Joint Tenants vs Tenants in Common

By Elias Metlej

There are different types of ownership if two or more people own a property together. Understanding the difference is critical to protect your interest and plan for your future.

“Joint Tenants” describes the ownership of land by two or more people where there is a right of survivorship. When one of the joint owners dies, his or her share passes automatically to the surviving owners. The right of survivorship is the most important element of joint tenancy.

As “Tenants In Common”, each owner has a separate and divisible interest in the property. If one person dies, his or her share does not automatically pass to the surviving owners. Rather, it is passed on according to the terms of his or her will and the Probate Court will tax the value of the share.

The difference between joint tenants and tenants in common can have a significant impact on estate planning matters. Many couples buy as joint tenants to avoid estate taxes and related expenses upon the death of a spouse. If you plan to leave your interest in a property to the person that you own it with, holding title as joint tenants will allow this to occur immediately and without triggering probate taxes on death.

However, you may not want your interest to pass to a surviving owner. If you want to leave your share in an investment property to your family, as opposed to your business partner, tenants in common is recommended.

If you own a property, check your deed to confirm if you own it as joint tenants or tenants in common. Fortunately, it is not expensive to change the form of ownership if it does not match your needs or intentions.

- Elias Metlej is a real estate lawyer with the Halifax firm Blois Nickerson & Bryson. www.bloisnickerson.com You can write to Elias at askelias@yahoo.com

Reposted from the Metro Daily News (July 27, 2009)

Understanding Income Properties

By Elias Metlej

“Your mutual funds will not call you at 2:00 am to complain that they don’t have heat.” This is the advice that I frequently give to people who are looking to purchase an investment property. While many people recognize the benefits of an income-generating asset, they often underestimate the responsibilities that accompany such an investment.

As a result of best-selling books, seminars, and television programs, income properties are becoming increasingly popular among investors. The promise of great profit and minimal work is understandably alluring. However, many people consider such investments based solely on their potential for financial return. Rarely do investors consider the practical implications of owning an investment property.

A client recently said, “If you buy a property, you should also buy a plunger.”Rental income is typically characterized as passive income. However, it is highly unlikely that you will be able to succeed without investing your time with your money. Hiring a manager for a small rental property is not typically feasible. You must be available to personally deal with management issues such as marketing, conducting maintenance, and engaging in tenant relations. The call to deal with problems could come at any time; at 2:00 am, when you would rather be sleeping, or at 2:00 pm, while you are working at your job.

Investing in real estate certainly has financial benefits. The property value will likely appreciate and the rental income may generate a positive income stream in excess of your expenses. However, you must budget for major capital expenditures and vacancy. The modest monthly profit may be insufficient to cover the cost of replacing a roof or repairing a furnace. As well, your mortgage payments and heating costs will subsist despite an empty apartment. Therefore, you must be prepared to invest beyond the initial costs of purchasing the property.

- Elias Metlej is a real estate lawyer with the Halifax firm Blois Nickerson & Bryson. www.bloisnickerson.com You can write to Elias at askelias@yahoo.com

Reposted from the Metro Daily News (July 20, 2009)

Protecting Your Property when Living as Common Law

Understanding Rights in a Common Law Relationship

By Elias Metlej

Four years and more than $80,000.00 later, the separation was complete. But this couple was not married and didn’t own the house together.  

The rights and responsibilities of common law partners are often overlooked, and not considered as seriously as those of married couples. If you own your home, but allow someone to live with you as common law, you must carefully consider what you are entering into.

A common law relationship exists when two people, who are not married, live together in a marriage-like relationship. The couple can be a same-sex couple or of the opposite sex.

While Nova Scotia laws dictate the rights of married couples, the rights of common law couples are not as clearly defined. Ironically, some people select common law living to avoid the legal complications of marriage. However, living as common law has proven to be more complex, especially if there is no agreement on key issues.

For example, if a person who owns a house dies without a will, their common law partner may not have any entitlement to the property or the proceeds if it is sold. Conversely, while your intentions may be to leave your home to a family member, your common law spouse may have a claim against your estate depending on the circumstances.

To best protect yourself, you can set out the terms of your relationship in a cohabitation agreement. This document formalizes the interests and intentions of common law spouses. While the agreement can address numerous legal issues, it should explicitly establish how property and debts will be divided if the relationship ends.

Cohabitation agreements can be created Rebefore a couple starts living together or at any time during the relationship. Ultimately, each spouse should get independent legal advice before the agreement is signed.

Understanding common law rights and responsibilities will foster a strong relationship. Creating a cohabitation agreement will ultimately ease the situation, and protect your home, if the relationship ends.

- Elias Metlej is a real estate lawyer with the Halifax firm Blois Nickerson & Bryson. www.bloisnickerson.com You can write to Elias at askelias@yahoo.com

Reposted from the Metro Daily News (August 13, 2009)

Time to Renovate?

Did you know that the Federal Government has a Home Renovation Tax Credit (HRTC) of up to $1350 for renovations of “Eligible Dwellings.”

What is an “eligible dwelling”? An “eligible dwelling” is a house, condo, or cottage owned for personal use.

Renovations and alterations must be relatively enduring to qualify for the tax credit. For example, resurfacing a driveway, new carpets, interior or exterior painting, renovating a kitchen, or building a deck are eligible for the credit. Included in the credit are the costs of building materials, labour, permits, professional services, rentals and fixtures.

“Ineligible renovations” are things such as new furniture and appliances, maintenance contracts such as house cleaning and snow removal, or the purchase of tools. Routine repairs and maintenance also do not qualify for the HRTC.

 

How the HRTC Works:

• You are eligible for the 15% credit on expenditures of over $1,000 but under $10,000 to a maximum credit of $1350.
• The expenditures have to be incurred after January 27^th 2009 and February 1^st 2010.
• You must make the claim for the HRTC on your 2009 Tax Return.
• You have to keep all of your receipts; they do not need to be submitted with your tax return, but must be available if requested by the Canada Revenue Agency (CRA).
• Renovations are not eligible if completed by someone you are not at arm’s length with, for example a blood relative, unless they are registered to collect GST/HST.

 

For more information check out http://www.budget.gc.ca/2009/pamphlet-depliant/pamphlet-depliant3-eng.asp or http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhmrnvtn-eng.html

Click here for more info on calculating your HRTC and keeping track of renovations http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/hmwnr/hrtc/clcltng-eng.html

 

All Information taken from the Canada Department of Finance http://www.budget.gc.ca/2009/home-accueil-eng.asp and the Canada Revenue Agency http://www.cra-arc.gc.ca/menu-e.html

Think Like A Purchaser, Not A Borrower

By Elias Metlej

Many people enter into property transactions with minimal money. Prepared for the obvious amounts, buyers set aside just enough for a down payment, legal fees, and the registration costs. Unfortunately, there are many valuable products and services that are widely unknown and, therefore, not budgeted for.

Most of my clients have never heard of title insurance until we review their mortgage commitment. This product is a popular option to satisfy common loan requirements. A policy may eliminate the need for a new survey of your property. However, its popularity stems from the price as opposed to the benefits of the coverage. Unless a lender specifically demands the insurance, or a policy is identified as a cheap alternative to a lender’s survey requirements, title insurance is commonly overlooked.

Title insurance protects property owners, and their lenders, against losses stemming from property title or ownership. Unlike most policies which require an ongoing premium for a potential future loss, title insurance provides protection for a one-time fee. The premium is typically paid on the closing date. The policy insures against unknown title defects, existing liens, encroachment issues, fraud, and errors in public records. It also covers issues related to zoning requirements, building permits, and even mistakes made by your lawyer.

The cost of title insurance is usually less than $300.00. Considering the one-time premium, with no deductible, and the extensive coverage for multiple matters, title insurance is a beneficial product for any homeowner. However, most people approach the issue from the perspective of a borrower, looking only for the bear minimum to satisfy their lender. Don’t wait for your mortgage company to demand a product like title insurance before you consider it. Think like a purchaser, not a borrower; make decisions that benefit you as opposed to decisions that are required to protect your lender.

- Elias Metlej is a real estate lawyer with the Halifax firm Blois Nickerson & Bryson. www.bloisnickerson.com You can write to Elias at askelias@yahoo.com

Reposted from the Metro Daily News (June 29, 2009)

The Mortgage That You Don’t Know You Have

By Elias Metlej

I am always amazed by the number of people who naively claim that they don’t have a mortgage. Many clients do not appreciate when a mortgage is registered against their home. In an age of extensive consumer protection laws and regulated banking, how do people end up with mortgages that they are unaware of? The answer lies in the fact that many consumers unknowingly use their homes as security for loans and lines of credit.

Unsecured borrowing occurs when no security is taken by the bank or finance company. The loan is offered to you based on your promise to repay it and the lender’s confidence in your ability to repay. With secured borrowing, the lender has a legal charge, a mortgage, over your property. If you do not make your payments, the lender could foreclose on the property to get their money back.

Products like the “Total Equity Plan”, “HomeLine Plan”, “HELOC” (Home Equity Line of Credit) and the “Secured Borrowing Account” are becoming more common. They are marketed as simple, convenient, and cheaper alternatives to traditional lines of credit. However, they are rarely marketed as a mortgage. While various lenders have branded their secured products differently, the common factor is that they all require a mortgage.

While a lawyer is required when purchasing a home, the secured loans may be established directly with the lenders. Surprisingly, the mortgages can be granted without ever meeting with a lawyer or receiving legal advice. As a result, people end up with mortgages that they unaware of.

Before signing up for you lender’s latest loan product, ask if it is a secured loan. If it is, you should consult your lawyer before you end up with a mortgage that you don’t know you have.

- Elias Metlej is a real estate lawyer with the Halifax firm Blois Nickerson & Bryson. www.bloisnickerson.com You can write to Elias at askelias@yahoo.com

Reposted from the Metro Daily News (June 22, 2009)

Choosing a Real Estate Lawyer

By Elias Metlej

A client told me that when she bought her first home she met with her lawyer once, for only 15 minutes. Following this, she understood only two things – she paid a lot of money and she owned a house. Unfortunately, far too many people experience this legal blur when purchasing or selling their home.

A property transaction will be an overwhelming experience. In our business, surprises are problems, and choosing the right lawyer will help avoid them. The following are some of the factors you should consider when selecting a lawyer for a property transaction:

Use A Real Estate Lawyer – There are more than 2100 lawyers in Nova Scotia, and most can complete a property transaction. You can expect specialized service and a greater familiarity with the subject matter from real estate lawyers.

Seek Multiple Meetings – Your lawyer’s role is to explain everything and coordinate your file. Achieving this during one consultation will be difficult, especially if it occurs on or just before the closing date. Find a lawyer who provides an initial consultation to review the legal and financial aspects of your deal. Many lawyers offer this service at no extra cost.

Compare Prices - While most lawyers charge fixed fees for property transactions, be sure to investigate exactly what is included in the price. Quoted legal fees may not represent everything you are responsible to pay for. Avoid the persuasion of the lowest price; fees are a significant factor but should not be the sole basis of your decision.

Rely On Trusted Sources – Follow the advice of your realtor, banker, or those close to you who are familiar with a lawyer. Hopefully they will guide you towards someone you trust and are comfortable with; possible the two most important qualities of a lawyer.

- Elias Metlej is a real estate lawyer with the Halifax firm Blois Nickerson & Bryson. www.bloisnickerson.com You can write to Elias at askelias@yahoo.com

Reposted from the Metro Daily News (June 14, 2009)

A Man’s Home is His (and His Co-Signer’s) Castle

By Elias Metlej

“I’m ready to buy a house with my girlfriend, but I’m not buying a house with her father!” That was a client’s response when he understood the meaning of “co-signer”. The young couple I was working with required a co-signer for their mortgage. Unfortunately, they, like many borrowers, did not understand the meaning of co-signer or appreciate how it would impact their ownership.

The term “co-signer” is often used indiscriminately. It could mean “guarantor”, which refers to a person who agrees to be responsible for the debt or obligation of another. If a borrower does not make the required loan payments, the lender can turn to the guarantor for the money. While this is the definition that many people are familiar with, it is rarely the type of co-signer that lenders demand.

In the current world of mortgages, the term typically refers to a “co-borrower”. When someone lacks sufficient credit history, or has inadequate income to qualify for a loan, a co-borrower can bolster an application to obtain approval.

However, in addition to being responsible for the loan, the co-borrower must also own the property. This creates estate planning issues, tax consequences, and practical implications that must be addressed before borrowing.

While owning a house with your girlfriend’s father may complicate your life, it will also impact his personal state of affairs. Co-signing a loan will impact credit and will be a factor when calculating one’s debt-to-income ratio. It will directly affect the co-signer’s ability to secure additional personal loans.

If you can’t qualify for a loan on your own, and a co-signer is required, don’t expect to be the sole owner of your house. If you are not prepared to own the house with someone else, think twice before signing an agreement to purchase.

- Elias Metlej is a real estate lawyer with the Halifax firm Blois Nickerson & Bryson. www.bloisnickerson.com You can write to Elias at askelias@yahoo.com

Reposted from the Metro Daily News (July 9, 2009)

How Green is Your House

This summer you might be thinking about renovating your home; replacing drafty windows, buying a low or dual flush toilet, or replacing your heating system with an ENERGY STAR rated system. Now is the time to do it! There are Federal and Provincial rebates, zero-interest renovation loans, and an assistance program for low to modest income families to do just this. All you have to do is have your home evaluated, at a cost of $150 to $250, then you have 18 months to carry out the recommended renovations to be eligible for rebates of up to $6500; $5000 from the Federal Government and $1500 from the Provincial Government. In addition to the Federal and Provincial rebates you will have a permanent reduction in your energy bills every month – an average savings of 30%! Conserve NS has also made it easier to complete these renovations by pairing with local retailers to make energy efficient products easier to find as well as educate consumers on EnerGuide upgrades.

 For more information and a compete list of rebates click here:

http://www.conservens.ca/resources/energuide/EnerGuide-Rebate-Guide.pdf 

 

These rebates are not only for old, drafty homes, but are also for new homes being constructed. With the cost of installing energy efficient windows, doors, appliances, and making the appropriate energy efficient upgrades being only about 10% higher than installing standard equipment, it is much cheaper to install energy efficient equipment than it is to upgrade it in the future. Some upgrades; such as insulating your basement are not possible after the foundation is poured or the home is constructed. New homes are rated from 1 – 100 according to the EnerGuide. If a house gets a score of above 80 the $250 inspection fee will be refunded and if a score of 83 is reached the house is eligible for another $500 rebate. All homes built with energy efficient products will also have permanently reduced energy costs.

 Click here for a list of costs of upgrades and savings:

http://www.conservens.ca/resources/energuide/EnerGuide-for-New-Houses-Cost-and-Savings-Chart.pdf

 

To learn more take a look at the Conserve NS Website:

http://www.conservens.ca/in-the-home/

 

All info from Conserve NS Website

Morris Lake Area’s Home Sales Among Canada’s Hottest

Halifax is home to one of the hottest-selling neighbourhoods in Canada, according to a survey by Century 21 Realty.

The Morris Lake area on the northeast shores of the harbour is ranked alongside High Park in Toronto, Richmond in Vancouver, and upscale North Kildonan in Winnipeg.

In the Morris Lake area, the average house price was $222,756 in April, an increase of 11 per cent from a year earlier. Those prices were up 11 per cent from the $200,041 average price in April 2008.

Century 21 Team One broker-owner David Yetman said he’s not surprised. The Morris Lake-Russell Lake West area has lots of new homes with access to natural gas, good schools, and a Link bus terminal. There are lots of mature trees and a selection of R-2000 energy-efficient homes.

“It’s been a hot area for a couple of years now. It’s like a new Colby Village. It’s got a little bit of everything,” he said. “There’s been 154 houses sold in that general area since April 1.”

When local sales are compared to the slowdown across much of Canada, he said Halifax has been a very steady market.

The majority of the hottest 21 neighbourhoods for housing prices are located in and around Toronto and Vancouver. In the very hottest neighbourhoods nationally, prices are up by 17 per cent in the past year.

Don Lawby, president of Century 21, said the survey serves as a reminder to homeowners to avoid relying on city, provincial or national averages to gauge their local neighbourhood housing markets.

Instead, sellers should monitor selling prices of similar homes in their own neighbourhoods.

Reposted from the Chronichle Herald Business Section

By STEVE PROCTOR Business Editor
Sat. Jun 13 – 4:46 AM

Find the article here http://thechronicleherald.ca/Business/1127001.html

( sproctor@herald.ca)