League and Williams Lawyers

Category: Real Estate

  • BC Speculation and Vacancy Tax: Am I Exempt?

    BC Speculation and Vacancy Tax: Am I Exempt?

    The BC government first introduced the BC Speculation and Vacancy tax in 2018 to incentivize homeowners to occupy their vacant properties. The tax also aims to generate revenue for housing initiatives, ultimately creating a more affordable housing market. Recently, the province has introduced legislation to expand the tax to more communities in BC. Most BC residents are subject to an exemption from the tax. In this article, we’ll discuss the various exemptions available for homeowners and how the declaration process works.

    What is the Tax?

    The Speculation and Vacancy Tax aims to reduce the number of residential properties that sit vacant. In British Columbia, institutional and foreign investors in real estate have gained a reputation for leaving properties empty. Until recently, the Speculation tax only applied to residential properties in the following areas:

    • Capital Regional District (CRD)
    • Metro Vancouver Regional District
    • City of Abbotsford
    • District of Mission
    • City of Chilliwack
    • City of Kelowna
    • City of West Kelowna
    • City of Nanaimo
    • District of Lantzville

    As of 2024, property owners in the following areas also have reporting obligations:

    • Vernon, Coldstream;
    • Penticton, Summerland;
    • Lake Country, Peachland;
    • Courtenay, Comox, Cumberland;
    • Parksville, Qualicum Beach;
    • Salmon Arm; and
    • Kamloops

    Responsibilities of Homeowners

    If you own property in any of the areas listed above, you must submit a yearly declaration form. The form tells the government about where you live and how you use your property or properties. The BC government sends a letter to those subject to the tax to ensure people are aware of their responsibilities. Homeowners in applicable areas must fill out the declaration each year, even if they are exempt from the tax.

    The Yearly Declaration Form

    Residential property owners in the newly affected areas will have submitted their first annual declaration form in January 2025. The form will report on the property’s use in 2024. When you receive your declaration letter, it will include a letter ID and a declaration code. You can use this information to quickly submit a declaration online. You can also submit your declaration over the phone.

    Exceptions to the Speculation and Vacancy Tax

    Most BC residents are exempt from the tax, which aims to deter a specific type of property investment which reduces available housing stock. In this section, we’ll discuss the details of the available exemptions to individuals.

    Entities Which Are Always Exempt

    Properties owned by the following groups and organizations aren’t subject to the tax and do not need to submit an annual declaration form:

    • An Indigenous Nation or a corporation owned by an Indigenous Nation
    • Registered charities
    • Housing co-ops
    • Certain not-for-profit organizations
    • Municipalities, regional districts, governments and other public bodies
    • Corporation owned by municipalities or regional districts
    • Corporations incorporated or continued through an enactment (“crown corporations”)
    • Corporations designated as “agents of government” by legislation, and their wholly owned subsidiaries

    Further, properties with an assessed value under $150,000, or unstratified apartment buildings with four or more units are excluded from the tax.

    Exemptions for Individuals

    On the annual declaration form, you must claim the exemptions relevant to you only. Different exemptions can apply to different owners, even of the same property. The Provincial government has provided the following example of how individuals with shared ownership should report their exemptions:

    “If a parent co-owns a home with their adult child and the adult child lives in the home and the parent lives elsewhere, then the following exemptions may apply:

    • The child claims the principal residence exemption
    • The parents claim the tenancy exemption for family or other non-arm’s length persons”

    Principal Residence Exemptions

    In a nutshell, the principal resident exemption means that your home won’t be subject to the tax. However, there are a number of reasons that individuals may not live in their principal residence for extended periods of time throughout the year. There are detailed exemptions which homeowners can claim, depending on the circumstances. Owners of a property can be exempt, even if they are not living in the property full time, if:

    • A person with a disability designated under the Canada Pension Plan, Employment and Assistance for Persons with Disabilities Act, or the federal Disability Tax Credit under the Income Tax Act lives in the property as their principal residence. 
    • An owner or owners are temporarily living away from the residence for medical or work reasons. 
    • The owner is a member of the Canadian Armed Forces and is living away from the residence due to military service requirements. 
    • An owner is living in a residential care facility and their spouse still resides on the property.

    Previous Principal Residence Exemptions

    If you have moved out of a property that was your principal residence, you may still be able to claim the exemption if:

    • You lived in the residence before moving out of province, and were unable to tenant or sell the home before the end of the year. 
    • You lived in the residence before moving into a residential care facility. This exemption can apply for up to two years. 
    • You are living away from the home for medical reasons, for up to two years. 
    • You moved out of the property because it became uninhabitable as a result of a disaster or hazard. 
    • You have temporarily moved to a secondary residence to be closer to medical treatment. 
    • You and your spouse have separated or divorced in the same calendar year, and one spouse has moved out of the residence.

    Tax Exemptions and Estate Planning

    There are also a number of exemptions relating to the death of a homeowner and the estate’s tax liabilities if the house is held on trust after their passing. If a homeowner dies, their estate and any other living owners on title are exempt from the vacancy tax for that year, and the year immediately following. This eases the burden on estate administrators who may be stuck waiting for probate to be able to distribute the property to its beneficiary. 

    Further, if the property is held in a trust created in the owner’s will for the benefit of a minor, the property is exempt until the beneficiary turns 19. This means that a property can be vacant without being subject to the tax, so long as all beneficial owners of the property are minors. If the beneficiary of the trust is a charity, the property held on trust will also be exempt.

    Reminders for Homeowners

    It can be challenging to navigate exemptions for this tax, particularly if you are living in an area that is only subject to the tax for the first time this year. If you’re unsure of how the tax will impact you, your investments or estate plan, contact an experienced lawyer today.

    For more information, you can find the full list of exemptions for individuals here.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • New Short-Term Rental Rules in BC

    New Short-Term Rental Rules in BC

    In recent months, British Columbia has introduced and passed a number of bills to address the ongoing housing crisis. These bills address a wide range of housing policy issues, and will impact many people. Broadly, the bills all aim to increase available housing stock for purchase and for rent in British Columbia. In particular, new restrictions on short-term rentals have sparked discourse online and in the news. In this article, we’ll discuss the rules that came into effect on May 1st, and what hosts need to know.

    The New Rules

    B.C. passed the Short-Term Rental Accommodations Act in 2023. New restrictions on short-term rentals came into effect on May 1st, 2024. They aim to take short-term housing stock in high-demand areas and make them available to long-term renters. They also expand the powers of local governments to enforce restrictions on short-term rentals locally. 

    The main obligations imposed on affected short-term rental hosts by the Act are:

    • Hosts must display a local government business number on their short-term rental listing.
    • Hosts must comply with the provincial principal residence requirement.

    The Provincial Primary Residence Requirement

    The most significant change faced by hosts as a result of the new rules is the Provincial principal residence requirements. Essentially, this rule limits short-term rentals to rooms within the host’s principal residence, plus one secondary suite on the same property. This rule aims to ensure that suitable long-term homes aren’t taken off of the market for vacation accommodation. In a nutshell, short-term rental properties in affected areas can only be on the host’s primary residence property. Hosts aren’t allowed to construct more than one extra suite on that property for the purposes of short-term renting. 

    For example, a host can advertise a room or suite on their property on websites like Airbnb and VRBO. They can even construct a separate dwelling on their property, known as an accessory dwelling unit, for this purpose. However, a host can’t divide their existing basement suite into two studio apartments to be rented out on sites like Airbnb and VRBO.

    Which Properties Are Affected?

    The Act applies to short-term rentals offered to the public, including:

    • Those on online platforms connecting short-term renters with hosts, like Airbnb and VRBO
    • Those offered through other online channels, including Facebook and Craigslist
    • Listings in print offers, like newspapers and flyers

    Traditional Bed and Breakfasts are still able to operate as normal, though the provincial principal resident requirement still applies. B&B owners must live on the property that they host guests on in order to comply.

    What is a “Short-Term Rental” According to the Act?

    The Act considers rental properties available for stays of less than 90 days short-term rentals. According to the province, data from 2023 indicates there are over 16,000 entire residential properties being used as short-term rentals for at least most of the year in BC. More recent figures estimate that number is up to 19,000 properties.

    Regions and Municipalities

    The rules automatically apply to cities that have a population of 10,000 or more. However, smaller municipalities can opt in to have the bylaw apply in their town. Restrictions on short-term rental properties must be as restrictive as the Provincial guidelines or more restrictive, unless they do not apply due to population size. It’s important to note that local governments usually can’t opt out of these rules. The province only allows local governments tol request to opt out if they have a rental vacancy rate of at least 3% for two consecutive years.

    As of right now, the communities which have the principal residence requirement are primarily in the Lower Mainland, and areas in the Okanagan and Capitol Regional District. For more information, the province has provided a map of the municipalities that currently have this requirement.

    So far, at least 17 unaffected municipalities have elected to opt-in to the new rules, including many of the Gulf Islands, Tofino, and Osoyoos.

    Which Properties And Businesses Are Exempt?

    Some properties may be exempt from this requirement, depending on their zoning and the type of accommodation service provider the business is. The aim of the Act is to increase long-term rental housing stock by taking suitable properties on the short-term market and ensuring they are available as long-term homes for British Columbians. Properties which aren’t suitable for long-term housing are exempt. According to the province, this can include:

    • Strata-titled hotels and motels
    • Time share properties
    • Properties listed on home exchange websites
    • Fractional ownership properties, where no one owner uses it as a principal residence
    • Overnight accommodation lodges (fishing or hunting lodges, for example)
    • Student accommodation owned by an institution or non-profit
    • Employee accommodation owned by an institution or non-profit
    • Strata guest suites

    How Will The Rules Be Enforced?

    The Act aims to help local governments enforce regulations on short-term rental businesses. This includes the following requirements and enforcement methods:

    Requiring Display of Business Licence: In areas where businesses must display a local business licence, short-term rental owners have to display that licence number on their property listing. 

    Holding Online Platforms Accountable: Online short-term rental platforms must remove non-compliant listings from their offerings at the request of the local government. The Act requires these platforms to share information on local short-term listings with local governments on a monthly basis. 

    New Licensing Authority for Local Governments: Amendments to the Local Government Act now allow regional districts to regulate and grant licences to short-term rentals.

    The Provincial Compliance and Enforcement Unit: The Province will establish a dedicated unit to ensure compliance and enforce the new regulations. This unit will monitor compliance using data provided by online short-term rental platforms and can issue penalties for violations.

    Introduction of a Provincial Registry: The Province says it aims to launch a short-term rental registry by early 2025 to aid in compliance monitoring. Hosts will have to register with the province, and include their registration number on their property listings. Online platforms will be required to validate the provincial registration numbers on listings to ensure compliance.

    Fines For Non-Compliance

    Non-compliance with the new regulations can result in receiving fines for bylaw offences. Regional districts can issue fines of up to $50,000 for bylaw offences, and municipalities can issue fines of between $1,000 and $3,000 per infraction per day. It is yet to be seen how municipalities and regional districts will approach ticketing for violations of short-term rental bylaws.

    New Responsibilities For Short-Term Rental Owners

    Many short-term rental owners have expressed concern about the new regulations, including the lack of consultation from the government and potential impact on their investments. If you are or have been operating a short-term rental business, it’s essential to understand your new obligations under the Short Term Rental Accommodations Act. Here is an overview of the new rules under the Act:

    • Short-term rentals must be hosted in your primary residence or on the property.
    • Only one accessory dwelling unit or secondary suite is allowed on that property for short-term rental.
    • You must display a local business licence on your short-term rental listing.
    • You may have to register that short-term listing with the province in the future.  

    If you’re unsure of how your business operations will be affected by the new rules, or need guidance to ensure compliance, contact an experience corporate lawyer today.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Speculation and Vacancy Tax Exemptions for Estates and Trustees

    Speculation and Vacancy Tax Exemptions for Estates and Trustees

    The BC government first introduced the BC Speculation and Vacancy tax in 2018 to incentivize homeowners to occupy their vacant properties. The tax also aims to generate revenue for housing initiatives, ultimately creating a more affordable housing market. Recently, the province has introduced legislation to expand the tax to more communities in BC. In this article, we’ll explore the impacts of the tax and exemptions available for estates, trustees and businesses.

    What is the Tax?

    The Speculation and Vacancy Tax aims to reduce the number of residential properties that sit vacant. In British Columbia, institutional and foreign investors in real estate have gained a reputation for leaving properties empty. Until recently, the Speculation tax only applied to residential properties in the following areas:

    • Capital Regional District (CRD)
    • Metro Vancouver Regional District
    • City of Abbotsford
    • District of Mission
    • City of Chilliwack
    • City of Kelowna
    • City of West Kelowna
    • City of Nanaimo
    • District of Lantzville

    As of 2024, property owners in the following areas will also have reporting obligations:

    Properties held on trust for a minor are eligible for an exemption until the minor turns 19.
    • Vernon, Coldstream;
    • Penticton, Summerland;
    • Lake Country, Peachland;
    • Courtenay, Comox, Cumberland;
    • Parksville, Qualicum Beach;
    • Salmon Arm; and
    • Kamloops

    What Is the Tax Rate?

    Currently, the rate varies based on the owner’s residency status, and if they are a Canadian citizen or resident. The tax is calculated on your property’s assessed value for that year. The rates are:

    • 0.5% of the property’s assessed value for Canadian citizens and residents (excluding untaxed worldwide earners)
    • 2% of the property’s assessed value for foreign owners and untaxed worldwide owners

    Exceptions to the Speculation and Vacancy Tax

    Most BC residents are exempt from the tax, which aims to deter a specific type of property investment which reduces available housing stock. However, the impact may be greater on some businesses which hold or develop residential property. According to the provincial government, many of the exemptions available to individuals can also be claimed by corporations and trustees.

    Disclosure Obligations

    In order to be eligible for certain exemptions, corporate interest holders, beneficial owners and partnership interest holders must all meet the requirements that individual owners would. This means that, in order to claim an exemption, all interest holders must be:

    • Canadian citizens or permanent residents 
    • BC residents for income tax purposes, and 
    • Not untaxed worldwide earners or members of a satellite family

    Additionally, trustees and business owners should contemplate their obligations under the Land Owner Transparency Act (LOTA). The Act requires that corporations and trustees register interests in land with the BC Land Title office. This requirement includes the submission of a transparency report. Under the Act, beneficiaries must be disclosed as indirect owners. There is a high bar for disclosure obligations, and all interest holders must meet the above criteria in order for an owner to claim an exemption.

    Entities Which Are Always Exempt

    Trustees of certain organizations may have no reporting obligations in order to be exempt from the tax. Properties owned by the following groups and organizations aren’t subject to the tax and do not need to submit an annual declaration form:

    • An Indigenous Nation or a corporation owned by an Indigenous Nation
    • Registered charities
    • Housing co-ops
    • Certain not-for-profit organizations
    • Municipalities, regional districts, governments and other public bodies
    • Corporations owned by municipalities or regional districts
    • Corporations incorporated or continued through an enactment (“crown corporations”)
    • Corporations designated as “agents of government” by legislation, and their wholly owned subsidiaries

    Further, properties with an assessed value under $150,000, or unstratified apartment buildings with four or more units are excluded from the tax.

    Exemptions for Tenanted Properties

    Properties which are rented out for at least six months of the year are eligible for an exemption to the tax. Owners may have a number of different tenants throughout the year to meet his requirement. However, it is important to note that other provincial and municipal laws may impact business owners who rent out residential properties for periods of six months or less. For example, the Short-Term Rental Accommodations Act restricts short-term rentals of non-primary residences of less than 90 days in some areas. Having several consecutive short-term tenants is likely not a viable way to claim a tenanted property exemption to the tax.

    Further, the Act differentiates between arm’s length and non-arm’s length tenants for determining exemption eligibility of owners. An arm’s length tenant has no personal relationship or advantage with the owner, and usually has a traditional tenancy agreement and rent arrangement. This arrangement always allows the owner to claim an exemption, even if they are a foreign owner.

    A non-arm’s length tenant may be a family member or friend who lives in the property under a casual arrangement. A homeowner’s spouse or child can’t be considered a tenant for the purposes of the Act. Under section 39 of the Act, if the owner of the non-arm’s length tenanted property is not a Canadian citizen or resident, the tenant must meet the following conditions to claim an exemption:

    • Be a Canadian citizen or resident;
    • Be a BC resident for income tax purposes;
    • Not be an untaxed world-wide owner or member of a satellite family; and
    • Have BC income for the calendar year that is equal to or greater than 3 times the annual fair market rent for the entire property.

    Exemptions for Estate Properties and Properties Held On Trust

    There are also a number of exemptions relating to the death of a homeowner and the estate’s tax liabilities if the house is held on trust after their passing. If a homeowner dies, their estate and any other living owners on title are exempt from the vacancy tax for that year, and the year immediately following. This eases the burden on estate administrators who may be stuck waiting for probate to be able to distribute the property to its beneficiary.

    Further, if the property is held in a trust created in the owner’s will for the benefit of a minor, the property is exempt until the beneficiary turns 19. This means that a property can be vacant without being subject to the tax, so long as all beneficial owners of the property are minors. Trustees must still disclose beneficial ownership and complete the yearly declaration form to claim an exemption.

    How to Declare

    Corporations, trusts and business partnerships with residential property in taxable regions will receive a declaration letter. The declaration process for these entities is similar to that of individuals, but requires more detailed information. You can fill out the declaration form on eTaxBC using your declaration letter, CRA business number and incorporation number. 

    The form asks you to describe the ownership of the property, and disclose the personal details of all corporate interest holders, beneficial owners and partnership interest holders related to the property. This information includes their name, date of birth, country of residence and Social Insurance Number. 

    If you’re unsure of how the newly expanded tax will impact your business or estate, contact an experienced lawyer today.

    You can find the full list of exemptions for individuals, many of which are available to corporations and trustees, here.Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Inheriting a Mortgaged Property in British Columbia

    Inheriting a Mortgaged Property in British Columbia

    Inheriting a property can be a bittersweet experience, filled with emotions and legal complexities. One such complexity arises when the inherited property has an active mortgage. This situation can lead to a host of questions: What are your responsibilities as an heir? What kind of liability do you face? What are your options moving forward? In this article, we’ll provide a clear understanding of what it means to inherit a mortgaged property in British Columbia.

    Inheritance and Estate Debt

    It is increasingly common for testators to die with some form of personal debt, no matter the total value of their estate. One of the most common types of debt is mortgage debt on a family home or investment property. When a person dies with debt, their estate must pay back their creditors before beneficiaries can receive their inheritance. For more on inheritance and estate debt, see our recent article here.

    Mortgages are a type of debt called secured debt. This means that the loan is tied to an asset the borrowed money was used to purchase. In the case of a mortgage, the creditor is the lending bank. They retain the right to seize the asset to recoup unpaid debt owed by the estate. 

    Some lenders offer a grace period to beneficiaries of mortgaged property. However, heirs should act quickly to manage their new asset.

    Rights and Responsibilities of the Beneficiary

    In British Columbia, the beneficiary who inherits a mortgaged property assumes responsibility for maintaining payments to the mortgage lender. They must handle other ownership costs such as property taxes and Strata fees. This applies even if the heir is ultimately going to sell the property. They may have to rearrange the details of the mortgage with the lending bank, but this may only happen when the mortgage is up for renewal. The lending bank will only exercise their rights to seize the asset tied to the secured debt if payments are not made. 

    Importantly, the executor of the estate must maintain payments on the property from the estate until the transfer of the property to its beneficiary.

    First Steps for Beneficiaries of a Mortgaged Property

    Inheriting a house with a mortgage can be a complex and challenging situation. Depending on the circumstances, there are different options and consequences to consider.  The first thing to do is to contact the mortgage lender as soon as possible and inform them of the death of the previous owner. They may have a grace period for mortgage payments in these circumstances, but they will need to verify your identity and ownership of the property.

    Next, beneficiaries must decide what to do with the property. Some options include:

    • Paying off the mortgage balance with other cash and assets from the estate. This may be possible if you have enough funds or if the estate has other valuable properties or investments which you are entitled to.
    • Taking out a new mortgage in your name. This may be an option if you want to keep living in the property or rent it out, but you will need to qualify for a new loan based on your income and credit history.. You may also need to pay fees and charges for setting up a new mortgage.
    • Selling the property and using the proceeds to pay off the mortgage. This may be an option if you want to cash out quickly or if you don’t want to deal with maintaining or managing the property. However, you will need to factor in selling costs, taxes, and potential capital gains or losses when calculating your net profit.

    Seeking Advice for Beneficiaries of Mortgaged Properties

    Inheriting a house with a mortgage can have significant financial implications and responsibilities for yourself and your family. It is important to understand your rights and obligations as an heir, as well as the potential risks and benefits of each option. You should consult a professional estate planner or financial advisor before making any decisions. They can help you assess your situation, explore your options, and advise you on the best course of action for your goals and needs.

    If you’re passing down a mortgaged property through your estate or expect to inherit a mortgaged property, contact an experienced estate lawyer today.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • British Columbia Strata Property Act: How am I Impacted?

    British Columbia Strata Property Act: How am I Impacted?

    B.C.’s new Housing Supply Act introduces measures to support specific communities in increasing their housing supply in response to the ongoing housing and rental crisis. The Act will impact buyers and renters, real estate agents and developers and those considering buying property in the future. Further, amendments to the Strata Property Act will work with policy introduced in the Housing Supply Act to improve the supply of rental and purchase homes in B.C. So what does this new legislation mean?

    New Housing Policies Introduced

    The new Housing Supply Act sets out ways the B.C. government can target specific communities facing the worst housing unavailability, set specific goals for that community to meet and support that community in actioning them. This policy provides support for communities facing high-demand and low-supply of rental properties in particular to make policy changes that suit their community’s specific needs while receiving support in achieving those goals form the Provincial government. It’s important to understand that, while Canadians all over B.C. and Canada are feeling the effects of the housing crisis, there is no one-size-fits-all approach to improving housing supply in every community. For example, a community may need significant development of new homes, but face environmental limitations on expansion of single-family homes sprawling outside of their city’s centre.

    Under the Act, communities identified by the B.C. Housing Minister will have expanded powers to increase housing development and implement bylaws to improve housing supply. When the Minister identifies a target community under the Act, they will issue a housing target order which specifies housing targets, the metrics with which delivery on those targets will be measured, and a timeline for when these targets need to be achieved.

    The Strata Property Act

    It is important for both owners and renters of their home to stay up-to-date with legislative updates and new housing policy.

    Amendments to the Strata Property Act ban rental-restrictions in strata managed property developments. Strata rules which prohibit renters from residing in a strata home are invalid and do not have to be followed. The updates stipulate that stratas maintain the power to ban short-term rentals (using services like Airbnb or VRBO to list your strata property for rent). Short term rentals in residential developments in high-demand communities like Vancouver put further pressure on the supply of rental properties, taking potential long-term rental homes effectively off the market for locals. 

    Another change introduced in the legislation is the banning of age-restrictions for those seeking to buy or rent a property in a strata community, except for the “over 55” rule allowed for strata communities catering to senior citizens. This change will hopefully reduce strata communities’ ability to create barriers or “red tape” for those seeking to buy and rent in their communities.

    Own a Strata Property?

    Owners should be aware that the ending of rental restrictions on strata properties across B.C. means that, if their strata property is unoccupied, it will now be subject to the B.C. Provincial speculation tax (empty home tax) at 0.5% of the property’s value. Note that this tax rate is variable, depending on the residential status of the homeowner. Owners in Vancouver can also be subject to the municipal Vancouver vacant home tax, at an annual rate of 3% of the home’s total value. 

    If you own a strata property that is unoccupied and unrented for 6 months of the year or more, or you’re unsure if your use of the property qualifies as unoccupied for the purposes of either the B.C. speculation tax or the Vancouver empty home tax, check out our article here.

    Renting, or Planning to Rent?

    The Housing Supply Act and amendments announced for the Strata Property Act aim to support renters in high-demand low-supply housing markets, like Vancouver, Victoria and their surrounding cities. There are a number of ways these new policies should help increase the supply of rentals in high-demand communities in B.C. over time:

    1. Increased rental options: The removal of rental restrictions in strata properties can potentially increase the availability of rental units in Vancouver. This may provide renters with a broader range of options to choose from when looking for housing.
    2. Removal of age restrictions: While age restrictions will still be allowed for “seniors only” strata, the elimination of 19-plus age restrictions might open up rental opportunities for a wider demographic, particularly families with children.
    3. Application of empty homes tax to strata properties: The inclusion of strata properties in the empty homes tax may prompt owners of strata property which is unoccupied or under occupied to list the home for rent, potentially increasing availability of rentals in strata communities. 
    4. Increased housing supply over time: The introduction of the Housing Supply Act could lead to increased housing development in select municipalities. While this may not have an immediate impact on renters, it could help alleviate housing shortages in the long run.

    These changes may offer some potential benefits for renters in terms of increased rental options and reduced age restrictions. However, the impact on rent prices and overall rental availability will depend on various factors, including how property owners, developers, and the market react to these legislative changes.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Conveyancing: The Basics

    Conveyancing: The Basics

    Conveyancing is the process of transferring title of land when it is sold. Though it may sound simple, conveyancing is an area of law that must be practiced with precision. The job of a conveyancer goes beyond changing titles at the Land Registry. Conveyancing is an essential part of a home buyer’s due diligence in purchasing a new home. The conveyancer plays a key role in the transfer of property, so what does the process look like?

    First Steps of Land Transfer

    Before the conveyancing process can begin, the conveyancer must first confirm the identities of the seller and purchaser. They’ll carry out checks on the land title of the property being transferred and make sure there are no concerns. This due diligence will make sure there are no liens on the property, outstanding strata fees or unpaid property taxes the buyer is unaware of.

    Importantly, conveyancers for the purchaser will often oversee or check that the relevant inspections of the property have been carried out. Generally, these inspections will vary based on the nature of the property, for instance, if it is commercial or residential land. These early steps will make sure the land is ready for transfer, preventing unpleasant surprises for the purchaser.

    Preparing the Purchaser’s Documents

    To move forward with the conveyancing process, there are a number of documents that will be prepared by your conveyancer. Usually, these documents will all be prepared for signing at one appointment for the convenience of the buyer. The signing appointment is an important part of any home purchase because it gathers all the relevant information in one place to be finalized, and provides an opportunity for the buyer to ask any legal questions. Usually, your conveyancer will go over the information in each document, making sure nothing is misunderstood by any party.

    Your conveyancer should go over each document in detail at your signing appointment.

    The documents necessary for conveyancing include all the details surrounding the financing of the property needed to complete the transfer. The purchaser’s documents that are most commonly prepared for residential conveyancing include:

    • Mortgage documents
    • Insurance documents
    • Tax documents
    • Bank draft for balance of the down payment

    The seller has a different set of forms which must be completed. These documents also include tax details, but the most important document is the Freehold Transfer document. This document will effect the transfer of the land title from the sellers to the purchasers.

    The Final Report and Filing

    After all the documents have been signed, the buyer and seller’s conveyancers will exchange documents and draft a report to confirm all the documents are completed correctly and ready to be filed. This report includes the details of the transfer including tax and mortgage information. Most importantly, it includes the buyer’s certificate of payment.

    Once the report is complete, your conveyancer will file with the Land Registry to transfer the land title. After the transfer has been registered and the sellers have been paid, the conveyancer and realtor will arrange possession. Finally, the conveyancer will order the Title Certificate for the property from the Land Title Office as proof of the transfer.

    Summing up, conveyancing is an incredibly important final step in purchasing a home. Of course, attention to detail is key in ensuring an efficient and stress-free transfer of the land title. If you are buying or selling your home and need conveyancing support, contact an experienced lawyer today for a free consultation. We’ll make sure everything is in order for an easy transfer of title.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • BC Speculation Tax- The Basics

    BC Speculation Tax- The Basics

    The government introduced the BC Speculation and Vacancy tax in 2018 to incentivize homeowners to occupy their vacant properties. The tax also aims to generate revenue for housing initiatives, ultimately creating a more affordable housing market. This article will guide you through the basics of the tax, its impact on homeowners, and exemptions.

    What is the Tax?

    The Speculation and Vacancy Tax aims to reduce the number of residential properties that sit vacant. In British Columbia, institutional and foreign investors in real estate have gained a reputation for leaving properties empty. The BC Speculation tax applies to residential properties in the following areas:

    The applicable rate for the BC Speculation and Vacancy tax varies based on the residency and tax status of the homeowner(s).
    • Capital Regional District (CRD)
    • Metro Vancouver Regional District
    • City of Abbotsford
    • District of Mission
    • City of Chilliwack
    • City of Kelowna
    • City of West Kelowna
    • City of Nanaimo
    • District of Lantzville

    The taxable regions are population centres in British Columbia, where the ongoing housing crisis is particularly severe. This differs from the similar Federal Underused Housing Tax, which applies across Canada in census population centres.

    Responsibility of Those Subject to the Tax

    If you have property in these BC areas, you need to submit a yearly declaration form. The form tells the government about where you live and how you use your property. The BC government sends a letter if you are subject to the tax to ensure people are aware of their responsibility. Further, homeowners in taxable areas must fill out the declaration each year, even if they are exempt from the tax.

    Exemptions to the Speculation and Vacancy Tax

    This tax, aimed at deterring property investment which reduces available housing stock, exempts almost all BC residents. Some of the most common exemptions to the tax include people who:

    • Own one property and it is their primary residence
    • Own an additional property (or properties) which are rented out at market rate for at least 6 months of each year
    • The owner has temporarily vacated the primary residence due to reasons such as illness, divorce, or other extended absences like travel.
    • Purchased the property in the past year.
    • The vacant property is owned by a public body or not-for-profit organization, an Indigenous group or First Nation, or some registered charities

    Note that short term rental periods of less than 4 weeks cannot count towards the 6 cumulative months rented in the year to exempt the property from the tax.

    Details of the Tax

    Interestingly, the rate of tax incurred relative to property value differs based on the tax status of the property owning individual. An individual or family with ‘satellite’ tax status will have a tax rate of 2% applied to the assessed value of their property in that year. ‘Satellite’ refers to individuals or families whose main source of income (more than 50%) comes from outside of Canada and who are not subject to Canadian income tax. Read more on special satellite tax status in our article here. For Canadian citizens and permanent residents who don’t belong to this special tax category, the rate is 0.5% of the home’s assessed value in that year.

    If you’re a homeowner or prospective home buyer with questions about navigating this tax or other new vacancy taxes, contact an experienced lawyer today. We’ll ensure you fully understand your tax obligations and potential exemptions.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Appointing an Overseas Power of Attorney

    Appointing an Overseas Power of Attorney

    It’s becoming increasingly common for Canadians to hold assets overseas. Often, they are dual citizens who moved to Canada and still hold family assets in another country, snowbirds who own a vacation house abroad, or Canadian international students who have bank accounts in their country of study. One challenge many such Canadians run into is difficulty managing their assets when they are outside of the country where those assets are located. Further, Canadians abroad may have difficulty accessing and managing their accounts within Canada. For example, the CRA My Account for individuals is difficult to access online while abroad. In order to manage such assets and accounts, Canadians can appoint legal representatives or an overseas power of attorney.

    The Power of Attorney: at Home and Abroad

    First, what is a power of attorney (POA)? Powers of attorney are common in estate plans in British Columbia and across Canada. A POA is a representative with the power to make legal decisions on behalf of an individual. A POA has privileges to sign documents on behalf of the individual as well. In previous articles we’ve discussed the importance of having an enduring power-of-attorney in cases where will writers are expecting to lose testamentary capacity due to degenerative disease like dementia. The role of a power of attorney in the context of estate planning varies from their role in managing a person’s assets that are located abroad. For more on POAs and estate planning, read our article on the role of POAs in the context of estate planning.

    What is an Overseas Power of Attorney?

    Appointing an overseas POA can save individuals the trouble of coordinating with lawyers or other specialists abroad, especially where there is a significant time difference or language barrier.

    An overseas power of attorney differs from a POA appointed for estate planning purposes in that they often live in a different jurisdiction than the individual appointing them. Usually, an individual would appoint an overseas POA that lives in the same jurisdiction as the assets they will be responsible for managing. This is particularly beneficial for managing assets in jurisdictions where there is a significant time difference, a language barrier, or rules prohibiting the owner from accessing their accounts from Canada. 

    Appointing an overseas POA is also beneficial for those who don’t have assets, but have interests abroad. For instance, individuals involved in overseas or cross-border litigation should have legal representatives in the relevant jurisdictions, and having an overseas POA can significantly ease pressure on everyone involved as they are able to sign documents and receive communications on behalf of the represented individual. Individuals receiving inheritance from family abroad should consider appointing an overseas POA for similar reasons. Having a representative ready and able to assume responsibility for signing documents, attending hearings and accessing legal support can reduce confusion and barriers to legal resolution, ultimately saving time and money. 

    How to Appoint an Overseas Power of Attorney?

    Appointing a POA is usually a quick and simple process. However, individuals must be careful and considerate in drafting a POA for an overseas representative. By appointing an overseas POA, they are handing over legal authority to an individual who will operate in a different jurisdiction. It is important that the person appointed is someone you trust, or is a professional POA with experience and a strong reputation. There are many online services and notaries who offer assistance in creating a power of attorney document. However, the cross-border nature of assets or interests is a complicating factor that should not be ignored. The best and most careful way to give another individual power of attorney to manage your legal affairs is to meet with an experienced lawyer.

    If you’re considering drafting a power of attorney in Canada or abroad, contact an experienced estate lawyer today. We’ll make sure your best interests are represented no matter the circumstances. 

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Married or Not? Spousal Support in BC

    Married or Not? Spousal Support in BC

    When a couple is legally married and there’s a marriage certificate, there is little doubt as to the nature of the relationship and the rights that the spouses have should the relationship dissolve. Similar rights, like spousal support, are also available in British Columbia to people who live together in a “marriage-like relationship” for two or more years. However, sometimes there is disagreement as to the nature of the relationship and spousal status of the parties. In these cases, the court will consider the intentions and evidence of the parties and make a judgement about the nature of the relationship. This issue was recently before the BC Supreme Court in the case Kennedy v Smith, 2022 BCSC 1622, where the court considered how the law determines spousal status when the parties disagree on the legal nature of their relationship.

    The case highlighted the need for unmarried couples who choose to live together to consider what may happen with their assets should they separate in the future and the value of having a formal agreement in place.

    Kennedy v Smith (2022) Case Facts

    The Claimant, Ms. Kennedy, was seeking to establish that she had spousal status and that she had previously lived in a marriage-like relationship with the defendant, Mr. Smith. Ms. Kennedy was seeking to have a division of family property and spousal support from Mr. Smith under the Family Law Act 2011. The main concern of the court in determining Ms. Kennedy’s spousal status was the nature of her cohabitating relationship to Mr. Smith and if they had lived in a marriage-like relationship for the purposes of the Family Law Act. 

    The facts of this case are rather strange, and the judge highlighted that the claimant’s submissions lacked credibility. Mr. Smith and Ms. Kennedy rented apartments in the same building, and became acquainted with one another in 1999. Ms. Kennedy claimed that their relationship was romantic, and that Mr. Smith had moved in with Ms. Kennedy in 2008 and only used his apartment to store his belongings. However Mr. Smith absolutely denied romantic involvement with Ms. Kennedy, denied that he lived with Ms. Kennedy and had his brother testify that he had often visited Mr. Smith’s apartment, and it was clear he was living in the unit as normal during the period in question. 

    Was the House a Marital Asset?

    People who live together should draft a cohabitation agreement or a relationship agreement to clearly set out their intentions for the property and prevent future conflict.

    Eventually both Ms. Kennedy and Mr. Smith moved out of the apartment building, and over many years lived separately at various addresses until at least 2011. At that time, Mr. Smith purchased a house and invited Ms. Kennedy to live with him as she was being evicted from her apartment. Mr. Smith bought the house with a mortgage of nearly $500,000 and paid the entire down payment himself. The house was registered jointly between Mr. Smith and Ms. Kennedy, meaning that the whole property belonged equally to both parties and they did not hold individual shares in the value of the house.

    In their time living in the house, Mr. Smith was the only one to make payments on the mortgage although Ms. Kennedy managed some of the utility bills and paid for some household expenses. The nature of their cohabitating relationship was in dispute with Ms. Kennedy claiming that the pair shared a bedroom and often gave each other gifts, and that they shared a close relationship with each other’s families. Ms. Kennedy also testified that Mr. Smith had taken her on a vacation to celebrate her birthday and that they travelled together frequently. Mr. Smith denied most of Ms. Kennedy’s testimony regarding the nature of their relationship.

    The court had to determine the credibility of the testimony that was provided to decide if the relationship was marriage-like for the purposes of the Family Law Act.

    Evaluating Credibility of Witnesses

    In the decision, the judge determined that Mr. Smith’s evidence was more credible than that of Ms. Kennedy. The judge came to this conclusion because Ms. Kennedy’s evidence was inconsistent and often contradictory while Mr. Smith’s evidence was consistent and did not contradict itself.

    In this case, the judge considered that the determination of spousal status must consider both fact and law and does not rely on a set of simple criteria or checklist. To determine spousal status, the court considered both the couple’s intentions and their behaviour as objective evidence. The judge pointed out that Ms. Kennedy’s evidence indicated that she believed she was in a marriage-like relationship for almost the entire time she knew and lived with Mr. Smith. In contrast, Mr. Smith’s evidence indicated that he did not believe he was in a marriage-like relationship with Ms. Kennedy.

    The Court’s Decision- Spousal Support

    As a result, objective evidence was necessary to establish spousal status. As Mr. Smith’s evidence was preferred to Ms. Kennedy’s evidence, the judge found that the elements of a marriage-like relationship were not sufficiently present to establish spousal status. The judge decided that the Family Law Act was not invoked on the facts, and Ms. Kennedy was not entitled to her requests of division assets and spousal support. 

    It is not uncommon in family law matters for opposing parties to give contradictory evidence of the events. This can complicate court decisions significantly as the credibility of the evidence must also be decided on. In this case, because the evidence given by Ms. Kennedy lacked credibility and her claim for spousal status was dismissed. Had Ms. Kennedy’s evidence been more credible, it is likely that the court would have found evidence of a marriage-like relationship and granted Ms. Kennedy some division of family assets and/or spousal support from Mr. Smith. 

    If you are concerned about shared assets in a marriage-like relationship, it is important to make a plan as soon as possible. Couples or friends sharing assets or cohabitating should always communicate their intentions for the property in writing to avoid conflict in the future. If you live with a friend or partner in a shared home and are concerned for the future, contact an experienced contract lawyer today.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Cohabitation Agreements: The Basics

    Cohabitation Agreements: The Basics

    As housing markets around the world make living alone unattainable for many, cohabitation agreements are gaining in popularity. Couples often use a cohabitation agreement, but it can benefit anyone living in a property they share with another person. Making a cohabitation agreement can help couples plan for the future and address the concerns of everyone involved. People considering a cohabitation agreement should remember that it is a legally binding contract.

    Reasons For Drafting a Cohabitation Agreement

    There are various reasons people may feel a cohabitation agreement is right for their relationship or living situation. In British Columbia, it is becoming increasingly common for friends and family to buy property jointly to enable affordability. If they choose to live in the property together, a cohabitation agreement is an important opportunity to discuss and finalize their plans for the property and prevent future conflict. Couples more commonly use cohabitation agreements to confirm the property’s ownership details and each partner’s respective financial or maintenance responsibilities. They are particularly important for unmarried couples who have children. Cohabitation agreements can also be an important part of one’s estate plan, especially if they have an adult child or caretaker living in their house full-time. 

    Terms of Cohabitation Agreements

    People draft cohabitation agreements for a variety of reasons, and lawyers can tailor the documents for their specific needs. Because of the highly customizable nature of these contracts, consultation with a legal professional is essential to understand the full scope of your options. The most common provisions in cohabitation agreements for unmarried couples include:

    • Respective responsibilities of the partners for care and maintenance of the property
    • How the property or equity in the property will be divided should they separate
    • Identification of shared debts and terms of individual repayment should they separate
    It is a good idea for couples to set out specific financial responsibilities for each partner in their cohabitation agreement.

    Unmarried couples commonly include these provisions in their cohabitation agreements to safeguard both partners’ interests should they separate. One of the most common issues dealt with in cohabitation agreements is to identify a “fair” division of assets should they need to separate.

    For instance, partners can use a cohabitation agreement to address a situation where one partner owns a house, but both partners equally share the monthly mortgage payments. This arrangement often poses a problem for many couples because, in the event of a split, the partner who owns the house solely owns the portion of home equity that both partners contributed to equally. This can result in one person leaving the relationship facing disproportionate financial harm. There are various ways a cohabitation agreement could address this issue with a home or any other shared asset, and creating the agreement helps couples feel prepared in the event of a separation. 

    The “Marriage-Like Relationship”

    In British Columbia courts have identified common law spouses, where two people live together for at least two years in a marriage like relationship, as having many of the same rights as those with a traditional legal marriage. In the event of a financial dispute following the separation of partners who meet these criteria, the nature of the cohabitating relationship could be very important in determining the rights of each person involved. To be certain of what will happen to your assets in the event of a shared relationship, a cohabitation agreement or relationship agreement is essential. If you’re considering creating your own cohabitation agreement, contact an experienced lawyer today. We’ll ensure the agreement is carefully written the specific needs of your situation.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.