Real Estate and the Notary

1. Real Estate and the Notary Challenges, Opportunities, Issues and Practice Tips

2. Topics • Review of the Industry as it operates today Expectation that less people will be using the traditional real estate model going forward due to: The desire to save money • The evolving impact of the internet on the consumer • Competition Act Rulings and Changing Legislation • New brokerage and service Business Models evolving Discount Brokerages Unbundling Consent Agreement and Mere Postings Marketing Portals; Comfre, Zoocasa, REW What does this mean for the Notaries • Potential of Increased opportunities at the front end of the transaction • Increased risks • Need for increased knowledge specific to both reviewing and writing contracts

5. Notaries Act • Ability to act on behalf of a client and charge a fee without being licensed under RESA • Sec 1 of legal Professions Act allows notaries to provide Real Estate Services as defined. • Includes advising on price, making representations, finding real estate for a buyer, finding buyers, showing the real estate, negotiating the price and terms of a sales, presenting or receiving offers, receiving deposit money • Notary Act, Bylaws and Rules restrict that? • Technician or fiduciary? • What are you doing / What does the customer think you are doing • Agent/advisor or just a contract writer • What does the customer think he is going to get when he hires you • Exempt from licensing under RESA but not much else…..(RESA, REDMA, Strata Act, etc)

6. Scenarios - Parties have already agreed in some form just need it ‘written up’ (mere posting sale/private sale) • Buyer wants something drafted • Seller wants something drafted • Contract Review (either side) • Signed /Unsigned /Do it your self or standard form? • Rural vs Urban • Condo vs Single Family • Mobile Homes, Leasehold Interests

7. First Steps • Before you act or represent a fee have a clear understanding of • Who you are working for • What is being sold or bought • What is the expected timeframe involved • What the major issues are • Understand what documents or resources will be required prior to a binding contract being achieved • There are no simple transactions • And independent buyers and seller may not know exactly what they want or need (some innocent , some not so) • Make Notes to be able to go back to

8. Basics to set the table Insure that you are dealing with the registered owner Confirm residency status (tax issue and timing) Id re fraud Confirm that the other party will be expected to get ILA on any contract you prepare Confirm with all parties that you are not an agent as defined by law (unless you have agreed in writing to do so)

9. Retainer Letters and ILA • Why • Should be written • States clearly what you are doing and for what fee…. • What you are not doing (clearly state your understanding of the client’s expectations of your role and the desired outcome) • Buyers and Sellers have different requirements and responsibilities in regards to representation and diligence • Retainer example (Notary Site) • Make sure that the customer is clearly aware of who is responsible for what in regards to diligence • Remember that in most private deals one or the other party may not be as informed as the other party to the agreement • Note taking

10. Basic Retainer Items Not an agent Not providing advice on value; past, present or future Not making any representations in regards to the property condition or uses or representations on materials provided by other parties Not providing any due diligence services (strata, permits) No representation re any tax issues (HST, Income tax, tax strategies associated acquisition or disposal On commercial properties income and expense issues

11. Test your Real Estate Knowledge One The Real Estate Services Act (RESA) defines real estate services as: • Rental Mgmt services • Trading services • Mortgage services • All of the above • A, b only

12. Two • A ‘Time’ clause; • a) refers to the period of time an offer is open for acceptance • b) is the period that the vendor or purchaser can change their mind • c) the period of time that a condition subsequent is in force • d) refers to the period of a time the other party has to remove a condition precedent once the clause is invoked

13. Three • Which of the following is Not a requirement for an enforceable contract of purchase and sale • A) deposit • B) description of property sold • C) names of the parties • D) description of the price and financing

14. Four • Your client is interested in purchasing a residential property with three unauthorized suites. As part of his contract he will need to review • A) copies of the leases/tenancy agreements • B)A property condition disclosure statement • C) financial statements • D) Nothing, as this is unauthorized accommodation the seller does not need to provide any details • E) A, B, C above

15. Five • A Seller is aware of a latent defect on his property and he has disclosed it to you. When is it required to disclose its existence? • a) prior to the contract being signed • b) after the subjects are removed • c) on completion but prior to possession • d) only if asked, as this is resale property, ‘caveat emptor’ prevails

16. Six Who Can give notice to a tenant to vacate their residential suite once a contract of purchase and sale is signed? • A) the property manager • B) the buyer after he has removed his subject condition • C) the sellers lawyer • D) the seller once all subject clauses are removed in writing

17. Seven Under RESA a deposit : • A) is an indication of serious intention by the buyer • B) will be returned to the purchaser immediately if he does not remove subject conditions • C) is liquidated damages payable to the vendor in the event that the buyer does not complete • D) should at least represent the amount of your fees • E)A,B,C above

18. Eight When purchasing a strata title unit the purchaser is entitled to receive • A) a form B and a From F • B) the minutes from the last two years strata corp meetings • C) the last two years financial statements and the current bylaws • D) a Form F • E) all of the above

19. Nine The Real Estate Development Act • A) requires The filing and delivery of a disclosure statement for the sale of 5 residential subdivision lots . • B) requires a disclosure statement for the sale industrial and commercial developments • C) allows the developer to use deposits for expenses related to construction and marketing in certain circumstances • D) require a seven day recession period • E) A,C,D above

20. Ten The purchaser’s offer is revoked when • A) the purchaser fails to provide you with the deposit • B) the vendor does not respond in the allowed period for acceptance • C) The purchaser informs you that he will not be proceeding • D) if the offeree receives notice prior to accepting the contract

21. Key Documents for the Transaction Contract of Purchase and Sale A PCDS Addendum Form Fintrac

22. Contract Writing BasicsBuyer and Seller issues • Beginnings • -using the standard contract- • The Deposit • Why and how much and when • Chattels and Fixtures • Exclusions or inclusions • Completion, Possession and Adjustment • Timing • Title Search Clause • Offer and Acceptance • Timing issues

23. Title Search Clause • Clause 9 of the standard contract • Acknowledgement of Title Clause The Buyer acknowledges and accepts that on Completion the Buyer will receive title containing, in addition to any encumbrance referred to in Clause 9 (TITLE) of this contract: 1. Any non-financial charge, and 2. Any financial charge payable by a utility on its right-of-way restrictive covenant, easement or other interest set out in the copy of the title search results that is attached to and forms part of this contract.

24. Or • Subject to the Buyer on or before_________ obtaining and approving the attached copy of the title search results against the presence of any charge or other feature whether registered or not, that reasonably may adversely affect the proerties use or value

25. Subject Conditions • Basic considerations • The Big Five • Financing • Insurance • Title Search • PCDS • Inspection • BY when and for who …This subject condition is for the sole benefit of the purchaser And must be removed in writing by or this agreement will Become null an void and all deposits will be returned to the purchaser immediately

26. Subject to Financing • New First Mortgage Clause • Subject to a new first mortgage being made available to the Buyer by (date) , in the amount of $(amount) at an interest rate not to exceed % per annum calculated (select either half-yearly or monthly) , not in advance, with a -year amortization period, - year term and repayable inblended payments of approximately $ (amount) per month including principal and interest (plus1/12 of the annual taxes, if required by the mortgagee). This condition is for the sole benefit of the Buyer.

27. Property Disclosure Statements • Buyer Approving the Executed Property Disclosure Statement Clause • Subject to the Buyer on or before (date) approving the Property Disclosure Statement dated(date) with respect to the information that reasonably may adversely affect the use or value ofthe property. This condition is for the sole benefit of the Buyer. If approved, such statement will be incorporated into and form part of this contract

28. Subject to Title Search • Title Search Clause • Subject to the Buyer, on or before(date)searching and approving title to the property against the presence of any charge or other feature, whether registered or not, that reasonably may affect the property’s use or value. • This condition is for the sole benefit of the Buyer.

29. Inspection • Inspection of Property Clause • Subject to the Buyer, on or before (date) at the Buyer’s expense, obtaining and approving aninspection report against any defects whose cumulative cost of repair exceeds (select a monetaryvalue) and which reasonably may adversely affect the property’s use or value. This condition is for thesole benefit of the Buyer. The Seller will allow access to the property for this purpose on reasonable notice.

30. Material Latent Defect • Disclosure of Material Latent Defect Clause • The buyer acknowledges having received separate written disclosure of a material latent defect relating to (general reference to issue) .

31. Insurance • Fire/Property Insurance Clause • This offer is subject to the Buyer obtaining approval for fire/property insurance, on terms and at rates, satisfactory to the Buyer, by (date) . • This condition is for the sole benefit of the Buyer.

32. Other situations • Strata Requirements • Tenant Occupied Properties • The Residential Tenancy Act • Commercial Properties • Subject to sale and • Acceleration or ‘Time ‘ clauses • Non conforming space • Material Latent Defects vs Patent defects • Vendor Financing/Creative Financing

33. Strata • Subject to the Buyer, on or before (date) * receiving and approving the following documents withrespect to information that reasonably may adversely affect the use or value of the strata lot, including any bylaw, item of repair or maintenance, special levy, judgment or other liability, whether actual or potential: • a current Form ‘‘B’’ Information Certificate attaching the strata corporation’s rules, current budget and the developer’s Rental Disclosure Statement, if any; • a copy of the registered strata plan, any amendments to the strata plan, and any resolutions dealing with changes to common property; • the current bylaws and financial statements of the strata corporation, and any section to which the strata corporation lot belongs; and • the minutes of any meeting held between the period from (date) to (date) ** by the strata council, and by the members in annual, extraordinary or special general meetings, and by the members or the executive of any section to which the strata lot belongs. • [Include any other information, document, record or report the Buyer needs before being committed to buy.] • Immediately upon acceptance of this offer or counter-offer, the Seller will authorize the (Seller’s/Buyer’s agent, to request***, at the (Seller’s/Buyer’s)† expense, complete copies of the documents listed above from the strata corporation or other source and to immediately, upon receipt, deliver the documents to the Buyer (or the Buyer’s agent). • This condition is for the sole benefit of the Buyer.

34. Tenant Occupied Properties • If buyer is going to occupy a tenanted property than insure that they can, • If assuming tenant than get a copy of the rental agreement or have purchaser approve tenant • Identify amount of damage deposit • Residential tenancies are complicated, notice to vacate can only be given if the buyer and/or his immediate family are going to occupy. Leases determine terms. • Two months minimum, specific notice requirements etc .

35. Subject to Sale • Sale of the Buyer’s Property, with Time Clause • Subject to the Buyer entering into an unconditional agreement to sell the Buyer’s property at (address)by (date) . • This condition is for the sole benefit of the Buyer. • However, the Seller may, (select either at any time or upon receipt of another acceptable offer)deliver a written notice to the Buyer* or to (name of his or her representing real estate company)requiring the Buyer to remove all conditions from the contract within (number) hours** of thedelivery of the notice, not to include Sundays and Statutory Holidays. Should the Buyer fail to remove all the conditions before the expiry of the notice period, the contract will terminate. ** The period usually ranges from 24 to 72 hours. depending on market conditions.

36. Acceleration Clause • Notice Invoking the Time Clause (for use with preceding time clause) • This document constitutes written notice from the Seller to the Buyer requiring the removal of (select either all conditions or the condition)from this contract within(number of hours)hours*not including Sunday or Statutory Holidays, or this contract will terminate at the end of the(number of hours)-hour period and the deposit will be returned to the Buyer. • This Time Clause will start running on delivery of this Notice to the Buyer or to(his or her representing brokerage)which will be at(time of delivery of notice)o’clock(select eithera.m. or p.m.)on(date) . Therefore, the(number of hours)hours will expire at(time)o’clock(select either a.m. or p.m.)on(date) . • * Fill in the same number of hours as in preceding clause.

37. More Non residency (buyers vs Sellers) Rural situations (diligence) Grow Ops insurance issues, rehabilitation, vendor will have ‘no knowledge’ of course Non conforming or illegal space New Housing Registered Builder/Owner Builder/HPO Second Properties HST

38. Grow Ops • Growth or Manufacture of Illegal Substances Clause • The Seller represents and warrants that during the time the Seller has owned the property, the use of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and that to the best of the Seller’s knowledge and belief, the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances. This warranty shall survive and not merge on the completion of this transaction. • or • The Buyer acknowledges that the use of the property and the buildings and structures thereon may have been for the growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises, and the Buyer accepts the property and the buildings and structures thereon in their present state, and in an ‘‘as is’’ condition.

39. Even more Special Situations • Assignments • Options • Trades • Rent to Own • Leasehold Interest (First Nations, SFU, etc) • Acting on your account • Commercial Transactions • Investment vs Business Acquisition

40. Resource • Great Resource • www.recbc.ca/licensee/psm.html The Professionals Standards Manual Buying a Home in BC Selling A Home in BC