SPIS

I thought these were dead, but then I saw one on a deal the other day.

A Seller Property Information Sheet is a form designed to give buyers additional information about the house. It asks sellers to list any known defects, pending work orders or tax increases, oversight by any regulatory body such as conservation authorities, etc. The idea is that, if you disclose everything up front, you reduce your liability. Here’s the problem: it doesn’t reduce liability, primarily because they are often filled out wrong.

If you don’t say anything about the sprinkler system, believing it to be fine, the buyers have the responsibility of making sure that they do an inspection before closing. If it fails after closing, you are better protected as long as you didn’t hide any defects.

If, however, you say on the SPIS that there are no issues with the sprinkler system, and it turns out that there are, you have now been untruthful. This will cause a much bigger problem down the line, even if you honestly believed that there were no problems.

If you are selling and are asked to sign a SPIS, be very careful.

Are you an artist? Then you definitely need a will.

When Sylvia Plath died, her executor was her ex-husband’s sister. This sister was, effectively, given full authority to determine Ms. Plath’s writing legacy. Ms. Plath likely listed her as her executor at a time when she was still married; we may never know if she wanted her to remain as her executor, or if she simply forgot that it was set up this way, and we will never know if her literary estate was managed in the way that Ms. Plath wanted.

Artists have unique considerations when it comes to estate planning. There is not simply money; there are also copyright and trademarks, and the ability to licence or sell artworks for years or decades to come. It is particularly important to choose not only the executor of your financial estate, but who will manage your artistic legacy.

Should you rent or buy?

A lawyer’s favourite answer: it depends.

Because it really does. It depends on how frequently you move; any less than a few years in a house and you will likely lose money on closing costs alone. It depends on how stable your income is; if you frequently would have to borrow from a credit line to make ends meet just to own a house, you’ll be paying far more for that house than you should be. It depends on where you live; in very hot housing markets like Toronto, it can make more sense to find an affordable rental than stretch beyond your means just to say that you own a home.

There are a lot of considerations that go into whether you should buy or rent. Don’t jump into a decision – always get as much professional advice as you can. And don’t be afraid to go with a choice that makes sense for you, even if it’s not what you’re “supposed” to do.

What happens if there is an error on the will?

I recently helped a client get probate for her mother’s estate. The will had been done years earlier, and unknown to everyone involved, the pages were accidentally misnumbered to be missing one number – so while there were no pages missing, it appeared that page 5 was not there. Thankfully, we were able to get the lawyer who drafted it to sign an affidavit that there was no page 5 and it was simply a typo, and were able to get probate for the estate.

We all make mistakes; none of us is immune. For minor errors like this, it is often possible to explain the situation to the court and have probate approved. If there are more serious errors, it may require a formal hearing to address the issue. Either way, just because there is an error is not fatal to a will.

Can you break your mortgage?

Short and sweet this week. The answer: usually. Before you sign to refinance, check your existing mortgage – some banks only allow you to pay out your current mortgage if you are selling. It’s in the fine print, and they’ll hold you to it.

The better question is, should you break your mortgage.

Do you have a right to see the will?

Only if you’re named in it. If you think you might be a beneficiary, it can be helpful to have your own lawyer contact the executor to see if they would be willing to share the will with you, but ultimately, if you are not named in it, you have no legal right to see it.

What should you have in writing when co-owing a house?

If you are buying a house with someone who does not share their financial life with you, you will need to consider several extra points in addition to where and how much. The first question is how to take title [reference last post]; the second is how you run the day-to-day and the big questions of when to sell or refinance.

Whenever I have clients going on title to a property with a sibling or parent, I recommend they get a trust agreement that details their obligations. It discusses who is responsible for which expenses (mortgage, taxes, insurance, maintenance, etc.), who can authorize a new mortgage, and when the property can be sold (and how much each party gets on a sale).

 

Having the rules set out clearly at the beginning makes for far less stress going forward.

Mirror, mirror?

I see a lot of couples who come in to do their estate planning together. Usually, it is a first marriage for both, and they want to leave their entire estate to each other. This is a situation where it often makes sense for them to see me as a couple. Sometimes, though, it doesn’t.

When you see the same lawyer as a couple, that lawyer has an obligation to disclose information shared with them to the other party. This includes years in the future, if you want to make any changes – you can’t do that with the same lawyer without your spouse’s consent. As long as you are both married to each other and both alive, that lawyer is conflicted out of doing anything for only one of you on the same matter.

One solution is to do two separate retainers – you each do your wills with the same lawyer, but individually. This allows you to change your wills in the future. This would make more sense in the situation of a second or later marriage where you might want to leave assets to someone other than your spouse.

Ultimately, this is a question to discuss with your lawyer, before you go ahead with will instructions.

What is the best way to take title with a parent?

I see a lot of clients who are buying their first homes, and getting some assistance with either the down payment or the financing from a family member, usually a parent. Most of the time, because it’s not something they would have come across on their own, they have not considered how they should take title.

There are two ways of taking title to property in Ontario: joint tenants, and tenants in common. Joint tenants means that everyone owns the whole thing jointly with everyone else, and there are survivorship rights if one owner dies. Tenants in common means that you own shares, in whatever percentage you decide – the default is equal shares, but you can set it differently. For example, if you are going on title to your daughter’s house solely for financing, you can own 1% and she can own 99% to maximize her first-time buyer rights and minimize any chance you could be charged capital gains taxes.

If you are going on title with anyone – even with a spouse – you should be asked how you want to take title, and get more information if you’re not sure. It’s a big decision that can affect you financially down the road.

What happens if your inheritance is late?

With estates, and assets, becoming increasingly complicated, it is not uncommon for it to take some time to distribute assets out to beneficiaries. Sometimes, this can take several months; sometimes, several years. If your inheritance is sitting in a bank account for an extended amount of time, what are your rights?

In Ontario, we have what is informally known as the “executor’s year”: basically, the executor of an estate has one calendar year to start distributing assets, after which the beneficiary is entitled to interest on their inheritance back-dated to the date of death. While this timeline can be extended with justification, generally, as an executor, you should work to have the assets distributed as quickly as is practical.