Buying real estate subject to title review

Explaining property title

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While most property buyers are familiar with the phrase “subject to financing,” many are often less familiar with the term “subject to title review”.

The titles to various properties in the Okanagan are located at the Land Title Office in Kamloops. Title is a legal document which confirms ownership of the property (i.e. who can sell the property) and includes information such as charges registered against the property, as well as legal notations.

There are several types of charges which can be found on a title. They can include rights of way, easements or statutory building schemes and covenants to name just a few. Most properties in Kelowna have registered charges, so it’s nothing out of ordinary.

It is important to understand the charges to ensure your intended use of the property can be accomplished. That is important if you plan to alter the property in some way. For example, you may want to add additional buildings, run a business or add a pool. The title may indicate restrictions on all of these.

For example, the City of Kelowna may have a right of way across a portion of your property to maintain underground sewage or water systems. If that is the case, you cannot build your dream pool within that right of way area, or anything else for that matter.

I am aware of a case where an individual built a pool within a right of way area without checking, and was subsequently forced by the city to rip it out.

Another example of a registered title charge are easements. Easements benefit one neighbouring property and burden the other. For example, you may see an easement where two properties have a shared driveway. The property owners share maintenance obligations, and neither can block the easement area. Easements cannot be changed or removed without consent from the owners of the properties that benefit from the easement.

Another reason we review title prior to subject removal, and again before closing, is to ensure there are no lawsuits that relate to the property.

Occasionally, a title will contain a certificate of pending litigation. That indicates a lawsuit has been filed against the owner. It will need to be removed if title is to change to a new owner.

If you need help in reviewing title and completing the purchase of your property, I can be reached at 778-478-8555 or by email at [email protected].

The information provided in this article does not, and is not intended to, constitute legal advice. All information and content are for general information purposes only.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Is it too late for mum to have a power of attorney?

Power of attorney

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A power of attorney will appoint an “attorney” to act on behalf of an adult regarding their financial affairs. That could include banking, selling real estate or filling taxes.

If you are trying to assist your elderly parents with day-to-day financial tasks and they have not appointed you as power of attorney, you will hit roadblocks. You won’t be able to manage their money or property, and institutions like banks and the Canadian Revenue Agency will not communicate with you without a power of attorney on file.

If you or your parents have not signed a power of attorney, and their capacity is still OK, it is prudent to schedule a meeting with a lawyer right away to have it done. The lawyer will assess the adults’ legal capacity at that point.

If, however, a loved one no longer has legal capacity, there is a legal process called “committeeship,” which allows the Supreme Court of British Columbia to appoint a “committee” to manage the financial affairs of another adult during their life. That effectively grants the committee or committees authority over financial and health decisions of the incapacitated adult.

Regrettably, the process of obtaining committeeship is long and expensive. It provides substantial authority to act on behalf of the incapacitated adult but will not allow you to draft a will on behalf of that individual. If there is no will in place, the Wills, Estates and Succession Act, SBC 2009 c 13, will govern how an estate is distributed.

A client approached me about six months ago because her mom had dementia and she needed to sell her mother’s home to pay for her care.

Her mom never prepared a power of attorney and now it was too late. I advised her a commiteeship petition can take between 3 and 6 months to complete. The daughter took issue with this as she needed to do things on her mother’s behalf right away.

Unfortunately, in that case, the client was stuck and would have to wait. Furthermore, the cost of a commiteeship petition is thousands of dollars. She told me she wished her mother had done a Power of Attorney earlier, which would have been several hundred dollars.

One of the reasons a committeeship petition takes so long is because the court requires medical reports on capacity from two doctors. These doctors can take a significant amount of time to coordinate assessments. It also takes time to prepare lengthy materials for the court to review, you may need to obtain consent from a surviving spouse and children, as well as consent of the B.C. Public Guardian and Trustee.

If you are in a situation where you’d like a power of attorney prepared or need to obtain committeeship. please reach out to discuss your options. I can be reached at 778-478-8555 or by email at [email protected].

The information provided in this article does not, and is not intended to, constitute legal advice; all information and content are for general information purposes only.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Should I incorporate my business?

Is incorporation right move?

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Kelowna is a city bustling with entrepreneurship and business.

As a corporate lawyer, I am regularly approached by clients wanting to learn information to determine whether they should operate as a sole proprietor or as a corporation.

I dealt with a client last week who runs a landscaping company. He has three trucks, various pieces of equipment and three employees. He operates as a sole proprietor and was curious to learn whether incorporation would be beneficial for his business.

One of the first topics I discuss when looking at incorporating is liability. When I spoke to him, I told him that by operating his business personally, as a sole proprietor, he is personally transacting with the customer. That means if something goes wrong with the business, say a mistake on a job, he would be personally liable.

The risk of operating as a sole proprietorship is a disgruntled customer could sue him personally. From a liability perspective, that is not good. It means his personal assets could be at risk, including his family home and vehicles.

By incorporating a company, he would create a separate legal entity that would transact with customers. That is known as the “corporate veil.” The corporate veil provides a layer of protection for business owners because if something goes wrong, with limited exceptions, the company is liable and not the individuals behind the company.

In my client’s case, if his company was sued and lost, the company would be liable but his personal home, vehicles and other assets would be safe from creditors.

Business owners who decide to incorporate also need to make sure it is clear to customers they are dealing with a corporation and not the individual personally. As a result, in my client’s case, he would need to update his business cards, website and any other business documents to ensure the company is listed and not him personally.

The second reason to incorporate is to keep more money in your jeans at the end of the year. To determine whether that is the case in your specific circumstance, you need to speak to your accountant. The question is, “Am I paying less tax if I am incorporated?”

One way corporations can help reduce tax is through a tax-efficient share structure. For example, my client could include his wife or kids as shareholders so they could split income to reduce the overall tax burden.

Another way corporations help reduce overall tax burdens is when the owners make more money than their expenses, they can leave funds in the corporation. Funds remaining within the corporation are taxed more efficiently and can be used for investment purposes going forward, for example, buying a rental property.

If you have any questions, please feel free to reach out to the writer at 778-478-8555 or by email at [email protected].

The information provided in this article does not, and is not intended to, constitute legal advice. All information and content are for general information purposes only.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

How to protect your loved ones when you die

Complete estate plan: Part 2

Photo: Contributed

In my previous article, I discussed wills, which are the first document in a complete estate plan.

Contrary to popular belief, a will does not provide any legal authority to handle your affairs while you are alive. So, to provide authority for individuals to manage your affairs while you are still alive, two other documents are needed for a complete estate plan. These documents are the power of attorney and the representation agreement.

The power of attorney, often called a POA, grants an individual or individuals authority over your financial affairs. Unlike a will, which only applies if you are dead, a POA applies while you are alive. It also applies if you are not incapacitated, unless you specify otherwise.

We typically advise clients to not restrict a POA to incapacity, as it adds a layer of complexity for the individual named on the POA. POA’s can be abused, so it is important to choose individuals you trust, and if there are multiple individuals, you need to consider whether they can work well together.

The POA is important because your loved ones, including your spouse and children, have no authority over your financial affairs without it. For example, they would be unable to sell your home to assist with the costs of care, or to access your bank accounts or investments that are held solely in your name.

The representation agreement grants an individual or individuals authority over decisions relating to your health and well being. Like a POA, it only applies while you are alive and may apply if you are not incapacitated. The authority under a representation agreement is comprehensive and can include health decisions, well-being decisions and authority to access records. It also includes an end-of-life provision, which prevents medical professionals from administering heroic measures in the event there is limited or no prospect of recovery. Representation agreements also allow doctors to remove you from life-support if you have a limited, or no, prospect of recovery. Otherwise, they must keep you alive in a vegetative state.

Preparing the power of attorney and representation agreements in a timely manner is important. If you put off preparing these documents and lose capacity, they can no longer be prepared as you must have capacity to sign these documents.

I have dealt with many cases where individuals did not prepare these documents prior to losing capacity, and then tragedy struck, such as car accident, stroke or dementia. In those cases, the family was left scrambling to figure out how to deal with their loved one’s finances, health decisions and bills. The solution at that point is a very time-consuming and costly petition to the court known as “committeeship.”

If you have any questions, please feel free to reach out to me at 778-478-8555 or by email at [email protected]. You can also view my firm's website and profile here.

The information provided in this article does not, and is not intended to, constitute legal advice. All information and content is for general information purposes only.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.