Tag Archives: Westbank Lawyer

WFN – WEST HARBOUR LEASE FAQ

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West Harbour is a residential community and marina located immediately across Lake Okanagan from Kelowna, BC and developed by Troika Developments.

  1. What is the term?  Unless earlier terminated, the sublease expires June 5, 2107. Upon termination of the lease, your leasehold interest will expire and you must remove all belongings and leave the premises in good condition. A lease may be terminated prior to the end of the term in the event of an uncured default of either the sublease of the head-lease.
  2. Is the lease entirely prepaid?  YES – In addition, there are additional components which you are responsible for paying on a monthly ongoing basis being: Additional Rent and Home Owners Association dues, which will include common costs for property taxes, utilities, common area maintenance, common area insurance, and common area utilities.
  3. Other financial obligations under the lease? The rent is pre-paid however, as with other strata-type properties, there are additional components which you are responsible for paying on a monthly ongoing basis being such items as: Property Taxes and Utilities are payable to the WFN and Home Owners Association dues are payable (similar to strata fees) which will include common costs for property taxes, utilities, common area maintenance, common area insurance, and common area utilities
  4. Does the lease allow the owner to assign (sell) to a third party? YES – but, prior to assignment (sale) to any third party a certificate of good standing will have to be obtained. The Assignment must be registered with WFN. Additionally, there is a non-assignable, non-transferable sublease for a boat slip which terminates upon assignment to a third party, a $500 assignment fee is payable by the Buyer.
  5. Does the lease permit the owner to obtain a mortgage from a bank? Yes – the lease will permit the mortgaging of the Tenant’s interest without consent of the Landlord. The lease also contains those provisions which are required by the CMHC to provide insurance to lenders.
  6. Does the lease restrict the use of the property? Yes- Your use of your property is restricted to residential uses and home-based business uses which are subordinate to your residential use and carried on indoors.
  7. Are there unique insurance requirements? Yes – the Tenant must obtain a Personal Liability Insurance policy in the name of both the Tenant and the Sublandlord (West Harbour Holdings Ltd.)  in the amount of $2,000,000 and maintain “All Risks” Property Insurance upon improvements of Subleased Premises to their full insurable value.
  8. Are there provisions for a homeowners association? Similar to a Strata, The Home Owners Association or Sub-landlord may create bylaws and rules and fines may be imposed if you breach those bylaws or rules

By Kelowna Real Estate Lawyer Peter Borszcz.

West-Harbour-estates-2

WFN – ELKRIDGE LEASE FAQ

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Elkridge is a mixed townhome and single family home community located on Elk Road near the Two Eagles Golf Course in Westbank, British Columbia

  1. What is the term?  Unless earlier terminated, the sublease expires: January 2, 2109. At the end of the term, your leasehold interest will expire and you must leave the premises in good condition.
  2. What type of Lease is it? Upon the sale of the last unit in the development and at the discretion of the Developer, Elkridge uses a “Lessee Corp”  as Sublandlord model where the Owner may be issued a share Homeowners Association which is the tenant of the Headlease (note this has yet to occur).
  3. Is the lease entirely prepaid?  YES – In addition, there are additional components which you are responsible for paying on a monthly ongoing basis being: Additional Rent and Home Owners Association dues, which will include common costs for property taxes, utilities, common area maintenance, common area insurance, and common area utilities.
  4. Other financial obligations under the lease? The rent is pre-paid however, as with other strata-type properties, there are additional components which you are responsible for paying on a monthly ongoing basis being such items as: Property Taxes and Utilities are payable to the WFN and Home Owners Association dues are payable (similar to strata fees, and include a 15% administration fee) which will include common costs for property taxes, utilities, common area maintenance, common area insurance, and common area utilities
  5. Does the lease allow the owner to assign (sell) to a third party? YES – but, prior to assignment (sale) to any third party a certificate of good standing will have to be obtained and a transfer fee will be payable. The Assignment must be registered with WFN.
  6. Does the lease permit the owner to obtain a mortgage from a bank? Yes – the lease will permit the mortgaging of the Tenant’s interest without consent of the Landlord. The lease also contains those provisions which are required by the CMHC to provide insurance to lenders.
  7. Does the lease restrict the use of the property?  YES – Your use of your property is restricted to residential uses  and home based businesses only.
  8. Are there unique insurance requirements? YES – You are required to insure your premises according to the terms of the Sublease.
  9. Are there provisions for a homeowners association? Similar to a Strata, The Home Owners Association or Sub-landlord may create bylaws and rules and fines may be imposed if you breach those bylaws or rules

Elkridge

Understanding a Developer’s Disclosure Statement

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When Homes Buyers enter a show suite for the first time, it can look very impressive and they are often shown marketing materials which can include the layout of some of the units and the amenities which will be present once the development is built. Often a contract is signed and a deposit is made before Buyers have had a chance to fully contemplate their decision.

By law in British Columbia, Purchasers of new development property have a 7 day rescission period to cancel their purchase agreement and have their deposit returned without penalty.

During this 7 day period purchasers should thoughtfully and carefully review their disclosure statement to ensure that the development property meets their expectations.

 

In British Columbia, all new developments which are comprised of five or more units are subject to the Real Estate Development and Marketing Act which governs how a developer can market and sell or lease these development properties. The Act is consumer protection legislation which facilitates disclosure about the development by requiring the Developer to provide a Disclosure Statement to the Buyer which discloses the following:
a) The Background and Experience of the Developer
b) The Purchaser’s Rights of Rescission
c) Permitted Uses of the Development
d) Phasing of the Development
e) Strata Information and Budgets
f) Parking Entitlements
g) Utilities and Services
h) Description of the Land Title
i) Construction and Warranties
j) Local Government Approvals and Finances
k) Handling of Purchaser’s Deposits

It is important that the Buyer’s ensure that their timeline and their intended use of the Property align with the Developer’s disclosure. Buyers should not simply rely on the verbal assertions of sale persons as Developer’s contracts will expressly state that only those representations and warranties made in writing in the contract are binding between the parties.

After a Buyer has had a chance to review the Disclosure Statement on their own, I often find that reviewing the following questions assists most Buyers in their thought processes:

1) Do you have any reservations that the Developer will not complete this project?
2) Is your quality of life going to be impacted if the project is delayed?
3) Why did you purchaser this unit, what made it special?
4) Was there any assurances that you were given by the sale centre staff which prompted you to purchase this unit?
5) If the project does not proceed, how will your life be impacted?
6) Are you aware of the Developer’s termination rights in the contract?
7) Are you aware of the limitations on assignment or covenants respecting the re-marketing of product after it has been purchased?
8) If a part of the project (or amenities) are phased, how will your perceived value of the unit be altered if subsequent phases do not proceed?

In short, a Developer’s Disclosure Statement is very much like a “specifications sheet” and are legally binding representations of the Developer about the nature of the property that you are intending to purchase.

Peter Borszcz is a Business and Real Estate Lawyer practising in Kelowna, British Columbia and a shareholder of Pihl Law Corporation.

Distressed Sales: Options for Sellers of Distressed Property

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Unfortunately, and often due to a series of unfortunate events, some owners find themselves unable to afford their home and in some cases being forced to sell at a loss. There are a number of different ways for this to occur:

A. Short Sale with Seller Bringing in Cash to Complete

This type of transaction occurs when the proceeds of sale are insufficient to pay the mortgage, commission and fees associated with the property and the Seller is able to access other financial resources to complete the transaction by depositing the shortfall in trust with their lawyer to complete the transaction.

Of all the options for a distressed sale, this options makes the best of a bad situation, there is no foreclosure proceeding and no judgements registered against title or the seller.

B. Short Sale with the Bank Accepting Shortfall of Net Proceeds

Where the Seller is unable to make up the difference on Closing between the net sale proceeds and the mortgage payout and the Seller is in default of their obligations to the Lender, most Lenders will grant of discharge of the mortgage registered on title in exchange for net sale proceeds (less agreed adjustments) in exchange for a consent to personal judgement against the Seller and a reasonable payment plan for the balance.

The option avoids a formal foreclosure proceeding (and it is the Seller that accepts a Buyers offer “subject to being able to clear title”), but Seller agrees to a debt judgement against them and they will continue to have to pay the balance remaining after the sale to the Lender. Often when a mortgage default has proceed to this stage, there is a certificate of pending litigation on title.

C. Court Ordered Sale

As the Bank has proceeded with the foreclosure, at this stage the ability to sell the property  is now subject to Court Approval.  A Buyer’s offer will be subject to Court Approval and other buyers may appear in Court to bid on the property. The Seller is not involved in this transaction and registration in the Land Title Office takes place by filing of a certified copy of the court order granting the property to the Buyer (on payment of the purchase price) [Important: ensure Buyers names are correct on the Court Order!].

D. Lender Owned Property

If the property has proceeded through the entire foreclosure without an offer, the Lender may seek an “Order Absolute” and the Lender will assume ownership of the Property. In this case the Lender is the Seller (as they are the Seller on title) and the transaction proceeds very similarly to a normal real estate transaction (except that Lenders are often very reluctant to provide Property Disclosure Statements).

Peter Borszcz is a Business and Real Estate Lawyer practising in Kelowna, British Columbia and a shareholder of Pihl Law Corporation.

First Time Home Buyers: New Property Transfer Tax Declarations

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When the province announced the new First Time New Home Buyers Rebate associated with the HST rebates, they tightened the definition of “First Time Home Buyer” (see my post here for more information on the rebates). This tighter definition indicates that the government is looking more closely at (ie; auditing) who is a “first time” home buyer. This higher degree of oversight is also supported by recent changes to the Property Transfer Tax Form which required a Buyer to DECLARE the following:

  1. Have you owned an interest in a principal residence (where you lived) anywhere in the world?
  2. Have you ever recieved a British Columbia (BC) first time home buyer’s exemption or refund?
  3. On the date of registration, are you a Canadian citizen or a permanent resident as defined in the Immigration and Refugeee Protection Act (Canada)?
  4. Have you continuously resided in BC for at least one year immediately prior to the date of registration or filed income tax returns as a BC resident during the six year before the date of registration?
See the new form here:

If the Buyer makes a FALSE DECLARATION, the Minister of Finance may charge a penalty equal to DOUBLE THE TAX.

Also, the Buyer MUST qualify as a first time home buyer (above) and the they must purchase a “Qualifying Property”:

  1. Fair Market Value is less than $425,000 (for full exemption)
  2. Land is less than 0.5 hectares in size
  3. Property used as Principal Residence
And, the Buyer MUST actually occupy the home:
  1. Must move into the home within 92 days of the date of registration (unless vacant land, then must move in within 1 year)
  2. Must continually occupy as principal residence for one year from the date of registration.
The form changes and the recent legislative attention to this issue likely will result in greater audit attention to this area. First Time Home Buyers should ensure they meet all the criteria: as a Buyer, with a Qualifying Property, and they plan to Occupy the home for the first year.

Peter Borszcz is a Business and Real Estate Lawyer practising in Kelowna, British Columbia and a shareholder of Pihl Law Corporation.

Real Estate Development: Preliminary Layout Review Letters

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The filing of a subdivision plan in the Land Title Office cannot occur without the approval of an Approving Officer appointed by the local municipal authority (s.88 Land Title Act). It is common practice for most municipalities to issue a Preliminary Layout Review letter (PLR Letter) which sets out what the approving officer will “likely” require to grant approval to the subdivision.

Although the PLR Letter is not binding on the municipality, administratively it forms a very important checklist for developers. Careful and early review of the PLR letter with your real estate lawyer can be very helpful to streamline the real estate development process.

Some of key items discussed may include:

  1. Park Area Dedication and No Build Areas
  2. Performance Bonds
  3. Development Cost Charges
  4. MOTI (Highways) referrals and Traffic Impact Assessment requirements
  5. Geotechnical and Engineering Considerations
  6. Retaining Wall Requirements
  7. Zoning and Setback Requirements
  8. Utility and Servicing Right of Way Requirements
  9. Restrictive Covenant Requirements (ie; Wildfire Interface Covenants in the Okanagan)
Most, and often all, of these requirements will require the involvement of a real estate lawyer. Real Estate Development Lawyers can assist clients with the negotiation, drafting and registration throughout the process.
The time it takes for a Developer to go from “conception to subdivision to building” will vary greatly from project to project and will often depend on the unique third party requirements (ie; geotechnical, engineering, or provincial approvals). Most PLR Letters have a “sunset” clause and expire (usually within 1 year) from the date of issuance but can be often be extended.
Peter Borszcz is a Business and Real Estate Lawyer practising in Kelowna, British Columbia and a shareholder of Pihl Law Corporation.

Agricultural and Farm Property: Special Considerations

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Agricultural and Farm property occupy an interesting segment of the real estate market, as they are often a mix of commercial and residential uses. This means that many of the rules that apply purely to a residential home purchase have limited applicability to agricultural lands.

A. THE 0.5 HECTARE RULE:

There are a number of tax exemptions which do not apply (or have limited applicability) where a property exceeds 0.5 hectares (1.24 acres) in size:

  1. Principal Residence Exemption - this Income Tax Act exception allows exempts capital gains of a primary residence from income, however the total area of a “principal residence” must not exceed 0.5 hectares (1.24 acres) hectares.
  2. Property Transfer Tax (Related Individual) – a transfer of a principal residence from a parent to child, or to a spouse is an exempt transfer for property transfer tax, however (similar to above) the total area of a “principal residence” must not exceed 0.5 hectares (1.24 acres) hectares.
  3. Property Transfer Tax (First Time Home Buyer)  - a transfer of a principal residence to a first time home buyer is an exempt transfer for property transfer tax, however (similar to above) the total area of a “principal residence” must not exceed 0.5 hectares (1.24 acres) hectares.

B. Rural Area Tax Incentives

  1. Agricultural Land Reserve (“ALR”) Tax Exemption - 50% of the assessed value of ALR land is exempt from school tax if the land is classified as a farm or is in the ALR and is vacant, used as a farm or for residential purposes.
  2. Rural B.C. Home Owner Grant - B.C. has a property tax assistance program which reduces the amount of taxes paid on a home. You can claim the additional rural grant of $200 (for a total regular home owner grant of $770) on your principal residence if you live in rural areas of British Columbia and you file your income tax in British Columbia.(Kelowna is considered a rural area)

 C. GST/ HST on Agricultural and Farmlands

The applicability of HST on farmland is complicated by the “mixed” use of most farmland as both residential and commercial use. Generally sales of farm property attract GST/ HST unless there is a specific exemption.

  1. If selling the farm as a business as a going concern to a unrelated third party – GST/HST applies, but GST Election 44 can be applied to have no GST/ HST applied on sale
  2. If selling a hobby farm not used as a business – GST/HST would not apply as you are selling your home and there is no reasonable expectation of a profit from the hobby farming activities.
  3. If selling a personal residence with farm property- that portion of the property that is necessary for the use and enjoyment of the house is exempt from HST.
For Purchasers of farm property, it is important to ensure that:
  • the Purchaser receives tax advice prior to subject removal; and
  • the Purchaser is registered for GST/HST prior to closing

D. Agricultural Land Reserve

The Agricultural Land Reserve in British Columbia limits the non-farm uses of designated property. These restrictions may include what kind of buildings can be erected and whether the lot can be subdivided (including the addition of home site). If you are purchasing a property that has been designated in the ALR, please ensure that your future use of the property is within the uses permitted by the Agricultural Land Commission Act.

Peter Borszcz is a Business and Real Estate Lawyer practising in Kelowna, British Columbia and a shareholder of Pihl Law Corporation.

First Time Home Buyers: Special Programs

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I must admit, I love watching the HGTV show “Property Virgins“, and seeing the excitement of first time home buyers fulfil their dreams of home ownership is one of the best things about my job.

In British Columbia, real estate prices (compared with much of Canada) are high relative to average income, which increases barriers to first time home owners. In the Okanagan, local professionals like to call this the “sunshine tax” (although “four season paradise tax” would be more appropriate). Thankfully there are some very helpful programs that First Time Home Buyers can use to assist them with their first home purchase.

A. Property Transfer Tax Exemption for First Time Home Buyers

This program exempts First Time Home Buyers from paying BC Property Transfer Tax.

To Qualify for the PTT Exemption a First Time Home Buyer must:

  1. Be a Canadian Citizen or Permanent Resident
  2. Have lived in BC for 12 consecutive months OR filed income tax returns for at least 2 of the last 6 years in BC
  3. Never have owed an interest in a principal residence anywhere in the world; and
  4. Never have previously received a First Time Home Buyers Exemption
If you qualify, on homes valued up to $425,000, a First Time Home Buyer will be exempt from paying Property Transfer Tax (a savings of $6,500 in PTT). The tax exemption diminishes on higher priced homes and is not available on any homes priced over $450,000.
You apply for the exemption at the time of conveyance, and often your lawyer will complete the PTT Return and Exemption application as part of the closing documentation.  There are severe penalties for a false declaration.

B. RRSP First Time Home Buyers Plan

This program allows First Time Home Buyers to “loan themselves” previously claimed RRSP contributions tax free to assist in the purchase of a home.

To Qualify for the RRSP First Time Home Buyers Plan:

  1. You must have entered into a binding agreement to build or buy a home
  2. You intend to occupy your home as a principal residence and be a resident of Canada
  3. You are a first time home buyer
  4. You must not have a “repayable Home Buyers Plan” balance on your tax return
This program will allow you to withdraw up to $25,000 from your RRSP to assist in your home purchase. This is withdrawn at your financial institution immediately prior to closing and you complete form T1036.

C. First Time Buyers New Home Bonus

This is a time limited rebate (introduced with the enhanced HST rebates) for First Time Home Buyers buying new homes (until March 31, 2013 only), to qualify:

  1. You must be eligible for an HST rebate on a new home purchased after April 1, 2012 and Completion must occur before Mar 31, 2013 (ie; transition tax does not apply)
  2. You (and the if a couple, both persons) must be a First Time Home Buyers and BC Residents
  3. The home must be the Buyers Primary Residence
  4. Your Family Income must be less than $150,000 for full rebate (note : the rebate phases out to $0 for income over $200,000)

After closing you will apply to the BC Government which will grant a rebate of 5% of the purchase price of the home (if under 200k) or $10,000 (whichever is greater). The rebate will be a cheque mailed directly out to claimants after the application has been approved.

The best place for First Time Home Buyers to start their new home search is by getting a clear idea of the process, check out my BUYERS PAGE.

Peter Borszcz is a Business and Real Estate Lawyer practising in Kelowna, British Columbia and a shareholder of Pihl Law Corporation.

WFN – COPPER SKY LEASE FAQ

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Copper Sky is multi-family development over looking Lake Okanagan and located on Old Okanagan Highway (Developers Website).

  1. What is the term?  Unless earlier terminated, the sublease expires: July 29, 2106. At the end of the term, your leasehold interest will expire and you must remove all belongings and leave the premises in good condition.
  2. Is the lease entirely prepaid?  YES – The rent is pre-paid however, there are additional components which you are responsible for paying on a monthly ongoing basis being: Additional Rent and Home Owners Association dues, which will include common costs for property taxes, utilities, common area maintenance, common area insurance, and common area utilities.
  3. Other financial obligations under the lease? Although the rent is pre-paid however, there are additional components which you are responsible for paying on a monthly ongoing basis being such items as: Property Taxes, Charges and Utilities are payable to the WFN and Home Owners Association dues are payable (similar to strata fees, and include a 15% administration fee) which will include common costs for property taxes, utilities, common area maintenance, common area insurance, and common area utilities.
  4. Does the lease allow the owner to assign (sell) to a third party? YES – but, prior to assignment (sale) to any third party a certificate of good standing will have to be obtained and a transfer fee may be payable. The Assignment must be registered with WFN. If the owner is a holding corporation a change of control (share sale) of this holding corporation is deemed to be an assignment.
  5. Does the lease permit the owner to obtain a mortgage from a bank? Yes – on the condition that the mortgage is registered in the WFN Registry, the lease will permit the mortgaging of the Tenant’s interest without consent of the Landlord. The lease also contains those provisions which are required by the CMHC to provide insurance to lenders and will provide the lender with an opportunity to cure a Tenant’s lease default.
  6. Does the lease restrict the use of the property?  YES – Your use of your property is restricted to residential uses and home office used which are ancillary to your residential use.
  7. Are there unique insurance requirements? YES – the Tenant must obtain a Personal Liability Insurance policy in the amount of $2,000,000 which names both the Home Owners Association and Sub-landlord as additional insured and maintain an All Risks policy.
  8. Are there provisions for a homeowners association? Operating similar to a Strata, The Home Owners Association or Sub-landlord may levy fees and create bylaws and rules and fines may be imposed if you fail to pay your homeowner association fees or breach those bylaws or rules. The Bylaws are incorporated by reference into the lease.

WFN – SONOMA PINES LEASE FAQ

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Sonoma Pines is a community located next to Two Eagles Golf Course on Carrington Road. 

  1. What is the term?  Unless earlier terminated, the sublease expires: April 30, 2102. At the end of the term, your leasehold interest will expire and you must leave the premises in good condition.  
  2. What type of Lease is it? Sonoma Pines uses a “Lessee Corp” model where the Owner is issued a share in the both the Homeowners Association and a share in the Lessee Corp..
  3. Is the lease entirely prepaid?  YES – However, the Developer has pre-paid the rent for only that portion of the Development which has been completed. In addition, there are additional components which you are responsible for paying on a monthly ongoing basis being: Additional Rent and Home Owners Association dues, which will include common costs for property taxes, utilities, common area maintenance, common area insurance, and common area utilities.
  4. Other financial obligations under the lease? The rent is pre-paid however, there are additional components which you are responsible for paying on a monthly ongoing basis being such items as: Property Taxes and Utilities are payable to the WFN and Home Owners Association dues are payable (similar to strata fees, and include a 15% administration fee) which will include common costs for property taxes, utilities, common area maintenance, common area insurance, and common area utilities
  5. Does the lease allow the owner to assign (sell) to a third party? YES – but, prior to assignment (sale) to any third party a certificate of good standing will have to be obtained and a transfer fee will be payable. The Assignment must be registered with WFN.
  6. Does the lease permit the owner to obtain a mortgage from a bank? Yes – the lease will permit the mortgaging of the Tenant’s interest without consent of the Landlord. The lease also contains those provisions which are required by the CMHC to provide insurance to lenders.
  7. Does the lease restrict the use of the property?  YES – Your use of your property is restricted to residential uses only.
  8. Are there unique insurance requirements? YES – You are required to insure your premises according to the terms of the Sublease (including adding the Head Landlord, Lessee and Home Owner Association as additional insured)
  9. Are there provisions for a homeowners association? Similar to a Strata, The Home Owners Association or Sub-landlord may create bylaws and rules and fines may be imposed if you breach those bylaws or rules

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