Do Your Due Diligence Regarding Rental Equipment When Buying A Home

Thinking of buying a home? One of the things that is often overlooked is how the transfer of rental appliances is handled. The Agreement of Purchase and Sale makes reference to rental appliances, but in our experience, the contract is often left vague to state “if assumable”.

What does that mean practically speaking? If there are rental appliances in the home, such as a water heater, furnace or air conditioner (or other), you should investigate what the cost of those rentals are, before agreeing to assume the rental equipment. You can ask your agent to see a copy of the bills associated with the rental equipment and any contract, including the cost to buy out the equipment. Generally, you can also obtain a ‘comfort letter’ or ‘ real estate transfer letter’ setting out the terms of the rental before you agree to ‘assume’ the contract.

If you sign an Agreement of Purchase and Sale which says you will assume any rentals and have not done your due diligence to determine if you are satisfied with the terms of the contracts, you can’t later try to get out of the rental on the basis of lack of knowledge as you ought to investigate this prior to signing the offer to purchase a property.

Similarly, if you are a seller, and you don’t know if you own or are renting your appliances, do your own due diligence before entering into the Agreement of Purchase and Sale. If you don’t specify that the equipment is rented, and then sell your house, you have an obligation to payout the contract on the rental equipment to the rental company, as you did not get the new buyer to ‘assume it’. The Buyer is relying on the appliances being owned, as this is what the Agreement of Purchase and Sale represented. This could cost you hundreds or thousands of dollars.

It is often a good idea to make your offer conditional on lawyer review prior to ‘firming it up’. This is one of the topics we would discuss with you to ensure you understand your obligations. If you are buying or selling a home in Barrie, Simcoe County or surrounding area, feel free to contact us for assistance.

Increase in Title Insurance Claims in 2018

We previously blogged on Title Insurance here

2018 saw a dramatic increase in the number of title insurance claims we had to make on behalf of clients. The majority of these were for arrears of taxes and water (from previous owners), although there are several types of protection available to consumers under a Title Insurance policy.

When we help you buy a property, the previous owners certify that they have paid their property taxes up to the date of closing and that they will pay their final water bill. However, often due to the quick turnaround of closings, we don’t have the time needed to order a Tax Certificate from the Municipality to cross-reference this information. In these cases, we rely on “Title Insurance” because your lender (mortgage) is going to require us to order it (and you will have to pay for it anyways). Some clients like us to do both (i.e. pay for a Certificate of taxes from the city AND get a policy of title insurance, but this is only possible where timing allows for it).

In the unlikely event we find out following closing that the taxes or water have not been paid by a previous owner, we will make a title insurance claim on your behalf. Assuming that these are legitimate arrears, and the claim is made within the time period set out by your policy, the arrears are usually paid directly to the Municipal Tax/Water office within a couple of weeks.

We were surprised to have made multiple claims in 2018 as we generally only have a handful per year. What was most surprising to us was that the ‘arrears’ notices were from closings that had happened up to 6 months prior (so there was quite a delay in issuing them from the City Offices). We were happy to report that all of the claims made for these types of arrears were successfully paid out for our clients, at no additional cost to them. Therefore, we think that Title Insurance policies are a good investment and take little time on our part to protect you, the Purchaser.

2018 in review..

As another calendar year draws to a close, we want to wish all our clients and community a Happy Holiday season and best wishes for the New Year.

Thank you for allowing us to serve you again this year. 2018 saw a lot of changes in the areas we practice. There have been changes in the Family Law Rules and Forms. With rising interest rates and mortgage rule changes, we have seen fewer spouses able to buyout their partner from the matrimonial home, and we have also seen an increase in real estate deals ‘falling through’ due to financing issues. We also have seen a dramatic increase in Title Insurance Claims being made for arrears of Taxes and Water. We plan to blog on these issues in 2019.

 We wish to remind you that we are closed for the holidays from December 21, 2018, re-opening on January 2, 2019. We will look forward to another great year representing Barrie and surrounding areas in family law, real estate and wills/ estates.

Happy holidays from all of us at Ewen Boyd LLP.

Common Law spouses vs Married Spouses - what is the difference?

Many people misunderstand the differences between the rights and obligations of married spouses, as opposed to 'common law' spouses.

In Ontario, being 'common law' is defined as two persons who are not married to each other and have cohabited either (a) continuously for a period of not less than three years or (b) are the parents of a child together in a relationship of some permanence.

Being a common law spouse does not automatically entitle you to the same division of property that married spouses have.  Married spouses have a legislated right to 'equalization' of net family property. Common law spouses have no such automatic right, but may have other types of claims available to them to address property disputes.

Since the law created a new type of claim called a “joint family venture” it has become more difficult (and costly) to determine what entitlement a common law spouse may have to property built up during a relationship.

For all of these reasons, we recommend entering into a “cohabitation agreement” or “marriage contract” (more commonly known as a “pre-nup”) at the outset of the relationship, which determines what will happen with property and support, upon a breakdown of the relationship.

If you are separating and need assistance making your way through the process, or are entering into a relationship and need help preparing a contract, please give us a call.

Why Do You Need a Will?

In Ontario, if you die without a Will, most people assume that your assets will automatically go to your spouse. However, this is only true for a portion of the assets. The balance are shared between the spouse and any children. There is also a lot of administration involved in the administration of resolving estates with no Will.

It is really important to get a Will done, and ensure your beneficiaries are appropriately designated on any policies of life insurance, investments and/or that your accounts and property are owned jointly with your intended beneficiary (where applicable). This will cut out a lot of “red tape” for your surviving spouse in what is already a difficult time.

Sometimes we hear from clients that “they don’t have anything” so why spend money to get a Will? This is simply not true. Even if your estate is as simple as a bank account, a car, and personal effects, you need to ensure your survivors have the authority to handle the wrapping up of those items. To ensure this is properly done, you need a Will.

Thanks, Barrie Ontario!

We are honoured to have been serving Barrie at Ewen Boyd LLP for the last 3 years! Prior to opening our own law firm, John Ewen and Laura Boyd worked at various other Barrie law firms, and saw a niche for a “boutique” style firm providing customized and hands-on service to clients. We are looking forward to continue helping residents of Barrie and surrounding areas with their legal matters, and would be happy to speak to you regarding your real estate, family law or simple Wills and Estates files.