Wednesday, December 10, 2008

Big banks keep slice of deep rate cut - Toronto Star

The Bank of Canada slashed its key interest rate yesterday by three-quarters of a percentage point to the lowest level in half a century and confirmed Canada's economy is "entering a recession" because of the deepening global economic slump.

But chartered banks refused to match the deeper-than-expected cut, dropping their prime rates by only half a percentage point, the second time in the past few months some have balked at passing on the full savings to consumers and businesses.... Read complete here

Sunday, December 7, 2008

Sellers should move out when deal closes

The typical Ontario Agreement of Purchase and Sale provides that, "Upon completion, vacant possession of the property shall be given to the buyer...". In this case, the buyers were moving from Toronto to London and arranged for movers for the closing date. They arranged for their London closing to happen at 3:09 p.m. and their sellers closed their own purchase at 4:24 p.m. on the same day.

The buyers' movers arrived at the London home at 6:00 p.m. but the sellers would not permit them access. The movers waited until around 9:00 p.m. but then left as their truck was needed in Toronto the next day. The movers returned the following Monday and billed the buyers an extra $1,393.91. The buyers incurred hotel and extra expenses totalling $401.55 and they sued the sellers for their losses.

The judge ordered these sellers to pay. She held that sellers are required to give vacant possession to their buyers on completion, and that means the closing of the transaction. If they do not, they are liable for any loss.

Foord v. Smith 33 RPR(2d) 279

COMMENTS: This case stands for the proposition that if the deal is closed and the buyers are the owners they are entitled to move in. If the sellers want to delay the closing, the contract should specifically say so. The judge also said, "It is often that parties are moving in as others are moving out, and most of the time this is done in a co-operative spirit which recognizes the problems inherent in moving in and moving out, along with the timing of transactions at the registry office." The practical realities are that keys and monies change hands usually between 9:30 and 4:30 and reasonable people make sensible arrangements with each other. If it were otherwise the system would never function at all. Of course, cautious buyers could always arrange for an overnight loan and stagger their closing dates and make their lives simpler, although somewhat costlier.

Hopefully, REALTORS® and lawyers representing sellers will bring this to their attention.

Where applicable, the information being used is from TREB, OREA, CREA or other professional associations, which the user is a member of.

Saturday, November 1, 2008

Real Estate & GTA - Greater Toronto Area: Money Laundering and Real Estate - My take on it

Real Estate & GTA - Greater Toronto Area: Money Laundering and Real Estate - My take on it

Money Laundering and Real Estate - My take on it

It is believed that criminals will find ways to conduct their activities no matter what. But I am a strong believer that we shouldn't make it easy for them. New law requires real estate agents to verify ID of buyers and sellers and track deposits. This is an excellent enhancement to existing procedures. Simply because, apart from other things, it enables you to know your client better. New federal laws and regulations dealing with money laundering and anti-terrorist financing went into effect on June 23rd, 2008. These require real estate agents and brokers to collect and verify more personal information from buyers and sellers. Real estate agents must also now track the source of funds received during the course of a real estate transaction, such as the deposit.


These new regulations are part of federal legislation (Bill C-25) passed in 2007 that requires a number of industries, including real estate, to do more to help stop money laundering and terrorist financing. The regulations are enforced by the federal agency known as the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC.

Real estate agents are now required to ask for proof of the identity of all buyers or sellers involved in a Canadian real estate transaction. If the client is a corporation, that information must include corporate documentation, and the names of the corporation directors. They must also ascertain if a third party is involved in the transaction.

The following scenarios in a real estate transaction are of particular concern.

  1. Client arrives at a real estate closing with a significant amount of cash.
  2. Client purchases property in the name of a nominee such as an associate or a relative.
  3. Client does not want to put his/her name on any documents that would connect him/ her with the property or uses different names on offers, closing documents and deposit receipts.
  4. Client inadequately explains the last minute substitution of the purchasing party’s name.
  5. Client negotiates a purchase for market value or above asking price, but records a lower value on documents, paying the difference “under the table”.
  6. Client sells property below market value with an additional “under the table” payment.
  7. Client pays initial deposit with a cheque from a third party, other than a spouse or a parent.
  8. Client pays substantial down payment in cash and balance is financed by an unusual source or offshore bank.
  9. Client purchases personal use property under corporate veil when this type of transaction is inconsistent with the ordinary business of the client.
  10. Client purchases property without inspecting it.
  11. Client purchases multiple properties in a short time period, and seems to have few concerns about the location, condition, and anticipated repair costs, etc of each property.
  12. Client pays rent or the amount of a lease in advance using a large amount of cash.
  13. Client is known to have paid large remodeling or home improvement invoices with cash.
  14. Client does not want correspondence sent to home address.
  15. Client over-justifies or over-explains the transaction.
  16. Client’s home or business telephone number has been disconnected or there is no such number.
  17. Client uses a post office box or general delivery address
Will this legislation and procedures be effective in stopping money laundering? In my opinion, it will certainly make a dent. What do you think?