Isenberg & Shuman Barristers, Solicitors & Notaries April 2014 In This Issue: How to take Title to your Home Ontario tenants can pay rent up front Sales and Average Price Up in March About Us Call For A Free Quotation: (416) 225-5136 How to take Title to your Home By Lorne Shuman Once you have decided to purchase a home, you will be faced with important decisions that will impact your estate for a long time. Understanding the importance of how to take “title” (or ownership) to your property is one important aspect of estate planning. In the event of your death, it will also help your beneficiaries administer with more certainty your affairs pertaining to your property. This article discusses the different ways of taking title to your home and the implications of each choice. Once you have finalized the offer to purchase and have hired a lawyer to close the deal, you will need to decide how you are going to take title to the property. Specifically, you will need to instruct your lawyer regarding the form of ownership that you want. Essentially, the decision will boil down to two distinct choices. Whatever choice you make will be clearly stated on the Transfer to your home. If more than one person will reside in the home, you can choose to take title to the property as joint tenants or as tenants in common. Oftentimes, spouses take title as joint tenants. Simply put, this means that upon the death of one of the joint tenants (for example, the husband), the surviving joint tenant (the wife) becomes the sole and absolute owner of the property. Not only spouses can take title as joint tenants. If two sisters, for example, are purchasing a home, they too can take title as joint
Once you have decided to purchase a home, you will be faced with important decisions that will impact your estate for a long time. Understanding the importance of how to take “title” (or ownership) to your property is one important aspect of estate planning. In the event of your death, it will also help your beneficiaries administer with more certainty your affairs pertaining to your property. This article discusses the different ways of taking title to your home and the implications of each choice.
Once you have finalized the offer to purchase and have hired a lawyer to close the deal, you will need to decide how you are going to take title to the property. Specifically, you will need to instruct your lawyer regarding the form of ownership that you want. Essentially, the decision will boil down to two distinct choices. Whatever choice you make will be clearly stated on the Transfer to your home.
If more than one person will reside in the home, you can choose to take title to the property as joint tenants or as tenants in common. Oftentimes, spouses take title as joint tenants. Simply put, this means that upon the death of one of the joint tenants (for example, the husband), the surviving joint tenant (the wife) becomes the sole and absolute owner of the property. Not only spouses can take title as joint tenants. If two sisters, for example, are purchasing a home, they too can take title as joint tenants. Upon the death of one sister, the other sister automatically becomes the owner of the property. An important point to remember, however, is that if you take title as joint tenants, whatever is in your will concerning the disposition of the property becomes ineffective. That is, upon the death of one of the joint tenants, the property is automatically transferred to the surviving joint tenant, regardless of what the will of the deceased says about how the property is to be treated.
Your second choice in terms of how you may take title is to take title as tenants in common. If two people take title as tenants in common, this gives them the option of specifying the percentage of ownership attributed to each owner. Let’s say that two brothers, Fred and Barney, are purchasing a home and it is decided that Fred will contribute 75% of the purchase price and upkeep of the home and that Barney will contribute 25%. In this case, it may make more sense for the brothers to take title as tenants in common. Fred would take title to a 75% interest in the home and Barney would take title to a 25% interest in the home. When people take title as tenants in common, their
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wills shall determine how their respective shares are to be distributed. Accordingly, upon Fred’s death, his will would determine how his 75% interest in the home ought to be distributed. This is unlike a joint tenancy, where the property would be transferred automatically without reference to the will.
How you choose to take title to your home is an important matter that you should first discuss with your lawyer as one component of your total estate plan.
Ontario tenants can offer rent up front By: Mark Weisleder
Printed With Permission
Corvers vs Bumbia: Ontario Superior Court decision has important lessons about lease negotiations between landlords and tenants.
Ontario tenants can offer a landlord rent up front, a court has ruled.
A recent decision of the Ontario Superior Court provides important lessons about lease negotiations between landlords and tenants in Ontario.
Here’s what happened:
Alison Corvers agreed to rent a home from Tanveer Bumbia in Mississauga from May 1, 2013 to April 30, 2014 for $7,500 per month. Bumbia initially refused Corvers’ rental application because Corvers was from the UK, was here on a visitor’s visa and was hoping to extend her time here by getting a work visa, according to her lawyer. Bumbia was concerned as to whether she would maintain the payments.
Corvers then paid one years’ rent in advance, $90,000, to demonstrate her good faith. Bumbia accepted this. Corvers also paid a security deposit of $7,500 up front to cover potential damages to the unit. The problem is that under Ontario’s Residential Tenancies Act, a landlord cannot request more than first and last month’s rent before a tenant moves into the property. The Act also states that anything in a lease that violates the Act is void. As such, after moving in, Corvers brought an application to court to pay the extra months’ rent and the security deposit back to her, as she claimed that this was all demanded by the landlord. In an original decision dated October 7, 2013, Judge Kofi Barnes of the Superior Court of Ontario looked at a text sent by the tenant’s real estate agent to the landlord’s agent that said “Alison will pay
12 month’s rent up front.” Based on that, he decided that since the tenant offered the money up-front, it was legal. However, since the security deposit was not offered by the tenant, this amount had to be paid back.
The case was appealed and in a decision dated February 12, 2014, Superior Court judge Frank Marrocco agreed with Justice Barnes and explained that while a landlord could not require a tenant to pay more than first and last month’s rent as a condition of the tenancy, if the tenant offered to pay more money in advance and the landlord accepted the payment, then it would be legal. In addition, the court held that interest on the entire prepayment of rent had to be paid by the landlord, in accordance with the rate prescribed under the Act, which was 2.5 per cent in 2013 and .8 per cent in 2014.
Barnes cited a decision in 2009 of Royal Bank v MacPherson in support of this position. In the MacPherson case, the tenant prepaid a year’s rent of $24,000 to the landlord and then the landlord lost the property to the bank after defaulting on his mortgage. The tenant said he did not owe any rent as he had prepaid it for a year. The bank argued that since the payment was illegal, it should not be binding. The court disagreed, and said that the bank must step into the shoes of the landlord and be bound by the prepayment. It would be unfair to penalize the tenant by not recognizing the prepayment.
As a result of the MacPherson case, lenders who sell a rental property after an owner defaults will typically state that the buyer accepts any tenancy arrangement. A buyer in this situation must do due diligence in advance to try and verify what payments were made by the tenant to the prior landlord so that they are not faced with a similar situation where the tenant has prepaid rent to someone else and now they are stuck with it.
Here are the lessons to be learned from these cases:
Landlords cannot advertise that they will require more than first and last month’s rent in advance of the tenant moving in. This includes any security deposit.
If the tenant offers to pay extra money up front, make sure that it is clear that the offer is coming from the tenant. This could include a deposit to cover any damages or clean the unit when the tenant wants to bring a pet.
Tenants need to keep a receipt for the payment as proof that the amount was paid, in case it is ever challenged later by anyone.
Sales and Average Price Up in March TORONTO, April 3, 2014 – Toronto Real Estate Board President Dianne Usher announced that Greater Toronto Area REALTORS® reported strong year-over-year increases in TorontoMLS home sales and the average selling price in March 2014. Home ownership affordability, backstopped by low borrowing costs, continued to be a key factor underlying this growth. A total of 8,081 sales were reported in March 2014 – up by 7.2 per cent in comparison to March 2013. Sales growth was much stronger in March compared to the first two months of the first quarter. Sales for Q1 as a whole were up by three per cent compared to the first three months of 2013. “Sales activity in the GTA accelerated last month. Compared to last year, a greater number of buyers found affordable home ownership options, as evidenced by sales growth for all major home types. Against this backdrop, however, overall inventory at the end of March remained lower than last year. This means competition between buyers increased, which is why the average selling price continued to climb,” said Ms. Usher. The average selling price for March 2014 sales was $557,684 – an increase of almost eight per cent compared to the average reported for March 2013. The average price for the first quarter of 2014 was up by 8.5 per cent year-over-year. “With borrowing costs remaining low and in fact declining, strong home ownership demand will continue to butt up against a constrained supply of listings. Strong price growth will be the result for the remainder of 2014. If the pace of price growth experienced in the first quarter is sustained, TREB may revise its outlook for the average selling price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.
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