Property Purchase Tax Act and Other Odds and Sods #104

Jun 01, 1987

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By Gerry Neely
B.A. LL.B.

The Property Purchase Tax Act, although it has only received first reading, is here to stay. The amendments to the Bill published in the Orders of the Day of May 19, 1987, primarily remove ambiguities from the Bill as originally drafted. They do remove the original perceived inequities that would have required an owner of property who sold under an agreement for sale or took back a mortgage where title was transferred to the purchaser, to pay tax when the owner regained title and possession because of the purchaser's default. In addition, one of the amendments exempts a transfer to a veteran from the Director, The Veterans Land Act (Canada).

Although these amendments fall far short of meeting the request from BCREA and a number of other organizations, for amendments dealing with matters such as a form of exemption for the first home buyer, the Minister does have the power to make regulations to provide additional exemptions. Representations will continue to be made to the Minister for additional exemptions.

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The Home Owner Grant Act is being amended to provide that the minimum tax payable by those persons entitled because of age, a handicap, or need, as defined under the Act, is now $100.00. For the remainder of those owners entitled to the Home Owner's Grant, the minimum tax has been increased from $200.00 to $350.00.

The Assessment Act is being amended to provide for the taxation of water lots regardless of actual possession.

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We occasionally receive letters from real estate firms where we know that the owners are limited companies who are carrying on business under another name, which may be, for example, a franchise name. The name of the company does not appear on the letter. One of the requirements of the Company Act in respect to a company's name is that the name should appear on all "contracts, business letters, and orders for goods and on all itsinvoices, statements of account, receipts and letters of credit; all notices and other official publications; all bills of exchange, promissory notes, endorsements, cheques and orders for money signed by it or on its behalf". If a company fails to do this, an officer or director of the company who knowingly permits it not to display its name as required is personally liable to indemnify "a purchaser or supplier of goods or services or a holder of any security of the company who suffers loss or damage as a result of being misled thereby".

The standard form offer to purchase used by most if not all boards makes the offer to purchase subject to existing tenancies. We have assumed that meant a tenancy in place at the time the purchaser's offer was accepted. It has, however, been argued that the tenancy referred to was the tenancy in place at the date of completion. A recent decision has confirmed that at least with respect to a residential property, the time referred to is the date when the contract was entered into. A vendor who agreed to sell his property in November and to give possession the end of December put a tenant in possession on the 1st of December. The tenant refused to move, the purchaser refused to complete, and the vendor refused to return the purchaser's deposit. The decision was that the purchaser was entitled to the return of his deposit, notwithstanding the condition in the offer to purchase that it was subject to existing tenancies. By creating the tenancy, the vendor was unable to deliver up vacant possession and this prevented performance of the sale.

  1. Bhayana v. Lam, Vancouver Registry, No. C820893.

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