New Requirements for Ontario Corporations Relating to Land/Building Ownership

minute-book-imgThere are recent amendments to Ontario’s Corporate legislation which you should know about.  One of the most important of which will impose additional record keeping requirements on Ontario Corporations.

In addition to existing minute book maintenance obligations, an Ontario Corporation is now required to:

  • create and maintain at its registered office a register of the corporation’s ownership interests in land and buildings in Ontario.

Under the OBCA, these new record-keeping obligations:

  • will apply as of December 10, 2016 (i.e. immediately) to all corporations that are incorporated or continued under the OBCA on or after December 10, 2016; and,
  • will apply as of December 10, 2018 (i.e. two years after the amendments come into force) to all corporations that were incorporated or continued under the OBCA before December 10, 2016.

It is possible that the term “ownership interest” could include not only the Corporation’s legal ownership interest but also the Corporation’s beneficial ownership interest in real estate.  In other words, an interest in a trust that legally owns the real estate.

Not unlike the share register, this new obligation on the Corporation will require it to continually maintain and update a real property register that:

  • identifies each property;
  • records the acquisition date for each property;
  • records the disposition date for each property in Ontario in which the corporation possesses an “ownership interest”; and,
  • contains copies of any deeds/transfers (or other document) which include the address, legal description and assessment roll number.

For Ontario corporations which existed before December 9, 2016, there is the two year grace period noted above.  For new or continued Ontario Corporations created on or after December 10, 2016, there is no grace period and the register should be part of the set up.

This is a summary of one aspect of the amendments which you may find of interest.  We would be pleased to speak to you about updating your minute book as required.

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Thinking of Buying a Cottage!

While it may seem like winter is never going to end, soon the snow will be gone and summer will be upon us. For some, this will be the summer they finally decide to buy that dream cabin in the woods where they can relax and get away from everything. However, purchasing a cottage is different than buying a home in the city and there are often many issues to be aware of before making an offer. Here are just a few items to keep in mind when looking for a cottage.

Well and Septic

Most homes in urban areas are on city water and sewer so your biggest concern when buying is likely to be that the previous owner is up to date on paying these bills. On the other hand, most cottages will be on well and septic which brings about more questions. Is the water potable? Were proper permits obtained to install the well and septic? Are the well and septic sufficient to serve your needs? There should be numerous provisions in your offer, such as having an inspection done of the well and septic and asking for proper permits, to increase the likelihood you will not run into problems in the future. If you do not perform this due diligence in advance, there could be significant costs incurred in the future as repairing or replacing a well or septic system can be very expensive.

Crown Patent & Waterfront Issues

When you finally find that ideal spot on the water, you may start envisioning private cookouts on the beach or building a dock for your new boat. Unfortunately, there is a chance you may not own right up to the water’s edge. As a result, this could mean that you will not be the only one enjoying the water and that you will need permission from the appropriate authority before building a dock or boathouse. In some cases, there are Crown patents that could result in the government owning sixty-six feet of property from the water’s edge. Furthermore, the Crown patent may also include other reservations in favour of the government, such as rights to any minerals or timber on your property. As such, you should confirm the contents of the Crown patent so you are clear whether any rights are reserved and exactly what you are purchasing.

Access

In more rural areas, it is common that you may have to travel over private roads in order to get to your cottage. Therefore, it is important to find out whether you have direct access to your cottage via public roads or if you are required to go on private property. If you do need to use someone else’s property in order to get to your cottage, you should have your lawyer check to ensure that you have a legal right registered on title to do so (this is called an easement). Without a legal easement, you could be deemed to be trespassing and, as a result, have no way to legally access your property.

Building Restrictions

Perhaps you find an ideal location and you intend to build your dream cottage on that land. Before committing to buy the property, you should research whether there are any restrictions on what can be built and where you can construct your cottage. For example, by-laws may restrict the type of dwelling that can be built or the property could be on a floodplain that limits where you can build. As a result, it is crucial to have a provision in your offer that makes it conditional on confirming you can build the structure you want. Otherwise, you may have end up having a permanent campsite instead of a cottage.

These are just some of the issues to consider when purchasing a cottage. To ensure you are properly informed, it is important to surround yourself with a team of professionals who can properly advise you. This would include a real estate agent and lawyer that have experience dealing with cottage properties.

Municipal Land Transfer Tax Will Not Expand Beyond Toronto

Sold Home For Sale Sign in Front of Beautiful New House.

Good news for all those interested in real estate. On December 1, 2015,  the Municipal Affairs and Housing Minister, Ted McMeekin, announced  that the provincial government has dropped its plan to expand land transfer taxing powers to municipalities, other than Toronto, which already has this power. Provincial land transfer tax is based on the purchase price of a home and is a graduated rate. In Toronto, homebuyers pay an average of $12,000 in provincial and municipal land transfer taxes, according to the Ontario Real Estate Association. The purchaser of a Toronto home selling for $450,000 will pay a total of $10,200 in land transfer tax — $5,475 to the province and $4,725 to the city. On a $1 million home in Toronto, that bill rises to $32,200.  “Extending the power to levy the municipal LTT to Ontario’s municipalities would hurt the home market by adding thousands of dollars to the costs of residential transactions” said the Ontario Real Estate Association Fact’s Sheet about the hike.

Thinking of Buying Your First Home?

For many people, the decision to become a home-owner is not an easy one. There are many reasons why people are hesitant to jump into home ownership but part of the reluctance can be the home-buying process itself. Uncertainty regarding down payments, interest rates, and surveys is common but the bigger question is often “where do I begin?” To assist those of you who are considering owning a home, here is a brief summary of the process.

Building Your Real Estate Team
One of the best ways to begin your home search is to surround yourself with real estate professionals who can help guide you through the process. A mortgage professional will be able to work with you to determine the amount of mortgage you could qualify for; a realtor
will assist you in finding that perfect home and preparing an offer; a lawyer will advise you on the legal issues associated with your purchase and register the deed. More importantly, your real estate team will answer your questions to put you more at ease.

Finding Your New Home
After working with your realtor and mortgage professional to determine your budget and the type of property you are looking for, the next step is finding the home. For most first-time buyers, condominiums are an attractive option since they are generally less expensive
than other types of properties. However, if you are considering a condominium, you should speak to your realtor and/or lawyer to ensure you understand how they work before making an offer.

Once you find a home you are interested in, you will submit an offer to the seller. The offer will consist of numerous items, such as the purchase price, the closing date, items included (e.g. stove, dishwasher, washer and dryer, etc…), and conditions. There are numerous conditions that can be included in the offer, but two of the most important are financing and inspection (if the property is a condominium, a status certificate condition is also vital). While it may seem like a financing condition is not necessary if you have already received a mortgage pre-approval, you should still consult with your mortgage professional (the potential lender could determine the property is worth less than what you are offering, which could result in them lending you less than what you were pre-approved for initially). Conducting an inspection is also crucial to ensure there are not any serious issues with the home (such as major leaks or foundation problems), which could result in extra costs in the future that will be your responsibility. Prior to making the offer, it is also important to get as much information as possible about the property so you can make an informed offer. For example, if the listing agreement mentioned that the basement has been finished, you may want to have a provision in the offer where the seller represents and warrants that they obtained the necessary permits and inspections for the work that was done.

After submitting the offer to the seller, the seller will accept, reject, or counter-offer. If you and the seller can agree on all the terms and sign the offer, you can then begin to satisfy your conditions. Assuming you have satisfied all your conditions and are ready to proceed, you will sign a document indicating as such and the deal will be firm.

I Bought A Home… Now What?
Once the deal is firm, there are still some items for you to work on prior to closing. Your lawyer will need information about you (e.g. date of birth, spousal status, how you are going to be registered on title, etc…), your mortgage, and the property (e.g. how old is it, what changes have been made to it, etc…) so they can begin to prepare the necessary documents. This information will also allow your lawyer to perform the necessary searches and advise you as to the cost for legal fees and disbursements. In addition to legal fees and disbursements, there may be additional costs on closing for pro-rated property taxes (i.e. the seller has already paid property taxes for the year but you are moving in before the end of the year) and land transfer tax. Luckily, as a first-time homebuyer, you will get a $2,000 credit toward the land transfer tax payable. During this time leading up to the closing date, you should also be finalizing the details of your mortgage with your lender and arranging for property insurance for your home.

Shortly before closing, you will meet with your lawyer to sign the closing documents and bring in the necessary funds. Once the transaction has been completed on the closing date, you will receive a phone call to let you know your keys are ready and that you are now the proud owner of a home!

This article originally appeared in the May 2015 edition of FACES Magazine.