League and Williams Lawyers

Category: Real Estate

  • BC Court Refuses to Compel Sale of Shared Asset

    BC Court Refuses to Compel Sale of Shared Asset

    Many couples own shared assets, and it is not uncommon for couples to hold tenanted investment properties together. When a relationship ends, co-owners must divide the shared assets. This division may necessitate selling the shared assets to split the proceeds. If the shared asset is tenanted and the co-owners don’t have an agreement on the asset’s management and division, they can seek the court’s intervention to enforce the property’s sale. In these cases the courts rely on both the BC Partition of Property Act 1996 and the Residential Tenancy Act 2002, and the results may not be satisfactory to the co-owners of the property. The BC Supreme Court recently discussed this issue in Benias v Lee (2021).

    The case underscores the need for co-owners to take initiative and draft an agreement that governs the management or division of jointly owned assets when necessary. Carefully considering and agreeing in writing what should happen with any jointly owned assets can help co-owners to avoid costly legal fees and delays in resolving the conflict.

    Facts of the Case

    The plaintiff and her partner lived together for five years, and the courts considered this a marriage-like relationship for the purposes of the Partition of Property Act. They had registered themselves as joint tenants in their property in Vancouver, and began renting it out to tenants for additional income after living in it together for a period of time. The plaintiff contributed significantly more to the purchase price of the home than the defendant had, and they shared the costs of the remaining mortgage on the home equally. The plaintiff expressed verbally and in writing to the ex-partner that they wanted to sell the house in order to have the proceeds fairly divided.

    The ex-partner (the defendant) refused to buy out the plaintiff’s share of the property and they were unable to agree to a fair division of the asset. As a result, the plaintiff turned to the courts, seeking remedy by compelling the sale of the shared property. During the dispute, the property had a tenant under a standard lease agreement.

    The Judgment

    The court rejected the request for an order for the sale of the property on the grounds that the plaintiff did not have standing to raise the claim. The judge examined both the Partition of Property Act 1996 and the Residential Tenancy Act 2002 in coming to this conclusion. According to the Partition of Property Act, a co-owner needs to have immediate right of possession of the land to bring court action and potentially compel sale of the property. Then, the judge looked to the Residential Tenancy Act to determine if the co-owner had immediate right of possession. The Residential Tenancy Act stipulates the circumstances under which a landlord can terminate a tenancy. The Residential Tenancy Act permits early termination of a tenancy under a very limited number of exceptions.

    Depending on the specific circumstances of a case, individuals have a limited ability to raise complaints to a court.

    Due to the ongoing tenancy, the court didn’t grant the claimant an immediate right of possession to the property. The court found the claimant did not have standing to petition for an order of sale, and was unable to provide a remedy to the plaintiff. 

    What Separating Couples Should Know

    This case demonstrates one of the many legal complications that arise when couples hold shared assets and haven’t drafted an agreement on how to manage the properties in the event of separation.

    An unmarried couple in a marriage-like relationship (sometimes referred to as common law marriage), should consider drafting a relationship agreement or cohabitation agreement, or an agreement specific to shared high-value assets, like an investment property. Preparing an agreement beforehand can offer certainty and peace of mind during a challenging transition period. It guides the management and division of shared assets in a manner that both parties deem fair and reasonable. Although the discussion about the potential division of shared assets might feel uncomfortable and unnecessary, it’s a crucial step to protect your interests.

    For couples already separated or in the process of separation that share assets but didn’t draft an agreement like a prenuptial or cohabitation agreement, it is important to act quickly. There are alternative routes to remedy available for couples through The Family Law Act 2011, although there is a limitation period of 2 years for claims. 

    If you have concerns about a shared asset with a partner or ex-partner, contact an experienced lawyer today.

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

  • Alternative Dispute Resolution: A Better Way Forward in Private Disputes

    Alternative Dispute Resolution: A Better Way Forward in Private Disputes

    Most people find nothing but a headache in involvement in a legal dispute, especially if the dispute goes to court. While having competent, full service legal representation can make the process much easier, the prospect of going to trial is enough stress to be overwhelming. Court processes can prolong disputes while litigants anxiously wait for appointments and face Covid-19 backlog related delays. Alternative dispute resolution (ADR) is attractive to litigants because it offers a means of dispute resolution that avoids the courts altogether, often saving considerable time. 

    Most Common Methods of Alternative Dispute Resolution

    There are a few different ways lawyers can help their clients go about alternative dispute resolution, and the method of choice will depend on the details of the dispute and how the parties agree to seek a resolution. The most common methods of ADR include

    • Mediation;
    • Arbitration;
    • Conciliation

    We will discuss the details of each process, their application’s pros and cons, and the scenarios best suited to them in this article. It’s important to remember that alternative dispute resolution is entirely voluntary, and the disputing parties must both agree to seek a resolution outside of the courts in order to move forward with a private settlement. 

    Mediation

    The process of mediation involves a third party known as the ‘mediator’, who works with both parties and their legal representation to come to a decision. Usually, the opposing parties sit in private rooms with their lawyers while the mediator goes between rooms to speak to each party to fully understand the situation and the interests of everyone involved. Mediation is a rigorous process depending on the circumstances of the dispute it seeks to resolve, and parties must come prepared to share all details of the dispute to the mediator. This often involves detailed financial disclosures or medical records with extensive evidence.

    People often use the process to reach settlements in personal injury claims or family disputes such as divorce. Mediation is informal and not binding, so it if often used in the greater process of drafting a binding agreement. Even if the mediation fails, it can help the parties to better understand each other’s positions on important issues and consider how they would like to move forward. This makes mediation a good choice for a first step in alternative dispute resolution, even for the most complex disputes. 

    Unfortunately, mediation does not always help parties to reach a settlement. A resolution must have both parties’ agreement to be binding, and sometimes, the parties can’t resolve their differences through mediation. Mediation doesn’t guarantee a resolution suitable for both parties, so an unsuccessful mediation risks wasting both parties’ valuable time and money

    This is a particularly important point for those seeking ADR to consider when deciding their approach, as the point of ADR for most is to save time and money by avoiding court processes. 

    Arbitration

    Like mediation, the disputing parties select or agree upon an independent third party in arbitration to find a resolution. However, the process differs from mediation because the arbitrator has the task of making a binding decision on behalf of both parties. Both disputing parties put their case forward to the arbitrator for them to consider. They will carefully consider the evidence put forward by both parties to help them come to a decision. Usually, the arbitrator will meet to discuss with each party at least once if not several times before coming to a decision to make sure they fully understand the dispute. 

    ADR processes allow the disputing parties to have more control over the outcome of their dispute than if they were to take the dispute to court.

    People call the arbitrator’s decision an award, and it becomes binding once the arbitrator submits it to the parties. The binding nature of the dispute is what makes arbitration attractive to many people facing legal disputes, as the decision from a professional arbitrator is likely to be fair and reasonable to both parties and often settles the dispute faster than meditation would.

    Adverse Outcomes in Arbitration

    However, those seeking arbitration run the risk of an outcome that they are very unhappy with. If they find the arbitrator’s award very unsatisfactory, they can appeal the decision and take it to the courts. However, arbitrators are usually legal professionals like ex-lawyers and it is not often that a court will find that their decision should be entirely reversed or significantly changed in favour of the appealing party. Appealing the award also risks the courts handing down a decision that is less favourable to them than the arbitrator’s resolution, meaning that they got a worse deal and failed to save time and money by avoiding the courts.

    Conciliation

    The process of conciliation looks very similar to mediation at first glance, but the role of a conciliator has important differences from that of a mediator. A mediator’s job is to facilitate a conversation between the two parties to reach a solution, where a conciliator’s job is more involved in arriving at the specific solution. Like a mediator, conciliator is meant to facilitate the conversation between the two parties, but they also make interventions to direct the conversation and give their own advice on reaching a resolution. They often set an agenda for the meeting(s) and prompt the parties to answer specific questions which they feel will contribute to constructive conversation and resolution of the dispute. Though it is similar to mediation, conciliation offers more significant support from the third party facilitator making it attractive to individuals looking for a quick solution for disputes which are not particularly contentious.

    The Role of Your Lawyer in Alternative Dispute Resolution

    Whether you are working with a mediator, arbitrator or a conciliator, your legal representative will be one of your most important resources during the ADR process. Parties engaging in any of these ADR processes almost always have a lawyer representing and guiding them throughout the whole process, ensuring they are properly advocated for and fully understand their rights and options.

    Your lawyer will be directly involved throughout every step of the ADR process, helping you to understand the legal implications of the dispute, gather and organize your evidence or disclosures, and providing coaching and support prior to and during meetings with the other party. Feeling comfortable and confident with your legal representation is the first step in successful alternative dispute resolution. If you are considering ADR as a means of solving a legal dispute, contact an experienced lawyer today. We’ll ensure you are properly advocated for and are prepared to put your best case forward to third party professionals. 

    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.

  • The Purchase and Sale Agreement

    The Purchase and Sale Agreement

    The most essential part of any real estate deal is the purchase and sale agreement. It is the contract which legally binds both the purchaser and the seller of property to completing the sale. Often, your real estate agent will fill out the standardized form for the purchase and sale agreement, but should you still have a lawyer read over the document before signing?

    What is the Purchase and Sale Agreement?

    If you hope to purchase a house, you must submit a written offer to the seller. In British Columbia, you do this with a document called the purchase and sale agreement. The document is a contract through which the buyer offers to purchase the property at a certain price. If accepted, the seller promises to give them the house by a certain date. 

    A purchase and sale agreement is very important in any sale or purchase of a home, as it sets out the rights of both the buyer and seller, and their responsibilities to each other. Usually, the BC Real Estate Association and the BC branch of the Canadian Bar Association jointly publish this document as a standardized purchase and sale contract. Standardizing the document benefits both parties. It ensures everyone can easily understand the contract and that it includes all necessary information.

    What is in the Agreement?

    The standard purchase and sale agreement will outline the key responsibilities of both parties for the sale of the property. This will always include important information like:

    • The purchase price 
    • The completion date 
    • Subjects to the purchase, and dates that those subjects will be removed

    Most residential sales in British Columbia use the standard agreement, but you can use an altered or different document instead. For instance, a developer will likely use a standard pre-sale contract in the sale of a home that isn’t built yet. For new-build custom houses, builders will use a construction contract. These agreements differ from the standard purchase and sale agreement because the purchase itself is quite different from that of a standard residential home sale. Rather than making a promise to transfer the land title to the purchaser, a builder is making a promise to construct a house on a specific plot. Usually, a developer promises the other party the right to purchase a unit at a certain price upon completion of their development in a presale contract.

    After both the buyer and seller sign it, a purchase and sale agreement becomes legally binding.

    Responsibilities After Signing

    Once signed, the terms of the agreement dictate the responsibilities of the parties. Offers on property often have subjects – stipulations from the buyer that the seller must fulfil before the completion date. This can include a professional inspection of the house, carrying out specific repairs to the house, or even the removal of fixtures such as a hot tub. As soon as the seller accepts the offer in writing, the contract becomes legally binding. This means both the buyer and the seller owe legal obligations to each other. For offers that include subjects, the buyer promises to purchase the property as long as the subjects are met by the closing date. If the subjects are not met, the contract allows the buyer to walk away.

    After signing but before the completion date, the seller of the home is liable for damages to the property. However, at midnight on the completion date the buyer becomes legally responsible for the home, meaning they should purchase home insurance which begins on the closing date rather than the date they plan to move in.

    What Happens if the Agreement is Broken?

    If, after the agreement becomes legally binding, the buyer decides to walk away from the deal they will face legal consequences. If a buyer tries to walk out on a sale, the seller can keep their deposit and sue them for damages, such as a loss in value of the property due to market conditions. The seller can also sue the buyer, forcing them to ‘perform’ the promise they made in the purchase and sale agreement. In this scenario, a court would force the buyer to go through with the sale and the buyer could potentially claim damages for the complications caused by the buyer’s breach of contract.

    The Role of Your Lawyer

    The process of buying, selling, or moving homes comes with extensive responsibilities and it’s easy for things to fall through the cracks. Signing a purchase and sale agreement is the same as signing any other type of contract, and it’s important to always get a professional opinion. Particularly for the sale of land, there are many restrictions that may be on the property, such as the type of structures allowed on it, which the seller might not even be aware of. Buying a home is likely the biggest purchase of your life, and your lawyer will make sure everything goes to plan. If you’d like a professional opinion on a purchase and sale agreement, contact an experienced 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.

  • Land Owner Transparency Act: The Basics

    Land Owner Transparency Act: The Basics

    In November 2020, BC’s new Land Owner Transparency Act (LOTA) came into force. The Act creates new disclosure obligations for owners of real estate in the province. It has a very broad scope and could impact many people. Keep reading for more information on the Act, and what it means for you as a home owner or real estate investor.

    What is the purpose of the act?

    The Government of BC has created the LOTA with the stated purpose of preventing tax evasion, money laundering, and real estate fraud. This comes amidst an ongoing housing crisis and the publishing of several studies and news articles which suggest that BC’s real estate market is particularly vulnerable to financial crime. The Act requires applications to the BC Land Title office to register interests in land. This requirements includes the submission of a transparency report.

    This report discloses whether the Act considers a transferee (the person receiving the land title through the transfer) a “reporting body”. A ‘reporting body’ includes any person or entity holding the land title under a corporation, trust, or through a partnership. This is to prevent individuals from deliberately obscuring their identity purchasing and holding land in order to commit financial crime.

    If the Act considers the transferee a reporting body, they must complete an additional transparency report. This report discloses information on all relevant interest holders. For example, if your children each own shares in your business through which you own property, you must disclose their details when registering your interest in the land.

    How am I Affected?

    This will impact many people’s estate plans, as it’s common to hold assets such as real estate in a trust for beneficiaries. The Act requires the disclosure of these beneficiaries as indirect owners. For example, if you create a trust account to hold real estate, you are transferring the interest in land away from yourself and in to the trust. The land register will reflect this transfer, and the Act identifies the trust as a reporting body. In completing the transfer application, you must file a transparency disclosure with details on the beneficiaries of the trust.

    Small business owners should make sure they have disclosed the necessary information under the new Act.

    This may sound complicated, but it should not discourage you from considering using trust instruments in your estate planning. There can be many benefits to your estate and beneficiaries by using trusts to distribute your assets. For more on this, read our article on inter vivos gifts.

    What do reporting bodies have to do?

    If this change might impact your real estate holdings or estate plans, you should consider seeking legal advice. Simply, when you transfer the land title of your property, either through sale or as part of your estate planning, or for some other personal reason, it is likely that you will have to fill out new forms for the land register as a result of the act. The information you share in the disclosure will depend on the type of transferee- the person or entity receiving the land title. Let’s look at some examples. If the transferee is…

    • A trust: Information on both the trustee, the settlor, and any beneficiaries is required.
    • A corporation: The name of the company, the address(es) it’s registered to, its corporation number and business number is required.
    • Individuals: Name, birth date, social insurance number, home address and even information on their relationship to the reporting body will be necessary.

    As you can see, the information required by the Land Owner Transparency Act is not intrusive and does not pose any new challenges to people buying/selling property in British Columbia. If you’re still unsure of how this act will impact you or your estate plan, contact an experienced estate lawyer today. We’ll make sure you’re on the right track.

    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.

  • Land Title Choices for Co-Ownership

    Land Title Choices for Co-Ownership

    Breaking into the expensive B.C. real estate market is proving increasingly out of reach for many Canadians due to the rising cost of property in the province. In order to purchase an investment property in B.C. in a more affordable manner, many are choosing to purchase property together with a family member, friend, or other business partners. A practice commonly referred to as co-ownership. When creating a co-ownership agreement, one of the most important things you must decide is what kind of land title you will hold as co-owners of the property.

    Co-ownership Choices for Land Title: Joint Tenancy, or Tenants in Common?

    When deciding which type of land title to hold on co-owned property, the nature of your relationship with your co-owner will likely be the most important factor to consider. Your purchase or management of the property won’t significantly change due to the type of registration, but it will determine the asset’s distribution if you or your co-owner die. Each co-ownership has unique circumstances, and the owners should each consider how the land title will affect their personal estate plans. Let’s examine the two land titles’ differences and identify the co-ownership situations they best fit.

    Joint Tenancy

    This is the presumed title for most land purchases involving two people, who are most often spouses, however, there can be more than two owners on the property. Joint tenancy gives each owner an equal property share, and it doesn’t allow division into smaller or unequal portions among the owners. One of the primary benefits of joint tenancy is that when one owner dies, the surviving owner automatically becomes the owner of all shares in the property. In terms of estate planning, this has many benefits. The deceased owner’s shares automatically transfer to their co-owner, allowing widowed spouses to become the property’s sole owner without waiting for estate administration completion.

    This can help grant some ease and peace of mind to grieving spouses facing a very difficult time in their lives. Another benefit of this automatic transfer is that the co-owners don’t need to include the house shares in their wills, which means the asset won’t be part of the probate process. In B.C, probate fees are roughly 1.4% of the total value of all probate assets in the estate. For most people in British Columbia, their homes are the most valuable asset they own, so keeping the family house out of probate can save most estates thousands of dollars at a minimum. Saving this money can also mean that you have extra cash to pass onto your heirs. 

    If there are three or more joint tenants and one passes away, the surviving owners would each automatically receive an equal portion of the deceased’s shares.

    Tenants in Common

    Unlike joint tenancy, tenants in common are able to divide the property into shares of varying sizes. If a co-owner dies, their will would distribute their property share to its beneficiaries, not the co-owners of the property. Especially in cases of co-ownership of an investment property with friends or business partners, it’s important to carefully consider who you choose to inherit your share in the property. It is a good idea to discuss your succession plans for your shares with your co-owners to avoid uncomfortable situations for your beneficiary and business partner(s). The succession of shares in the co-owned property should also be discussed in your co-ownership agreement to ensure a smooth transfer of the assets for all interested parties when the time comes. 

    In the end, the type of land title that is best for your co-ownership will depend on your unique circumstances. Co-owners should carefully tailor their agreements to suit the unique needs of their situation and their assets. If you’re looking to make an investment purchase with one or more other investors, or are considering buying a house jointly with a spouse or partner, contact an experienced lawyer today to prepare you and your partners to protect your rights over the asset.

    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.

  • Buying a Home with Co-Ownership

    Buying a Home with Co-Ownership

    What is a Co-Ownership Agreement?

    Two or more people often use a co-ownership agreement when they buy an asset together, like a house or land. It details the rights and responsibilities of each owner of the property, governing anything from the business relationship between the partners to the day-to-day management of the property. For those hoping to invest in real estate, accessing funds for a down payment and getting financing can be a major obstacle to breaking into the market, and a co-ownership arrangement can make home ownership more affordable. For this reason, it’s increasingly common for people to purchase real estate with a family member or business partner. If you are considering purchasing a shared asset, a co-ownership agreement can protect your, your investment partner, and your property. 

    How Do Co-Ownership Agreements Work?

    Co-ownership agreements will usually include details of the purchase, providing a record of who spent what on the property, preventing confusion should there be a legal dispute over the property in the future. They also describes in detail how the owners wish to manage the property. The co-ownership agreement legally binds the co-owners to perform the duties set out for them in the agreement, and if either owner breaches their responsibility, the other partner can hold them liable for the consequences of the breach.

    Some common details co-owners include in their agreements are:

    • The size of share in the property each individual owner is entitled to (usually based on the initial monetary contribution of each partner);
    • How the property will be used (for example as a rental property, or for the owners to live in);
    • How the owners will hold title to the property (will they hold it in joint tenancy, or as tenants-in-common?);
    • How future decisions regarding the management of the property will be made between the partners;
    • The respective responsibilities of each owner, and what will happen if a partner does not perform their duties;

    This list is not exhaustive, and it’s important to understand that each co-owner relationship is unique. Co-owners should have an agreement drafted to fit their specific needs in order to be as effective as possible.

    What Are the Benefits?

    Co-ownership agreements are especially essential when one of more of the co-owners are going to reside in the property.

    When making a real estate purchase in partnership with a family or friend, some may feel that creating a legal agreement is unnecessary or might cause tension with their investment partner.  Of course, creating a contract with a loved one can be uncomfortable. However, it’s in everyone’s best interest to establish a co-ownership agreement.

    A  co-ownership agreement serves as a guideline for owners, ensuring each person understands and is accountable for their responsibilities. This protects the owners from financial injury if one owner fails to uphold their responsibilities. The agreement can also act as a guideline if things go wrong in the management of the property. It can also help avoid confusion and disagreement between co-owners throughout their time owning the asset cooperatively. Detailed co-ownership agreements can be especially important when planning your estate, as there should be no question of what will happen to your portion of the co-owned property upon your passing in order to protect your beneficiaries and your co-owner from litigation after your death. Creating a co-ownership agreement is also an easy way to avoid confusion and frustration with your business partners.

    Are There Risks to Making a Co-Ownership Agreement?

    In general, the purpose of a co-ownership agreement is to mitigate risk for the partners, protecting them in the instance that their co-owner does not fulfill their responsibilities causing harm, financial or otherwise. The agreement also clarifies each partner’s rights over the investment, preventing future disputes. In this way, entering a co-ownership agreement is the best way to avoid risk when making a large purchase, though you should be certain that you will be able to fulfill your responsibilities according to the agreement, or risk being in breach of your co-ownership agreement.

    When creating a co-ownership agreement, it is crucial that you are fully aware of its contents, and completely understand the responsibilities the agreement designates both to you and your co-owner(s). Your co-ownership agreement should be tailored to the unique needs of both the asset and its owners. If you’re looking to make an investment purchase with one or more other investors, or have already made said purchase without creating a co-ownership agreement, contact an experienced lawyer today to prepare you and your partners to protect your rights over the asset.

    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.