B.C. Supreme Court rules in mother-daughter housing dispute

A RECENT B.C. Supreme Court battle should serve as a caveat for relatives thinking of jointly buying property.

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Reblogged from The Georgia Straight | Carlito Pablo

This one pitted a daughter against her mother in connection with a home purchase where they did not put their agreement in writing.

In a July 18, 2014, ruling, Justice Barry Davies reminded us about the pitfalls of “undocumented or under-documented inter-generational ventures entered into amongst family members”.

As Davies observed in his reasons for judgment: “All too often…the best of intentions result in sorrow.”

In the case filed by Catherine Ann Cerenzie and her husband against the woman’s mother, Mary Teresa Duff, “what is lost by all involved…is far more than money.”

“The real loss,” Davies wrote, “is the love and trust which gave rise to the venture in the first place and which likely will never be regained.”

Wading through conflicting testimonies, Davies was able to piece together a narrative around the purchase and eventual sale of 1064 Buoy Drive in Port Coquitlam.

The property was purchased by Duff and her daughter in 2008 out of the younger woman’s desire to have a stable home for her three children. When mortgage financing of $464,000 was first approved, it was contemplated that both Duff and Cerenzie were to be the mortgagors.

“It was only later, after Mrs. Duff advised Mrs. Cerenzie that she would eventually qualify for lower property taxes, that the Buoy Drive Home was conveyed only to Mrs. Duff rather than jointly to her and Mrs. Cerenzie, with Mrs. Cerenzie then becoming a guarantor rather than a co-borrower on the mortgage obtained for its purchase,” Davies recalled.

Duff made a $137,000 down payment, and the Cerenzies contributed $5,000. The Cerenzie family occupied the upstairs of the house, while Duff moved into a suite on the lower floor.

Although there is “insufficient evidence of the specifics of the arrangements”, Davies noted that there was “general agreement” between the parties on buying a suitable home that they could all “collectively afford”.

One aspect of this agreement was that Duff would contribute $500 monthly toward paying off the mortgage and the Cerenzies would shoulder the balance of mortgage payments.

In the spring of 2012, Duff “began to assert sole ownership rights by unilaterally determining to sell the Buoy Drive Home”, Davies wrote.

Davies didn’t go into why there was a falling-out. He noted that there had already been “sufficient discord and recrimination in this litigation to likely irreparably poison the once good relationship between the parties”.

The Cerenzie family was evicted, and Duff sold the house.

During the trial, Duff testified that the Cerenzie family was her tenant, an assertion that the judge rejected. Davies agreed with the plaintiffs’ claim: “In this case, Mr. and Mrs. Cerenzie submit that evidence establishes that they are entitled to a share of the Sale Proceeds both by imposition of a resulting trust or by application of the equitable principle of unjust enrichment.”

The judge determined that the Cerenzies contributed a total of $83,913.86 toward the purchase of the house: their down payment of $5,000 and mortgage payments totalling $78,913.86.

Duff contributed $155,510.66, which is the sum of her down payment of $137,000 and her monthly mortgage payments.

Although Davies agreed that the Cerenzies are entitled to a share of the sale proceeds of $192,682.45, he denied their suggestion that the amount be divided on a pro rata basis or in proportion to overall contributions.

One reason is that Duff made a bigger initial investment to acquire the home, and that should “accordingly entitle her to a greater share of the Sale Proceeds”.

After some adjustments, Davies ruled that Duff is entitled to $136,800, and the Cerenzies, $55,882.45.

Davies also dismissed Duff’s counterclaim that the plaintiffs owe her for damage to the home and loans made by her to Mr. Cerenzie.

As in many cases similar to this, Davies noted, when courts are called to sort out issues, the “result will never be totally satisfactory to the parties”.

Read the original article and more here

BCREA Housing Market Update (June 2014)

Questions for Property Transfer Tax (BC)

20140219-224133.jpgIf you are like me, then you probably have tons of questions about Property Transfer Tax. Do I have to pay it? What happens when I sell my house? What if I want to give my house to my children? Are there any rebates, discounts or first-time homebuyer benefits?  I’ve come across a nice article from David Simon – which is quite helpful in some of the odd particulars of Property Transfer Tax, like adding someone’s name to title – does that constitute a sale subject to property transfer tax? I’m by no means an expert nor a lawyer – should you consult your own lawyer if you have a particular situation or question? Yes. If you want to shoot me over a quick question, or get some recommendations on who you should really be speaking to, please hit up the comment section below or on my contact form.

For all you lucky Albertan’s, you’ve probably never encountered nor will you ever hear about this strange thing we call property transfer tax.

“I am often asked how a person can add someone to a title without paying property transfer tax. Usually that person contributed to the acquisition and has been helping paying the mortgage. Unless the person is a “related individual” as defined in the Property Transfer Tax Act and the transferor or the transferee has been living there as his/her principal residence for at least 6 months, then property transfer tax has to be paid. A related individual under the Act is a direct relative, e.g. son, daughter, parent grandparent. Siblings and aunts and uncles do not fall within the definition and the transfer tax has to be paid for transfers to them.

 I have been asked if a company can transfer its property free of property transfer tax to its shareholders. The answer is no as the company is a separate legal entity from its shareholders. Only if the company was holding the property in trust and the trust declaration was registered when the transfer to the company was registered, can the transfer be done free of property transfer tax.

 From an income tax point of view, the law is that on any disposition, or deemed disposition, of capital property, tax is payable on any capital gains. The main exception to this is for dispositions of a primary residence. There is no tax payable on the capital gains from a disposition of a primary residence.  A deemed disposition occurs when a person dies, there is a gift of property or there is a change of use of the property, e g. it goes from being your primary residence to a rental property, or from a rental property to being your primary residence. The gain has to be determined at that time and any applicable tax paid. So before anyone takes title to, or transfers title to, all or part of a primary residence or any other property, even if a family member is involved, they should consult with their tax advisor as to possible tax consequences. Once you do something it is difficult and potentially costly to undo it.”

Bang for your $599,000 buck

There’s a house for sale in Vancouver for under $600,000

Reblogged from The Province

In a city where affordable housing is an oxymoron, a two-storey East Vancouver character home is bound to catch some attention with its price tag.

The 1,951-square-foot home at 2622 Clark Dr. is set to go on the market Monday with a listed price of $599,000 — expected to be the lowest-priced, detached, freehold house in Vancouver.

“I expect it to be noticed,” said listing agent Mary Cleaver. “It’s a beautiful renovated Craftsman-style house in a lovely neighbourhood at a great price.”

The low price is because the three-bedroom, two-bath Grandview-Woodland property faces busy Clark Drive and is on a small 30.5-X-58-foot lot, about half the depth of typical lots in the neighbourhood.

Contrary to what some people might expect from the — relatively — bargain-basement price, the house is well-kept and lovingly maintained.

Built in 1911, its plumbing, electrical and windows were updated before the current owners bought the place in 2005 for $333,000. They have since replaced the roof, refinished the floors, installed a new kitchen and repainted the exterior, said Cleaver.

Homeowner Simon Yu, who owns a deck-renovation company, also added a wraparound deck to the home, adding an extra 600 sq. ft to the property.

The low price is rare in the city, said Cleaver, although it isn’t the only one. In January, a house in the Fraserview-Killarney neighbourhood sold for $592,000. A house off of Commercial Drive sold for $471,000 in April 2012.

Currently, the cheapest freehold, detached house listed in Vancouver is $628,000 in Hastings-Sunrise.

The Clark Drive house may be a deal in comparison with million-dollar fixer-uppers that have become the norm in the city, but statistics show Vancouver’s housing market still remains out of reach for average wage earners. An RBC report last year shows detached homes in Metro Vancouver require more than 80 per cent of median household income. A recent international survey also placed Vancouver second after Hong Kong in having the least-affordable housing.

And there are no signs Vancouver’s sky-high market is heading for a downturn. The region’s housing market is maintaining its steady pace from last year, said the Real Estate Board of Greater Vancouver, with residential sales in February jumping 40 per cent compared with February 2013.

Cleaver said the homeowners, who have two young children, were very happy in the house, but are selling it because they need more space. She’s holding an open house April 5 and 6 from 2 to 4 p.m.

“It’s a very nice, livable house, and (at that price), it is competing with apartments and townhouses,” she said.

What $599,000 will get you:

If you want even more bang for your buck, you have to look farther afield. Here is what $599,000 will get you in:

Langley: 20465-67B Ave.

A 3,248-square-foot, five-bedroom, four-bathroom house in Willoughby with gourmet kitchen and finished basement.

Maple Ridge: 10070-246B St.

Built in 2013, this four-bedroom home on a quiet street has a great room, vaulted ceilings in the master bedroom and a rec room.

Sechelt: 6220 Mika Rd.

There are panoramic sea views, oversized decks and 14-foot ceilings in this five-bedoom West Sechelt home on a 11,412-sq.-ft lot.

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Vancouver home sales jump 30% in January from a year ago, board warns people to ‘price’ home right

The message from realtors in Canada’s most expensive city is clear — price your home right if you want it to sell.

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Reblogged from The Financial Post | Gary Marr

The message from realtors in Canada’s most expensive city is clear — price your home right if you want it to sell.

The Real Estate Board of Greater Vancouver said there were 1,760 sales through the Multiple Listing Service in January, a 30.3% increase from a year ago. But sales were down 9.9% decline from December.

The board’s president had a specific message to homeowners, in a press release.

“If you’re looking to sell your home in a balanced market, it’s critical that your list price is reflective of current market conditions,” said Sandra Ms. Wyatt.

Last month’s sales figures remain 7.2% above the 10-year average for the month of January. Prices have inched up a bit too. The board’s composite benchmark price for all residential properties in Metro Vancouver stood at $606,800 last month, a 3.2% increase from a year ago.

“The Greater Vancouver housing market has been in a balanced market for nearly a year. This has meant steady home sale and listing activity accompanied by stable home prices,” said Ms. Wyant, in the release.

New listings are on the rise, reaching 5,128 in January. That’s a 4.2% increase from a year ago. New listings were also 17.7% above the 10-year average for the month.

The new listings bring the total number of properties for sale across the Greater Vancouver area to 12,602 which is down 4.9% from a year ago but up 9% from December.

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Money hurdles for 2014: Kids need to learn about money

‘Resolve the make your kids more financially savvy than you were’

Motivational quote for your fridge: “Teaching kids sound financial habits at an early age gives all kids the opportunity to be successful when they are an adult.” —Warren Buffett

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Reblogged from Melissa Leong

Pep talk: Sure, we all want our children to be happy. But let’s be honest — what we’d rather be saying is: we all want our children to be rich. Well, you can point them in the right direction. Warren Buffett says his greatest inspiration was his father who taught him about the value of saving. This is your chance to give your kids something better than money. Teach them to fish, so to speak.

Peer support: When Naomi Mesbur’s son, Ciaran, was born, she was in debt.

She had helped fund her first husband’s business and supported them when he became ill. When he died, she had $40,000 worth of debt.

“I don’t want to leave debt for my kid,” the 43-year-old Toronto legal assistant says. “I also want to teach him so that he doesn’t end up in this mess.”

She looks for teachable moments. She talks to Ciaran who is seven, about prices at the grocery store. They play Monopoly. She brings him to dollar stores for treats. “[I tell him,] ‘You can get one thing…but it can’t be more than $1.50.’ So he chooses something and looks at the prices.”

Every week, his school has pizza day. They go to his piggy bank for the money to purchase a $2 slice and a $1 drink. If he wants an extra slice, he can help around the house for more money.

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Money hurdles for 2014: How to get out of debt ASAP

“According to a recent TransUnion survey, 47% of Canadians are committing to at least one financial resolution this year. That being said, 37% did not reach their goal in 2013.

Resolutions are easy to make, hard to keep. Goals can be more attainable if you have a coach in your corner. So let us help you tackle your financial resolutions for 2014.”

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Reblogged from Melissa Leong

‘We resolve to reduce our debt as speedily as possible’

Motivational quote for your fridge: “It always seems impossible until it’s done.” — Nelson Mandela

Pep talk: You are determined to tackle your debts. You’re not alone. Paying down debt was at the top of Canadians’ financial priorities last year, according to CIBC. And we ought to take action — TransUnion predicts that average Canadian consumer debt will rise by 4% to an all-time high of $28,853 by the end of 2014.

Debt is stressful but think of how awesome you’ll feel when you’ve got a plan to beat it, when you’re seeing it retreat, when you’re finally free and clear, when you’ve got all of that extra money, etc.

Peer support: At the age of 20, Mike Bremner moved to Whistler, B.C. He also got his first credit card. “By the time I was 23, I had $20,000 in credit card debt,” he says.

When he maxed out one $15,000 card, the company increased his limit to $45,000. That was the moment he realized that his situation wasn’t going to change without his own intervention. He cut up all of his credit cards except one.

“You have to change your lifestyle. I cut back on spending by not eating out and drinking as much. I shopped online instead of in stores. I got a second job,” he says. “This all sounds like a nightmare to some people, I know. But your life is going to be better in the future because of this.”

The 28-year-old independent contractor for a technology company in Chester, N.S., put more than $500 every month to his debts for four years. He became debt-free in March.

“I said once I was out of debt, I’d spend the money to go on vacation and get a new car; but I’ve been spending more wisely and I’ve been keeping the money to do nicer things,” he says.

“It is hard to see the end. When I made my first payment, it felt like nothing. But it’s like going for a car drive across the country. On the first day, you don’t look at getting to your destination. You look at driving across the province. You have to set realistic goals for yourself.”

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Getting rid of risky property play will improve retirement

Situation: Couple has retirement portfolio with high risk investments that could fizzle
Solution: Get out of speculative investments, then invest for reliable income

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Reblogged from Andrew Allentuck

In Alberta, a couple we’ll call Frank, who is 57, and Ella, who is 51, emigrated to Canada decades ago to find work and build secure lives.

Starting with nothing but their will to work, Frank in a municipal civil service job, Ella in health care, they have built up about $705,000 of net worth, most of it in their $490,000 home. They worry, however, that their income from about $184,000 of financial assets plus two civil service pensions at 65 plus CPP and OAS may not be enough to sustain their retirement. The irony is that their Canadian assets would make them very wealthy in their countries of birth. In Canada, though, they worry that their liabilities could sink their retirement.

It is a legitimate concern, for they have a $70,000 line of credit to pay off at $1,200 a month, about 18% of their $6,500 combined monthly take-home pay. The line of credit was taken out to buy into a speculative land development in which they are co-owners of undivided land rather than sole owners of a defined parcel. It is a risky investment that produces no current income. Moreover, they have $37,500 in a mortgage fund in their RRSPs which yields 10% a year. That yield implies the mortgages carry more risk than banks and credit unions accept.

Family Finance asked Derek Moran, head of Smarter Financial Planning Ltd. in Kelowna, B.C., to work with Frank and Ella, who still have a daughter at home attending university.

“The good thing about the couple’s financial affairs is their dedication to their work and their home,” he says. “The not so good thing,” he notes, “is that they appear to have made investments in land and mutual funds on the basis of trust in advice.”

The interest on the loan to buy the property is not tax deductible, though it can be added to the adjusted cost base of the property, eventually reducing the taxable capital gain. Best bet: sell the land to pay off the line of credit and capture a capital gain which the couple believes to be about $30,000 or $20,000 after costs. We’ll assume they just get their money back, then invest in low fee mutual or exchange traded funds focused on producing dividends.

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Five things to do if you are over-extended on your mortgage

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Reblogged from Financial Post, Andrew Allentuck

Mortgage default may be rare in this country, but nearly 9% of indebted households need 40% or more of their gross income to pay their debt service charges, says the Bank of Canada Financial System Review.

If you can see problems coming, then you can take action to avoid foreclosure, which happens when lenders run out of other alternatives and borrowers can do no more to pay their debts. Here are five options to consider when you are being crushed by mortgage payments:

1. Extend amortization: If the mortgage has been paid down to 10 or 15 years, then extending it to 20 to 25 years or even to 30 years will decrease payments. In a lot of cases this will work, says Elena Jara, director of education for Credit Canada Solutions, a Toronto-based non-profit organization which offers free credit counselling.

2. Seek better terms: You can go for lower interest rates with the same or a different lender but with a potential penalty, says Bill Evans, a mortgage broker with Mortgage Architects in Winnipeg.“If you are having trouble with payments with one lender, another may not want to take you on. But if you can present a case for a new income, you can go to a so-called specialty lender such as Home Trust or Optimum Trust for a fresh look at your problem and potential solutions,” Evans says. “If you just want to alleviate the problem, timing is crucial.”

3. Renew at a floating rate: There is more risk but lower interest cost in floating rate mortgages. If you are on a fixed rate mortgage with relatively high rates and want to go to a lower floating rate, perhaps by taking the mortgage to another lender, then there may be relief when it is time for loan renewal. The present lender may add a penalty, but over time, floating rates and the often attractive rate on a one-year closed loan can offer relief, Mr. Evans says.

4. Sell it and rent: In markets with high home prices as a result of speculative building, absentee owners will often rent at relatively low cost. That makes for good deals for renters.

5. Discuss a consumer proposal
The homeowner can avoid outright bankruptcy and foreclosure of the home by talking to creditors, suggests Bruce Caplan, trustee in bankruptcy for BDO Canada Ltd. in Winnipeg. “The homeowner can make a consumer proposal in which a settlement plan is devised for the creditors. Secured creditors such as the banks or private mortgage lenders can work out new terms such as reduced payments or a payment bridge for a period of time with the homeowner,” he suggests.

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Quick! Read this before you head off on Winter Holidays!

Five practical financial preparations for a long-term vacation.

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Reblogged from Financial Post, Melissa Leong

When that first cold wind or frost hits, I’m always surprised. I have no clue why — I’m Canadian, a Winnipeg native — and I’m well acquainted with this country’s winters.

If the chilling reminder of what’s in store this season has you thinking of going on an extended trip, here are five financial preparations to make before any long-term vacation.

Get travel insurance. Only half of Canadians, according to BMO, buy medical insurance before traveling. You don’t want to get caught with a $20,000 bill to treat a broken leg in the U.S. Check with your employer or your credit card company because you may have some coverage under their plans.

Check your home insurance policy. According to a recent TD Insurance survey, only 12% of Canadian snowbirds say they checked their home insurance policy to ensure their primary residence would be covered while on vacation. Often, insurance policies have specific “away” requirements, which, if not fulfilled, could void coverage if your home is left unoccupied and unattended for an extended period of time, TD Insurance says. Make sure you know what steps to take to keep your policy valid, for example arrange to have someone check your home every seven days to make sure heating is on and shut off the water supply.

While you’re renting a vacation home, if you have home insurance, your contents could be covered anywhere in the world and you may have liability coverage. It’s best to check your policy.

You want your home to have that “lived-in” look while you’re away.Suspend your newspaper subscription. Have someone shovel your snow. Get Canada Post to hold your mail. This service starts at $20 for the first 10 weekdays and is $8.50 for each additional week. So if you’re gone for six weeks, it will cost you $54 for Canada Post to hold your mail. To save money, enlist a friend who will come by and check up on the property and collect your mail.

Don’t forget to set up a budget before you leave. The wise thing to do would be to know how much you have to spend and try to play within your boundaries. The unwise thing to do would be to overuse your credit card and return home to a giant bill that will stress you out after a relaxing vacation.

Make sure that your bills get paid. A lot of bills can be paid online or prepaid with your credit card. Make a list of the bills that need to get paid and try to sort out the payment before you leave in case the sun and the beach makes you forgetful.

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