If you are the only owner of your property, you will have to comply with the Dower Act when you sell your property. You must do one of the following:
- Swear an Affidavit to say you are not married.
- Swear an Affidavit that you or your spouse (if you are married) have never lived on the property at any time since your marriage.
- If you cannot swear an Affidavit attesting to one of the above, that means you are married and you or your spouse have lived on the property either alone or together since the date of your marriage. You must obtain your spouse’s consent as part of the sale documents.
The Dower Act provides the spouse of a married person with a life estate in the homestead. Effectively, this means that a married person cannot sell their homestead unless their spouse consents to the sale of the property.
If either you or your spouse, or you and your spouse have lived on the property at anytime during the course of your marriage, the Land Titles Office will require your spouse’s consent before the property can be sold. It is important to remember these dower rights when attempting to sell your property, particularly in circumstances in which you may still be legally married to your spouse but have separated.
Bridge Financing or Interim Financing
Bridge/interim financing is a short term loan granted by your lender which uses your net sale proceeds from the sale of your home as security for the loan. It bridges the gap between the sale of your existing property and the purchase of your new property to ensure that you are not handcuffed by a buyer’s delay in closing the sale of your existing property. Bridge/interim financing also allows you to get an advance on your net sale proceeds if you are selling your property after you have purchased the new property. Essentially, it provides you with certainty that you will have sufficient funds to apply towards the down payment on your purchase, notwithstanding the date your sale is actually completed.
We suggest you make arrangements for bridge or interim financing in the following situations:
- If you are applying the net sale proceeds towards the down payment on another property you are purchasing;
- If you are purchasing the property before the sale is completed;
- If you are purchasing the property on the same day or shortly after the sale of your property
Set up bridge/interim financing even if you do not anticipate using it. Sometimes there are unexpected delays in the completion of the sale of your property. For example, if the buyer of your property does not obtain their financing in time to complete the sale on the completion date, you will not have funds available to apply to the purchase of your property. Despite the best efforts of all involved, there are a multitude of circumstances leading to a delay in the buyer of your property funding their mortgage. If you need the funds in short order, you may be left in a situation in which you are not able to complete the purchase of your property. Or, at the very least, you will be delayed in doing so.
Realtors perform a valuable role in the purchase and sale of real estate. Realtors have expertise in marketing properties. They also perform many other valuable functions. Their primary functions can be divided into three categories.
- Realtors provide expertise, feedback and information to both buyers and sellers regarding the property itself. The seller’s realtor will provide valuable advice on what can be done to enhance the property to make it attractive to buyers. The realtor for the buyer can either directly, or with the assistance of experts such as building inspectors, identify for potential buyers the strengths and potential weaknesses of a prospective property.
- Realtors have been trained in and have considerable experience in the process of negotiating an acceptable deal for both sides. Reaching a consensus regarding price is just one aspect of the negotiating process. Negotiating a number of other details such as completion dates or a process for any necessary repairs can ensure a smooth closing.
- Realtors provide valuable assistance in navigating the entire real estate transaction. For example, they will ensure the seller orders an RPR well in advance of closing and provide valuable advice on issues such as insurance and utilities.
As lawyers, we do not provide the services of realtors. For that reason, we strongly encourage the use of realtors and will refer potential clients to a realtor for their advice and assistance before agreeing to act on a real estate matter. In certain circumstances, such as a transfer between family members or business partners, we will act where no realtor is involved.
Non-Resident Withholding Tax and Clearance
Anyone selling real estate in Canada who is not a Canadian resident for income tax purposes, or does not file Canadian income tax returns is obligated to report and pay income tax on any required capital gains tax resulting from the sale of the property.
Since the person liable for the tax is non-resident, Canada Revenue Agency may not be able to collect the tax owing. Accordingly, the Income Tax Act states that the responsibility for the payment of tax lies with the purchaser. If a purchaser of real estate in Canada does not ensure that the seller is a Canadian resident for income tax purposes, that purchaser will be liable for payment of the tax that the non-resident seller should have paid.
The standard Alberta contract includes the necessary statements where the seller verifies they are Canadian residents. Your realtor and lawyer can also assist in making sure the seller is a Canadian resident for income tax purposes. This is just one more instance where the services of a professional realtor can be of tremendous assistance.
As a purchaser, you must either obtain from the seller the Certificate issued by Canada Revenue Agency showing that all required taxes are paid or you must send 25% of the entire purchase price to Canada Revenue Agency. CRA will hold those funds until the non-resident seller has filed their tax return. CRA will then release any excess funds to the seller.
If you are a non-resident seller and would like to receive all your sale proceeds on the day of closing, you must file a tax return showing the purchase price, the sale price and any related expenses and then pay any required taxes. All this can be done before the closing date with a Certificate issued in advance of the closing date. Presenting this Certificate to the buyer’s lawyer will allow you to receive all the sale proceeds on the closing date.
Special considerations apply when selling a property owned by an estate. Of primary importance is when the sale can take place. The answer to this question has several layers. Legally, a final sale and transfer of the property can only happen once a Grant (often referred to as a Grant of Probate or Grant of Administration) has been issued by the Courts. Depending on the other assets in the estate, the number of beneficiaries and the complexities of the Will, it can take several months before a Grant is issued. Please review our extensive coverage of Estates for more details by clicking here to visit the Estates section of our website.
In the meantime, someone must take control of the property and ensure bills are paid, common utilities are maintained, and the property is secured. This is typically done by the Personal Representative (previously known as the Executor or Executrix) of the estate. Where there is no Will, there may be uncertainty as to the Personal Representative and you should contact our office. Also, where there is a potential dispute amongst family members or beneficiaries, an emergency application can be done to ensure someone is appointed to look after the property. However, this is an expensive process and all efforts to reach a consensus must be exhausted.
It is not necessary for the Grant to have actually been issued by the Court before taking possession of the property and getting it ready for sale. Cleaning, maintaining and repairing the property to get it ready for sale are acceptable and sometimes necessary.
Where everyone is in agreement, the property can be listed for sale before a Grant is issued by the Courts. Consent from all affected parties including all beneficiaries can allow the listing of the property before the Grant is issued. We have dealt with estates where a property is listed and an offer is accepted before the Grant is obtained. In those cases, special wording is used in the Real Estate Purchase Contract so the buyer recognizes the fact that a Grant has not been issued.
Obviously, title to the property cannot be transferred until a Grant is obtained.
For any other questions regarding the sale of an estate property, please contact our office.