Olivia Chow: Land transfer Tax Increase to Fund School Nutrition

With the mayoral race heating up in Toronto, and the candidates trying to convince voters that they are best for the job, Toronto mayoralty candidate Olivia Chow recently proclaimed that if elected, she will raise the city’s land transfer tax by one per cent to fund a school nutrition program. Types of Ownership

Now, before everyone in Toronto gasps, according to Ms. Chow, the proposed increase will only apply to transactions that exceed $2 million.  She added that Chow said the tax would apply to only a fraction of annual real-estate transactions in Toronto. Since September 2013, 473 homes and 56 condos sold for more than $2 million.  According to Chow, her plan will make the system “more progressive.” She said people paying more than $2 million for a home can afford an increase in the land transfer tax. Chow says the increase will raise about $20 million a year.

For those that aren’t familiar, click here for more information about Land Transfer Tax.  A quick refresher, Toronto’s Municipal Land Transfer Tax (MLTT) is paid by a purchaser of a home or business in the city. Toronto is the only municipality in Canada with a MLTT and it’s paid in addition to the provincial land transfer tax, which is slightly higher.

As it stands today, the purchaser of a house with a $2,000,000 sale price would pay $72,200 in land transfer taxes, specifically, $35,725.00 for the Toronto Land Transfer Tax and $36,475.00 for the Ontario Land Transfer Tax.  

EDIT:  Her plan is actually for a 1 percentage point hike, not just a 1 per cent hike — which is a substantial difference.

People buying a $2,000,000 home would pay 56 per cent more than they do now, $55,725 instead of $35,725. Which would bring the total Land Transfer Tax to $92,740.00 compared to the $72,200 they would currently be paying. 

My prediction is that if this (or something like it) were to pass, it would hurt the just over $2,000,000.00 (namely the $2-2.2 million) real estate market, as people in that market would likely try to only spend $1,999,999.00 to avoid the extra $20,000.00 in closing costs.  Or it would drive people out of the city into often larger, more luxurious homes for the same 2 million dollar plus price tag, but likely with more land and/or home. 

The Oct. 27 election is now less than two months away.  Some of you may recall my previous blog post regarding the possibility of eliminating or reducing the MLTT (click here). 

One thing is certain, this remains a hot button election issue.  Do you think Toronto should increase or decrease the municipal land transfer tax? Or, should they keep it the way it is?

Whatever your opinion on the issue, for those that live in Toronto, let your voice be heard, and vote on October 27th.

Condominium: Owners Allege Didn’t Get What Promised

New Condominium:  When you don’t get what you were promised

Or Led to Believe

Wendy Ji, purchased a condominium unit Emerald City Condominiums at Don Mills Road and Sheppard Avenue in 2010 for $460,000.00.  One of the reasons she bought from this development was the advertised “easy underground access” to the Sheppard subway line and the proximity to Fairview Mall.  This was advertized in the sales brochures.  Ms. Ji believed that she would be able to access the subway through the condominium itself, without having to go outside.  A promotional video for the project showed a subway train pulling into a station with stairs marked Emerald City. 

In February, when the purchased closed, and she went into her new condominium, she discovered that there was no tunnel to the subway, as she alleges she was lead to believe. Condominium

Ms. Ji along with some 60 other residents have commenced a class action lawsuit against the development seeking a 10-15% rebate, saying the lack of direct subway access has devalued their units. 

The only way she could get access to the Don Mills Subway station was by walking outside across Sheppard Avenue or through the TTC pathways that ended in outdoor mall parking lots. 

As almost all contracts for new constuction, the agreement of purchase and sale contained the usual clauses stating that the builder chan change the plans and specifications of the building at its sole discretion or as required by the government, as long as it is not a materal change. This would include anythign that is promised in the sales brochure.

As noted in a Toronto Star Article by Susan Pigg, the lawyer for condo developer Elad disputes the claim saying, “there was never any representation that there would be underground access” from the condo building to the subway or directly to Fairview Mall: Both are easy to reach by walking out the lobby doors and six metres to the subway entrance right out front.

“The station isn’t far. It’s not going to kill me to walk there. But it’s the failure of the promise and the fact we paid a premium for that building because it was supposed to have underground access… Most people would just accept it and keep complaining, but this just pushed my buttons and, I thought, we have to speak up for ourselves.” said Ji in an interview with the Star.

Latent Defects – What About a Haunted Building?

Is a Haunted Property a Latent Defect? 

The Facts of the Case

In September of 2010 the plaintiff purchased a commercial property in Kitchener from the defendant.  On December 28, 2010 an article appeared in the local Kitchener newspaper. Mr. Kramer, a director of the defendant, was quoted as saying the following about the subject property, to the newspaper reporter:

and it’s haunted”, “I have heard this from a couple of people – up on the third floor, there is an office up there and they said some days you see somebody moving around inside of there and there is nobody there” & “we used to make jokes that Jimmy Hoffa was in the basement … It’s a labyrinth in there”.

It should be noted that there is almost no case law on the stigmatization of property in Canada and whether or not a vendor is obligated to disclose it.

The plaintiff put forward no evidence that anyone had died in the building whether from natural causes or some criminal act.  Further, the plaintiff’s testimpny was that he has never seen a ghost, did not believe there was a ghost and that all conversations about the property being haunted were a joke and were not serious.

Haunted BuildingJustice Sloan questioned how the plaintiff would provide evidence as to the existence of a ghost.

The Court looked at two previous.  The first was a 2006 Small Claims Court case from the province of Québec, Knight v Dionne where the Court decided that where the son of the vendor had taken his own life 10 years earlier in a personal residence, that fact did not have to be disclosed to the purchaser.

The second decision was Guglielmi v Russo, which was an appeal from the Small Claims Court in 2010.   Justice Swinton quotes

“… A latent defect of quality going to fitness for habitation and which is either unknown to the vendor or such as does not to make him chargeable with concealment or reckless disregard of its truth or falsity will not support any claim of redress by the purchaser.” 

Justice Swinton goes on to state:  

“In any event the vendor is not liable for damages for a latent defect of which he has knowledge unless it renders the premises unfit for habitation or dangerous.”

 The Decision:

In 2013, after hearing this evidence, Justice Sloan dismissed the case that this “haunted” commercial property had a latent defect. 

The plaintiff was not satisfied with this decision, and appealed Justice Sloan’s decision to the Court of Appeal.  Not surprisingly, the Court of Appeal dismissed the plaintiff’s appeal. 

For more information about patent and latent defects , and what must be disclosed to potential homebuyers, Click Here. 

Toronto Condominiums – Ceiling Heights Lowered on some projects

The Sky is Falling – Be Prepared to Duck

How Toronto Condominium Developers are Saving Space

Now we aren’t talking about Chicken Little, but it comes as no surprise to people who have been seeing new Condominium developments over the years that on average,  units are getting smaller.  

RealNet Canada Inc. released its latest stats for new condos in Toronto… and the numbers showed that the average size of a unit has shrunk to about 797 square feet, from closer to 900 square feet five years ago.

However, as noted in a recent Globe and Mail article, there is a new trend that is slowly creeping into new Condominium developments.  The ceiling heights are being lowered.  Toronto Condominium construction

When purchasing a Condominium pre-construction, you often only see two dimensional floor plans which will show you how large the unit will be.  What people often fail to consider, is the height of the ceilings.  Particularly if you are not aware of what a “normal” ceiling height ought to be. 

According to Matthew Slutsky, president of BuzzBuzzHome, “Nine feet is normal, 10 is luxury,” he says. “It’s gone up, eight used to be the norm about a decade ago. Around 2007 to 2008 it started to change to 9 being the standard.”

Why would developers be lowering ceiling heights?

When you think about it, it makes sense.  If a project is approved for a certain height, and they take six inches off per floor over 18 storeys, they can add another floor.  This allows developers to add condominium units, without making them smaller than they already are. 

What does that mean for you?

Nobody likes surprises when it comes to real estate.  If you don’t know to look for ceiling heights in the agreement, you may not turn your mind to the issue. This demonstrates why it is so important to have a real estate lawyer review your Agreement of Purchase and Sale.  

When you purchase a new condominium from a builder you have 10 days to have the document reviewed.  For more information about the 10 day cooling off period, click here.

Make sure you know what you are getting into.  Protect yourself.  

 

Canadian First Time Home Buyers Increase their Budgets

According to a Bank of Montreal Study the average first time home buyers have increased their budget to $316,000.00

This is up almost 6% from an average of $300,000 in last year’s report on first time home buyers.  

What is even more interesting is that buyers in Vancouver, Calgary and Toronto real estate have even higher budgets for their first homes.  

key-3-939487-mThe numbers from the online interviews conducted by BMO from January 25 – March 6, 2014: 

Approximately 30%  of the 513 Canadians interviewed online for the study said they expected assistance from parents or family.

Nearly 61%  said they have made cuts to their lifestyle to save for their first home.

To view the article from the Globe and Mail Click Here.

Toronto Real Estate – Are we in a housing bubble?

Is Toronto Real Estate About to Have A Price Correction?

A recent article by Julian Beltrame of the Toronto Star looked at The Conference Board’s major survey of real estate prices in Canada and concluded that there are no signs of an imminent crash.  This includes the the super-hot Toronto Real Estate market.Housing Bubble

The Conference Board does not believe that Canada’s housing market will suddenly crumble, saying the most likely outlook is for a modest decline nationally, and only in some specific markets.  After taking a comprehensive look at real estate Nationally, as well as in major urban centres, the Conference Board concluded that the conditions of a crash simply don’t exist, despite numerous reports that the market is overbuilt and overvalued.  

The Ottawa based think tank suggests that with the possible exception of Toronto, housing statistics in the past three years have been in line with the 20 year average.  Despite this, the Conference Board found that even in Torotno, there is only a “borderline” case that it could be overbuilt.  

“At this point in the housing cycle, there is a risk that Canadian housing prices in some market segments are due for a modest correction…Nevertheless, we believe that continued population growth, additional employment gains and modest mortgage rate increases will limit potential price declines in 2014 and 2015.”

However, there is a case for more dramatic price adjustment further out if mortgage rates begin to increase and affect affordability, the Conference Board says, but even in that scenario it is likely to be a soft rather than a hard landing.

In recent years, some economists and international organizations such as the OECD, the IMF, Deutsche Bank and The Economist magazine have described Canada’s housing market in bleak term,  characterizing it as among the the most expensive in the world based on historical averages and other metrics.

However,  the consensus of economists within Canada has tended to be more subdued. Last week, the Canadian Real Estate Association also predicted a slowdown as mortgage rates start edging up later in the year.  Despite this forecast, they still predict the market overall growing in 2014 and 2015.

The Conference Board says fears of a housing bubble about to burst in Canada are exaggerated.

The Conference Board concluded that some of the evidence cited by correction hawks, including comparing home prices as a multiple of rental costs, don’t take into account historically-low mortgage rates that keeps affordability steady. Specifically citing Toronto real estate, it notes that in 2013 mortgage payments consumed less than 20 per cent of average household income.  This is the same as it was in 1993.

“Mortgage costs, not just house prices, are the principal deciding factor for potential homebuyers,” says Robin Wiebe, the think-tank’s senior economist.

Even when mortgage rates do start rising, the Conference Board believes it will happen gradually and over an extended period. For instance, it forecasts rates with only a gain of 200 basis points — two percentage points — by 2017 or 2018.

But at current low rates, the typical homeowner on a posted five-year rate will have paid down $42,104 principal on a $100,000 in mortgage debt, so affordability won’t be seriously impacted once it comes time to renew at a higher rate.

The Conference Board provides an outlook on six major cities:

  • Toronto Real Estate:  Balanced with healthy price growth.  A major correction is is difficult to see given solid employment and population growth.
  • Vancouver Real Estate: Moved back into balance last spring. Recent price gains will give way to slower advances in 2014.
  • Calgary Real Estate: A approaching sellers’ conditions, noting strong price gains last year.
  • Edmonton Real Estate: Balanced, with brisk resale and price growth activity last year.
  • Ottawa Real Estate: Market cooling due to falling employment from the government sector, flatter sales and tempered prices.
  • Montreal Real Estate: Flirting with buyer’s market conditions with sales and average prices having dropped somewhat last year.

Are they right?

That is a question I am asked all the time.  My answer is always the same.  Ask 10 people and you will get 10 different opinions.  There is no magic crystal ball.  However, this does show that the predictions are not all dark and gloomy.  Real estate is an investment.  Like any investment, it can appreciate or depreciate.  For the past 15 years I have heard that prices in Toronto are going to drop drastically.  I can say that those people have been proven wrong. However, even if there is a drop in real estate prices; statistically, in the long run, real estate will usually bounce back.  It is important to think about how long you will be able to live in or keep that property you are thinking of buying.  

If you are thinking about purchasing a home, while it is important to consider  the investment potential of the property, and the overall economic outlook, it should not necessarily be the only deciding factor.  Waiting until the market drops or the “bubble bursts”, may price some people out of the area they are looking to buy.  At the same time, purchasing a property out of a fear that there will no longer be any affordable properties in the city may not be the best course of action.

The answer at the end of the day is “it depends”.  (I know, the lawyer gave a non answer).  The truth is, there are a number of individual  factors to consider when buying property.  What I know for certain, is there is no way to predict with any certainty what the future will hold.  

 

Tarion Warranty – Just What Does It Cover?

What is a Tarion Warranty? tarion

Purchasers of real estate from a builder, whether it be a home or a condominium, are often confused about the warranty protection programs available on their newly built units.  

Tarion is a non-profit, private corporation established in 1976 to protect the rights of new home buyers and regulate new home vendors and builders according to the terms of the Ontario New Home Warranties Plan Act (the “Act”). Not only does the Act require builders in Ontario to provide new home warranty coverage, but they must also be registered with Tarion and enrol every new home prior to the start of construction. Tarion is also responsible for managing a guarantee fund to ensure that builders honour the statutory warranties, and for enforcing the overall terms of the Act. For more information Click Here.   

Who is covered under a Tarion Warranty?

Homes, this could be a detached home, a townhome, a row-home or a unit in a quadruplex are covered.  Residential dwelling units in a standard condominium project or a dwelling built on a vacant land condominium unit will have coverage if they meet the “new home requirements.” For more information about which homes are covered, or to determine whether your new home will be covered under the Tarion Warranty, Click Here

When does the coverage start?

The clock starts ticking when the home is “completed for possession”.  What this means is that for a home, coverage usually starts when the deal is closed and you own the home.  For condominiums, coverage begins at the date of occupancy.  If you are unsure about when your warranty started, ask Tarion to confirm their position before any warranty claiming periods expire.

What does a Tarion Warranty Cover?

Deposit Protection:

In the event that your builder goes bankrupt or breaches the terms of the purchase agreement, Tarion will protect your deposits to a maximum of $20,000. Deposits paid for all other new homes are protected to a maximum of $40,000.

However, any funds given to hold a condominium unit before you have an official signed purchase agreement are not protected under the warranty.

Delayed Closing or Occupancy:

Under the delayed closing and delayed occupancy warranty, your builder guarantees that your home will be ready for you to move in either by a date specified in the purchase agreement or by a date that has been properly extended if circumstances occur that delay the home’s completion. In many cases, your builder will be required to compensate you if a delay occurs. Be sure to read the Tarion Warranty Critical Dates that are included in the Agreement of Purchase and Sale. 

Unauthorized Substitution

This protects the purchaser from a builder unscrupulously substituting items specified in the purchase agreement. For example, if a particular back-splash color or material was agreed to, substitution without your written authorization is not allowed. This also extends to the inclusion of specifics (think stainless steel appliance by a notable brand, shutters or blinds of a particular suasion etc.). Your recourse as a purchaser is to demand that the original items specified be included or that cash compensation be given. In practice, your Agreement of Purchase and Sale will often include a clause allowing the builder to provide you a close match, or the next best substitute, often deemed by availability.

Common Elements

For most condominium projects, warranty coverage also includes the shared areas of the building, referred to as Common Elements.   

How long am I covered?

One Year Warranty

  • Requires a home is constructed in a workman-like manner and free from defects in material;
  • Protects against unauthorized substitutions.   
  • Requires the home to be fit for habitation;
  • Protects against Ontario Building Code violations; and
  • Applies for one year, beginning on the home’s date of possession even if the home is sold.

Two Year Warranty

  • Protects against water penetration through the basement or foundation walls;
  • Protects against defects in materials that affect windows, doors and caulking and defects in work that results in water penetration   into the building envelope;
  • Covers defects in work or materials in the electrical, plumbing and heating delivery and distribution systems;
  • Covers defects in work or materials that result in the detachment, displacement or deterioration of exterior cladding (such as   brickwork, aluminum or vinyl siding);
  • Protects against violations of the Ontario Building Code that affect health and safety; and
  • Applies for two years, beginning on the home’s date of possession.

Seven Year Warranty

Your home’s seven year warranty covers major structural defects (MSD) and begins on the date you take possession of the home and ends on the day before the seventh anniversary of that date.

For example, if your home’s date of possession is January 1, 2005, the seven year MSD warranty begins on January 1, 2005 and remains in effect until and including January 1, 2012.

A major structural defect is defined in the The Ontario New Home Warranties Plan Act  as:

In respect of a post June 30, 2012 home, any defect in work or materials in respect of a building, including a crack, distortion or displacement of a structural load-bearing element of the building, if it,

  1.  results in failure of a structural load-bearing element of the building,
  2. materially and adversely affects the ability of a structural load-bearing element of the building  to carry, bear and resist applicable structural loads for the usual and ordinary service life of the element, or
  3.  materially and adversely affects the use of a significant portion of the building for usual and ordinary purposes of a residential dwelling and having regard to any specific use provisions set out in the purchase agreement for the home

The seven year MSD warranty includes significant damage due to soil movement*, major cracks in basement walls, collapse or serious distortion of joints or roof structure and chemical failure of materials.

In addition to the general exclusions, the seven year MSD warranty specifically excludes: dampness not arising from failure of a load-bearing portion of the building; damage to drains or services; and damage to finishes.

What is Not Covered By Tarion?

Normal Wear and Tear

  • Normal shrinkage of materials that dry out after construction such as nail “pops” or minor concrete cracking
  • Settling of soil around the house or along utility lines (other than subsidence beneath the footings of the home)
  • Scuffs and scratches to floor or wall surfaces caused by moving, decorating or day-to-day use of the home by the homeowner

Damage Caused by Improper Maintenance

  • Dampness or condensation caused by failure to maintain proper ventilation
  • Damage resulting from improper maintenance

Damage Caused by a Third Party

  • Damage caused by municipal services or utilities
  • Damage caused by floods, “acts of God”, acts of civil or military authorities or acts of war, riot, insurrection, civil commotion or vandalism
  • Damage caused by insects or rodents, unless it is the result of construction that does not meet the Ontario Building Code

Secondary Damage Caused by Defects that are Under Warranty

  • Personal or property damage, such as personal injury, loss of income and other secondary loss associated with warranted defects or repairs

(However, your homeowner insurance may cover such secondary or consequential damage.)

Supplementary Warranties

  • Warranties or agreements provided by your builder over and above the statutory warranties.  Such matters are between the builder and the homeowner and are not enforced by Tarion

Deficiencies Caused by Homeowner Actions

  • Alterations, deletions or additions to the home that were made by the homeowner
  • Changes by the homeowner to the direction of the grading or the slope of the ground
  • Defects in materials, design or work that was supplied or installed by the homeowner

Elevators

  • The seven year MSD warranty does not extend to elevating devices

HVAC Appliances

  • The seven year MSD warranty does not extend to appliances that form part of the heating or cooling apparatus, equipment or systems, whether for water, air or other substances, including furnaces, air conditioners, chillers and heat recovery ventilators

Specific Defects Accepted in Writing

  • Ascertained defects in work or material accepted in writing by the homeowner

 There is a lot to cover, and this has only  scratched the surface.

If you need more information about Tarion, Click Here. 

Big Five Banks Unwilling to Give Mortgages for Micro Condos

What are Micro Condos?

Many developers are building what has been referred to as “micro condos”.  These are condominium units that are less than 400 square feet.  These micro condos have seen success in over populated areas such as Tokyo and New York, and are beginning to come to urban centres such as Toronto and Vancouver. 

Many people are surprised to find out that the big banks are often unwilling to provide financing for these micro condos.  This has led to purchasers, realtors and developers being frustrated and confused. 

“There are certain Canadian banks that won’t fund condominiums below a certain size but there are a lot of B-lenders that will and so the biggest mistake that the A-lenders are making is not funding those,” Brad Lamb of Brad J. Lamb Realty told , Canadian Real Estate Wealth. “They don’t actually know what they are doing.”

According to Mr. Lamb “They are greatly mistaken and poorly informed of where they should be putting their money,” he explains. “The funny thing is that they are prepared to lend money on the products that take the longest to sell and hardest to sell, yet the properties that rent instantaneously and sell instantaneously are the ones that the most people can afford.”micro condo

Lamb says the demand for micro-condos is “unlimited” in downtown urban centres, with young professionals craving these compact spaces.

So what does that mean for you?

Whether you are thinking of purchasing one of these units as an investment or to live in, in order to avoid any unexpected surprises, make sure you speak to a mortgage professional in order to ensure that you will be able to secure financing. 

While you can still get private financing or a B lender, it may not come with the interest rates or conditions that you would have gotten had you received a mortgage from one of the Big Five banks. 

Always make sure you make your offer is conditional on financing in order to avoid surprises. 

Who is a First Time Home Buyer – For Land Transfer Tax Refund Purposes

Who qualifies as a first a first time home buyer in order to qualify for the Land Transfer Tax refund?  Seems like a simple question.  However, the answer isn’t as simple as the question implies. 

What is Land Transfer Tax

The Provincial Land Transfer Tax applies to all transfers of land in Ontario.  If the transfer of land is in Toronto, there is an additional Municipal Land Transfer Tax. first time home buyer

In general, if you buy land or an interest in land in Ontario, you must pay  land transfer tax (provincial and possibly municipal), whether or not the transfer is registered at one of Ontario’s land registry office. 

Land includes any buildings, buildings to be constructed, and fixtures (such as light fixtures, built-in appliances and cabinetry).

The land transfer tax payable is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.

For more information about Land Transfer tax, and how it is calculated Click Here.

Who Qualifies for a Frist Time Home Buyers Credit? 

First-time homebuyers may be eligible for a refund of all or part of the tax. For transfers where:

  • the agreement of purchase and sale was entered into after December 13, 2007, the refund applies to all homes, whether newly constructed or resale.
  • the agreement of purchase and sale was entered into before December 14, 2007, the refund only applies on the purchase of a newly constructed home.

Applications for a refund must be made within 18 months after the date of the transfer.

To claim a refund, the requirements are as follows:

  • The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
  • If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world, while he or she was the purchaser’s spouse. If this is the case, no refund is available to either spouse.
  • The purchaser must be at least 18 years of age.
  • The application for a refund must be made within 18 months after the date on which the conveyance or disposition occurred. (Note that an application for the refund can be completed upon the electronic registration of the conveyance).
  • The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
  • The purchaser cannot have previously received an Ontario Home Ownership Savings Plan (OHOSP) based refund of land transfer tax.
  • If the agreement of purchase and sale is entered into before December 14, 2007, the home must be newly constructed.

First time home buyers or new and resale homes are eligible to receive refunds of the provincial and Toronto Land Transfer Taxes.

Am I a First Time Home Buyer?

Do I qualify for the First Time Home Buyers Refund?

There are several situations which have come across my desk where clients have been surprised that they did not qualify for the First Time Home Buyers Land Transfer Tax Refund.  I have accumulated some of the common questions/concerns below. 

1.  I am purchasing a property for the first time, but my parent has to be put on title at the insistence of the bank.  My parent is not a first time home buyer. 

In this situation, it will be necessary to pay land transfer tax at the time of registration and apply for a refund from the ministry.

If the parent did not acquire a beneficial interest in the property as a result of the conveyance:

  • the ministry will accept the fact that the parent was on title as a trustee for the child, and
  • the child would qualify for the newly constructed home refund, provided that evidence of the trust is submitted (e.g., a letter from the bank confirming that the parent is on title for mortgage purposes).

For example, where a parent who is not a first-time purchaser and a child who is a first-time purchaser, purchase a home with equal 50/50 interests, the child may claim a refund of 50% of the land transfer tax payable. The child’s claim cannot exceed 50% of the maximum allowable refund (i.e. 50% of $2,000).

2.      I inherited a property from an estate, but did not “purchase” the property.  Can I still claim the first time home buyers refund when I “purchase” my first home? 

To claim a refund, you cannot have owned a home, or an interest in a home, anywhere in the world. Previous ownership in a property means you do not qualify. The method of acquiring the property (e.g., purchase, gift or through an inheritance) is not considered.

3.      I am purchasing a property and I have never owned a home previously. However, my spouse has a property that he/she purchased prior to us becoming spouses. 

Your partner’s eligibility for a first time home buyers refund depends on whether you are “spouses” as defined in section 29 of the Family Law Act.

For land transfer tax purposes, “spouse” means either of two persons who are married to each other, or who are not married to each other and who have cohabited:

  • continuously for a period of not less than three years; or
  • in a relationship of some permanence, if they are the natural or adoptive parents of a child.

If you are not spouses according to the definition above, then your partner may claim a refund based on his/her interest acquired in the home.

If you are “spouses”, and the home was owned by one of the partners while you were spouses with each other (no matter how long ago or for how long), then you do not qualify for the first time home buyers refund, even if you did not live in the property together.   

For example if a husband owned a property prior to getting married, and sold it the day after he got married.  His wife has never owned interest in a property.  The wife would not be entitled to a first time home buyers refund.  (See Number 4 if the property was sold prior to becoming spouses). 

The situation does not change if title to the property is in one partner’s name alone. 

4.      I am purchasing a property, and I have never owned a property before.  My spouse owned a property prior to us becoming spouses, however he/she sold the property prior to us becoming spouses.   

In this circumstance, you are entitled to the first time home buyers refund, even though the first spouse is not a first-time homebuyer.  You can claim a refund up to the maximum, as long as the property was not owned  while you were each other’s “spouse.”

What this means is that if a husband who is a first time purchaser, and a wife who is not a first time home purchase a home, they can claim the  full land transfer tax refund if the home was sold prior to becoming spouses. 

It is important to remember that for land transfer tax purposes, “spouse” means either of two persons who are married to each other, or who are not married to each other and who have cohabited:

  • continuously for a period of not less than three years; or
  • in a relationship of some permanence, if they are the natural or adoptive parents of a child.

5.      I moved to Canada from another country.  I previously owned property in that country, however, sold it prior to coming to Canada. 

You would not be entitled to the refund.  A purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.

Contact Us to determine your eligibility for the land transfer tax first time home buyers refund.

Do I Have Right to A View?

One factor many people consider when purchasing a home or condominium, is the view.  Whether it be the mountains, the lake or a skyline, often purchasers pay a premium for this luxury.

Right to a View

However, an interesting case has developed in the Ottawa area, shows what can happen when the home owners “right to a view” was not put in writing. 

Several purchasers in the Sandgate Ridge community in Nepean purchased new homes from Monarch Corporation next to the Stonebridge Golf and Country Club.  Many of the existing homeowners paid a premium for their lots (in some cases $100,000 more than other homes in the development) for the view, and the verbal promise made by Monarch that the other land wouldn’t be developed.  Many homeowners now say that they paid this premium because they wanted the peace and quiet that these particular homes offered.  However, these promises were never put in writing. 

However, Monarch now intends to build 11 new homes just behind the fifth tee of the Stonebridge Golf and Country Club. 

Can there be a right to a view?

Technically, in Canadian law, there is no entrenched “right to a view”.  In most cases, it would be impossible to make those types of guarantees.  This is often due to the fact that the developers do not own all of the surrounding land, and cannot control what a neighbouring owner may do in the future. 

In most cases when you buy a new home, the developer cannot make these kinds of guarantees, often because they do not own all of the surrounding land. Nor do they have control over what neighbouring owners might apply for in the future.

What should I do to protect myself?

If you are looking to purchase a property, and one of the selling features is the view, it is smart to look around the development, and think about what may happen in the future. 

  1. Ask yourself questions. For example, if your neighbour were to sell their land and it was developed into a condominium, or build a second storey addition.  What can happen to the neighbouring land.
  2. Do your research.  Confirm the zoning of the adjoining land, and ask whether anyone has applied to rezone the land in the area. 

With regards to the existing homeowners from the Stonebrdige Community, it remains to be seen what will happen.  Currently the Stonebridge Community Association submitted a letter to the City of Ottawa in opposition to the Monarch plan, raising traffic and safety concerns.

Depending on the outcome, the homeowners may decide to sue Monarch, which is a costly endeavour.  However, without anything in writing, it will be difficult for their case to be successful. 

Be careful.  Sales people will often talk about the wonderful view you get, however they don’t usually guarantee that these views will be there in perpetuity.

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