Real Estate Lawyers – When Should They Enter The Purchase Process?

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When Should You Hire a Real Estate Lawyer?

If you are buying a home, condo, cottage, second residence or vacation property, have you ever considered the benefits of hiring a real estate lawyer to protect your financial interests? After all, the purchase of real estate is one of the largest financial investments a Canadian will ever make.

Should you hire a real estate attorney early in the purchase process, or wait until after the purchase agreement is signed?  There are a number of Canadians who would prefer to hire a real estate lawyer just to perform a title search, register the deed and transfer the funds after their purchase agreement has been signed. The reasoning is to save a few dollars on legal fees.

As many have discovered, hiring a qualified real estate attorney was one of the best investment decisions they made and actually saved them from potential financial risk and additional expenses.

Agreement of Purchase and Sale Legalese

Unless one has a working knowledge of real estate law in Ontario, the legalese contained within real estate documents can be very perplexing. To compound the matter, every Agreement of Purchase and Sale could differ in their legal terminology. One should recognize that these agreements are iron-clad and it is the responsibility of the buyer to understand exactly what they are purchasing.

You may be advised to include the phrase, ‘conditional on financing’ to your purchase agreement. It is a recommendation that you place a condition on your offer to purchase.  As a result, acceptance would be subject to you obtaining a financing commitment from a mortgage lender.

Acceptance under ‘Conditional on Financing”

Should financing be offered at a rate of 6.5%, rather than a preferred rate of 3.75%, you would not be in a position to pull out of your agreement.  You could also be at risk of losing your deposit. By accepting the higher financing rate, you would end up pay thousands of dollars more per year in mortgage payments.

A real estate lawyer could have helped avoid such a shortfall by writing, ‘conditional on financing agreeable to the buyer.”  Phrasing the condition in this manner would allow the buyer to pull out of the purchase agreement given that the financing offered was not agreeable to the purchaser.

‘Easement,’ vs. ‘Encroachment’

If within the purchase agreement, you discover that the seller wrote the word ‘easement,’ rather than the word ‘encroachment,’ you could find yourself paying substantially to correct a problem.  You could be presented with additional legal fees.

Real estate lawyers are well-known to be invaluable advisors when it comes to examining the dozens of legal pages contained in a condominium purchase agreement.

Since a majority of Canadians who purchase a new condo will invest most of their savings as down-payment, there is no room for an unexpected surprise that would require additional monies at the time of closing.

Adjustment Clauses

Numerous builders will add the cost of the Tarion warranty home enrolment fee, plus, any ‘adjustments’ your contract states you will pay on top of the purchase price on closing.

Agreement of Purchase and Sale contracts, and the adjustment clauses contained within, are drafted by the builder’s real estate lawyer. Since contract language is not limited to and may include phrases such as “more or less” and “subject to change without notice,” it cannot be understated how important it is to have your condo purchase agreement reviewed by a competent real estate lawyer.

These additional adjustments could add anywhere from a few thousand dollars up to $20,000 to the purchase price of your condo closing costs.

Your real estate attorney may advise you that capping the closing costs would be advisable. In many cases your lawyer may be able to negotiate a cap on any potential increases from builders. Since lawyers are consistently involved in numerous real estate transactions, they have come to understand the need of developers to reach their condo sales targets.  Sales targets are important for developers to reach if they are looking to acquire bank financing.

Words, writing, and language differences in Agreement of Purchase and Sale documents do make a difference.

Real estate lawyers are experienced in what to look for in all Agreement of Purchase and Sale documents. They will advise you in what you can and cannot do should you choose to live in the condominium complex before you accept any limitations the condo agreement may impose?

Residential resale condominiums do not have similar costs associated with your purchase.

Cross-Border Real Estate: Snowbirds Face Storm of the Century

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The lure of buying real estate in the United States as a result of the available bargain basement property values and warm weather has resulted in Canadians becoming one the largest foreign investors of property in the United States. Many Canadians who have purchased or plan to purchase real estate in the U.S. are unfamiliar with the potential tax and estate planning consequences they could be facing.

There are potential tax liabilities and cross-border bureaucratic differences between our two countries that should be considered before buying U.S. real estate property.

Even if Canadians are not considered residents of the U.S. for tax purposes, if they own U.S. real estate, they are subject to U.S. estate tax. Consideration of Canadians for U.S. tax purposes depends on how many days you are in the country. You would need to perform a substantial presence test calculation to determine if you would be subject to U.S. tax filing and requirements.

As a result, tax and estate planning should be considered an important course of action when purchasing real estate in the United States. The economic shock that could arise from unexpected taxes could dash any good intentions. Countless Canadians have been stunned to learn that the estate of a Canadian resident may have to pay United States estate taxes because they, like many Canadians, owned property in the U.S.

United States estate tax applies to estates with worldwide assets over a certain limit.  You will need to report any capital gains in both Canada and the United States if your U.S. property is not designated as your principal residence.

Before purchasing real estate in the United States, it would be prudent to seek competent real estate, tax and estate planning advice on how to best take ownership (title) of the property, and to review potential tax liabilities based on your tax rates and worldwide assets.  You may also want to review various estate planning strategies that are being used by savvy homeowners to reduce potential US estate taxes, penalties and interest.

After the United States housing crash, many Canadians purchased real estate (houses/condos) in Florida. If these properties were rented out while in Canada or purchased for the purpose of receiving rental income, then you are obligated to report the income to both the Canada Revenue Agency and the Internal Revenue Service.  Canadians who fail to do so will find themselves facing unwanted fines and interest penalties in addition to any taxes due.

For the do it yourself renovator, there is no problem if your property is for personal use. However, if your property generates rental income, U.S. regulations do not allow you to operate a rental or a business. In order to legally have your rent collected and your property maintained with any required renovations, you would need to hire a property management company. To perform these operations yourself would require you obtaining the appropriate work visa.

If you own, or are considering buying U.S. real estate, make sure you keep the Canada Revenue Agency and the Internal Revenue Service as Allies. 

There is No Substitute for Qualified and Specific Professional Advice!

Tax and estate planning proficiency to make sure title is taken in the most favorable structure to minimize legal issues upon sale or death.

Can Estate Planning Save You Potential Problems and Expenses?

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Wills, estates, trusts and power of attorney are all common tools used in estate planning.

Estate planning involves legally structuring your assets (e.g. property, stocks, business interests, money) so as to minimize potential taxes and fees, thereby, maximizing the after-tax value of your Estate on behalf of your beneficiaries in the event of your untimely death.

Recent surveys have concluded that many Canadians are unaware of their options or of the potential consequences for failing to plan.

One out of five Canadians have not prepared a Will

They mistakenly assume their estate will pass to their spouse/ beneficiaries. Dyeing without a Will in Canada means you are considered to have died “intestate.” Intestacy rules are governed by each province and could result in additional legal costs and time delays for your beneficiaries. In addition, your beneficiaries will not be able to decide how your estate will be divided – that decision will now be in the hands of the provincial government.

Less than half of all Canadians have Wills that are actually current

Canadians should review and revise their Wills annually; first and foremost if there is a major life or financial change; or secondly if there are changes to federal or provincial laws which may potentially save them thousands of dollars by taking advantage of new regulations.

You should periodically review and update your plan in case of:

Marriage
Divorce
Birth or adoption of children
Blended family relationship
Living common-law
Same-sex partner
Changes in Business interests
Illness or incapacitation
Changes in your intentions
Changes in tax or non-tax laws
Receive an Inheritance/windfall
Change in assets
Change in residence
Purchase Foreign Real Estate
Death of family member

One out of three Canadians believe a Will is sufficient

There’s more than One Pillar to a properly executed Estate Plan

A properly executed estate plan based on precise jurisdictional guidelines is designed to:

  • Help you accumulate wealth, preserve it and then pass it on to your beneficiaries
  • Help you plan for your retirement and or business succession
  • Help you minimize taxes
  •       During your lifetime
  •       Upon your death
  •       On any income that might be earned after your death
  • Provide for your family in the event of an untimely death or disability

Over one third of Canadians fail to consider potential problems which would require a Power of Attorney or Power of Attorney for Personal Care 

When Canadians are no longer able to make decisions about their personal care or medical treatments, a written document “Power of Attorney for Personal Care” explains how they would like to be medically treated to ensure their wishes.

A Power of Attorney would designate either a trusted individual or a trust company to manage their financial affairs should they be unable to do so. Without a Power of Attorney, an application would have to be made to the court requesting permission to manage their affairs.

The Tax Man Cometh

Presently Canada has no true Estate Tax. However, ones estate could be subject to three potential taxes or pseudo-taxes:

Income Tax Due to Deemed Disposition

A final tax return needs to be filed by the estate’s executor and must include all income earned, and any net capital gain recognized under the deemed disposition rules up to the date of death.

Provincial Probate Taxes

Upon death, the estate’s executor is generally required to file for probate with the provincial court and submit an account of the deceased’s assets as well as the original Will.

The estate’s executor is required to pay any probate tax owing and is based on the total value of all assets that pass through the Will.

Probate taxes may be reduced by the naming of beneficiaries, utilizing Joint Tenancy with the Right of Survivorship agreements and the use of living trusts.

Canada Trusts, if planned and executed correctly, offer:

Privacy
Asset Protection (structuring to better protect your assets from future creditors)
Control
Tax planning

U.S. Estate Tax (on your U.S. assets)

Canadians are required to pay U.S. Estate Tax based on the market value of their U.S. assets (real estate, publicly-traded stocks and bonds and other types of government (debt) at death.

Over 70 percent of family-owned businesses do not survive the transition to the second generation

Numerous family business shareholders have not completed an estate or succession plan for their business and mistakenly feel that writing a Will is all that is needed to safeguard their family business succession.

Succession planning should be considered synonymous with tax planning and estate planning for the reason that all three relate to planning for your future, your business future and your family’s future.

A family business succession plan provides instructions for your partners, heirs and successors to follow in the event of your death, disability or retirement and may include:

Buy-sell agreements between business partners and heirs
Distribution of business stock and other business assets
Life insurance policies
Debt elimination schedules
Division of successor responsibilities
Business valuation
Other factors that may affect the business

There is No Substitute for Qualified and Specific Professional Advice

Skilled tax, estate and succession planning are exceptionally complicated. Horror stories of do-it-yourself forms obtained from the Internet can be found everywhere. Obtaining the advice of a competent and skilled professional cannot be overstated. This means an attorney who specializes in tax, Wills and estate planning.

An experienced estate planning attorney will help you properly structure your estate and succession plan to help minimize taxes and disputes, thereby providing for your family in the event of an untimely death or disability.

New Startup Visa Program – Permanent Residency for Immigrant Entrepreneurs

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IMMIGRATION CANADA

As of April 1, 2013, Canada’s immigration Startup Visa Program will allow Canada to attract the world’s brightest entrepreneurs by making it easier for foreign entrepreneurs to get visas.

For immigrant entrepreneurs to qualify for the visa, they must secure funding from designated Canadian investors, as well as meet certain additional criteria.

The program was designed together with Canada’s Venture Capital and Private Equity Association (CVCA) and the National Angel Capital Organization (NACO) to help spur economic growth. By working together with investors, foreign entrepreneurs will be developing new businesses and creating jobs, especially in the high-tech field

Immigrant entrepreneurs, if accepted, will obtain immediate permanent residency. To qualify immigrant entrepreneurs need to secure a minimum investment of $200,000 from a designated Canadian venture capital fund or $75,000 from a designated Canadian angel investor group. Venture Capital and Private Equity Association and the National Angel Capital Organization, will work with Citizenship and Immigration Canada to pick those eligible for the program.

Applicants will also have to meet language proficiency criteria and have at least one year of post-secondary education.

The Startup Visa Program could become a new economic class for Canada’s Citizenship and Immigration if successful.

Immigration Lawyer Aila Makooli, B.A., J.D

 

Family Sponsorship – Canada Immigration

Family Sponsorship Immigration Canada

Effective October 25, 2012, sponsored spouses or partners must now live together in a legitimate relationship with their sponsor for two years from the day they receive permanent residence status in Canada.

As a Canadian citizen or a permanent resident of Canada, you can sponsor your spouse, conjugal or common-law partner, dependent child, adopted child or other eligible relative to become a permanent resident under the family class sponsorship.

If your looking to sponsor a family member to come to Canada, you have specific obligations and responsibilities that need to be met.

Contact our Canada immigration law firm today for a free initial consultation about qualifications for family sponsorship. We will work with you to determine whether or not you and your family meet the necessary requirements under the Family Class for sponsorship.

Immigration Lawyer Toronto

Immigration and Real Estate Lawyers Toronto Launches New Mobile Website

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Embracing the rapid rise of mobile technology, the Law Firm of Makooli Prekupec LLP, immigration and real estate lawyers in Toronto launches new mobile website.

TORONTO, ONTARIO July 22, 2013 — The law firm of Makooli Prekupec LLP., increased the accessibility of their law practice through the launch of a mobile website. Today’s on-the-go users are increasingly using their mobile devices for internet access.

The law firm’s new mobile website provides a greater browsing experience for clients and potent clients by helping web visitors attain quick, educational and easy-to-navigate information about their legal practice.

Due to the rapid rise of mobile technology, people have come to expect lawyer websites to be easily readable on their portable devices.

Most notable is that the  Makooli Prekupec LLP website features a responsive technology, a website design technique that allows the website to detect which type of desktop, tablet, or smartphone device the client is using. The mobile website will automatically adjust its size and layout depending on the type of mobile device.

In addition to accessing information on the law firms practice, clients will be able to take advantage of the one-touch call feature and instantly connect to the lawyers at Makooli Prekupec LLP directly from their mobile device.

The mobile-friendly website provides clients with a convenient way to learn more about the law firm, individual lawyers and their practice areas directly on the mobile devices they carry with them every day.

About Makooli Prekupec LLP

The Law Firm of Makooli Prekupec LLP (http://www.makooliprekupec.com) focuses on immigration, real estate, litigation, corporate/commercial, tax, offshore transactions, trust and estate planning law, located in Toronto Ontario.

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Hiring a Real Estate Lawyer in the Toronto Area

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Since real estate law is a specialty area of the law, it is expected that buyers and sellers of real estate will seek the representation of a competent real estate lawyer throughout the purchase and closing process. Informed buyers and sellers in Toronto rely upon the advice of a real estate lawyer given that most recognize that real estate transactions can be extraordinarily complicated. With the simple fact that real estate prices in the Toronto area are quite high, negotiating a bad deal could put at risk large sums of money.

Since the purchase of real estate represents one of the largest financial commitments one makes, you want to make sure that all the I’s are dotted and T’s crossed.  Now is not the time to miss something important. Crucial due diligence conducted by a real estate lawyer could provide you with the peace of mind that nothing has been left to chance. An experienced real estate lawyer is capable of spotting issues that may develop into future problems.

Whether you are contemplating a purchase or sale; refinancing a home, townhouse or condominium; buying your first house, vacant land or any other type of real estate, an experienced real estate lawyer in Toronto can help. Having competent legal representation lined up, whether in Toronto or the surrounding areas of  Ajax, Brampton, Burlington, Etobicoke, Markham, Mississauga, Newmarket, Oakville, Oshawa , Pickering, Richmond Hill, Scarborough, Vaughan or Whitby can help ensure the real estate transaction comes together in a fair and agreeable manner.

Since most people are not knowledgeable in real estate law, and given the fact that a number of things could potentially go wrong in the real estate process, you don’t want to find yourself regretting not investing a few dollars to obtain the services of a competent real estate lawyer in the Toronto area.

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Canadian Immigration is Becoming Increasingly Complex

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Changes to Canada’s Immigration

Over the past six years the Canadian Government has introduce numerous changes to Canada’s immigration system in an effort to reduce immigration backlogs, increase enforcement of fraudulent marriages and limit individuals who attempt to take advantage of the system.

While recent changes to the Federal Skilled Worker Program have shown to shorten the Canadian-experience class qualifying times with faster processing, it is unfortunate that many who filed prior to Feb. 27, 2008, will not see their applications processed.

Canada immigration is implementing higher standards in favour of high-skilled workers. The Canadian Government | Canada’s immigration system allow skilled migrant workers and foreign student’s transition into permanent immigrant status.

Changes to Canada’s immigration system are opening in favour of entrepreneurs, investors and skilled workers.  Applicants who previously met the criteria for permanent residence prior to the changes could now find themselves unable to qualify under the new rules.

Some of the new steps the Canadian government is taking are:

  • raising the language requirements,
  • restricting eligibility to specific professions,
  • pre-screen applicants’ foreign credentials,
  • certifying educational institutions that enroll foreign students,
  • require a sponsored husband or wife to remain in the marital relationship for at least two years

Qualifications for permanent residents and those seeking to become Canadian citizens are on the rise.

For any particular situation were an individual or individuals seek to immigrate to Canada, it is always prudent to seek professional legal advice before taking any decisions on one’s own.

Selecting a Business and Corporate Lawyer is Smart Business Planning

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Corporate Lawyer Toronto

An experienced business and corporate lawyer is capable of helping you plan for most probabilities, particularly while in the early-stages of a company’s creation. Corporate and business lawyers are knowledgeable in steering clear of complications as well as ensuring your business is safeguarded against possible problems. Fees to keep you in compliance with relevant laws and regulations are typically quite reasonable whenever competent professionals are brought on board in the beginning. The cost to you to resolve non compliance issues in the future however tends to be very costly.

Maintaining Your Corporate Status

Although a good number of businesses tend to use a lawyer to assist with the steps involved in incorporation, new businesses typically overlook the recurring legal requirements to maintain their corporation status. Annual shareholder, director and partner meetings must be held, and recording of minutes and the election of officers is required to comply with Provincial/Federal requirements. Failure to do so can potentially compromise corporate status and lead to the “piercing of the corporate veil.” In the eventuality of a court action or perhaps some other legal action, corporate officers would be subject to personal liability or possibly additional legal challenges.

Non-disclosure and Non-compete Agreements

Many businesses consider proprietary information, their list of customers or clients and the skill set of their employees, examples of their most significant assets. However, they neglect to safeguard those assets by means of Non-disclosure and Non-compete agreements with their personnel.

Employment Agreements

We not only know that business owners would be wise to verify restrictions on their new employees current or past employment agreements but they also must understand any existing provisions or restrictions pertaining to employment law issues. Additionally it is worthwhile to have employees sign written employment agreements that incorporate confidentiality provisions, non-compete provisions as well as any appropriate restrictive covenants.

Exit Strategies

Business owners place their efforts into establishing a new business and overlook what could happen in the event one of the principals actually leaves the business. Whenever a partner or major shareholder makes a decision that they want out, it could conceivably endanger the capability of the business enterprise to carry on functioning.

Written Partnership and Buy-Sell Agreements

A Partnership Agreement governs the relations of the partners/shareholders between or among each other, their rights, responsibilities and authority and also determines precisely how profits and losses are shared.

The most essential item to distinctly outline is just how many owners are required to sign important papers or authorize actions of the company. Any specific action beyond that authority would require former authorization of additional owners.

In the event that the business has a number of owners, then the business ought to have a written buy-sell agreement if it is not currently part of the Agreement.

Understanding Applicable Local, Provincial and Federal Regulations

Usually there are several levels of laws and regulations that could have an effect on the operations of a business. A business owner would need to have an understanding of most of these regulations.

For the most part business owners start businesses with funds from family and friends. Conversely, numerous business owners attempt to raise money by utilizing the World Wide Web, advertisements in community newspapers as well as other methods. Securities regulators are provided the power under provincial statutes to enforce securities regulation. Failure to comply may result in disciplinary action by the securities commission.

Escape Clauses

After a business is formed; business owners begin searching for business office space or alternatively retail space. Most do not negotiate an escape clause provision in their lease. An escape clause could possibly provide business owners a potential to terminate their lease in the event specific changes happen in the marketplace or alternatively in their business. Because commercial leases can be complex, always enlist in the aid of an experience real estate lawyer.

Gregory Prekupec B.A. J.D. (Hons.)  focuses on Corporate and Commercial law,  tax planning, offshore insurance structures, as well as asset protection.

 

 

Toronto Witnesses Record 12 Month Period for Commercial Real Estate Growth

 

Toronto region witnesses record 12 month period for business office real estate deals. 

Real estate investors sought commercial buildings in the Greater Toronto Area in 2012, resulting in establishing a record for the volume of transactions completed along with the value of those transactions.

Toronto witnessed a twofold volume increase of asset transactions over 2009, at a time when the real estate sector bottomed out in the wake of the economic crisis. Real estate transaction included primary properties such apartments, office buildings, retail space, hotels and industrial complexes.

Toronto has gone through a rapid rebound within the last 24 months in comparison to 2008 when funding dried up and organizations were downsizing.

Canada’s most populated city is on the march again, and real estate companies are prepared to speculate on long-term investment opportunities in the region given that employment growth remains steady.
Residential, industrial and commercial real estate land purchases represent the majority of  real estate activities. One can anticipate increased commercial development in the near future.

Toronto’s commercial real estate market continues to be one of the more stable and prolific marketplaces in North America.

Throughout the Greater Toronto Area in 2013 one should see a period of ongoing sound leasing and investment sales activities in the high-rise residential condo, office, retail, and industrial sectors. Existing low vacancy rates indicate additional demand and increasing price levels.

Market participants will continue to designate financial resources to Canada’s real estate investment market, in an attempt to achieve acceptable yields.

Growing occupancy levels with steady optimistic earnings proficiency has also achieved positive results for real estate investors, real estate investment trusts, and private funds buying REITs.

Product demand will remain to outpace the availability of properties available for sale, which will undoubtedly generate robust real estate capital streams in 2013.

The Canadian commercial real estate market for 2013 is shaping up to be a banner year for investors in the Greater Toronto Area if one can rely on the somewhat optimistic market trends predicted.

Ian Speers practice focuses on real estate, wills, estate planning, and estate administration.

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