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Archive for May, 2017

Home Inspection Act finally passed

The Ontario government last month finally passed legislation to regulate the home inspection industry and establish qualifications for home inspectors.

The Home Inspection Act 2017 establishes minimum standards for home inspection contracts, home inspection reports, disclosures and the performance of home inspections.

Under the new law, anyone performing a home inspection must be licensed and insured. A written contract with the homeowner must be signed, and a written report has to be delivered after the inspection.

Until now, anyone with a flashlight and a business card could hold himself or herself out as a home inspector. Without any rules for training, competence, insurance or oversight, the field was truly the Wild West.

Although the new law has received Royal Assent, it will not come into effect until the government drafts and proclaims regulations to implement the details of the legislation.

A regulating authority like the Law Society or the Real Estate Council of Ontario will be established by government regulation to oversee the profession.

Requirements for errors and omissions insurance will be implemented, and a code of conduct enacted to govern the conduct of registered inspectors. A discipline committee and an appeal committee will be established by regulation to enforce compliance.

A government announcement noted that these changes will ensure that consumers benefit from quality advice, are protected from surprise costs and are aware of safety issues before buying a home.

They will also create a level playing field for the home inspection industry, preventing inspectors with little or no training from competing with qualified professionals.

Back in 1994, the Ontario Association of Home Inspectors was established by an Ontario law, but membership was voluntary. The association pushed for a licensing regime for several years.

The government recognized the legislative vacuum and in December 2013, it commissioned a blue-ribbon panel to report on industry regulation. Not surprisingly, the panel’s report, entitled “A Closer Look: Qualifying Ontario’s Home Inspectors,” recommended setting up a governing body to license, govern and regulate home inspectors. Mandatory insurance, education standards and a code of ethics would be instituted.

The panel reconvened in 2015 and affirmed the 35 recommendations in its earlier report. Still the government took no action. In March 2016, Liberal MPP Han Dong (Trinity—Spadina) introduced a private member’s bill to regulate the home inspection industry.

The following month, David Orazietti — then Minister of Government and Consumer Services — told me that he felt strongly about the issue, and wanted greater regulation in this area.

“I’m committed to introducing legislation as soon as possible,” he said, adding that it would be “within this year.”

In August last year, no doubt prompted by Dong’s private member’s bill, the government announced its intention to introduce legislation.

The new law received first reading in the legislature in November, but was not passed until last month.

Ontario consumers have had to wait for this legislation more than three years after the first panel recommended regulating the industry. And there will be more waiting while the government drafts implementation regulations.

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.


5 Things to know about the New Ontario 15% Non- Resident Speculation Tax

Although the Province has just announced the 15% Non-Resident Speculation tax, there are already more questions than answers. Here is what you need to know.

  1. The tax is for non-residents of Canada buying 1-6 residential units in the Golden Horseshoe area of Ontario.

This tax is in addition to any Land Transfer Tax payable. It applies only on 1-6 units of residential property purchased by a Non-resident of Canada in the Golden Horseshoe Region of Ontario, including Toronto, Niagara, Hamilton, Peterborough, Simcoe, Waterloo and York. It thus does NOT apply to any apartment building with at least 7 residential units, or any commercial property, industrial property or vacant land.

  1. What if you are a Canadian citizen but also a non-resident?

If you are a Canadian citizen, you do not pay the tax. Even if you are a non-resident, living in the US, Great Britain or Hong Kong, as long as you are a Canadian citizen, you will not pay this tax.

  1. What if there are 3 buyers buying a property that cost $500,000.00, each owning a third of the property, with 2 owners being Canadian citizens and one being a non-resident?

Here it becomes very problematic. Even if the non-resident will own only one third of the property, they must pay 15% on the entire purchase price of $500,000.00, or $75,000.00

  1. Lenders ask for parents to sometimes co-sign a mortgage for their children buying a home and take a small percentage of title, even 1%, to do so. What happens if the children are permanent residents of Canada but the parent is a non-resident?

This is a disaster, because under the new rules, even if the parent was holding the 1% title in trust for the children, they must pay 15% of the tax on the ENTIRE purchase price.  Mortgage brokers, lenders and realtors must be aware of this when qualifying potential buyers. In this regard, lenders will have to start giving serious consideration to accepting a guarantee instead from the non-resident parents, to avoid the non-resident parents having to take any interest in the property, triggering this tax. The issue, however, is that if the children do not qualify based on their income, the parent may have to go on title to satisfy the lender requirements. In addition, the guarantee will likely require the parents to obtain independent legal advice , and permit them to raise more defences if the bank tries to enforce it. As you can see, this is not easy, and this must be determined before anyone in this situation puts in an offer to buy a home.

  1. Rebates

Even if the tax is paid, rebates will be available if the non-resident becomes a resident of Canada or a Canadian citizen within 4 years of closing, or if the non-resident is a foreign student who has been enrolled as a full-time student at an approved Ontario institution for at least 2 years after closing, or the foreign national has worked at a full-time Ontario job for at least one year after closing.

At our firm, we close real estate deals all over Ontario including the Golden horseshoe area.  With our mobile signing service we can come to you at the time and location of your choice to sign your closing documentation.

f you have any questions about the 15% non-resident speculation tax, do not hesitate to contact me toll free at 1-888-876-5529 or at mark@realestatelawyers.ca

Mark Weisleder is a Partner, author and speaker at the law firm Real Estate Lawyers.ca LLP. Contact him at mark@realestatelawyers.ca or toll free at 1-888-876-5529

If you prefer a video, go to https://youtu.be/Z4Y6s0cznfg