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Harvey Spector
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When the median price of a home on the Westside hits $3.5 million and the masses start screaming for changes, Christy decides to implement a foreign buyers tax over a long weekend in the summer when nobody is watching. When Kenney Gu is ratted out as a property flipper and making millions of dollars and paying zero taxes and the CRA and the police do nothing for 3 years, Christy decides to call the CRA to "crack" down on tax cheats. 

 

Christy's new moniker and slogan for the 2017 election campaign will be "a day late and a dollar short"...

Edited by Harvey Spector
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Court rules on “discount” mortgage provision

Those of you who have mortgages may know that the federal Interest Act contains a section that expressly governs post-default mortgage interest rates. Specifically, Section 8 of that act prohibits a lender from imposing a “fine, a penalty or a rate of interest” that has the effect of creating a higher charge on unpaid arrears than would be imposed on principal money not in arrears.

 

In plain language, this means that a lender cannot demand that the borrower pay a higher post-default rate of interest as a penalty or fine for going into default.

 

A recent Supreme Court of Canada decision, Krayzel Corp. v. Equitable Trust Co. tackled an interesting related issue: Does this prohibition also cover those scenarios where the borrower gets a lower-interest rate “discount” while he or she is not in default, as compared to the higher rate payable if the loan goes into default?


The issue arose in relation to a mortgage that prescribed a defined “interest rate” of 25 per cent that took effect only if the borrower went into default. That threshold was triggered by (among other things) a failure to make set payments at a stipulated lower-interest “pay rate”, which was likely to be around 7.5 per cent. Essentially, the lower “pay rate” was to serve as an incentive to the borrower for paying promptly.

 

The borrower made some payments but went into default. The lender claimed that this triggered the provision allowing for 25 per cent interest to be charged for arrears during the post-default period.

 

The Supreme Court was asked to rule on the validity of these mortgage provisions. It had to consider the proper interpretation of the mortgage, assessing the intention of the parties and reviewing the meaning and purpose of the legislation itself.

 

The court ultimately held that the “discount” provision was void under Section 8 of the act. As far as that prohibition was concerned, there was effectively no distinction between a higher-interest “penalty” for default and a lower-interest “discount” for punctual payment – they both made it more costly and difficult for borrowers who were in default. There was no justification for differentiating between the two, in light of the overall intent of the Interest Act, which was to protect landowners from charges that would make it impossible for them to redeem or protect their equity.

 

The court also noted that the lender’s use of (possibly) misleading terms like “bonus”, “discount” or “benefit” do not change the legal outcome. The validity of the mortgage provision is determined by its substance, not its form.

 

Returning to the mortgage at hand, when it was boiled down to its essence, the arrangement offered by the lender in this imposed a 25 per cent interest rate on arrears, as compared to 7.5 per cent interest on principal money not in arrears. This put it squarely within the wording of the Section 8 prohibition in the act. The court accordingly voided the 25 per cent interest provision and set it at 7.5 per cent or prime plus 5.25, whichever was higher.

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So...this doesn't look good for real estate in Canada.  It also makes FINTRAC and the watchdog group look completely useless and toothless.  Much like every other regulatory agency in Canada

 

Canada's anti-money laundering agency conducted on-site examinations of more than 800 real estate companies over four-and-a-half years and found "significant" or "very significant" deficiencies during 60 per cent of those visits, new data shows.

A document obtained by The Canadian Press through an Access to Information request shows that Fintrac conducted 823 examinations of companies in the real estate sector between 2012 and mid June of this year.

The federal anti-money laundering watchdog found "significant" deficiencies with the anti-money laundering and anti-terrorist financing controls at 468 of those companies, while 28 companies had "very significant" deficiencies.

Meanwhile, 324 companies had only "limited" deficiencies. None of the companies were named in the document.

When asked what constitutes a "limited deficiency," the agency said it includes instances where the deficiencies are minor or the regulations are only partially being followed.

According to the watchdog, an example of a significant deficiency is when there is a "excessive number" of minor deficiencies found, or a number of more severe issues.

Very significant deficiencies include instances where there is an "unacceptable" number of minor and serious issues, or infractions that are "very serious" in nature.

Paper trail incomplete

Federal anti-money laundering and anti-terrorist financing laws require companies in certain sectors — including banks, casinos and real estate firms — to identify their clients, keep records and report large cash deals and other suspicious transactions to Fintrac.

There are roughly 20,000 companies in the real estate sector that fall under the regulations.

If violations are found during an on-site examination, that could lead to fines of up to $100,000 per violation for individuals and up to $500,000 per violation for companies, depending on severity.

However, the federal watchdog issued monetary penalties only nine times during the almost five-year time span, the document shows.

When asked why more penalties weren't issued, Fintrac said it considers several factors when deciding whether or not to fine a company. Those factors include the business's compliance history, the seriousness of the violation and the extent to which the company has taken steps to correct the problem.

There are a number of avenues the watchdog can pursue besides a fine, the agency said, such as establishing an action plan or conduction a follow-up exam.

"In the nine cases identified, it was determined that the most appropriate course of action was to issue an administrative monetary penalty," Fintrac spokeswoman Renee Bercier said in an email.

"For the remainder, other enforcement actions were undertaken."

According to the federal agency's website, Pickering, Ont.-based Countrywide Generations Realty was fined $11,440 in July 2015 for six violations including incomplete record keeping and failing to identify clients in some instances.

In another case, Mississauga, Ont.-based ReMax Active Realty was fined $6,770 back in 2013 for four violations, including failing to develop and apply policies and procedures to detect money laundering.

In total, Fintrac has issued 12 monetary penalties in the real estate sector since Dec. 30, 2008, though in the vast majority of instances the companies were not publicly identified.

Jack Bensimon, the anti-money laundering adviser at Toronto-based Securefact, said he wasn't surprised to hear about the results of the examinations, given the lack of knowledge about best practices amongst real estate professionals.

"There are very, very few real estate brokerage firms that I've come across that actually have dedicated compliance staff," Bensimon said.

The low levels of compliance in the sector are problematic because real estate is highly vulnerable to money laundering, according to Bensimon.

"Canada is known to be a safe haven for parking investment capital," he said, adding that it's fairly easy for criminals to disguise the initial source of the cash by transferring several times, a process referred to as the "layering approach."

The Canadian Real Estate Association said it has provided training for its members with regard to preventing money laundering.

Pierre Leduc, a spokesman for CREA, said the organization has asked Fintrac for information about the results of examinations but the federal watchdog has not provided it.

"Since we aren't getting audit information from Fintrac we don't know specifics of compliance challenges, which makes it incredibly difficult for us help our members address any shortcomings," Leduc said in an email.

 

 

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Looks like the tax is doing it's job.  Toronto and Seattle are booming as Asian buyers shift their interest from Vancouver.  

http://www.bnn.ca/toronto-luxury-home-sales-heating-up-as-b-c-tax-diverts-foreign-buyers-sotheby-s-1.566555

 

Searches in China for Vancouver homes are down 81%...Seattle up 143%.

 

 

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30 minutes ago, clam linguine said:

Looks like the tax is doing it's job.  Toronto and Seattle are booming as Asian buyers shift their interest from Vancouver.  

http://www.bnn.ca/toronto-luxury-home-sales-heating-up-as-b-c-tax-diverts-foreign-buyers-sotheby-s-1.566555

 

Searches in China for Vancouver homes are down 81%...Seattle up 143%.

 

 

While Victoria and the southern Island are booming like never before.

 

We all knew this tax would just push investors outside of vancouver.  Calgary, Montreal, Toronto and the rest of BC including the Island and Victoria.

 

Cold beds, cold beds and empty homes for everyone!

 

From the ideology that brought you unpaid internships and the end of full time employment with benefits and pension plans.  Look for our exciting new product coming soon.

 

Feudalism for the 21st century!

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48 minutes ago, clam linguine said:

Looks like the tax is doing it's job.  Toronto and Seattle are booming as Asian buyers shift their interest from Vancouver.  

http://www.bnn.ca/toronto-luxury-home-sales-heating-up-as-b-c-tax-diverts-foreign-buyers-sotheby-s-1.566555

 

Searches in China for Vancouver homes are down 81%...Seattle up 143%.

 

 

The high end market in Vancouver for detached single family homes is getting hit hard right now. 

 

In West Vancouver there were 23 sales last year between Sept. 1-13. This year there are only 5 in the same time period.  So sales in West Vancouver are down 79% so far this month compared to September last year. 

 

The trend is similar on the Westside and in Richmond. There has only been ONE sale so far this month in the Steveston area of Richmond, which was booming earlier this year.  That is where my Chinese partner lives (and Deb) and she told me it is dead around her area for activity. 

 

It will be interesting to see the final numbers on detached single family homes for September in the "tax" zone. 

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54 minutes ago, Warhippy said:

While Victoria and the southern Island are booming like never before.

 

We all knew this tax would just push investors outside of vancouver.  Calgary, Montreal, Toronto and the rest of BC including the Island and Victoria.

 

Cold beds, cold beds and empty homes for everyone!

 

From the ideology that brought you unpaid internships and the end of full time employment with benefits and pension plans.  Look for our exciting new product coming soon.

 

Feudalism for the 21st century!

if Christy had a brain she would have just implemented the tax BC wide, or stopped foreign investment completely years ago. Instead, she is pushing foreign investment to the Island as well as remote places in Northern BC.  She has also pushed it to other parts of the country as well. 

 

Also, we still don't even know if this tax will hold up in court.  I am certain the lawsuits are coming, it is only a matter of time before the courts get involved.  It will be an interesting next 6 months that's for sure.  

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Thanks to Harvey and Rod for providing honest information regarding the situation in this province and region.

 

While I do understand Deb's frustration with the changing face of Steveston, where I've lived for the last six years and am moving away from, I also understand that Rod isn't doing anything more than stating what is happening.

 

I too have seen the altering of neighborhoods in the region, and not for the better. My old neighborhood in South Hill is almost unrecognizable.

 

Ugly cookie cutter houses with little to no usable land have replaced the sturdy 70-80 year old homes with big yards and gardens that once stood proudly. I can't say that it's progress though, as I highly doubt these new puke coloured houses will stand as long and as well as their predecessors did.

 

The real problem is the government of BC, hands down. Not the average real estate agent. I have been working with a wonderful agent on the Island lately, as I have been looking to move to an acreage. She has gone out of her way to drive us to various properties, relentlessly in pursuit of helping us find our ideal home and land.

 

Real estate agents didn't enact the Immigration Investment program that targeted wealthy foreigners rather than willing future Canadians. That was the Conservatives.

 

Real estate agents haven't allowed individuals siphoning millions of dollars from China, and paying for their homes in cash, to declare themselves "homemakers" and "students", enabling them to leech off social programs, the government did.

 

Rather than being divisive and going after each other, people in this province need to join together and deal with the real issue, by whatever means necessary.

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1 minute ago, PhillipBlunt said:

The Liberals for sure. The NDP now is a bit of a different animal than they were under Glen Clark. Any political party would be a step up from the Liberals.

What about under James and Dix? Different than that party too? 

 

Seems they're the same dysfunctional, disorganized and misguided morons whose only move is to oppose ANYTHING the party in power does, good or bad.

 

But yeah, I'm sure they'll be a beacon of light because they're so 'different' now...:rolleyes: 

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1 minute ago, J.R. said:

What about under James and Dix? Different than that party too? 

 

Seems they're the same dysfunctional, disorganized and misguided morons whose only move is to oppose ANYTHING the party in power does, good or bad.

 

But yeah, I'm sure they'll be a beacon of light because they're so 'different' now...:rolleyes: 

Hit a nerve, eh?

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Just now, PhillipBlunt said:

Hit a nerve, eh?

The two main political parties in BC are a complete joke. They're like caricatures of bad politicians. 

 

The biggest problem being that the people seem to be completely complacent in this. Until people demand better, we'll continue to get shafted by those two parties.

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53 minutes ago, PhillipBlunt said:

Thanks to Harvey and Rod for providing honest information regarding the situation in this province and region.

 

While I do understand Deb's frustration with the changing face of Steveston, where I've lived for the last six years and am moving away from, I also understand that Rod isn't doing anything more than stating what is happening.

 

I too have seen the altering of neighborhoods in the region, and not for the better. My old neighborhood in South Hill is almost unrecognizable.

 

Ugly cookie cutter houses with little to no usable land have replaced the sturdy 70-80 year old homes with big yards and gardens that once stood proudly. I can't say that it's progress though, as I highly doubt these new puke coloured houses will stand as long and as well as their predecessors did.

 

The real problem is the government of BC, hands down. Not the average real estate agent. I have been working with a wonderful agent on the Island lately, as I have been looking to move to an acreage. She has gone out of her way to drive us to various properties, relentlessly in pursuit of helping us find our ideal home and land.

 

Real estate agents didn't enact the Immigration Investment program that targeted wealthy foreigners rather than willing future Canadians. That was the Conservatives.

 

Real estate agents haven't allowed individuals siphoning millions of dollars from China, and paying for their homes in cash, to declare themselves "homemakers" and "students", enabling them to leech off social programs, the government did.

 

Rather than being divisive and going after each other, people in this province need to join together and deal with the real issue, by whatever means necessary.

Great post and I agree 100%.  The government is responsible for the law and order when it comes to real estate legislation in BC and Canada overall.  Realtors, Lawyers, Mortgage Brokers, Notaries, Appraisers, etc. are simply working within the rules to make a living.  It's kinda like professional athletes.  They make millions from how TV contracts and the leagues are set up so they take advantage of the opportunities given to them.  I don't begrudge Loui Eriksson making $6M per year if that is the market and what the Canucks want to pay him. Same with a Realtor.  The high cost of real estate in this province is not a result of greedy Realtors who are simply working within a corrupt system.  It is the lawmakers, the government, the CRA etc. who are responsible to enact legislation to stop foreigners from driving up prices, from using Vancouver real estate to launder their money from China, from avoiding paying their taxes, etc.  

 

The fact of the matter is, and Rod has brought this up many times, is that the BC government is bringing in BILLIONS of dollars in revenue from this crazy real estate market.  That gravy train is what is keeping this province afloat and allowing the government to get re-elected time and again.  The politicians are making a killing off this market and only now, when people have started to complain and there has been bad PR coming out in the papers and local media, have the government started to do something about it.

 

It's a little too late now and this City unfortunately has changed big time from 15 years ago and has become unaffordable for the average local Vancouverite.  I am not sure if it will ever become affordable again and most likely locals will be stuck moving out to the suburbs if they want single detached housing.  It is the price we have to pay for living in such a beautiful City, but also the price we have to pay because our leaders and government have failed us over and over again.

Edited by Harvey Spector
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2 minutes ago, Harvey Spector said:

but also the price we have to pay because our leaders and government have failed us over and over again.

We have also failed to hold them accountable over and over again. The people are just as complicit in this problem as the 'government'.

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"Seems they're the same dysfunctional, disorganized and misguided morons whose only move is to oppose ANYTHING the party in power does, good or bad. "

 

That is why they are called the opposition. Can you recall a time, way back when the NDP was in power and the Liberals agreed with an NDP policy?

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7 minutes ago, gurn said:

 

"Seems they're the same dysfunctional, disorganized and misguided morons whose only move is to oppose ANYTHING the party in power does, good or bad. "

 

That is why they are called the opposition. Can you recall a time, way back when the NDP was in power and the Liberals agreed with an NDP policy?

Did I say they did Mr. Strawman? And no, that's not why they're called the opposition.

 

How about instead of two parties whose entire MO is to simply disagree with each other and bicker at each other like children, we actually have parties/leaders who do things in the best interest of the people they're supposed to be representing/governing?

 

This is exactly what I'm talking about. People seem to think this sort of behaviour is not only acceptable but them actually governing 'properly' :picard:

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41 minutes ago, J.R. said:

The two main political parties in BC are a complete joke. They're like caricatures of bad politicians. 

 

The biggest problem being that the people seem to be completely complacent in this. Until people demand better, we'll continue to get shafted by those two parties.

In my whole life of paying attention to politics this is the standard for BC

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6 minutes ago, Shift-4 said:

In my whole life of paying attention to politics this is the standard for BC

It's the standard in North America.  Look at the gong show happening in the US right now.  We have a racist TV celebrity going up against someone who looks to be terminally ill with a doctor and an ambulance at her side 24/7.  Compare that to BC politicians and we look quite tame comparatively speaking.

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1 minute ago, Harvey Spector said:

It's the standard in North America.  Look at the gong show happening in the US right now.  We have a racist TV celebrity going up against someone who looks to be terminally ill with a doctor and an ambulance at her side 24/7.  Compare that to BC politicians and we look quite tame comparatively speaking.

Anybody looks good in comparison to that gong show! :lol:

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