to real estate contracts of purchase and sale should be aware that:

1. A subject-free offer cannot be withdrawn. If a party fails to complete, it constitutes a breach of contract, and legal remedies such as forfeiture of the deposit or a claim for damages may follow.

2. The doctrine of “anticipatory breach”: A legal doctrine where, in the event one party to a real estate contract gives a clear intention they do not intend to be bound to the terms of the contract, the innocent party, in anticipation of the breach, can elect to treat the contract as at an end and pursue damages.

Legal correspondence often emphasizes that a party is “ready, willing, and able to complete” to preclude allegations of anticipatory breach.

The Outcome

The seller could have claimed the deposit, relisted the property, potentially pursuing the buyers for damages if the resale price was lower than the original offer. The buyer’s agent’s message created unnecessary risk, not only for the buyers but also for themselves.

Fortunately, the deal still closed. After intense negotiation with litigator Robert Peake, the buyer agreed to a $20,000 price adjustment, and closed. Our client preferred closing for 98% of the contract price rather than risking a lawsuit with the buyer in breach, a battle with the strata, and having to find a new buyer. In that event, the buyer's agent would almost certainly be sued.

Remember:

• Arora Zbar LLP handled this in house. Our firm has real estate litigators, and transaction lawyers, under one roof - every notary, and many real estate law firms, do not.

• Communicate Carefully: Never make statements that could be construed as an intention to breach the contract.

• Understand Contract Law: Between subject removal and closing, parties are bound by the terms of the agreement. Be like the seller’s realtor, manage issues in consultation with a lawyer.

🤔 Did You Know?

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

A reminder that Arora Zbar LLP has 4 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, and Farsi. We are also super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely, Eli Zbar Lawyer

Check out some previous newsletters:

This month’s newsletter features a clear explanation of the Form B mortgage, the foundational document for every mortgage registered in the BC Land Title & Survey Authority. 

There’s so much information packed into the Form B mortgage, much in cryptic legalese. I’ve translated the document into plain English, with an anonymized example of a real mortgage. This newsletter features:

• What is a Form B mortgage?

• Plain English Explanation of the Form B Mortgage 

• When the Form B May Not Tell the Whole Story 

What is a Form B mortgage?

In BC’s Torrens system, a Form B mortgage is the registration that secures repayment of a loan using real property as collateral. Once registered with the Land Title Office, it becomes a legal encumbrance, known to the public, giving the lender a claim against the property until it’s discharged. When a Form B mortgage is registered on title, the property cannot be sold without either consent of the lender, or a discharge.  

Below is an anonymized example of a recent Form B Mortgage we registered, so you know what they look like:

Note: a Form B mortgage is not to be confused with the Strata Form B information certificate! They are completely different things with a coincidentally similar name.

Plain English Explanation of the Form B Mortgage 

Here’s a plain English explanation of the 12 numbered sections you’ll find on every Form B mortgage: 

1. Application – This section identifies the lawyer or notary who filed the Form B, who is not necessarily the same as the lawyer or notary who witnessed the signature.

2. Description of Land – This includes the Parcel Identifier (PID) and the full legal description of the property being mortgaged.

3. Borrower(s) / Mortgagor(s) – Lists the name, address, and occupation of each borrower.

4. Lender(s) / (Mortgagee(s) – Lists the name and address of each lender, which is typically the financial institution providing the mortgage funds. 

5. Payment Provisions – Details the key payment terms, including: 

   • Principal Amount: The amount borrowed, which is the initial loan amount provided by the lender. 

   • Interest Rate: The rate at which interest will accrue on the principal amount. 

   • Interest Adjustment Date: The date on which interest begins to accumulate on the principal amount, usually before regular payments start. 

   • Interest Calculation Period: Specifies how often interest is calculated, such as semi-annually. 

   • Payment Dates: The scheduled dates for regular payments, which might be monthly, bi-weekly, etc. 

   • First Payment Date: Indicates when the borrower must make their first payment. 

   • Amount of Each Periodic Payment: The specific amount that must be paid at each interval. 

   • Interest Act (Canada) Statement: Indicates the equivalent interest rate calculated on a half-yearly basis, ensuring compliance with federal regulations.

   • Last Payment Date: The final date when the last scheduled payment is due. 

   • Assignment of Rents: If included, this allows the lender to collect rent from tenants directly if the borrower defaults on the mortgage. 

   • Place of Payment: Where the borrower must send each payment, usually specified as the lender’s address. 

   • Balance Due Date: The date by which the entire remaining principal must be paid in full. 

6. Mortgage Contains Floating Charge on Land? – Indicates if the mortgage includes a floating charge, which only attaches to specific assets upon a triggering event, providing flexibility in collateral. 

7. Mortgage Secures a Current or Running Account? – Specifies if the mortgage is tied to a running account, like a line of credit, allowing funds to be borrowed, repaid, and borrowed again.

8. Interest Mortgaged – Defines the type of interest being mortgaged, such as fee simple ownership or a leasehold interest. This clarifies the rights being offered as collateral. 

9. Mortgage Terms – Indicates whether the mortgage includes Prescribed Standard Mortgage Terms, the Lender’s Filed Standard Mortgage Terms, or custom terms through an attached schedule.

10. Additional or Modified Terms – Details any additional or modified terms beyond the standard mortgage terms, tailored to the specific agreement. These may include unique clauses relevant to the transaction, and may appear on pages a schedule.

11. Prior Encumbrances Permitted by Lender – Lists any existing financial charges or encumbrances on the title that the lender has agreed to allow to remain. For instance, if there is an existing mortgage in first priority, this section would acknowledge it. 

12. Execution(s) – Includes the signature of the borrower(s) and witnessing officers. Notably, the lender does not sign the Form B. This section also certifies that the document complies with the requirements for registration. 

Bonus Tip: looking for a payout statement or discharge for a mortgage, but unsure who to contact? Start is the lawyer listed in Section 1 “Application” . Usually, the lender’s lawyer prepares the Form B mortgage, and files it. The borrower’s lawyer has the borrower sign, so you’ll see their name as the witnessing offer in section 12.

When the Form B May Not Tell the Whole Story 

Many lenders, especially big banks, do not want to publicize the terms offered to their clients. These lenders can obfuscate the true nature of the mortgage by:

1. Writing “N/A” in key fields, and point to a private agreement, to keep the details of their deal private. The details will be signed by the borrower at the branch, or with their lawyer, and incorporated by reference within the Form B mortgage. For instance, the Form B may state monthly payments, but the mortgage agreement binds the borrower to bi-weekly payments.

2. Writing a much larger principal and higher interest rate, then referencing the “true” details by reference to the mortgage agreement signed by the borrower at the branch, or with their lawyer. Quite common for “collateral” mortgages.

3. Incorporating the terms of a commitment letter or other private agreement in section 9.

Further Information

1. LTSA Guidance on Form B Mortgages 

2. Prescribed Standard Mortgage Terms

🤔 Did You Know?

Arora Zbar LLP has 5 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, Hindi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely, Eli Zbar Lawyer

Since 2022, hundreds of thousands of land owners have filed a declaration and/or report as required under the Land Owner Transparency Act, SBC 2019, c 23 ("LOTA")

Now the BC Government is sending warning letters to land owners who didn't file a LOTA report, but probably should have.

This month's newsletter is a LOTA refresher, in case you or someone you know gets one of these letters.

Answers to your most common questions:

• You got a warning letter - now what?

• How does the government know who didn't file?

• What are the key terms to understand?

• What kind of situations usually require a LOTA rep …

• What kind of situations DO NOT usually require a L …

• How much does a LOTA Report cost?

You got a warning letter - now what?

File the LOTA report ASAP - a LOTA enforcement officer can exercise discretion in applying a penalty when you’re working in good faith to meet the requirements.

The penalties for failing to file a LOTA Report are very steep:

How does the government know who didn't file?

LOTA declarations and reports, like titles, are a matter of public record linked to land's PID.

It appears the government cross referenced PIDs without a corresponding LOTA declaration/report with PIDs where title is held by a corporation, partnership, or trust.

What are the key terms to understand?

• Reporting Body: A corporation, trust, or partnership with an interest in land.

• Interest in Land: LOTA applies to any "interest in land", including:

  • registered ownership of a property;

  • leases with a term of more than ten years;

  • right to purchase (not option to purchase);

  • transmission to an executor/administrator; and

  • Transmission to surviving joint tenant.

• Interest Holder: Every piece of land has an entity with an "interest in land" but not every interest in land has an "interest holder". LOTA reports are required for any interest in land held by an interest holder. Interest holders include:

  • Corporate interest holders: people who own, directly or indirectly, 10% or more of the issued shares or voting shares, or have the right or ability to elect, appoint, or remove the majority of the directors.

  • Trust interest holder: certain people and corporations who have power over, or are beneficiaries of trusts that have an interest in land.

  • Partnerships interest holders: people and corporations who are partners in a partnership.

• Land Owner Transparency Declaration: The LOTA Declaration is required even when land has no "interest holders" involved, because the entity which holds the "interest in land" changed.

• Land Owner Transparency Report: Unless the land is exempt from LOTA, or wholly owned by individuals listed on title, a Land Owner Transparency Report is required setting out the exact ownership structure.

What kind of situations usually require a LOTA report?

• You are an owner of a corporation, trust or partnership that has a legal interest in land in BC (for example, an investment in commercial or residential real estate), regardless of length of ownership.

• You are a part owner of a company which is a part owner of another company which has a legal interest in land in BC, regardless of length of ownership.

• Your company, which is based either inside or outside of BC, invests in real estate in BC, regardless of length of ownership.

• There are changes to your company’s ownership, and your company has a legal interest in land in BC, even if you’ve previously filed a Land Owner Transparency Report.

• You or your company is transferring ownership of all or part of a legal interest in land in BC.

• You are acting as executor on an estate which has a legal interest in land in BC.

• You are not sure if you or your company needs to submit a transparency declaration or a transparency report.

What kind of situations DO NOT usually require a LOTA report?

• You are an individual who directly owns land, unless the land is held in trust or with a partnership.

• You are purchasing property as the full owner, and not holding it in trust for a person or partnership - you’re not required to file a Land Owner Transparency Report, only a Land Owner Transparency declaration at the time of purchase.

How much does a LOTA Report cost? 

At Arora Zbar LLP, a simple LOTR starts at just $400 (including taxes and out of pocket expenses), meaning a report concerning one property with one interest holder. There's an additional $250 for each additional property and interest holder within the same report. For complex holding structures, we're able to provide pricing in advance after a preliminary review of the structure and relevant documents.

Reply to this email if you need help getting a LOTA report done

To better understand our pricing, consider the following examples:

1. Mr. Sidhu owns 100% of a holding company that owns one property. The cost of the report will be $400.

2. Mr. Sidhu owns 100% of a holding company that owns two properties. The cost of the report will be $650.

3. Mr. and Mrs. Sidhu each own 50% of a holding company that owns two properties. The cost of the report will be $900.

4. For a group of five people who each own 20% of the shares in a company that owns one property, the cost of the report will be $1,400.

Further Reading:

1. BC government LOTA enforcement info

2. LOTA Policy Help

3. BCFSA LOTA Guidance

4. BCREA LOTA Guidance

Did You Know?

We offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

A reminder that Arora Zbar LLP has 5 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

Recently, one of our lawyers, Raminder Arora was awarded the Best Lawyers 2024 “Lawyers to Watch” award for construction law.

We offer services in English, Punjabi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely, Eli Zbar Lawyer

Check out some previous newsletters:

Many realtors operate through a Professional Real Estate Corporation (PREC), and other entrepreneurs operate through their own corporations. There's plenty of good reasons to start a PREC / corporation, from tax efficiency, to branding, and most important - shielding yourself from personal liability.

In this newsletter, you'll learn how to properly sign a contract on behalf of your PREC (or any corporation), and review a recent lawsuit between two realtors where one failed to correctly sign on behalf of their PREC, then was found personally liable in court.

Failing to properly display your corporation’s name can result in personal liability, rendering your PREC (or any corporation) essentially worthless. Simply starting and owning a PREC is not enough to avoid personal liability. You must comply with the technical requirements of the BC Business Corporations Act in everything your PREC does, or you risk being held personally liable.

Corporations & Limited Personal Liability

Corporate law changed forever with the 1896 case of Salomon v A Salomon & Co Ltd [1896] UKHL 1, a UK case, affirmed in Canada, that still stands for the doctrine of separate legal personality for corporations, meaning, shareholders of a corporation are not personally liable for more than their investment in the corporation.

The contours of the doctrine of separate legal personality have shifted over the years, now shareholders can be personally liable for certain environmental damage, fraud, and unpaid tax. The general principle of Salomon remains — when properly used, a corporation shields individual directors and shareholders from personal liability.

No PR(ot)EC(tion): the Recent Case of Roome v Kaiser, 2024 BCSC 940

In 2019, two BC realtors, Ms. Roome and Mr. Kaiser decided to start a real estate team together. Mr. Kaiser operated through a PREC. The relationship went sideways, Ms. Roome sued Mr. Kaiser and his PREC. The BC Supreme Court rendered judgement in May 2024 in Ms. Roome’s favour.

Mr. Kaiser argued the court-ordered damages were payable by his PREC, not himself personally. The Court disagreed, finding Mr. Kaiser signed the contract in his personal name, with no reference to his PREC, noting:

Had Mr. Kaiser added “PREC” after his name in the contract and signature line, his PREC, not himself personally, would be liable. After this judgement, missing these 4 letters probably conjured up all sorts of other 4 letter words in his mind.

How to Avoid the Same Fate?

PRECs are especially tricky because the corporation’s name is your name with PREC on the end rather than a distinct business name like "Acme Real Estate Inc". Every corporation must be careful to comply with section 27 of the BC Business Corporations Act, which requires every company's name (INCLUDING THE INC/CORP/LTD/PREC AT THE END) to be displayed as follows:

• in a conspicuous position at each place in British Columbia at which it carries on business;

• in all its notices and other official publications used in British Columbia;

• on all its contracts, business letters and orders for goods, and on all its invoices, statements of account, receipts and letters of credit used in British Columbia; and

• on all bills of exchange, promissory notes, endorsements, cheques and orders for money used in British Columbia and signed by it or on its behalf.

When signing on behalf of a company, PREC or otherwise, the correct way to sign is:

Want to start a PREC?

Keep in mind - operating a PREC involves maintaining two licences: one for yourself and one for the PREC, each year. You also need a corporation before applying for the PREC license.

At Arora Zbar LLP, we can set up your PREC for $1,750 flat, including tax and legal fees, not including the fees owing the BCFSA. Want to start a PREC? Simply reply to this email, we will get the process started.

🤔 Did You Know?

We offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

A reminder that Arora Zbar LLP has 4 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, Hindi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely, Eli Zbar Lawyer

Check out some previous newsletters:

In approximately 2016, the British Columbia government introduced anti-avoidance provisions in the Property Transfer Tax Act. Anti-avoidance provisions have long been a part of the federal Income Tax Act.

The essence of anti-avoidance provisions are the penalties which may in circumstances of single, or multiple transactions, where the individual(s) or corporation(s) attempt to reduce, avoid or defer paying the required PTT.

The PTT department regularly audits transactions under the anti-avoidance provisions. Transactions are subject to audit for six years from the date the transfer is registered with the Land Title Office.

A common “red flag” for an audit is a foreign buyer registered at a low or minimal legal ownership percentage, such as 1%, only for the purpose of reducing the PTT payable.

If a transaction is audited, expect the PTT department to demand documents and information speaking to the financial circumstances (such as bank statements evidencing the ownership of the funds used to purchase the property), relationship between the various parties, and relations with the lender (such as guarantee agreements) showing the reason for 1% ownership. For instance, one would expect a 1% owner to pay 1% of the down payment, 1% of the mortgage etc.

Tax avoidance, penalties, and offences

Penalties for evading or avoiding the tax or making false certifications may include:

• Double the PTT (including the 20% additional PTT on foreign buyers, bringing it to 40% PTT!)

• PTT plus interest

• A fine of $200,000 for corporations

• $100,000 for individuals and/or up to two years in prison

The penalties apply to anyone who participates in tax avoidance, even if they are not aware of the provisions.

Additional penalties may apply for people who don’t comply with the PTT Department’s requests for info during an audit.

Therefore, if one splits the ownership on title to reduce PTT, there is a risk of an audit and a penalty. When in doubt, ask a lawyer!

💡Practical Tips

1. BC government guidance on the meaning of ‘avoidance'

2. Full definition of anti avoidance transaction

3. Warning for lawyers about PTT avoidance

🤔Did You Know?

We offer real estate agents and mortgage brokers complimentary short phone consultations. Message us on WhatsApp, or book a free consult with one of our lawyers.

A reminder that Arora Zbar LLP has 4 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely,

Eli Zbar

Lawyer

Arora Zbar LLP

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🔥Fire season has, unfortunately, already started.

🔥That means real estate closing days (and many lives!) could be impacted by wildfires.

⛔There’s 2 primary ways wildfire could impact a real estate closing:

1. the property is damaged or destroyed by wildfire; or

2. the property is uninsurable due to wildfire in the area.

This newsletter explains the legal implications of the above two situations, including some practical considerations to keep in mind.

To make your lives easier, I’ve written two clauses to protect your clients (both buyers and sellers) from losing their deal due to a wildfire:

• Subject to Insurance Clause

• Automatic Extension Due to Wildfire Clause

🚒Property Damaged or Destroyed by Wildfire

People love to bandy about the word “frustration” when properties are damaged or destroyed before closing day. They think transactions collapse automatically if a property is significantly damaged before closing day.

These people are what us lawyers like to call “wrong.” Frustration generally does not apply in the case of fire damage.

Look no further than Gill v. Zhang, 2016 BCSC 1464 (“Gill”), a frequently cited case about a property seriously damaged by fire between subject removal and completion. Courts frequently rely on the principles set out in Gill for all sorts of property damage occurring between subject removal and closing.

The principles, as summarized from paragraph 87, are:

• The Buyer is entitled to:

  • purchase the property with an appropriate compensation or reduction in the purchase price;

  • the details of the insurance policy and details of the damage; and

  • a reasonable opportunity to assess the damage and their position before electing to affirm the contract or accept the repudiation.
    

• The Buyer is not entitled to demand an entirely new or different agreement.
  

• The Buyer and Seller are both obligated to:

  • agree to reasonable requests to extend the closing date to permit negotiations and investigations;

  • uphold their duty of reasonableness;

  • enter the negotiations in good faith; and

  • be reasonable as to price.

Keep these principles in mind if you find yourself in a situation where the property is damaged or destroyed by wildfire, or just about anything else. Ask me if you have any further questions!

📌Property Uninsurable Because of Wildfire in the Area

Many insurers will not offer renewals or new policies in areas where a wildfire is within 25, 50, or 100km. The definition of “wildfire” and radius varies between insurers.

Mortgage lenders require proof of insurance, on closing day, before funding a mortgage.

Therefore, unless the Buyer is paying cash, and chooses to take the risk of buying an uninsurable property, they will need insurance to complete the purchase.

Insurance could fail to materialize, or fall through, at the last minute. Many buyers get caught flat footed because their contract didn’t consider this possibility.

Wildfire extension clauses also protect sellers, as they “keep the contract alive” through (what should be) the length of wildfire season. This is especially important if a seller has a subsequent purchase lined up.

📝Consider Protecting Your Clients With These 2 Contract Clauses:

***Disclaimer*** Every transaction is unique, these clauses are not 1-size-fits-all. I’ve done my best to draft useful, reasonable clauses - they are not legal advice. It’s your duty to ensure you understand their implications before using them. Please contact myself or another lawyer to ensure these clauses fit your client’s needs.

Subject to Insurance Clause

Automatic Extension Due to Wildfire Clause

💡Practical Tips

1. Consider how you can help victims of wildfires.

2. Attempt to get an insurance policy bound to the property as soon as subjects are removed, perhaps even before. Some insurance agencies will bind policies up to 60 days in advance!

3. Get your home insurance information ready, including copies of all policy documents, for buyer review.

4. Prepare you home for wildfires as best you can.

   1. Here’s 10 tips from the Insurance Bureau of Canada.

   2. BC FireSmart Home Guide

5. Monitor Active Wildfires in Your Area

6. Review the BCREA guidance

🤔Did You Know?

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

A reminder that Arora Zbar LLP has 4 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely,

Eli Zbar

Lawyer

Arora Zbar LLP

Did you know the standard real estate Contract of Purchase and Sale allows Buyers to pay less than the full Purchase Price on the Completion Date?

This newsletter is an in-depth explanation all about Section 13 “Buyer Financing”. By the end of this article, you should know enough about Section 13 to explain it to a client.

The phrase the “Buyer….may wait to pay the Purchase Price to the Seller” in Section 13 causes much confusion because of the technical language and reference to the “CBA Standard Undertakings”.

Let’s demystify and explain how it works.

• Why Does Section 13 Exist?

• What’s An “Undertaking” & Why’s it in the Contract?

• When and How Does Section 13 Protect the Buyer?

• Conditions Imposed on the Buyer

• Implications for the Seller

Why Does Section 13 Exist?

If you’ve ever had a bank account, you know that banks make mistakes and work slowly. Section 13 exists to prevent innocent home buyers from losing their deals due to bank errors and general slowness.

What’s an “Undertaking” & Why’s it in the Contract?

An undertaking is a solemn promise made by a lawyer in their personal capacity. Pursuant to Law Society rules, lawyers face serious penalties for even minor or technical breaches of undertakings. The value of undertakings exists because of the professional sanctions established to enforce those undertakings.

The CBA Standard Undertakings are a key part of how lawyers close real estate transactions in a predictable and efficient manner, without needing to negotiate bespoke closing mechanics for every transaction, including:

1. delivery and exchange of documents;

2. timing and order of document registration;

3. form and timing of payment;

4. the order of operations for clearing title; and

5. how to return the Buyer and Seller to their pre-contract positions and deal with other contingencies if the transaction does not complete for some reason.

Imagine if you had to work through each of these issues with every Buyer and Seller, every time!

Since 1999, the BC branch of the Canadian Bar Association works with the BC Real Estate Association on the standard form Contract of Purchase and Sale, and the CBA Standard Undertakings. That’s why you see both logos at the top of every contract:

When and How Does Section 13 Protect the Buyer?

KEY POINT: the payment in full exception in Section 13 only applies if the buyer is getting a new mortgage.

A “new mortgage” includes:

1. a regular mortgage from a bank, or any lender securing their funds with a mortgage;

2. a renewal of an existing mortgage (Javelin Investments Inc. v Canadian Western Trust Company, 2020 BCSC 1179); and

3. assuming an existing mortgage (per the CBA Standard Undertakings definition).

If the Buyer simply doesn’t have the cash on closing day, Section 13 will not help them. If the Buyer is selling their home and relying on that money for their purchase, Section 13 will not help if the sale collapses making them unable to purchase.

However, if the Buyer’s new mortgage hasn’t funded on closing day, the Buyer’s lawyer can still close the deal, and “wait to pay” under certain conditions as set out in 13(a)-(c).

Conditions Imposed on the Buyer

Implications for the Seller

Notably, neither Section 13 nor the Standard Undertakings offer a specific deadline for how long the Buyer may “wait to pay”. This is not an extension to the Completion Date.

This is why I tell realtors never to put the Completion Date on a Friday or a day before a long weekend! If something happens to the Buyer’s mortgage, the Seller will have to give up possession and otherwise proceed with closing before being paid in full, as the Buyer waits until the next week for their mortgage to fund.

The CBA Standard undertakings specify that the lawyer must, to the best of their knowledge, know of no reason why the funds should not be disbursed in the ordinary course of business. Ordinary course of business is context dependant. During COVID, ordinary business was interrupted and thus parties to real estate contracts needed to provide lenders with extra time to move the funds between accounts.

More info: 

1. You can read the full text of the CBA Standard Undertakings here (warning: PDF).

Did You Know?

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

A reminder that Arora Zbar LLP has 4 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely,

Eli Zbar

Lawyer

Arora Zbar LLP

It’s no joke! Today, April 1, 2024, there are TWO major changes to the calculation of Property Transfer Tax in British Columbia.

We made sure our smart pricing app, PriceMyConveyance.com, is fully updated with the new PTT calculations. This newsletter describes what changed.

⬆️The First Time Home Buyers’ Exemption Went Up And Works Differently Now

Prior to today, the Fair Market Value (“FMV”) price had to be under $500,000.00 for a full First Time Home Buyers’ Exemption, and up to $525,000 for a partial exemption.

Now, the FMV can be up to $835,000 for a full exemption on the FIRST $500,000. A partial exemption is available for a FMV to $860,000.

A crucial change to understand is that, at most, $8,000 of PTT will be exempt, being the PTT payable on the first $500,000. PTT is payable on the FMV above $500,000.

For a FMV between $835,000 and $860,000, the partial exemption also applies on the maximum $8,000 exemption. For example, a FMV of $840,000 would normally be subject to $14,800 in PTT. However, a First Time Home Buyer is eligible for a partial exemption of $6,400, leaving $8,400 PTT payable.

🏗️The Newly Built Home Exemption Went Up 

The Newly Built Home Exemption remains conceptually the same, with increased thresholds. There’s no PTT on new builds with a FMV of up to $1,100,000 (up from $750,000) with partial exemptions are available on new builds with a FMV up to $1,150,000.

Unlike the updated First Time Home Buyers’ Exemption, this Newly Built Home Exemption is on the entire FMV, not the first $500,000.

These complex exemptions are a main reason we built PriceMyConveyance.com 

The Property Transfer Tax Act, RSBC 1996, c 378 has the algebraic formulae for the partial exemptions. We programmed these into PriceMyConveyance.com to make life easier for you.

In case you were wondering, here’s how the math actually works for the partial exemptions - easy, right? 🤣

First Time Home Buyers’ Exemption (s. 6(3))

Newly Built Home Exemption (s. 12.03(3))

⛳ Do you golf? Check out the PriceMyConveyance.com developer’s golf app!

PriceMyConveyance.com is programmed by longtime friend of the firm Travis Gritter. Please check out his innovative golf app Links League (linksleague.golf) and share it with your golf buddies. It’s like Strava for golf - use the GPS rangefinder, track your scores, and compete against your friends even when they play a different course. It’s completely FREE and available for Android and iOS.

Did You Know?

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

A reminder that Arora Zbar LLP has 4 lawyers offering services in real estate transactions, construction disputes, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

We offer services in English, Punjabi, and Farsi.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

Sincerely,

Eli Zbar

Lawyer

Arora Zbar LLP

This newsletter is a cautionary tale about deposits paid for assignment contracts.

Earlier this month, Raminder Arora, Associate Counsel with Arora Zbar LLP, obtained a judgment for our client in the amount of $100,000.00, being the client’s entire deposit paid per an assignment of Contract of Purchase and Sale of a new construction townhouse in Surrey.

This case serves as a reminder to realtors of what not to do when handling real estate deposits. Protect yourself, and your clients with the information below.

The case of Singh v Singh, 2024 BCSC 425, started in January 2022 when our Plaintiff client paid a $100,000 deposit to the Defendant pursuant to an assignment agreement for a townhouse being built in in Surrey, BC. The Defendant acquired his rights to purchase the property pursuant to an earlier assignment from the original purchasers in March 2021.

In 2023, a mortgage holder over the development project was granted conduct of sale after commencing foreclosure. The property was sold to a third-party purchaser around March 2023. Thus, the Defendant had no way of holding up his end of the contract and therefore the Plaintiff’s deposit was found to be returnable.

The BC Supreme Court, In deciding in favour of our client, emphasized that the deposit was paid by the Plaintiff directly to the Defendant, and the terms of the assignment agreement required the Defendant to return the deposit if completion did not occur by a specific date. Notably, even though the original purchasers were not able to recover their deposit against the developer, our client was successful against the Defendant assignor.

This case is a great reminder for realtors – always ensure all deposit money is paid into a trust account in accordance with the Real Estate Services Act. If you have a question about how to handle a deposit, reach out to us and ask.

Although our client was not represented by a realtor, the Defendant and original purchasers were represented and yet they paid the deposit directly to the developer, eventually losing their money. This could leave the original purchasers’ real estate agent open to lawsuit because realtors have a professional obligation to advise their clients against payment of deposit directly to the seller/assignor.

If you know someone who may need legal advice with respect to their real estate matter, either as a party to a contract or as one of the agents, please get in touch with Raminder Arora at rpsarora@arorazbar.com or book a free consultation here: https://calendly.com/rpsarora/consult.

More info: 

1. BCFSA Deposit Guidelines

2. BCFSA Assignment Guidelines

3. BCFSA Assignment Terms

Sincerely,

Raminder Arora and Eli Zbar

Lawyers

Arora Zbar LLP

In honour of Family Day long weekend, this month’s newsletter is all about the different meanings of “family” across real estate.

I often hear clients talk about plans for their “family”, for example, claiming the Property Transfer Tax exemption for transfers to “family” or evicting tenants so that “family” can move in on possession day.

Protect yourself from liability - don’t give your clients the wrong advice.

Consider the following:

1. Grandparents can add their grandchild to the title of their primary residence without PTT, but could not evict their basement tenant to have the grandchild move in, because grandchildren are not “close family” under the Residential Tenancy Act.  

2. Do you know who counts as your “family” under the Real Estate Services Rules? Specific disclosure rules apply when providing services to family for property management, and transactions.

3. A realtor faced a $36,000 insurance claim after they advised a buyer that siblings counted as family under the Residential Tenancy Act. The client closed on the property, evicted the tenant, and was liable for a penalty equal to 12 months rent, at $3,000 per month.

(Note: the below definitions are paraphrased for readability)

Residential Tenancy Act, SBC 2002, c 78

➡️"close family member" means a person’s parent, spouse or child, or the parent or child of that individual's spouse.

Property Transfer Tax Act, RSBC 1996, c 378

➡️"related individual" means a person's spouse, child, grandchild, greatgrandchild, parent, grandparent or great grandparent; the spouse of a person's child, grandchild or greatgrandchild, or the child, parent, grandparent or great grandparent of a person's spouse;

Home Owner Grant Act, RSBC 1996, c 194

➡️"relative" means (except as set out in specific sections) a person's child, grandchild, parent or sibling.

Real Estate Services Rules, BC Reg 209/2021

➡️licensee's spouse, family partner, child or parent… and "family partner" means a person who is living and cohabiting with a licensee in a marriage-like relationship, including a marriage-like relationship between persons of the same gender.

More info: 

1. RTB Policy Guideline On Ending a Tenancy for Close Family to Occupy (PDF)

2. PTT Exemption - Transfer of Principal Residence

3. BCFSA Conflict of Interest - Acting for Family

Did You Know?

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

A reminder that Arora Zbar LLP has 3 lawyers offering services in real estate transactions, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

Sincerely,

Eli Zbar

Lawyer

Arora Zbar LLP

With the forthcoming clamp down on AirBnBs, I’m seeing a spike in non-resident sellers. Many realtors and sellers don’t realize the implications of a non-resident seller for both buyer and seller.

Implications for Buyers:

Under the Income Tax Act, the buyer is obligated to make reasonable inquiry as to the residency of the seller. Normally, that’s done right in clause 26 of the standard form Contract of Purchase and Sale and when the buyer’s lawyer gets a statutory declaration regarding the seller’s residency.

Failure to make reasonable inquiry could make the buyer liable for the entire capital gains tax. Always ensure clause 26 is completed.

Implications for Sellers:

When the seller is a non-resident, the buyer must either pay the appropriate tax directly to the CRA or ensure that the seller gets a “Certificate of Compliance” (sometimes called a “clearance certificate”) from the CRA. Getting this certificate takes 3-6 months after subject removal - and there’s almost never that much time between subject removal and closing.

If the certificate doesn’t arrive by closing day, then between 25% and 50% of the gross purchase price must be held back in the seller’s lawyer’s trust account. The exact amount depends on whether the property is considered depreciable or not.

Once the certificate arrives, the taxes are paid from the holdback and the Seller receives the balance. It doesn’t matter if the seller is selling at a profit or loss, the holdback applies until the certificate arrives.

How will the seller pay off the mortgage to clear title on closing day if 25% of their money is tied up on closing day?

More info: 

1. CRA Guidance on Non-Resident sellers

2. BCREA Guidance for Non-Resident sellers

3. CPA firm Crowe Mackay guidance on Non-Resident sellers 

Please note - tax law changes all the time. The applicability of the info in this newsletter may change. Please talk to a tax accountant or lawyer before making any decisions.

Did You Know?

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

A reminder that Arora Zbar LLP has 3 lawyers offering services in real estate transactions, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

Sincerely,

Eli Zbar

Lawyer

Arora Zbar LLP

Realtors, landlords, all sorts of people ask me “does this need to be wet ink signed?” - especially when it comes to tenancy forms and real estate contracts.

Let’s demystify a few things around wet ink signatures.

Generally speaking, you can digitally sign any contract governed by BC law unless it's specifically not allowed. The BC Electronic Transactions Act, SBC 2001, c.10, allows almost anything to be executed by e-signatures with some notable exceptions in section 2:

1. wills and trusts created by wills

2. powers of attorney, to the extent that they concern the financial affairs or personal care of an individual

3. documents that create or transfer interests in land and that require registration to be effective against third parties

Item 3 is important - it means buyers and sellers can sign a Contract of Purchase and Sale digitally, but they must wet ink sign the actual title transfer documents with their lawyer.

🧠 Remember - whether digital or wet ink, all land contracts must be signed and in writing! The Law and Equity Act, RSBC 1996, c 253 section 59(3) says “a contract respecting land or a disposition of land is not enforceable unless there is, in writing signed by the party to be charged or by that party's agent, both an indication that it has been made and a reasonable indication of the subject matter”.

💡Practical Tip for Electronic Signatures:

• If you’re in doubt about using an electronic signature for something - ask a lawyer!

• Use a reputable digital signature provider with a digital signature certificate and audit trail.

• Keep your digital records safe, always have multiple backups because the Real Estate Services Act, SBC 2004, c 42 section 25 says:

  • A brokerage must maintain proper books, accounts and other records in accordance with the rules, and must keep these records in British Columbia.

• All digital records must capable of being retained through the printing or storage of the record by the recipient. Use PDF or other broadly compatible formats wherever possible. Electronic Transactions Act section 5 says:

  • A requirement under law that a record be in writing is satisfied if the record is (a) in electronic form, and (b) accessible in a manner usable for subsequent reference.

Did You Know?

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

A reminder that Arora Zbar LLP has 3 lawyers offering services in real estate transactions, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

Sincerely,

Eli Zbar

Lawyer

Arora Zbar LLP

Thank you to all the new subscribers!

Buying a tenanted property in British Columbia poses many risks, both for buyers and their agents. Use this info to help avoid battles on closing day, and a sour client.

The law surrounding ending tenancies is nuanced, the tenants can decide to end their tenancy early during the 2 month notice period, triggering an immediate payment to the tenant, or, they can live the 2^nd month rent free.

Unless the contract says otherwise, the seller must pay the tenant’s 1 month compensation. Most sellers assume it’s the opposite, after all it’s the buyers who made the request, and the buyers who are getting the benefit of vacant possession.

Communication is a great way to avoid problems. Before making an offer, discuss who pays the tenant’s 1 month compensation, and put it in the contract.

Either the seller:

🤝Passes on the cost to the buyer by an adjustment on closing day or

📝Explicitly agrees to pay the compensation.

🧠Other Things To Keep In Mind:

• Buyers of a tenanted property must (with limited exceptions) comply with the requirements of the 2 month notice by in fact doing what the notice says the buyers will do. Failure to do so could result in a penalty of 12 months’ rent against the buyers.

• “Family” has a narrow definition under the Residential Tenancy Act – it doesn’t include siblings, only spouses, children, and parents.

• As of 2023, rental deposits gain interest – make sure the seller returns the deposit including interest. Use the BC government’s calculator. 

Did You Know?

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

A reminder that Arora Zbar LLP has 3 lawyers offering services in real estate transactions, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

Sincerely,

Eli Zbar

Lawyer

Arora Zbar LLP