Three common claims to watch for

Three common claims to watch for There are many types of claims against licensees. Here are three common – and preventable – ones you should watch for. There’s almost no limit to the different types of claims E&O gets, or the complaints people file with the Real Estate Council, but we’re going to talk about three common ones, and how you can prevent them from happening to you.

Three common claims to watch for Is this suite legal? Suites are becoming more and more common in single-family homes in many parts of B.C. as homeowners look for extra income to help pay their mortgages. Buyers may be counting on income from a suite in their financial plans and representations about a secondary suite are important to them. Before you represent a suite as legal or authorized, it’s your job to ensure that you are making an accurate representation.

Three common claims to watch for Protect yourself: Verify the legality of the suite with the municipality Include accurate information in listing. There are ways to protect yourself against claims related to suites. Verify with the local municipality if the suite is legal and keep notes of information you obtain, including the date of your inquiry, name of person who provided the information and details. Ideally, get confirmation directly in writing from the municipality. Describing an illegal/unauthorized suite as a potential source of revenue is a breach of Rule 4-7 that prohibits false or misleading advertising. Discuss – does Rule 5-13 require a seller’s agent to disclose a known illegal suite? Answer – Any illegal suite will likely trigger this disclosure requirement as material latent defects in Rule 5-13 includes “a lack of appropriate municipal building and other permits respecting the real estate”.

Three common claims to watch for Can I – and should I – use a lockbox here? Lockboxes can be handy, but they also expose you to more liability. In some circumstances, licensees who use lockboxes incorrectly could be held responsible for damages such as the cost of rekeying a strata building or the value of stolen property.

Three common claims to watch for Protect yourself: Check and obey strata bylaws. Get permission. Show the property yourself. Check the strata rules or bylaws for any strata property listing: Are lockboxes allowed? If they are, what are the restrictions? Ask your seller to provide written authorization for you to use a lockbox. If there’s a tenant in the property, you need their permission, too. Get that permission in writing. Consider avoiding lockboxes and showing the property yourself.

Three common claims to watch for GST is complicated! Misunderstandings about whether GST is payable on a property, and who pays it, are common. Here’s how to avoid them.

Three common claims to watch for Protect yourself: Have a general understanding of GST. Buyers pay the tax; sellers collect it and remit to Canada Revenue Agency Licensees are not expected to be tax experts, but you should have a general understanding of when GST may be payable on the purchase of property. If GST is due on a transaction, it is the buyer’s obligation to pay the tax and the seller’s obligation to collect the tax and remit it to the federal government.

Three common claims to watch for Protect yourself: GST applies to all real estate transactions unless there is a specific exemption. Advise clients to seek professional tax advice before committing to the deal. GST applies to all real estate transactions unless there is a specific exemption. A common exemption is used residential housing, but its not always this simple. Factors that may attract payment of GST include: Property that’s been substantially renovated Resale of an unoccupied unit Seller’s status and use of property (ex. if property was used for commercial purposes, or if the seller has claimed GST input tax credits) Discuss – what red flags do you look for that might be an indication that GST is applicable? If you have any doubt about the applicability of GST to a transaction, advise your clients to seek advice from a tax professional before they commit to a purchase. Keep a record of your advice to them. Surprises can be avoided when the parties to a contract have received expert advice as to whether GST is applicable and they are then able to negotiate with full knowledge.

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