Tax Me I’m Canadian! A commentary on the latest Speculation Tax

Like the title to Mark Milke’s excellent book (well worth a read) suggests, Canadians –born under the colonial mantra of “peace, order and good government” roll over again and again as the federal and provincial governments in this country systematically tax them to death.

The BC NDP’s latest shake down is called the “Speculation Tax.”

It follows on the heels of Vancouver’s “Empty Homes Tax,” a draconian measure that penalizes anyone with a property in that city who dares to leave it empty for more than 6 months a year (unless it falls within an exemption, such as a principal residence).

Although the BC government has not yet thought out all the details of the Speculation Tax which is set to come into law later this fall, it seems so far to be nothing more than an expansion of the Empty Homes Tax into other parts of British Columbia, including Metro Vancouver, the Capital Regional District (except the Gulf Islands), Kelowna and West Kelowna, Nanaimo-Lantzville, Abbotsford, Mission and Chilliwack.

It will tax owners from between .5% to 2% of the assessed value of their homes unless they are rented out for at least half the year.

This poorly conceived strategy does not take into account that most renters don’t want to rent for six months or less, so how that will increase the housing stock for non-owners is not immediately evident.

The Speculation Tax is estimated to bring in about $200M per year, with BC residents picking up about $60M and the rest being paid by out-of-BC owners.

No mention has been made as to what the $200M speculation tax revenue will be used for.

While it could be earmarked for social housing or other housing related initiatives, most governments simply take the dough, plunk it into general revenue and then use it as they please. I would put money on the latter option.

The ostensible justification for yet another tax is to address housing affordability by penalizing those who don’t pay taxes here, but own property which is not used in a politically correct way (i.e. rented out).

Rather than just exempt BC residents, the government is proposing a refundable tax credit, which may or may not offset the tax to be assessed against a BC resident’s property.

While it is clear that foreign (i.e. non-Canadian) money has destabilized BC real estate markets in BC for the past 15 years and the government has sat back and done nothing but encourage it (and collect billions of dollars of Property Transfer Tax in the process).

The Speculation Tax would be far more palatable if it JUST APPLIED TO NON-CANADIANS (or “foreign entities” as defined in the Property Transfer Tax Act).

Instead, the BC government seeks to penalize both British Columbians who own a second home as well as other Canadians with the Speculation Tax.

With no due respect, there is no justification to hose those who live in BC (and thus pay taxes here), nor those who live in Canada, who are our fellow county men and women.

This seems to me to be yet another tax grab –plain and simple.

It’s necessary to fund the NDP’s social welfare agenda at the expense of any BC or Canadian resident who has had the wherewithal to scrape up enough money to purchase a second property.

Clearly the NDP government of BC is ideologically opposed to both private property rights as well as the accumulation of wealth.

As with all levels of Canadian government, if the the BC NDP could govern half as well as they can think up new ways to pick taxpayers’ pockets, we would have few problems in this country.


Pazder Law Corporation

© 2018

DISCLAIMER:  The foregoing is not legal advice. Details of the BC Speculation Tax are at present few and far between. As several changes to the as yet non-existent tax have already been announced, what the final version will look like is uncertain.

Presale Vancouver: Understanding the practice of flipping pre-sale condo contracts


With respect to the recent article in the Vancouver Sun regarding pre-sale assignments some clarification is in order.

The media has recently coined the term “shadow flipping,” to describe the practice of assigning pre-sale contracts in BC.

This practice has been going on in BC for over 15 years.

Firstly, there is nothing “shadowy” (or illegal for that matter) about assigning the contract of purchase before the completion date comes up.

In fact in almost every case the assignment sale is listed on the MLS and realtors are involved on both sides. It is advertised and marketed like any other sale (only it’s more complex to close on the legal side).

Pre-sale contracts are permitted under REDMA (the Real Estate Development and Marketing Act).

S.36 of the Law and Equity Act of BC allows all contracts to be assigned (except where a contrary intention appears in the contract or otherwise prohibited by law).

In response to the many stories in the media about “shadow flipping,” last year the BC government of the day (the Liberals) caused the standard BC CBA/REABC contract of purchase and sale in use in the province by virtually every Real Estate Board to include a “no assignment clause” (s.20A).

Ironically, very few contracts between individual buyers and sellers have EVER been assigned to a third party prior to closing!

This is because the closing dates are typically within 30 days of the contract being entered into and thus, the price will not have appreciated much if any in the interim.

Thus, as is often the case, the government wanted to appear to be “doing something” about a perceived problem, but ended up accomplishing nothing.

On the other hand, assignments of pre-sale contracts are quite common.

In the BC real estate marketplace, the values of pre-sale condominiums have appreciated substantially over the past 15 years (with the notable exception of 2007-8, being the era of the melt down of Wall St.)

Due to the long completion dates for pre-sales (1-3 years), the price differential between what the original buyer agreed to pay and what the completed unit will be worth several years down the road can make an assignment a tempting choice for many would be purchasers –even if their intention was to buy for themselves or as an investment.


Apart from pocketing the price increase, the original buyer (“the Assignor”) avoids paying GST (5%) and Property Transfer Tax ((“PTT”)(2%) (which may also include a 20% Foreign Buyers Tax) as he does not actually buy the property.

The new buyer (“the Assignee”) buys the property from the developer under the original contract (including GST and an increased amount of PTT based upon the new market value), but also pays a “lift” to the Assignor to compensate him or her for the increased value.

The Assignor will have to pay a fee to the developer (usually 2-2.5% of the sale price) to allow the assignment to take place.

The Assignor will have to pay tax on the “lift,” to Canada Revenue Agency be it capital gains tax or income tax, depending on the circumstances.

The problem that the BC government has with this process is that as the assignment is not registered anywhere (at least as of yet), it does its “cut” of the action so to speak. PTT is only payable upon the actual registration of title at the land titles office –so instead of getting PTT twice, it’s only payable once in the case of an assignment.

I wrote to the housing minister before the last budget and suggested that to fix that problem the government could simply amend the regulations under REDMA to prohibit all pre-sale assignments (unless special circumstances could be shown to demonstrate that the buyer could not close such as a divorce,  job loss or illness).  That way any speculator, foreign or local would have to buy the presale strata unit and then resell it, thereby paying full PTT and GST in the process.

Instead of heeding said advice, the BC government is apparently coming up with a new registry to track assignments.

This will solve nothing and will just expand the government bureaucracy yet again! (however that could be the actual purpose, knowing governments)

Like the previous Liberal government, it’s an attempt by NDP to appear to be doing something to address affordability and housing supply, while actually accomplishing little.


DISCLAIMER:  The foregoing is not legal advice, but is presented for information purposes only. Buying or flipping presale strata units is complex and it is suggested that the reader obtain proper legal and other professional advice prior to entering into such agreements.

© 2018 Pazder Law Corporation

TIME OF THE ESSENCE clauses in Real Estate Contracts

“I can be late for a date that ’s fine, but he better be on time!”– Shania Twain, Any Man of Mine

*tribute to Shania Twain visiting Vancouver!

We have all experienced the horrible consequences of being late on occasion.

This especially holds true for real estate. Timing in a real estate conveyance is critical.  In the standard CBA/BCREA contract of purchase and sale one of the important terms of the contract is paragraph 12, the “time is of the essence” clause.

12. Time will be of the essence hereof, and unless the balance of the cash payment is paid and such formal agreement to pay the balance as may be necessary is entered into on or before the Completion Date, the Seller may at the Seller’s option, terminate the contract, and in such event the amount paid by the Buyer will be absolutely forfeited to the Seller in accordance with the Real Estate Services Act on account of damages without prejudice to the Seller’s other remedies.

Do not take this clause for granted! It not only stresses the importance of the timing in which the contract must be completed but also the consequences of being even “a minute too late.”

What does “Time of the Essence” mean?

It means that the parties must perform their obligations strictly within the time frame stipulated in the contract.

Failure to act within said time frame will constitute a breach of the contract, giving the other party the right to pursue his or her legal remedies forthwith.

When time is of the essence, the consequences of being a minute too late can be disastrous to the offending party.

Losing the Deal

In Gill v Bal 2017 BCSC 2015 the Supreme Court re-enforced the importance of not being late. The contract stated that the transfer documents were to be registered by 4:00 p.m. on the closing date.  However, at 4:00 p.m. the Buyers were not in a position to close as their lawyer had not yet received the money in his trust account to enable him to register the conveyance pursuant to the standard CBA undertakings which are made part of the contract pursuant to paragraph 14. At 4:19 p.m. the Seller required the executed transfer documents to be returned as the Buyers were not in a position to close and had missed the 4:00 p.m. deadline. At 5:36 p.m. the Buyers were finally able to close, having received the mortgage funds. The Seller refused to complete. The court held that the Buyers were in breach having not been ready to close at 4:00 p.m. as required by the contract. The court awarded the Seller not only the deposit but additional damages as the Seller had to obtain additional financing in order to close on another property.

Forfeiting the Deposit

One of the basic principles of contract law is that damages are calculated on the actual loss suffered by the innocent party. An exception to this rule exists in the context of a real estate deposit. In British Columbia, if a purchaser defaults or is otherwise unable to complete a real estate purchase he is liable to forfeit his or her deposit even if there was no actual loss suffered by the seller. In Tang v Zhang 2013 BCCA 52, the BC Court of Appeal confirmed that the Seller was entitled to keep a $100,000 deposit even though the Seller suffered no actual loss as he was able to resell the property at a higher price.  The court considered the deposit to be earnest money (a term borrowed from US jurisprudence) and therefore subject to forfeiture upon default by the buyer.

Extending the Completion Date

Sometimes circumstances occur where it is impossible for one of the parties to complete on the closing date. If the parties agree to extend the closing date, then the time of the essence clause must be expressly reinstated to give sufficient notice to the other party that the new closing date is being relied on. It is not sufficient to state “all other terms and conditions to remain the same” (Ambassador Industries v Kastens 2001 BCSC 484).

If timing of the contract is critical to a party, anytime the contract is amended or extended, the time is of the essence clause should be reasserted for further assurance that the timing of the deal remains an essential part of the contract.

Waiving Time is of the Essence

Like all other terms, time being of the essence can be waived.

If by words or conduct a party waives the time is of the essence clause, timing of the contract will cease to be strictly enforceable.

In such case the party is given a reasonable time to perform her contractual obligations (Whittal v Kour 1969 CanlII 701 (BCCA) cited in Salama Enterprises (1988) Inc v Grewal 1990 CanLII 1677 (BCSC)).


The Moral of the Story

In today’s hot market where property values are sky high, a purchaser needs to make sure that she and her lawyer get everything done on time! A purchaser stands to lose not only her dream home but potentially a substantial deposit as well.

A realtor who cavalierly assumes that a seller “will be reasonable” in the face of a request for a last minute, short term extension may be in for a rude awakening when the seller digs his heels in and refuses to agree to it (perhaps a back-up offer is in the wings), resulting in the realtor’s client losing the deal and forfeiting her deposit in the process! (guess who’s getting sued after that happens?)

Remember the words of William Shakespeare which are apropos in every real estate transaction:

“It is better to be three hours too soon, than a minute too late!”



Real Estate Lawyers           

© 2018

DISCLAIMER:  The foregoing is for information purposes only and does not constitute legal advice.  The reader is urged to consult a lawyer prior to acting or relying on the information contained herein.  Such information can change over time due to many factors. In addition the reader’s own particular legal or financial circumstances may affect his or her ability to make use of this information.

Everything you ever wanted to know but were afraid to ask about SUBJECT CONDITIONS in Real Estate Agreements

First off, “what is a subject condition?”

It is a condition in a contract of purchase and sale which must be removed or waived by the benefitting party before a certain date, failing which the contract will terminate.  

The benefitting party is usually the buyer, but it could also be the seller or both the buyer and seller.

Subject conditions are essential because they allow a party to carry out their due diligence (inspections, documentary reviews, searches and other confirmations) PRIOR to the contract becoming binding.

Typical subject conditions for a buyer could include: 

 – Financing;

 – Building inspection;

 – Review of title, strata plan, by-laws, strata minutes, Form B, insurance, financial statements, parking arrangements, depreciation or other engineering reports;

 – Confirmation that: a. GST or PTT are not applicable, b. no underground oil tanks are located on the property, c. the water is potable, d. the septic system is approved and properly functioning, d. the zoning is appropriate for intended use, e. insurance is available on the property, f. the property was not subject to a stigmatizing event (such as a murder, suicide, paranormal event or other).

Too often subject conditions are carelessly thrown into contracts of purchase and sale without regard to their wording or significance. The importance of subject conditions should not be overlooked as a poorly drafted subject clause may give a party room to walk away from a deal or prevent a contract from even forming.

Typically when entering into a contract of purchase and sale each party has the same goal in mind, namely to complete the transaction. Once the price is agreed on the contract is a done deal, right? WRONG! While the negotiation of the purchase price is always important it is not all that matters. 

In the standard form Contract of Purchase and Sale, those conditions that your real estate agent lists under Terms and Conditions play a very significant role. In fact, a party’s obligations under the contract do not commence until those subject conditions are removed.

A typical subject condition might be: “Subject to the Buyer obtaining and approving a building inspection. To remove a subject condition, the benefitting party must waive or declare fulfilled the condition AND give written notice of the removal of the subject clause before the deadline stipulated in the contract.

Duty of Good Faith

In removing a subject condition, a party has a duty to act in good faith and make all reasonable efforts to remove their subject conditions and complete the contract (Dynamic Transport Ltd v O.K. Detailing Ltd., 1978 CanLII 215 (SCC), [1978] 2 SCR 1072). To act reasonably and good faith is to not act in a capricious or arbitrary manner (Mason v Freedman, 1958 CanLII 7 (SCC), [1978] SCR 483 at 487).

Subject conditions can on occasion play a critical role in aiding a party to get out of his or her contract. Unless the subject condition is waived or fulfilled by written notice the contract is terminated. 

However, as noted above, a party cannot refuse to remove a subject condition for an illegitimate reason.

For example, a Seller cannot refuse to remove her subject to legal review clause merely because she has found another Buyer who is willing to pay more money for the property (Zhang v. Amaral-Gurgel 2017 BCSC 1561).

For a hesitant or risk adverse party, the impulse may be to draft the subject clauses as subjectively in an attempt to give that party the ability to walk away from the contract. However, if the wording of the subject conditions are too subjective it may prevent a contract from even forming. To form a contract there must be some degree of certainty as to the essential terms of the contract. The more subjective a subject clause is, the more uncertain the criteria of the terms are. Therefore, instead of a binding contract, the parties may only have an offer to purchase and a binding contract will not be formed until the subject conditions are removedThis may give either party the ability to walk away before the subject conditions are removed.

Most parties when entering into a contract are not looking for a way out. To promote efficiency and certainty, subject conditions should be drafted objectively. Objective conditions are usually dependant on the happening of an external event, for instance “subject to the Buyer obtaining mortgage financing with an institutional lender.” The criteria of this condition is clear and precise as to when and how it will be fulfilled.

Is a “satisfactory” subject condition enforceable?

Often, a real estate agent will insert the word “satisfactory” to give the party some wiggle room as to the acceptableness of the conditionTake for example, “subject to arranging satisfactory financing.” The term satisfactory implies a subjective standard, leaving concern of the certainty of the clause. However, the Court of Appeal in Griffen v Martens (1988), 1998 CanLii 2852 (BCCA) stated that the purchaser has to use “his best efforts” to obtain financing as the meaning of “satisfactory” means “satisfactory to a reasonable person with all the subjective but reasonable standards of a particular purchaser.” Thus the term satisfactory invokes an objective standard of a reasonable person so the clause is not the subject to the whims and fancies of a particular individual. Therefore, there is a sufficient degree of certainty to the condition

The moral of the story

In today’s hot real estate market, most everyone want the deal done quickly –BUT in a professional and enforceable manner

Properly drafted subject conditions can aid in this goal (although, admittedly in many cases, particularly in Vancouver, buyers are forced to make offers with no conditions at all due to the many bidders all vying for the same property).*

A real estate transaction is one of the biggest transactions most people ever make, so it is not in anyone’s best interest that the deal collapses because of a poorly worded subject condition clause!

When in doubt, feel free to call us for advice 24/7.**  So far we’ve successfully closed over 30,000 purchase and sale agreements!

*In such cases, it is often possible to put in some of the buyer’s due diligence items by way of warranties or representations by the seller.  Also, if the buyer wants to spend the extra money without knowing whether he will be the successful bidder, most of the subject conditions can be carried out BEFORE the offer is made, in which case the offer need not contain any conditions.  However, after losing out on a few such offers, the buyer may become hesitant to continue this expensive and somewhat time consuming procedure.

© 2018 Pazder Law Corporation

1460 – 800 W. Pender St., Vancouver, BC, V6C 2V6, 


Kenneth Pazder (ext. 245)Melissa Valana (ext. 258)


DISCLAIMER:  The foregoing is not intended as legal advice, but is presented for information purposes only. Statutory law and case law changes from time to time and it is always advisable to consult experienced, competent legal counsel prior to entering into a major contract such as a purchase or sale of real estate.

How to avoid buying a Stigmatized House

There are many stigmatized properties all over the world.

These properties are “stigmatized” due to circumstances or events which transpired in or around them. For example:

  1. The home could have been the scene of a murder;
  2. It might have been occupied by a serial killer or sex offender;
  3. The former resident was a member of an organized crime group or gang;
  4. The property was robbed or vandalized on prior occasions as it was used to carry out criminal activities;*
  5. The property is alleged to be haunted or plagued by other paranormal phenomena;
  6. The former owner committed suicide on the property;

In BC a seller of property is not legally obliged to disclose any of the above circumstances to a potential buyer.

This is because such circumstances do not at law constitute a material latent defect.

As noted by the judge in the decision referred to below:

A vendor has an obligation to disclose a material latent defect to prospective buyers if the defect renders a property dangerous or unfit for habitation. A latent defect is one that is not discoverable by a purchaser through reasonable inspection inquiries. See McCluskie v. Reynolds (1998), 65 B.C.L.R. (3d) 191 (S.C.), and Cardwell et al v. Perthen et al, 2006 BCSC 333 [Cardwell SC], aff’d 2007 BCCA 313 [Cardwell CA].

This term is also defined in the standard Property Disclosure Statement in use in most residential real estate transactions in BC:

material latent defect means a material defect that cannot be discerned through a reasonable inspection of the property, including any of the following:

(a) a defect that renders the real estate

(i) dangerous or potentially dangerous to the occupants,

(ii) unfit for habitation, or

(iii) unfit for the purpose for which a party is acquiring it, if

(A) the party has made this purpose known to the licensee, or

(B) the licensee has otherwise become aware of this purpose;

(b) a defect that would involve great expense to remedy;

(c) a circumstance that affects the real estate in respect of which a local government or other local authority has given a notice to the client or the licensee, indicating that the circumstance must or should be remedied;

(d) a lack of appropriate municipal building and other permits respecting the real estate.

However, the aforesaid standard Property Disclosure Statement approved by the Real Estate Board does not contain any mention of circumstances which would or could render a home a stigmatized property.*

Thus the doctrine of caveat emptor (buyer beware) is applicable when purchasing a property in this province.

In the recent case of Wang v Shao (BCSC 2018 377) contains an extensive summary of the law concerning the disclosure of stigmatizing circumstances by sellers.

In said case the seller failed to disclose that her husband, Raymond Huang was the victim of a targeted murder likely by a criminal organization just outside the gates of the property.

Although the judge found that this did NOT in itself constitute a legal reason for the buyers to renege on the purchase, he ruled that the vendor’s partial answer as to why she was selling (her daughter was being transferred to another school where she could improve her English skills) amounted to a fraudulent misrepresentation.

At paragraph 217 the judge stated:

[217] As Ms. Shao acknowledged, the inquiry about why the owner was selling is a general question, rather than a specific inquiry about deaths at or near the property, or latent defects. However, having put the question to the plaintiff through her agent, Ms. Shao was entitled to an accurate answer, rather than one calculated to conceal Mr. Huang’s death as a reason for the plaintiff’s decision to sell the property. Ms. Shao did not ask if the daughter’s change of school was the only reason why the plaintiff was selling the property because she believed the representation made by the plaintiff through Mr. Yee. For Ms. Shao, the representation was material, and she relied upon it as an inducement for her purchase of the property.

In other words, an incomplete although technically or partially true representation can amount to a fraudulent misrepresentation in some circumstances –like these.

The vendor sought then to rely on the “entire agreement” clause in standard BC real estate contracts as stated below, but the judge gave short shrift to that argument:

[38] Clause 22 of the agreement of purchase and sale, which is Exhibit 3 in these proceedings, is the “entire agreement” clause. It provides, in part, that:

There is no representation, warranty, collateral agreement or condition, whether direct or collateral or expressed or implied, which induced any party hereto to enter into this Agreement or on which reliance is placed by any such party, or which affects this Agreement or the property or supported hereby, other than as expressed herein.

This clause is vitiated by fraud and it is not open to the defendant to rely upon it in the circumstances. See Ballard v. Gaskill (1955), 14 W.W.R. 519 (B.C.C.A.).

As this case was just reported a few days ago, it is not clear whether the vendor will appeal the decision, as there is about $600,000 on the line depending on the final outcome.

In my view the case could have gone either way, as the failure to disclose was not that blatant and the representation that was made was partially true.

The moral of this story is that it is much better to make NO REPRESENTATION than a half or incomplete representation which can be construed as fraudulent or misleading. Had the seller said nothing about her reasons for selling this would have been an open and shut case –the plaintiff would have lost.


First, advise your realtor that you don’t want to buy a stigmatized home and let him or her know what that subjectively means to you. Ask the realtor to make inquiries with the vendor’s realtor.

Second, do a GOOGLE search of the property to see if the subject property comes up with a story about an unsavory event or circumstance. I have never tried it, but there is a website called which purports to have over 25,000 listings of stigmatized properties across North America.

Third, write a representation into your offer to purchase which covers off any of the circumstances which are important to the purchaser (“the vendor warrants and represents that to the best of his knowledge, information and belief that the subject property was a) not the scene of a murder, b) not previously occupied by a sex offender, member of a gang or organized crime, serial killer or other criminal, c) not a former marijuana grow-op, drug lab or place for the manufacture, storage or distribution of illicit substances, guns or explosive devices or illegal products or services, d) not used for other criminal activities, e) not haunted or subject to other paranormal phenomena.”)

Even in these days of “no subject offers” vendors don’t seem to mind making warranties and representations about the property –but they often balk at any “subject conditions” which could allow the buyer the opportunity to lawfully walk away from the purchase.

Fourth, if time permits, which is usually not the case, talk to the neighbors who invariably know what is going on next door.

Given that any kind of purchase in BC involves a lot of money, the more due diligence you can do the less chance you have of being surprised.

And as I have said many times before, in real estate no surprise is ever a good surprise.

*With respect to a property that was formerly used for criminal activities such as a grow op or meth lab, if such activities rendered the home dangerous, unfit for habitation or otherwise defective, that could well be construed as creating a latent material defect in the home (as is often seen in former grow-ops which may have mold, mildew, unsafe electrical wiring etc. which may not always be discerned by a routine building inspection). For that reason the standard PDS used in the real estate industry does contain a question to be answered by the seller as to whether he was aware that the property was formerly used to grow marijuana or to manufacture illegal drugs.

Disclaimer: The foregoing is for information purposes only and not intended as legal advice to the reader. Always consult with an experienced real estate lawyer when modifying the standard real estate contract in use in BC. In addition statutory law as well as case law may change from time to time which could render this analysis inaccurate in the future. 

(C) 2018 Pazder Law Corporation


“What do you mean, the price went up?” Risks of buying a pre-sale strata

As I mentioned in previous blogs, there are at least 7 major risks associated with buying a pre-sale strata property in BC, summarized as follows:

1. Market Value (can go down by the time the project is completed)

2. Interest Rate (can go up by the time the project is completed)

3. Financing (rate holds can be lost by the time the project is completed, buyer may no longer qualify for any number of reasons)

4. Completion date (is a moving target. It can be moved up or backwards almost indefinitely by the developer –but not the buyer)

5. Size and layout (can be changed by the developer)

6. Finished product (may be substandard and there is little that can be done about it)

7. Legal consequences (if buyer doesn’t close he loses his deposit and possibly more. If the developer doesn’t close the buyer gets his deposit back –that’s it!)

The recent case of the Westbourne Residences project at 5th Avenue and 13th Street is a perfect example of risk number 7 above.

This developer alleges that it ran into unexpected costs and delays and it has now approached the buyers asking for an increase of 15% from the original price so it can complete the project later this year.

If that doesn’t work, the developer has offered to return the buyers’ deposits plus 50% or re-sell the unit when it’s ready and give the original buyer 40% of the net increase in the sale price (after various adjustments, incentives etc.)

The buyers have been given until February 28, 2018 to decide or have their purchase agreements terminated.

The subject strata development has likely appreciated about 25-30% since the pre-sale buyers signed the contracts, so essentially the developer is asking the buyers to split the price appreciation with it.

To my knowledge the developer has not provided any documentary evidence to the buyers to substantiate these cost overruns nor any explanation as to how the 15% price increase was arrived at.

The contract of purchase and sale in this case is pretty standard for developers and contains the usual clause which says that if the developer fails to complete the sale, the buyer’s sole remedy is to get his deposit back.

This clause has not yet been tested in the BC courts, so on its face, it permits the developer to simply change its mind and not complete the sales with virtually no liability to the buyers.

Simply getting one’s deposit back (even with a 50% increase) does not nearly compensate a buyer, who will have to attempt to buy another strata unit at a price 25-30% higher than the one he or she just lost.

Let’s imagine that the proverbial shoe was on the other foot.

If the buyer defaulted, the developer would be legally allowed to keep the deposit AND to sue the buyer for any further losses (regardless of the buyer’s reason for not completing).

We saw this situation several times in 2007-08 when the market corrected and developers were suing buyers for not closing (as the prices had declined). To my knowledge, none of the developers were willing to “split the difference.”

That hardly seems fair.

While this scenario does not happen often, in my view, it should not happen at all.

Pre-sales are governed by REDMA (the Real Estate Development and Marketing Act).

Thus far the government has given the developers a free hand to draft their own one-sided presale contracts, which essentially foist all of the risk onto the buyers.

It is long overdue that a prescribed contract should be mandated which fairly attributes risk between the developer and the buyers.

In this regard, I urge all readers of this article to email Selina Robinson, the BC Minister of Municipal Affairs and Housing ( and suggest that the NDP government adopt a fair presale purchase contract under REDMA. There is certainly precedent for this as the Residential Tenancy Act of BC requires the use of a prescribed form of rental agreement to prevent abuses by landlords.

A pre-sale purchase is a very big investment for most people and to have it blow up in their faces with virtually no remedy against the seller (other than perhaps a law suit which few individuals can afford) is in my view, unacceptable from a public policy perspective.

Disclaimer:  The foregoing is for information purposes only and not intended as legal advice to the reader.  Always consult with an experienced real estate lawyer when modifying the standard real estate contract in use in BC. In addition statutory law as well as case law may change from time to time which could render this analysis inaccurate in the future. 

(C) 2018 Pazder Law Corporation 

Real Estate Tip #1: Never Assume Anything

I often advise my clients and their agents to never assume that anything in an MLS Listing is accurate. There is a disclaimer on the bottom of every listing to the effect that the information contained therein is believed to be accurate but not guaranteed.

In many cases, the information is not accurate and as much of it (i.e. size, condition, age, views, GST status etc.) is NOT replicated in the Offer to Purchase, the buyer can seldom rely on it in a law suit when he finds out that the information was wrong after moving into the property (see para. 18 of the standard Contract of Purchase and Sale which purports to exclude all warranties, representations etc. not included in the contract).

The next step for the buyer is usually to sue his realtor for not pointing that out or writing an offer to incorporate the relevant information.

Can that be avoided? Yes. Don’t assume that the listing is accurate. Personally check out any information which is important to the buyer.

In the recent BC Supreme Court case of Laidar Holdings Ltd. v. Lindt & Sprungli (Canada) Inc., 2018 BCSC 66, assumptions were again at the crux of this fairly complicated law suit which resulted in a judgment of almost 500 paragraphs.

A commercial tenant leased some space in Vancouver without verifying that the zoning was appropriate for its particular intended usage.

Its real estate brokerage (in Toronto) wrote the offer up “assuming” that his Vancouver realtor had checked the zoning. The Vancouver realtor “assumed” that the Offer to Lease would contain a provision for the tenant to verify the zoning (it did not). The tenant’s lawyer “assumed” that realtors had already dealt with the zoning issue (there was no indication that the tenant’s lawyer had input into drafting the Offer to Lease).

The tenant signed the lease and later found out that the city of Vancouver would not permit its intended retail space usage.

The tenant then walked away from the lease and was sued by the landlord. The tenant counterclaimed that the lease was invalid and it also sued the realtors as well for not verifying the zoning in advance.

The tenant was held liable for breaching the lease and its Ontario real estate brokerage was held liable for 70% of the tenant’s claim against it (30% was held to be the tenant’s own responsibility).

Zoning is an important consideration in ANY purchase of real estate (particularly commercial) and it is fairly easy to ascertain in advance of making an offer OR it can be included in an offer as a “subject condition” to be removed by the buyer along with other items of due diligence.

The Moral of the Story: Don’t make assumptions regarding real estate matters. There is too much money on the line.

Disclaimer:  The foregoing is for information purposes only and not intended as legal advice to the reader.  Always consult with an experienced real estate lawyer when modifying the standard real estate contract in use in BC. In addition statutory law as well as case law may change from time to time which could render this analysis inaccurate in the future. 

(C) 2018 Pazder Law Corporation 

Writing an Offer to Purchase to comply with the Vancouver Empty Homes Tax

The Vancouver Empty Homes Tax was signed by Mayor Robertson on November 16, 2016 for Class 1 Residential properties* located within the city of Vancouver pursuant to the Vacancy Tax By-Law no. 11674.

Thus far no other municipality in BC has enacted similar legislation. Accordingly, by February 1, 2018 all owners of said residential properties must have submitted an Empty Homes Tax declaration (by phone or online), failing which they will face a $250 fine and a property tax assessment of 1% of the assessed value of the property.

How do you protect your purchaser who wants to buy a residential property in Vancouver now?

At the moment, the standard CBA/BCREA approved Contract of Purchase and Sale does not make mention of said tax so the buyer has to include the following additional clauses in to the offer by way of an addendum:

1. The Seller shall provide a filed copy of the City of Vancouver Status Declaration to the Buyer prior to closing as an exhibit to a Statutory Declaration confirming that said declaration is true and accurate;

2. Depending on the status declaration, a warranty by the Seller that the subject property is NOT subject to payment of vacancy tax pursuant to Vacancy Tax By-Law no. 11674.

3. If the declaration confirms that the subject property is subject to the Empty Homes Tax, confirmation that payment will be made by the seller’s lawyer upon the completion date or adjusted on the Vendors Statement of Adjustments;

4. If the declaration indicates that the city has not made a determination regarding the applicability of the tax a holdback of 1% of the assessed value of the property should be required to be held in trust by the seller’s lawyer pending the final determination (and paid if the tax is applicable);

In addition, it is also advisable to order an owner’s policy of residential title insurance to protect your owner from the consequences of a false declaration having been made by a previous owner.

The Empty Homes Tax provides that the city can audit a declaration for up to 2 years after it has been made so presumably, the new owner would not be aware that a previous owner had made a false declaration in the past (at present, the only tax period which of relevance is January 1 – December 31, 2017).

The city’s website states that a prior owner who made a false declaration would be liable to pay the fines (which can be up to $10,000/day), but that the vacancy tax itself is assessed on the property and hence the new owner could be stuck with it. In such case, the new owner would be put to the trouble and expense of locating and suing the previous owner to recoup the tax –which is not always feasible or possible.

To cover off this possibility we recommend that the new owner purchase a policy of residential title insurance from FCT or Stewart Title. Upon compliance with their underwriting requirements, which are not onerous, the new owner would be insured against the outstanding taxes for a relatively modest, one-time premium (which incidentally covers off survey/encroachment issues, title fraud, unpaid property taxes or strata fees, lack of permits and many other things) – see here for a summary of title insurance coverage.

Unfortunately for pre-sale buyers or other buyers who made contracts with long closing dates, the above noted suggestions are not particularly useful, as the seller is not under any legal obligation to commit to additional representations or warranties or execute statutory declarations which are not already contained in or required by the contract of purchase and sale.

In such cases, a policy of title insurance is a must (although you might have to talk to the title insurer’s underwriting department to explain why you cannot obtain the necessary representations and documents from the seller).


Always protect yourself with the best possible contract of purchase and sale. We recommend that you have your realtor insert a condition (where possible) that the contract of purchase be subject to satisfactory review by your legal counsel within the time frame set for other subject conditions, so that this kind of issue can be identified before you become liable to buy.

We recognize that in this frenzied market (for condos in particular) that this is not always possible, so hopefully this article will help you avoid at least one pitfall.

* Class 1, Residential — single-family residences, multi-family residences, duplexes, apartments, condominiums, nursing homes, seasonal dwellings, manufactured homes, some vacant land, farm buildings and daycare facilities.

Disclaimer: The foregoing is for information purposes only and does not constitute legal advice to the reader. Always consult a qualified legal professional when drafting or customizing a contract.

Disclaimer:  The foregoing is for information purposes only and not intended as legal advice to the reader.  Always consult with an experienced real estate lawyer when modifying the standard real estate contract in use in BC. In addition statutory law as well as case law may change from time to time which could render this analysis inaccurate in the future. 

(C) 2018 Pazder Law Corporation 

7 Migration Scams revealed in recent BC Supreme Court judgment (Fu v. Zhu BCSC 9)(2018)

I wanted to share a story with you from Vancouver Sun:

Douglas Todd: Explosive B.C. court case details seven migration scams

It took the court system to shed some light on the subterfuge which is routinely being practiced by foreign buyers in Vancouver.

For the past ten years the BC liberals denied that such shenanigans were being pulled and in fact lauded such purchases as “foreign investment” in this province.

The article outlines numerous transgressions including:

1) failure to declare world-wide income to CRA (no big surprise there, as most foreign buyers feel that CRA does not have the means to verify their income in other countries –which is largely true),

2) pretending to spend time in Canada to meet residency requirements (despite Canadians’ belief that our country is so wonderful, lots of wealthy people (including wealthy Canadians like Wayne Gretzky, Justin Bieber and Shania Twain) prefer to spend their time elsewhere),

3) hiding the true (beneficial) ownership of homes in Canada to avoid paying capital gains taxes (we have seen many “students” and “homemakers” with no visible means of support showing up as the registered owners of multimillion dollar properties in Vancouver),

4) illicitly moving money out of China to evade its currency controls (Canadian banks and governments have turned a blind eye to this process, notwithstanding that it is a criminal offense in China),

5) misusing provincial immigration programs by failing to reside in the province of origin (this happens a lot in the Quebec immigration program which is the worst joke played on Canada by Quebec since confederation) and

6) using the Canadian courts to sort out their disputes at the expense of Canadian tax payers (in fairness, this is probably the ONLY venue that they have, since a Chinese court would likely decline jurisdiction and if it came to light in the court proceedings in China that Chinese currency controls were being deliberately violated, doubtless the litigants would be arrested on the spot).

What the article (above) elucidates is that contrary to the myth propounded by politicians that wealthy foreigners are buying in Canada for the benefit of Canadians (“as investment”) or because they are so enamoured with the country (which many refer to as an “immigration jail”), the fact is that they are gaming the system much like any other business persons would do.

Unfortunately, this unregulated flow of wealth (legal and otherwise) into Canada has de-stabilized our real estate markets and put the dream of home ownership out of the reach of many Canadians.

Federal and provincial governments have shown an extreme level of either indifference or downright denial (for fear of being branded racist, xenophobic etc.) that this process has affected Canadian real estate markets, all the while raking in billions of dollars of GST on new home purchases and Property Transfer Tax on the provincial side.

Is it time for Canadian citizens and permanent residents OF ALL ETHNICITIES to say “enough is enough! Put the brakes on foreign money flowing into Canada!”

Unfortunately, that is easy to say, but practically difficult to do.

For the existing homeowners who have reaped unprecedented windfall profits on their homes (bought twenty five years ago for $200K and now worth $2.5M), cutting off the supply of foreign buyers willing to pony up such a large sum for a “tear down” on the west side of Vancouver, could well eliminate a sizable chunk of their equity.

Thus, by their inaction over the past 10-15 years, the governments have created two classes of Canadians –those who own property and those who don’t. As prices continue to rise, the gap between the two becomes a gulf and eventually will lead to social unrest.

To actually address the issue of affordability, it will probably be necessary to precipitate a “correction” in the real estate market and unfortunately, like purposely starting a forest fire to counter an existing blaze, sometime that gambit does more harm than good.

Suggestions from any readers to solve the problem are welcome!

Disclaimer:  The foregoing is for information purposes only and not intended as legal advice to the reader.  Always consult with an experienced real estate lawyer when modifying the standard real estate contract in use in BC. In addition statutory law as well as case law may change from time to time which could render this analysis inaccurate in the future. 

(C) 2018 Pazder Law Corporation 

Vancouver’s newest proposed Development Cost Charges; is there a democratic deficit in the city’s densification policies?

Yet another tax, in this instance called a “DCC” ( development cost charge ) is to be added to all new developments.

This has been approved by the Translink Mayors’ Council to pay for future transit expansion and road infrastructure.

It will vary from $2,100 for a house to $1,200 for a condo (but unlike the Foreign Buyers Tax it will also apply to retail ($1.00/sq.ft.), office ($0.50/sq.ft.) and industrial ($0.50/sq.ft.) developments.

The reason for this thinly disguised tax is that presumably more developments will put more pressure on transit and roads, so more money is needed to improve them. Needless to say that charge will be added directly to the cost of the project and passed along to the buyers, thus increasing the already sky high prices.

As cities are hamstrung in their ability to tax their residents (having no direct taxation power like the feds and the provinces), they are always on the lookout for more avenues to squeeze money out of the residents (like increased parking rates, DCC’s, property taxes, by-law fines and parking tickets, empty homes tax etc.)

One of the main ways municipalities raise money is to increase DENSITY in neighborhoods by rezoning areas to permit high rise towers where single family dwellings or low rise apartments once stood. Densification increases the property tax base exponentially.

However, it also increases the need for more transit and road infrastructure costs –thus requiring MORE inventive forms of taxation to pay for the higher number of residents –and on it endlessly goes.

The mayors’ view of increased density and migration into the metropolitan areas in BC is diametrically opposed to those of the residents, 90% of whom seem to think that we already have enough people here.

This is something that Noam Chomsky has referred to as “the democratic deficit”, a situation where the majority of people are in favor of a particular policy or state of affairs and it doesn’t happen. GMO labelling is a prime example of this. Studies have repeatedly shown that 80% or more of consumers want to know whether their food has been genetically modified. Despite this, in North America initiatives for mandatory labelling have been routinely defeated for the last 25 years by the bio-tech industry.

So if most British Columbians don’t want more people coming to the Lower Mainland, why is the population increasing by 30,000-40,000 per year?

Part of the reason is the dubious immigration policies of the federal government. Part of the reason is that land developers are making a lot of money building towers and they are able to sway the many leaf-in-the-wind politicians with campaign donations.

And lastly, part of the reason is that governments can ignore the will of the masses because they are not organized and do not “block vote” to further their own collective agenda.

Over the past ten years I have made it a point of asking my real estate clients who are buying or selling whether they would like to see more people move the Lower Mainland. To a man (or woman) they have told me that they are NOT in favor of more people moving here as there are already enough traffic jams, pollution and general congestion.

So what do you think – THE MORE THE MERRIER or ENOUGH IS ENOUGH?

Disclaimer:  The foregoing is for information purposes only and not intended as legal advice to the reader.  Always consult with an experienced real estate lawyer when modifying the standard real estate contract in use in BC. In addition statutory law as well as case law may change from time to time which could render this analysis inaccurate in the future. 

(C) 2018 Pazder Law Corporation