Tag: homeowners

Canada’s Ban on Foreign Homebuyers

As of January 1, 2023, Canada has restricted the purchase of residential property by non-Canadians. The Government of Canada has enacted the Prohibition on the Purchase of Residential Property by Non-Canadians Act in an effort to stabilize the Canadian housing market and help make homes more affordable for Canadian citizens and those living in Canada. Passed by the Canadian Parliament in June of 2022, this new legislation prevents non-Canadians and corporations controlled by non-Canadians from purchasing, directly or indirectly, any residential property in Canada for two years.

The Act defines residential property as any real property that is a detached home or similar building which contains no more than three dwelling units, as well as semi-detached homes, rowhouses, or condominiums, and vacant land zoned for residential and mixed-use. Thus, the legislation does not explicitly ban the purchase of larger buildings with multiple units.

A key parameter in the Act’s accompanying Regulations notes that this legislation will only apply to properties located in a “Census Metropolitan Area” or a “Census Agglomeration.” A census metropolitan area has a total population of at least 100,000, with at least 50,000 living in its core, while a census agglomeration has a core population of at least 10,000 people, based on data from the previous Census of Population Program. Thus, homes and recreational properties, such as cottages and lake houses, located outside of Census Metropolitan Areas or Census Agglomerations will not be considered residential property and not subject to the ban.

The Act further lays out exceptions to specific categories of individuals who will be allowed to purchase residential properties in the two-year period. There is no ban on the purchase of property by Canadian citizens, persons registered under the Indian Act, and permanent residents. Refugees, buyers with Canadian spouses or partners, and temporary residents studying or working in Canada, all meeting specific criteria, are not subject to the ban. Additionally, the new legislation will not affect individuals who acquire an interest or a real right resulting from death, divorce, separation, or a gift.

Banned individuals who violate the prohibition may be subject to a penalty of up to $10,000 CDN and may be forced to sell the property purchased, “receiving no more than the purchase price paid.” In addition, those who knowingly assist a non-Canadian in “contravening the prohibition” may also be subject to the fine.

The prohibition does not apply if a non-Canadian becomes liable or assumes liability under an agreement of purchase and sale of residential property prior to January 1, 2023.

To learn more about how this may affect your potential of purchasing of a home or vacation property in Canada, please contact us.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.

Attorney Laura M. DeMarcoFraser Trebilcock attorney Laura M. DeMarco concentrates her practice on insurance law and general business matters. Laura can be reached at ldemarco@fraserlawfirm.com or (517) 377-0834.

COVID-19 Mortgage Relief

Homeowners who have reduced income or lost their jobs because of the coronavirus pandemic are being offered some relief.

Federal regulators, through the mortgage giants Fannie Mae and Freddie Mac, are ordering lenders to offer homeowners flexibility. Fannie and Freddie guarantee about half of all home loans in the U.S.

Depending on their situation, homeowners who are current on their mortgage should be eligible to have their mortgage payments either reduced or suspended for up to 12 months.

This is not a forgiveness of debt or free money. Homeowners must be proactive and contact their mortgage servicer to work out a repayment plan or a forbearance (suspension) once they recover financially. This might entail just extending the term of the loan, but it will likely vary by lender and each homeowner’s situation.

Homeowners can find out if they have a Fannie Mae-owned mortgage and access to the Disaster Response Network™* by visiting www.KnowYourOptions.com/loanlookup.

Fannie and Freddie are also directing lenders to suspend foreclosures for the next 60-days, though this is more of a public health move because anyone facing foreclosure already would have run into serious financial trouble before the coronavirus started to spread in the United States.

We have created a response team to the rapidly changing COVID-19 situation, and will continue to post any new developments. You can view the page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

Now is the Time to Consider Appealing Your 2019 Property Taxes

Arriving in a mail box near you is your annual property tax Notice of Assessment. Property taxes are a significant business operating expense and they are typically the second highest expense of homeowners after their mortgage. We routinely assist industrial and commercial property tax appeals for our clients. Our experience practicing before the Michigan Tax Tribunal can help you achieve significant tax savings depending on the circumstances.

Deciding whether to challenge an assessment, business and property owners should consider a variety of factors including current market value of their property, valuation methods used, and practices used by local assessing authorities. Once the decision has been made to appeal, the procedures involved are often technical, complex, and time sensitive. The legal requirements for filing an appeal are usually strictly enforced against the property owner. Experienced legal counsel is invaluable in protecting the taxpayer’s rights.

If you disagree with the valuation on the Notice of Assessment, you can reach out to your local assessor to gain either a better understanding of the factors used. In some communities this process is required as an “assessor’s review.” If you can’t reach an understanding or an agreement with the assessor’s office, the next step is to protest to the Board of Review.

For most industrial and commercial property owners, a protest to the local Board of Review is not a requirement. There are, however, certain types of property tax claims that do require a Board of Review protest, even for industrial and commercial property owners. Although it does not happen often, there are instances where a taxpayer protests an assessment and the Board is made aware of something, typically a factual matter, that provides some relief. Other times, the assessor may notice a discrepancy on closer examination that may actually cause the assessment to increase.

If the Board of Review denies your protest, you can always proceed to the Michigan Tax Tribunal. The Michigan Tax Tribunal is an administrative tax court that has authority over assessment disputes relating to both property and non-property tax matters. While most property tax reductions are obtained through the process of negotiation, on occasion, however, formal hearings or court action are necessary to achieve the desired result.

Procedural matters in the Tax Tribunal is perhaps where many property owners go wrong. While the Tax Tribunal is not a court in the formal sense, many taxpayers fail to appreciate that the Tribunal nevertheless has its own procedures, formalities, and timelines. For a number of reasons, the Tax Tribunal is rather strict in the application of its rules and is rather unforgiving regarding its deadlines. Substantial compliance is an argument one never wants to have to make.

Another area where taxpayers tend to go astray is in appreciating how the Tax Tribunal approaches property tax claims and evaluating evidence. Property owners have a sense of what their property is worth, what features, in their subjective knowledge, add and/or detract from its value, and a feel for the local market. A valuation, for property tax purposes, must meet a certain evidentiary threshold, and involves an expert appraiser that comes in and gives an exact value on the property based on a greater number of factors that a property owner in a general sense may not be aware of or able to articulate. The Tax Tribunal looks and evaluates the valuation evidence much the same way.

All of this being said, it is important to consult with professionals, a tax attorney, qualified appraiser and other experts to evaluate if an appeal is in your best interest and to properly guide you through the process. And now is the time to consider this with your Notice of Assessment arriving in the mail soon.

Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.