Rectification in Tax and Estate Matters Part I – Tax

Confucius said “A man who has committed a mistake and doesn’t correct it is committing another mistake.”

When we are dealing with tax and estate matters, even a simple mistake may have disastrous consequences. One way such a mistake may be corrected is by way of a rectification order.  Indeed, rectification is an important remedy that allows for the correction of errors or mistakes in legal instruments that have resulted in an unintended result.  This newsletter will review the doctrine of rectification as it applies to tax matters.  Our next newsletter will focus on rectification in estate matters.

What is Rectification?

A rectification order is an equitable remedy to correct errors in legal instruments that do not reflect the true intention of the parties resulting in unintended and, likely, unfortunate results.  A rectification order allows the affected parties to rectify the terms of a transaction as was initially intended by the parties. The effect of the rectification is retroactive.

The remedy of rectification is available only under certain defined circumstances; essentially to correct a mistake. However, rectification is not permitted if the intention of the parties is simply to alter the terms of an instrument nor can it be invoked in an attempt to correct every mistake in order to alter unwanted results.

In order for a rectification order to be granted, one must file an Application to the Superior Court of Ontario; only a court may grant such remedy.  Interestingly, the Tax Court of Canada cannot grant equitable remedies, and, as a result, rectification of a tax matter can only be heard by the appropriate forum, the Superior Court of Ontario.  The duty of the Court is to examine the evidence and assess the facts in order to determine whether the application is truly one to correct a mistake which result in an unintended legal effect or an undesirable legal consequence.  The Court must ensure that the parties are not just changing their minds “in the middle of a transaction.” The evidence is the key to the determination.

To be successful in obtaining a rectification order, one must establish:

1. the existence and nature of the common intention of the parties prior to preparation of the instrument alleged to be deficient;
2. that the common intention remained unchanged at the time the document was made; and
3. that the instrument, by mistake, does not reflect that initial common intention.

If one can prove the above, the Court may grant a rectification order thus restoring the party(ies) to their initial common intention.  Applicants should be aware that rectification orders are a discretionary remedy granted at the discretion of the Court and one should not anticipate the granting of an order.

Rectification in Tax Matters

In tax matters where unintended tax consequences arise as a result of a mistake, rectification may be a valuable tool, if not a “life saver,” for taxpayers who find themselves in a situation where their tax planning went awry.

Although the equitable doctrine of rectification is not new, it only truly emerged as a valuable tool in tax matters in the last decade or so.  The leading case, Canada v. Juliar, has been a key decision in establishing such remedy to taxpayers. Indeed, in Juliar, the Court granted a rectification order in a tax matter which ultimately fixed a mistake in a document intended for tax planning purposes. The granting of the rectification order enabled the taxpayer to avoid having to face a tax liability from an unanticipated outcome. Interestingly, the Court had no issue with the fact that the taxpayers’ intention throughout the transaction was to avoid immediate tax consequences.

Since the Juliar decision, the law and the doctrine of rectification in tax matters has expanded considerably.  Taxpayers appear to show a willingness to consider an application for rectification to correct/rectify transactions that achieved unintended tax consequences. Notably, the jurisprudence has acknowledged that the avoidance of tax is a legitimate intention in rectification matters involving a tax issue.  As a result, rectification may be available where transactions that resulted in unintended tax consequences might be altered in order to achieve the initial tax intention; that is the avoidance or minimization of tax.

A more recent decision from the Supreme Court of British Columbia, McPeake v. Canada, is also instructive as to how and when granting a rectification order may be appropriate in tax matters.  The McPeake decision is consistent with prior cases where the taxpayers demonstrate an intention to avoid tax but the documents or transactions failed to reflect their true intentions.

The McPeake decision stands out also on the basis that in tax matters, the taxpayers must convince the Court that their initial intention was to avoid tax.  Another interesting point of that decision is the fact that the Court accepted that it ought to consider the unfairness or harm the taxpayer may suffer should the rectification order not be granted (thus allowing a tax liability to arise although the avoidance of such liability is what gave rise to the transaction in the first place).

Rectification Application and the Crown

The Crown also distinguishes between an error in implementation and an error in tax planning and the Agency will vigorously oppose rectification orders disguised as an attempt to implement a form of retroactive tax planning.

The Crown’s position is that a taxpayer requesting a rectification order should provide the Agency with notice of the application; especially in instances where the rectification application is being made on the basis that the taxpayer is alleging unintended tax consequences.

However, whether or not the Crown should be notified of any particular application for rectification is a dilemma for the taxpayer and his lawyer to resolve.  There is a valid argument to be made that since the Crown may not be a party to the original instrument and the original transaction, it has no interest in the application to rectify the written instrument and the transactions. There is jurisprudence where the Court has said that notice to the Crown was “appropriate” or a matter of courtesy; however, the Court has never said it is mandatory.

In reality, the decision of whether to serve notice to the Crown or not is essentially a matter of assessing the basis of the application and ultimately, it is a strategic decision. Further, should one serve notice to the Crown, they risk having the Crown oppose the application.  However, opting not to serve notice may result in the judge requesting notice be served prior to rendering his or her decision.  Having to serve the Crown after the initial application is likely to raise suspicion from the Crown.

It is important to know that the Department of Justice has a rectification committee which discusses and decides whether to oppose an application.  The CRA and the Department of Justice have established a procedure to be followed when applying to the Court for a rectification order; notably, that a letter be sent to the Director of the Tax Services Office advising rectification will be sough, that the CRA should be named as a party in the Motion and that the Department of Justice be served with the Notice of Motion.

Once served, the rectification committee will review and discuss the merit of the application and inform the party(ies) whether it intends to oppose the application.

Conclusion

In tax matters, an application for a rectification order remains a valuable tool for taxpayers and should be considered when adverse tax consequences are erroneously triggered by an error or errors in implementing a transaction.

An application for a rectification should be considered by tax advisors, including accountants, lawyers and any other tax advisors.  Indeed, rectification may be the key to correct an oversight in their tax planning memorandum or an error in the drafting of an instrument.  Rectification may translate into a lifeline for their mistake, thus avoiding a liability; something well worth considering.

Ultimately, the original intent is the key determining factor in the decision whether to grant a rectification order.

In our next newsletter, we will address rectification in estate matters.

Tierney Stauffer LLP would be glad to assist and advise you.  If you have any questions, please do not hesitate to contact us.

Sébastien Desmarais
LL.B., LL.L., J.D.
Lawyer, Tierney Stauffer LLP
This article is provided  as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter  referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship.

Defamation, Responsible Communication and Cyberspace

[excerpt form paper by Partner Ian Stauffer]

Before embarking on a review of some important substantive and procedural issues, remember that there are two conflicting values at stake in all defamation cases. There is the desire to protect an individual’s reputation pitted against the perceived need to encourage free speech.

It’s said that a person’s reputation is priceless.

But butting up against this ancient maxim is another value which goes back to at least the American Revolution: Freedom of Speech. As you probably know, our Charter of Rights and Freedoms sets out, as a fundamental freedom, the freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication.  It is my belief that the pendulum has swung from protecting reputation to enhancing freedom of expression.

As one Supreme Court of Canada Judge has put it: “an individual’s reputation is not to be treated as regrettable but unavoidable road kill on the highway of public controversy, but nor should an overly solicitous regard for personal reputation be permitted to ‘chill’ freewheeling debate on matters of public interest”.

In a lawsuit based on defamation, a judge or jury is asked to set limits on what someone can write or say about another person.

In this short paper I will consider some of the difficult questions a lawyer must address when a plaintiff or defendant is involved in a defamation action.  Remember, defamation has been recognized as the basis for a lawsuit since at least the 17^th century and there are volumes of cases and legal commentaries which have been generated.  This paper can only skim the surface of a very complex and technical subject.

For the full paper please go to http://www.tslawyers.ca/_files/Defamation%20IStauffer%20Paper%202012.pdf

 This reference is provided  as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter  referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship.

Tax Obligations of U.S. Citizens Living in Canada

Contrary to the Canadian tax system which is based on residency, the United States tax system is based on one’s citizenship as well as residence. Under the U.S. tax laws all U.S. Citizens regardless of their place of residence, U.S. residents or green card holders, have a statutory obligation to file their tax returns in the United States.

FILING DEADLINES
U.S. citizens, U.S. residents and U.S. green card holders must report all of their worldwide income from all sources no later than April 15th of the year following the taxation year. U.S. persons living outside the United States must also comply with the filing requirements but are granted an automatic two-month extension.

Therefore, a U.S. citizen living in Canada must file his or her U.S. tax return by June 15th. All U.S. citizens living in Canada must fi le their U.S. tax returns every year regardless of whether any taxes are due. Even if a U.S. person owes no tax in the United States, he or she should file a return, if only to preserve all available tax credits.

Failing to maintain filings may trigger unfortunate issues such as denying renewal of that person’s passport or delaying entry to the United States until that person’s tax record is updated.

RRSPS, RIFFS & PENALTIES
RRSPs and RIIFs are an area where there is a clear diff erence between the Canadian and U.S. reporting requirements.  Under U.S. tax law a U.S. citizen or resident owning a Canadian RRSP or RRIF must report any income and gain earned within his or her RRSP or RRIF on a yearly basis; not when the income is withdrawn as is the case under Canadian tax laws. To avoid double-taxation the Canada-U.S. Tax Treaty allows for an election in the U.S. citizen’s tax return to defer recognition of the income earned and gains until such income or gain is withdrawn from the subject RRSP or RRIF.

However, to take advantage of that election the U.S. person must file his or her tax return on time and failure to do so may result in losing the right to make that and other similarly important elections.

ESTATE AND GIFT TAX
Upon death, the United States levies a tax on the fair market value of the world-wide property of a U.S. citizen, U.S.  residents or non-resident aliens if they own property in the United States. Consequently, any U.S. citizen living in Canada
will be subject to the U.S. estate tax and ought to consider such in their estate planning (Canadians should consider the estate tax before acquiring U.S. property). There is a basic exemption available to U.S. citizens that may result in the
estate being exempt from the estate tax but the prudent approach is always to seek professional advice on the subject.

One can see that, aside from the issue of estate tax, dealing with a deceased U.S. person’s taxes upon their death can be a nightmare for estate trustees if the deceased failed to file his or her U.S. tax returns in previous years. This will inevitably result in an onerous estate administration for the estate trustee and may have disastrous results for the beneficiaries.

Also, an omission of the estate trustees to consider the U.S. estate tax and failure to ensure the deceased’s tax record is in order may result in the estate trustee being personally liable for any taxes owed. To avoid such dire consequences
on death, U.S. persons must maintain orderly and up to date tax files.

THE HIRE ACT
In light of the UBS banking scandal in the United States, Congress passed the Hiring Incentives to Restore Employment Act (HIRE).

HIRE requires foreign banks and other financial institutions to report all U.S. persons’ bank and financial accounts to the IRS. HIRE also provides that foreign entities such as corporations, partnerships and trusts must report U.S. persons’ ownership or beneficial interests.

HIRE appears to provide overreaching powers to the IRS since it essentially implements a system that “forces” the foreign financial institution or entity to submit to the IRS’s jurisdiction. However, Canadian financial institutions and
other entities will likely comply with HIRE and report U.S. persons’ bank and financial accounts to the IRS. This may complicate the U.S. persons’ income tax filing requirements since their information will have to mirror the data
submitted by the Canadian institutions or entities.

Although the impact of the HIRE exceeds the scope of this newsletter, those involved in Canada-U.S. dealings and taxes must be informed.

RELINQUISHING U.S. CITIZENSHIP
Considering all of the onerous reporting obligations, the idea of simply relinquishing one’s U.S. citizenship may seem  tempting. However, to no one’s surprise, the U.S. government has created onerous rules aimed at dissuading the relinquishment of U.S. citizenship for tax purposes.

To successfully relinquish your U.S. citizenship, one must first comply with all requirements of the U.S. State Department as well as completing and filing all required forms with the IRS; notably Form 8854 and ensure all tax returns are up to date. Also, it is likely the U.S. person will be deemed to have disposed of all their worldwide assets at fair  market value and incur taxes on the deemed disposition; something to consider before starting the process.

It is also possible that taxes may still be owed aft er one relinquishes his or her U.S. citizenship. Those rules are complex and ought to be discussed with a tax professional. The expatriate tax will also apply if the relinquishing person is present
in the U.S. for more than 30 days in any calendar year during the 10 years following the date that person relinquished his or her citizenship. Note that the expatriate tax only applies if it is greater than the amount of tax that would otherwise be imposed if you were taxed as a non-resident alien.

As one can clearly see, although tempting, relinquishing one’s U.S. citizenship may not be worth the trouble involved.

CONCLUSION
U.S. tax fi ling obligations are often misunderstood or simply ignored by U.S. citizens living in Canada. Ignoring or  delaying the fi ling requirements places one at tremendous risk. The consequences of being held liable for failure to file
a tax return in the U.S. will result in additional taxes, penalties and interest to be paid as well as other unforeseeable consequences.

If you are a U.S. citizen living in Canada, we highly recommend you seek professional tax advice as to your U.S. tax duties and obligations and make every effort required to meet all deadlines for filings.

Sébastien Desmarais, LL.B., LL.L., J.D.
Associate, Tierney Stauffer LLP

This article is provided  as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter  referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. 

Changes to Not-for-Profit Legislation: Are you Ready to Transition?

The new Canada Not-for-Profit Corporations Act (“New Act”) is expected to be proclaimed in force this year. Once proclaimed in force, it will replace Part II of the Canada Corporations Act (“CCA”).

For charities and not-for-profit organizations incorporated under the CCA (“CCA Corporations”), it is important to note that the New Act will not automatically apply to CCA Corporations. Instead, CCA Corporations will be required to transition to the New Act. There will be a three-year transition period for CCA Corporations to apply for continuance under the New Act. Failure to transition to the New Act will cause a CCA Corporation to be eventually dissolved.

CCA Corporations wishing to transition will need to undergo the following steps in order to transition to the New Act:
Resolution by the Members: The members of a CCA Corporation will be required to pass a resolution authorizing the Board of Directors to make an application to transition to the New Act.
Filing Articles of Continuance: In order to successfully transition to the New Act, a CCA Corporation must apply for a certificate of continuance. As part of this application, the corporation must file Articles of Continuance, which will replace the corporation’s letters patent. The Articles of Continuance will need to set out the following information:
a. the name of the corporation;
b. the province where the registered office is to be situated;
c. the classes, or regional or other groups, of members that the corporation is authorized to establish and, if there are two or more classes or groups, any voting rights attaching to each of those classes or groups;
d. the number of directors or the minimum and maximum number of directors;
e. any restrictions on the activities that the corporation may carry on;
f. a statement of the purpose of the corporation; and
g. a statement concerning the distribution of property remaining on liquidation after the discharge of any liabilities of the corporation.

Notice of Registered Office: In addition to the Articles of Continuance, a CCA Corporation will be required to file a notice of registered office, as well as a notice of directors, with Industry Canada in the forms to be prescribed by Industry Canada and within the periods to be stipulated in the New Act’s regulations.

Officer’s certificate: A CCA Corporation, as part of its application package, must also include an officer’s certificate certifying that the corporation’s members have adopted by-laws that conform to the New Act’s requirements. Under the New Act, Industry Canada will no longer be required to approve a corporation’s bylaws; however, reference copies of the bylaws must still be filed on record with Industry Canada. While a CCA Corporation can maintain its current bylaws (as long as they meet the minimum requirements set by the New Act), it is advisable that an organization, at the time of transition, review its bylaws to assess whether changes may be appropriate (for example, provisions may need to be added to ensure the bylaws are in conformity with the New Act, or provisions may be deleted where such provisions are not required by the New Act or are not favourable to the organization).

Industry Canada will not charge a fee for the filing of an application to continue under the New Act.
Similarly to the New Federal Act, discussed above, Ontario has also enacted new not-for-profit corporation legislation.

Currently, in Ontario, provincial non-profit corporations are regulated by Part III of the Corporations Act (“OCA”). On October 25, 2010, the Ontario Not-for-Profit Corporations Act (“ONPCA”) received Royal Assent. Once proclaimed in force, the ONPCA will apply to non-share corporations on the day the statute is named into force, including corporations without share capital currently under Part III of the OCA (please note that there are exceptions to this.

For example, the ONPCA does not apply to corporations without share capital that are under the Co-operative Corporations Act or insurance corporations under Part V of OCA). It is anticipated that the ONPCA will be proclaimed in force in 2012.

While the ONPCA will immediately apply to non-share capital corporations, it will not immediately change the governing documents of those companies to comply with the new legislation. Under the ONPCA, previously valid governing provisions that are invalid under the new legislation are only deemed into compliance with the ONPCA three years after the legislation comes into force.

During this transitioning period, it is advisable to review your organization’s governing documents and to assess whether any changes to them are necessary in order to bring them into compliance with the new legislation, or whether any changes are simply desired to get rid of provisions in your governing documents that are no longer necessary or helpful to your organization.

If you have any questions concerning ONPCA or employment law in general, please do not hesitate to contact me directly 613.288.3221 or by email at jbrigandi@tslawyers.ca.

Jennifer Brigandi,
Associate, Tierney Stauffer LLP

This article is provided  as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter  referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. 

I am considering buying a property that has an “easement.” What does that mean?

An easement is a legal term that means a right exists that either:

–       Requires the owner to allow something on the land; or

–       Prevents the owner from doing something on the land.

For example: you may be required to allow access across your land to owners beside you, or may be prevented from building a fence that would restrict that access.

Often, easements exist to allow services (hydro, cable, etc.) to be delivered to houses in a specific area.  These easements may not be visible (cables or pipes under the property, for example) or they may not negatively impact your enjoyment of the property.

It is important to note that an easement is attached to the land itself, and not the property owner.  Responsibilities surrounding easements do not disappear when the property is sold so it is important to understand what type of easement exists before you purchase a property.

There are several different types of easements and only a search on the property’s title by a professional can determine the scope and how the easement may affect you.

Dana Dingman
Associate

 

This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions.

Changes to the Ontario Insurance Act for Users of Public Transit

The Ontario government has amended the Insurance Act provisions with respect to injuries incurred by someone using public transit. In situations where an occupant of a public transit vehicle is injured, they will not be entitled to statutory accident benefits if the public transit vehicle did not collide with another automobile or any other object in the incident.

For more information, please see the Insurance Act. The changes appear in sections 267.5(6.1) and 268(1.1).

 

Details, Details: the Importance of the Minute Book

It is important for business owners, directors, officers and managers of a company to maintain accurate corporate records in their corporate minute book.

Minute books are meant to serve as the official source of all corporate records. They should contain such documents as the articles of incorporation/amendment/ amalgamation, corporate bylaws, and minutes of shareholders’ and directors’ meetings. Ensuring the minute book is up-to-date helps to ensure that all vital corporate documents are in one place. This way, such documents can be easily found, retrieved and consulted when and if needed.

The minute book should properly identify the shareholders of the company, and document all share issuances and transfers. The minute book must also properly identify the decision makers of the corporation (i.e. directors and officers), when such decision makers were elected/appointed and when they ceased their functions. The corporate records should properly demonstrate that the directors and officers were granted their authority to act. The minute book share ledgers and shareholder, director and officer registers should be updated each time there is a change. These registers will often be used to quickly identify who the directors, officers and shareholders are, or were, on any given date.

A minute book that is accurate will also show the official standing of the corporation. Such information will be vital to facilitating many corporate transactions, such as a potential sale of a company. For example, shareholders are required to approve the sale of a business. If share transfers and/or issuances were never documented, or improperly documented, it may be difficult to quickly and accurately identify the current shareholders in order to obtain their consent to the sale. If your company’s minute book is out-of-date, a generally straight-forward transaction may become lengthier and much more expensive.

There may also be times when third parties will need to examine your minute book. For example, in the case of an audit by the Canada Revenue Agency (“CRA”), the minute book can help to establish effective dates for tax purposes, and can serve as a record of bonuses and dividends the corporation has paid out. The CRA may disallow dividends if the appropriate resolutions are not prepared, signed and included in the minute book. The Workplace Safety and Insurance Board may also examine the book to assess compliance under the Workplace Safety and Insurance Act.

Having an out-of-date minute book can have both practical and legal implications. Practically speaking, and in addition to those implications already discussed, if a company is being sold, the buyer will likely require a legal opinion relating to various corporate matters. Such opinions will not be able to be drafted until all corporate documents have been properly executed and the minute book has been updated accordingly. Having an up-to-date minute book can help avoid any such delays related to the legal opinion. An out-of-date minute book and improperly kept corporate records may also cause delays in obtaining financing.

Moreover, if the minute book is missing documents demonstrating that certain directors and officers have been properly elected or appointed, their authority to make decisions may be subject to challenge.

From a legal perspective, a corporation that fails to comply with requirements to maintain certain corporate records may be found guilty of an offence and liable to a fine.

If your corporate minute book is not up-to-date, there are methods of rectifying such deficiencies in the corporate records. A corporate lawyer will be able to perform a proper review of your minute book to identify any deficiencies and will be able to prepare the necessary documentation to resolve any problems. Ensuring your minute book is properly updated now may help prevent any future delays and expenses associated with updating your corporate records.

Jennifer Brigandi, Associate

 

This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions.

 

Do I need a shareholders’ agreement for my new business?

Here is a typical scenario:  2 or more colleagues join together to start up a business.  They incorporate and organize a company.  Then they ask themselves whether they should enter into a shareholders’ agreement.

A shareholders’ agreement is an agreement among the shareholders of a corporation setting out their agreement on how the company will operate. Typically, it deals with issues such as: (1) who will be the directors and officers of the company; (2) how the start-up costs and ongoing costs will be funded; (3) what are the restrictions on the transfer of shares; (4) what happens if new shares are being issued; (5) how are disputes resolved; (6) what happens on the death, bankruptcy, divorce or incompetence of any of the shareholders; and (7) how are major decisions approved.

A major benefit of a shareholders’ agreement includes the ability to clearly set out how the company will be run.

Firstly, when people start up a business they are usually cordial and optimistic.  Later on, if the business is not doing so well and animosity sets in, it’s hard at that point for the parties to agree on issues such as those set out above.  For example, how much should each shareholder contribute to the $100,000 needed to carry the company through the year?   This issue is easier to deal with when the company is starting as opposed to when the company is going through a tough time and no one wants to put in more money.

Secondly, you want to deal with issues before it’s too late.  What happens if Shareholder A dies suddenly? Without a shareholders’ agreement, the shares go to his beneficiary under his Will who is usually the spouse.   Shareholder B knew Shareholder A and could work with him. Now the spouse steps into the role of a shareholder and with it a say on how the company is to be run.  A shareholders’ agreement may say that upon death the other shareholders or the company will buy back the deceased shareholder’s share at their fair market value.  The spouse is treated fairly because he or she receives the fair value of the shares but the company or other shareholders don’t have to deal with the spouse and all of the uncertainty that may bring.

Thirdly, you may want to modify what the law would “default” to in the circumstances.  For example, under the Ontario Business Corporations Act most fundamental decisions (i.e. major decisions) require 66.7% of shareholder approval.  But what if you want a greater approval for some major decisions?

If you are starting up a corporation with a number of other people, consider the above issues and consult a lawyer to see if it makes sense in your case to get a shareholders’ agreement drawn up.

If you have any questions about shareholders’ agreements or concerning other legal aspects of setting up a business, please do not hesitate to contact me directly at 613.288.3226 or by e-mail at meng@tslawyers.ca.

Michael Eng, Associate

 

This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions.

What is Ontario title insurance? Why do I need it?

When you purchase real estate, it is crucial that you obtain a property with clear ownership or “good title.” Title insurance can assist in ensuring that the quality of the legal title that you are purchasing is unproblematic thereby giving you peace of mind.

Title insurance can provide coverage for work orders which arise from the failure of previous owners to obtain proper permits. Title insurance can also cover a purchaser for issues that an up to date survey might reveal (such as encroachments of buildings over lot lines), access related problems, fraud, mortgages or other encumbrances affecting title and, in general, the unmarketability of title to the property.

Use of title insurance often lowers your closing costs by eliminating many of the costly “off-title” searches. It allows you to close your transaction sooner instead of waiting weeks for responses to the off-title searches. The survey coverage provided by title insurance allows a purchaser to close a transaction without obtaining an up to date building location survey potentially saving $1500 to $2000.  The cost of title insurance is approximately $280 and is a onetime payment which provides coverage to the purchaser for the length of time that they own the property.

Title insurance will not necessarily fix any issue that is discovered on title but will often protect an owner from financial loss for issues which may not be discoverable through regular investigations. Title insurance is a tool to be discussed with your lawyer to provide you added protection and peace of mind when purchasing real estate.

If you have any questions, please do not hesitate to contact me directly 613.623.3177 or by email at aparker@tslawyers.ca

Alexander Parker, Associate
Tierney Stauffer LLP
Arnprior, Ontario

This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions.

2012-2013 Articling Students – Timelines

Tierney Stauffer LLP is now reviewing resumes for 2 articling student positions for 2012-13. If you wish to be considered for either of these positions it is important that you review the timelines for submission and interviews, which is set by the Law Society of Upper Canada. Please scan the QR code below to go directly to our Articling information page on the Tierney Stauffer LLp website.

This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions.