Insurance Issues

In arranging a property insurance, a purchaser (homeowner as well) often makes the following mistakes:

  1. Using the possession date (instead of completion date) as the starting date for the insurance policy. This mistake exposes the home owner a great danger. For example, if the possession date is Jan 15, and the completion date is Jan 14, the fire burns down the house at 9 am Jan 14. The purchase become the home owner at 12:01 am, Jan 14, and the insurance policy starts from 12:01 am Jan 15. therefore, the home owner does not get compensated from the insurance policy.
  2. While having a mortgage on the property, the insurance policy does not state that the “First Loss Payable to” as the lender. This happens often when the home owner switches to a different insurance company. A prudent insurance broker would ask for the details about the mortgage and the lender, but not always though. When you borrow money from a bank or a private lender, the mortgagee (the bank or the private lender) should be paid first in case of fire insurance claim.
  3. Ignore the inclusion of “IBC Standard Mortgage Clause”. the IBC Standard Mortgage Clause guarantees the payment to the mortgagee (lender) even if the damages to the property were the result of the breaches of insurance conditions  by the home owner.

Title Insurance may Save a Real Estate Purchaser

The following is the list of real life examples showing the need to have a title insurance when one purchases a property:

  • 4 days after closing on a strata property, a young couple received a notice from the strata company, informing them about a special assessment of over $30,000. The couple filed claim to the title insurance company (First Canadian Title). Their claim is paid by the title insurance.
  • After purchasing their home, the new owners noticed a lingering, pungent odour emanating from under an addition on the back of the house. The addition was illegally constructed on top of the septic system! the title insurance company (Stewart Title Guarantee Company) paid more than $130,000 to demolish the addition, reconstruct it, and reinstall a new septic system.
  • A son forged a Power of Attorney document and use it to transfer his mom’s house to himself. He then mortgaged the property and ran away with the money. The title insurance company (Stewart Title Guarantee Company) paid the full amount of the loss (of more than $65,000) to the mother.

Many BC Homeowners and Parents Don’t Have a Will

[The following contents are from the website of the Society of Notaries Public of BC] The Province of British Columbia has declared April 9 to 15, 2017 “Make a Will Week” to encourage the many British Columbians who don’t have a current Will to prepare one, and to encourage families to discuss the topic and future planning.

New research shows a significant gap between the number of British Columbians who own a home and those with a legal Will in place, particularly among those under the age of 35.

A March 2017 omnibus telephone survey of 500 B.C. residents by Mustel Group showed that about half, or 48%[1], of B.C. adults have a Will, but a separate recent Mustel survey showed that 74% of adults own a home.

The discrepancy is even higher among those 18 to 34 years old, of whom 50% own a home but only 13% have a Will.

“This is a troubling situation when such a large number of people who own real estate don’t have a legal Will,” said Tammy Morin Nakashima, President of BC Notaries and Steveston Notary. “If someone shares ownership of a property or home it is especially important to review the structure of that agreement, since it could determine what happens to that person’s share of ownership after they die.”

If there is no Will in place, or the Will is not properly prepared, an estate may not be distributed as the deceased intended. Furthermore, if the Public Guardian and Trustee is brought in to administer the estate, the Province may then decide how assets will be divided.

The Mustel survey also found that 56% of respondents with families do not have a current Will in place.

“It is also essential that anyone with dependent children have a current Will,” said Morrie Baillie, a Victoria Notary. “The lack of a Will can leave dependent children vulnerable to wait in foster care while courts decide on a suitable guardian. Contrast that to the simplicity of a Will, which empowers you to nominate someone you trust to take immediate care of your minor children.”

The costs of administering the estate may also be higher if a legally enforceable Will does not exist. The kindest thing someone can do is ensure they have completed up-to-date estate planning, so that loved ones don’t need to worry about it after they’re gone.

Creating a Will takes less time than most people think and can usually be completed in one or two short meetings.  A good way to start the process is to identify a legal professional in your community, like a Notary, who can assist you in preparing a proper and legal Will.

“Most people find the process leads to important discussions and decisions, and brings families closer as there is more certainty and peace of mind for everyone,” said Susan Tong, a Vancouver Notary. “It also provides the Will-maker with assurances that their assets will be distributed to family, friends and charitable organizations according to their wishes.”

The Society of Notaries Public of BC represents more than 365 highly-trained Notary professionals. Most Notaries have locally owned and operated offices and all provide personal assistance to clients around the province. Individuals, families and businesses seek the services of BC Notaries for a wide range of non-contentious legal matters, including residential and commercial real estate transfers, mortgage refinancing, Wills and advanced healthcare planning, powers of attorney, and other important documents.

BC First Time Home Buyer Property Transfer Tax Exemption

The Property Purchase Price for PTT exemption for FTHB is now $500,000.00

To qualify for a full exemption, at the time the property is registered you must:

  • be a Canadian citizen or permanent resident
  • have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years
  • have never owned an interest in a principal residence anywhere in the world at any time
  • have never received a first time home buyers’ exemption or refund

and the property must:

  • be located in B.C.
  • only be used as your principal residence
  • have a fair market value of:
    • $475,000 or less if registered on or before February 21, 2017, or
    • $500,000 or less if registered on or after February 22, 2017
  • be 0.5 hectares (1.24 acres) or smaller

You may qualify for a partial exemption from the tax if the property: