FREQUENTLY ASKED QUESTIONS
October 10, 2007
Changes to Disclosure Statements for Pre Sale Condos
May 3, 2008
Paying off Your Mortgage Faster
March 8, 2004
Title Insurance - An Explanation
May 31, 2006
Torrens System - An Explanation
April 5, 2004
Why a Lawyer and not a Notary?
CHANGES TO DISCLOSURE STATEMENTS FOR PRE SALE CONDOS
October 10, 2007
The Superintendent of Real Estate has introduced two new Policy Statements to further enhance consumer information and awareness and assist purchasers in understanding offerings of real estate developers. Beginning on November 1, 2007, Disclosure Statements filed under the Real Estate Development Marketing Act will require additional information regarding the terms of pre-sale agreements, the background of developers, and potential conflicts of interest. The full text of the Information Bulletin can be found at http://www.fic.gov.bc.ca/pdf/real_estate/redma-07-03.pdf
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 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.
HOW TO BECOME MORTGAGE FREE FASTER
May 3, 2008
Paying off Your Mortgage Faster
Our clients tell us that one of their highest financial priorities is to reduce or pay off their mortgage as quickly as possible. This was also confirmed in a recent survey undertaken by the Canadian Mortgage and Housing Corporation.
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 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.
TITLE INSURANCE - AN EXPLANATION
Title Insurance is a form of insurance policy that protects purchasers from a number of potential risks.
These risks are usually matters which are not covered by a traditional lawyer's due diligence. Briefly summarized, these added protections include the following:
- Defects that would be revealed by a new Survey. In the absence of an existing survey, Title Insurance may be ordered in lieu of a new survey. Please note that this assumes that a new survey must be ordered. If the vendor is able to provide an older survey or if the applicable City Hall has a survey certificate, these may usually be utilized. Title Insurance also insures a defect that would be revealed by an existing survey such as an encroachment of a neighbour's building onto the adjacent property. The most famous example is a swimming pool located on a residential property in Calgary which has 14 Easements, Rights-of-Ways or Covenants some of which affected the pool. The Lender was able to provide financing based on the strength of the Title Insurance Policy.
- Fraud, Forgery or False Impersonation. A Title Insurance Policy is not qualified by "the authenticity of the title documents obtained." What this means is that if an innocent person acquires an interest in a property from someone who is acting in a fraudulent manner (for example a false vendor), they can be compensated. The lender is also insured in the event of lawyer or third party fraud.
- Errors in Public Records. While this is not as relevant in British Columbia given our Torrens System, Title Insurance does cover errors in public records, including incorrect information on Tax Certificates.
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 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.
AN EXPLANATION OF THE TORRENS SYSTEM
May 31, 2006
In conveyancing, one of the lawyer’s responsibilities is to confirm that the party selling the property actually owns the property that they are selling.
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 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.