Archive for Conveyancing

Legal and Beneficial Ownership

In an earlier blog we discussed the two types of ownership of property, Joint Tenancy and Tenants in Common.  Joint Tenancy and Tenants in Common are fairly easy to understand, because they are straight forward, but there are a few other types of ownership, which you should know about. These alternate forms of ownership can affect your ability to deal with your land. In this blog, I am going to discuss the concepts of legal and beneficial ownership. Legal ownership and beneficial ownership are two different things. Legal ownership of property is the person on title which has no real value to it. And the beneficial ownership is the actual property owner. The Legal owner is not the true owner of the property; he/she holds the title for the beneficial owner. The person, who owns the property, owns the both, the legal title and the beneficial title, but in some circumstances it is not the same.

Legal owner: The legal owner is the person under whose name the property is registered. Under the Legal ownership the legal owner has no right to sell or rent the property and has no right to make any decision about the property. The Legal owner is not the true owner; but merely holds the title for the true owner.

Beneficial owner: The beneficial owner as the “real owner” of the property is entitled to receive all revenue from the property and is the decision maker with respect to all aspects of the property. The beneficial owner determines the rent charged, the terms of any leases or tenancy agreement, who to hire as a property manager, who to finance the property with and when to sell the property. The beneficial owner has all control over the property. Beneficial ownership can be used when parents want to protect their future and they also want their kids’ names be as owners of the property. For example; grandparents want to give their property to their grandchildren, but they also want to keep some control of the property, in that situation they can transfer the legal title, but they can keep the beneficial title.

To facilitate the division between the legal and the beneficial owner there should be a legal structure called a bare trust. A Bare trust is a type of a company which is used to hold a legal and registered title to the property as nominees, in trust for the beneficial owner of the property. The share of the bare trustee company is owned by the beneficial owner.  It acts on the directions of the beneficial owner. It is a single purpose company, created to hold the specific property, with no other history and assets.  It cannot hold more than one property with another company for different properties. The legal relationship between the bare trustee and a beneficial owner is needed to be set out in the bare trust agreement. There are so many advantages of having a bare trust. The transfer of the beneficial ownership is not registered in the land title office, so as the transfer is not filed, it is not subjected to pay the Property Transfer Tax, but if the transfer is for some reason, registered with the land title then the beneficial owner is subjected to pay the Property Transfer Tax.

When the purchaser buys the property, the purchaser will buy the beneficial interest in the property at the decided value and will also buy a share in the bare trust for $1.00.

The other advantage of the bare trust is that it allows multiple co-owners to hold the beneficial interest in the property, with only a bare trustee on the title. It also allows changes in co-owner without paying the Property Transfer Tax.

While there are many advantages of having a bare trust, there is also a disadvantage of it. It is very costly to establish and maintain the trustee company. It costs approximately $1,200 to incorporate a trustee company and prepare the bare trust agreement. And the annual cost of maintaining the bare trustee company is approximately $300 per year.

To get more information feel free to give us a call @ 604-503-3853, I am always happy to serve you.

 

 

Home Owner Grant

The home owner grant is a provincial program governed by the BC Ministry of Finance, which helps to reduce the amount of residential property tax you pay. The home owner grant applies to the property taxes paid by British Columbians to their municipality or to the Surveyor of Taxes for rural areas.

There are two categories of grants:

1.The regular grant may reduce your taxes up to $570 for Surrey, but varies by the community.
To qualify for the regular grant:
• You must be a Canadian citizen or permanent resident and ordinarily reside in BC, and
• You must be the registered owner or eligible occupant of the home on which the grant is being clamed you must occupy the home as your principal residence.

2.The additional grant may reduce your taxes up to $845 for Surrey, but varies by the community.
To qualify for the additional grant:
• You must be 65 or older during that calendar year. If you are a joint owner of the house one of you must be 65 or older to apply for the grant. The qualifying owner or eligible occupant must be the claimant.
• You are a veteran or a veteran’s spouse or widow/widower receiving an allowance under the War Veterans Allowance Act (Canada) or the Civilian War-Related Benefits Act. Veterans must attach documentary proof from Veterans Affairs Canada to the home owner grant application.
• You are a person with a disability and are receiving disability assistance, hardship assistance or a supplement under the Employment and Assistance for Persons with Disabilities Act. You must provide the required Consent for Release of Information completed and signed by you and the Ministry of Social Development representative
• You are a person with a disability, who does not receive disability assistance under the Employment and Assistance for Persons with Disabilities Act, or you are the spouse or relative of a person with a disability and the disabled person resides with you.

Further Requirements:
Grant applications are reviewed to ensure that grants have been approved only for owners or eligible occupants of eligible properties. You may need to provide documentation to support your claim, such as proof of ownership, residency or costs associated with your disability. Failure to provide the requested information may result in the denial of your grant claim.

You (or your spouse) can only claim the home owner grant for your principal residence each year. However, if you are married and living together you cannot apply for the grant for separate principal residences, but if you have a written separation agreement with your spouse at the time you apply, you can each claim the home owner grant for separate principal residences.

For more information please contact Harinder Dail Notary Public @ 604-503-3853.

First Time Homebuyer Exemption

It is a very exciting time when you start looking for a house for your family. It may be exciting but it is not as easy as it sounds. There is a lot of stuff that you need to be very careful about. I am specifically going to discuss the first time home buyer exemption for the first time homebuyer. If you are buying a house for the first time in British Columbia you might be eligible for the first time home buyer exemption.

Under the First Time Homebuyer Exemption program, people who meet certain requirements, and are first time homebuyers, are eligible for the exemption in property transfer tax, which is a provincially payable tax, whenever property changes hands.

Other requirements necessary to claim this exemption:

• Person claiming the exemption must be a Canadian citizen, or permanent resident as defined by the Canadian Immigration and Refugee Protection Act;
• Must have lived in BC for 12 consecutive months immediately before the date the property is registered, or have filled 2 income tax returns as a British Columbia resident during the 6 years before the property registration date;
• Never owned an interest in a principal residence anywhere in the world at any time (a principal residence is the usual place where an individual lives);
• Never received a first time homebuyer’s exemption or refund.

Property requirements for the exemption are:

• The fair market value of the property (land plus improvements) should not be more than $475,000 to claim a full exemption.
• The land should not be more than 0.5 hectares (1.24acres).
• The property should only be used as your permanent residence

If there is more than one purchaser and only one of them is claiming the first time homebuyer’s exemption, then only the percentage interest acquired by the first time home buyer is eligible (if the market value of the property is under $475,000). The exemption is calculated on full market value of the property not on an individual’s share. You cannot claim the exemption on the property if the market value is over $500,000, but between $475,000 and $500,000 a partial exemption is given.

In some circumstances an exemption can be taken away, so in order to keep the exemption you should meet the following requirements:

• If it is an existing home, you must move into the home within 92 days of the date you register the title of the property.
• If it is vacant land, you must build and move in within 1 year of the date you register the title of the property.
• You must use the property as your permanent residence for the first year

Please give our office a call for further information @ 604-503-3853

Purchasing a Home

Buying a home isn’t as easy as it looks on TV or in movies. While you’re packing and getting ready to move into your new home, you have tons of important paper work that needs to be dealt with. In order to complete the purchase a notary public is recommended. A notary public can ensure all your legal documents are filled out and submitted by deadlines. A notary also ensures that the seller has made all the required payments. With the legal advice from a notary you can make your moving process less complicated and less stressful. For more information give us a call at 604-503-3853.