FREQUENTLY ASKED QUESTIONSOctober 19, 2011 October 10, 2007 May 3, 2008 March 8, 2004 May 31, 2006 April 5, 2004
USING A POWER OF ATTORNEY TO BUY, SELL OR REFINANCE REAL ESTATEOctober 19, 2011
Legislation relating to the use of Power of Attorney’s was passed effective September 1, 2011. The changes were mostly to the form of the Power of Attorney, and do not substantially change the use of a Power of Attorney for real estate. Below is a discussion on how to use a Power of Attorney to sell, refinance or purchase a property. In all of these situations we are assuming there are no trust issues between the person giving the Power of Attorney (the "Adult") and the person who is allowed to sign pursuant to the Power of Attorney (the "Attorney"), and all parties are acting in a professional manner. Giving a Power of Attorney to an untrustworthy person will result in serious difficulties. USING A POWER OF ATTORNEY TO SELL PROPERTY So long as the Power of Attorney is property drafted, there are very few issues with using a Power of Attorney to sell property. The Power of Attorney should be limited in terms of how long the Power of Attorney is valid, and to what purpose it is to be used. A general example is: "To sell real estate legally described as (legal description of property) and any interest therein, in such manner as my attorney may think fit, and execute and deliver all documents and other instruments required for such purpose as my attorney may think fit. GENERAL INFORMATION ON POWER OF ATTORNEY’S A Power of Attorney is a document which authorizes one person, an “Attorney”, to make decisions or perform tasks on behalf of another person, the “Adult”. A Power of Attorney can only authorize an Attorney to make legal and financial decisions on behalf of the Adult and not personal care or health care decisions. Although the Power of Attorney Act was substantially revised effective September 1, 2011, Powers of Attorney executed before September 1, 2011 will continue to be valid. An enduring Power of Attorney has no expiration date, and is not commonly used for estate planning purposes. These are broad in nature, and will remain valid when the Adult becomes incapable of looking after her own affairs. A Non-Enduring Power of Attorney is usually limited to a specific task such as to sell the Adult’s property while she is away, or may have an expiry date. While a Power of Attorney is not self-expiring unless specified, s. 56 of the Land Title Act provides that a Power of Attorney is not valid for land title purposes 3 years after the date of execution unless it is an enduring Power of Attorney or the Power of Attorney expressly excludes the effect of s. 56. An Adult cannot appoint an individual who is compensated for providing personal care and health care to the Adult or an employee of a facility providing personal care or health care services to the Adult (unless the individual is also the Adult’s child, parent or spouse). While these are the only legal restrictions, the Adult should obviously trust an individual’s honesty and judgment before appointing her as an Attorney. So long as the Adult is capable, a Power of Attorney can be revoked at any time. There are also certain circumstances when the Power of Attorney terminates, such as upon the death of the Adult or court order. An Attorney must act honestly and use reasonable care and diligence. The Attorney’s authority must be exercised in the best interests of the Adult. It should be noted that a Power of Attorney cannot be used to transfer land to the Attorney unless the Power of Attorney specifically permits. USING A POWER OF ATTORNEY TO SELL PROPERTY So long as the Power of Attorney is property drafted, there are very few issues with using a Power of Attorney to sell property. The Power of Attorney should be limited in terms of how long the Power of Attorney is valid, and to what purpose it is to be used. A general example is: "To sell real estate legally described as (legal description of property) and any interest therein, in such manner as my attorney may think fit, and execute and deliver all documents and other instruments required for such purpose as my attorney may think fit. This Power of Attorney shall expire on (insert date)." USING A POWER OF ATTORNEY TO PURCHASE OR REFINANCE PROPERTY A Power of Attorney can be used to purchase or refinance real estate, but you must check with the lender to confirm their willingness or requirements about using a Power of Attorney. Each lender has different rules regarding the use of a Power of Attorney. At the time of writing this page, Scotiabank will allow a Power of Attorney but they require that the lawyer preparing the mortgage be the lawyer that prepares AND witnesses the Adult’s signature on the Power of Attorney. Our office recently completed a file where we prepared the Power of Attorney but the Adult was already in the UK so her signature was witnessed there. Scotiabank made an exception on this file to allow it to fund, but they advised that for future deals, the Adult either has to fly to B.C. to sign the Power of Attorney or Scotia will not do the deal. Obviously if the Adult has to fly to B.C. they could sign the documents on their own, and a Power of Attorney is not required. RBC will allow a Power of Attorney to be used but RBC will insist on a title insurance policy, which has a minimum cost of $250.00. TD will also allow a Power of Attorney except for equity takeouts, but have extensive requirements. They will require at least two days notice, information on the relationship between the Adult and Attorney, circumstances as to why a Power of Attorney is required, banking relationships, and knowledge of the Adult to the financing request. Even if all this information is provided and they approve of the Power of Attorney, title insurance will be required. Rather than review all of the other lenders requirements, we suggest you (the client) contact the lender at the time of making the application. Lender requirements constantly change and even the above may change frequently. If a transfer of the property to the Attorney is required as a part of the refinancing transaction, keep in mind that there must be specific wording in the Power of Attorney to permit this. SUMMARY Our goal is to remind you that a Power of Attorney can be used for out of town clients, but consideration should be given to the lender requirements for a refinance or purchase of property.
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice regarding your own situation. Copyright © 2011 by Spagnuolo & Company Real Estate Lawyers. All rights reserved. You may reproduce materials available at this site for your own personal use and for non- commercial distribution. All copies must include this copyright statement.
CHANGES TO DISCLOSURE STATEMENTS FOR PRE SALE CONDOSOctober 10, 2007
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice regarding your own situation. Copyright © 2007 by The Spagnuolo Group of Real Estate Law Firms. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.
HOW TO BECOME MORTGAGE FREE FASTERMay 3, 2008 Paying off Your Mortgage Faster
In an article published in the Vancouver Sun on March 20, 2008, it was reported that 78% of respondents said they wanted to pay their mortgages off as fast as possible and one third said they had made a lump sum payment toward that end. Eighty four percent of homeowners who are making weekly or biweekly payments on their mortgages are doing so at an accelerated rate in order ho help shorten their amortization period. The faster our clients reduce the outstanding balance on their mortgage, the more they will save in interest charges. This is particularly important as mortgage interest is not tax-deductible in Canada (unless the mortgage is for a business purpose). Mortgage payments are made with money that our clients have already paid tax on – after tax dollars. There are many options to help reduce mortgage debt quicker. These include accelerated payments or periodic lump sum payments. We have searched for various articles on how to pay off a mortgage quicker and the best we could find is published by the Government of Canada. The article mentions accelerated payments, increasing the amount of the payment, making extra lump sum payments and paying extra on your payment dates. To view this article, click here. Making Your Mortgage Tax Deductible As stated above, mortgage interest is not tax-deductible in Canada. Mortgage payments are made with money that our clients have already paid tax on – after tax dollars. The exception to a mortgage not being tax-deductible is if the money is borrowed for a business purpose, in other words, to create more money. Generally, interest on borrowed money is deductible if the money is borrowed to earn investment or business income. To make the interest deductible on an existing mortgage on your house, you must have income producing assets. The idea is to take these assets and swap them for mortgage debt. Being lawyers, we do not want to give advice on our website without giving you this disclaimer: DO NOT DO THIS WITHOUT TALKING TO AN ACCOUNTANT. If you need accounting advice, call us and we will refer you to an accountant. Once this asset swap is completed, you will own an equal amount of investment assets, and you still have a mortgage on your home. But because you borrowed against your home (in the form of a mortgage) in order to buy assets that create wealth, the interest on your mortgage is now tax-deductible. You have just given yourself a giant tax break. Please remember the Income Tax Act may be changed at any time by the federal government. The information above is accurate as of the date of writing but please review the government website or discuss your situation with your accountant to ensure the proper amount of taxes are being paid. If you do not have an accountant, we would be happy to refer you to our partners, The Newport Group, Chartered Accountants, part of Spagnuolo & Company Professional Services (www.newportgrp.com). The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice regarding your own situation. Copyright © 2006 by The Spagnuolo Group of Real Estate Law Firms. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.
TITLE INSURANCE - AN EXPLANATION
These risks are usually matters which are not covered by a traditional lawyer's due diligence. Briefly summarized, these added protections include the following:
For answers to any questions on Title Insurance, please call us at 604-527-4242 or email us as set out below. Please remember that Title Insurance may frequently change along with the coverages and while we try to keep our website up to date as much as possible, please do not rely upon the information without talking to one of our lawyers. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice regarding your own situation. Copyright © 2005 by The Spagnuolo Group of Real Estate Law Firms. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.
AN EXPLANATION OF THE TORRENS SYSTEMMay 31, 2006
Historically, confirming ownership required the lawyer to check the documents transferring title to the property for several prior transactions. This is known as the Deed System, which is still used in some jurisdictions in Canada. In the Deed System, even though a person appears to be the owner of land, the purchaser is not entitled to rely on the registry and must confirm that the person selling the property was the rightful owner of the property. British Columbia uses a Torrens System, modeled after the ship registry system devised by Robert Torrens. In the Torrens System, a purchaser does not need to search back through each previous transfer. Instead, the purchaser can rely on whatever name shows on the Land Title Registry. If the Land Title Registry shows a person as the owner, the purchaser can buy the property from that owner without worrying about how that person became the owner. The Torrens Land Title Registration System provides a sure method for determining and assuring title to land. Under a Torrens System, security of title is based on the four principles of indefeasibility, registration, abolition of notice and assurance. Each of these is described below. The first principle is indefeasibility. A title that is indefeasible cannot be defeated, revoked, or made void. The person who is registered on title has a right, good against the world, to the land. Under the British Columbia Torrens System, evidence of ownership is shown by a registered indefeasible title which includes the name of the owner and the names of any others who have interests in the property. There are a limited number of exceptions to this principle of indefeasibility and these are listed in s. 23 of the Land Title Act The second principle is registration. Registration in the Land Title Office is important because it is required to establish an indefeasible title. While registration is not mandatory in British Columbia, failure to register means that the estate or interest claimed by an owner cannot be enforced against a third party. The third principle is abolition of notice. With the adoption of the Torrens System, the principle of notice has been abolished. It is not necessary, in British Columbia, to make an exhaustive inquiry into the validity of a title or an interest. Rather, a person who deals with land is entitled to rely on the Land Title Register. A limited number of exceptions to this principle are set out in s. 29 of the Land Title Act. The final principle is assurance. While the Torrens System allows the purchaser to rely on the names shown on the Land Title Registry, there are occasions where title may not be accurate. The Land Title Act establishes an Assurance Fund to compensate individuals who are deprived of an interest in land through the operation of the Torrens System. An example would be best to illustrate how the Assurance Fund works. Mr. Smith is the registered owner of a piece of property. A fraudulent person, Mr. Jones, obtains false identification purporting to identify him as Mr. Smith. Mr. Jones then transfers the property to an innocent third party, Ms. Adams. Ms. Adams becomes the owner of the property without any knowledge of the fraud or forgery. Using these facts, Ms. Adams would remain the owner of the property since she was a completely innocent purchaser with no knowledge of the fraud. Mr. Smith would be compensated by the Assurance Fund, provided they were not at fault for their loss. This is a quick summary of the Torrens System. For further information, please contact our offices. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice regarding your own situation. Copyright © 2003 by The Spagnuolo Group of Real Estate Law Firms. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.
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 Spagnuolo In the NewsAugust 2011
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