Pre-construction real estate risk and rewards

Real Estate Law /

Recently, I sat down with Daniel Char, a mortgage broker who helps real estate buyers obtain mortgage financing. We talked about a lot of things affecting home buyers, including some risks and rewards of buying pre-construction homes.

The Reward: When buying a pre-construction home, you’re typically required to put down a deposit of around 20% of the purchase price, and the builder is contractually required to provide occupancy of the home within a few years. If the housing market keeps on rising, by the time the home is completed, the fair market value of the home may be worth more than the purchase price.

The Risk: The housing market does not always go up. There is a risk that the fair market value of the home falls below the purchase price when the builder finishes construction and requires you to complete the closing of the property. That’s when having a mortgage broker like Daniel can help you get the mortgage financing that you need to complete the purchase.

Check out our full conversation here:

Pre-construction real estate risk and rewards

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New first time home buyer incentive

Real Estate Law /

Earlier this year, Trudeau’s federal budget for 2019 outlined a new incentive to help first time homebuyers buy their first home that he called a “shared equity mortgage”. It’s effectively an interest free loan from the federal government for eligible homebuyers.

More details have since been released, and it’s looking like it’ll be an exciting end of the year for first time homebuyers.

The program will be ready to receive applications on September 2, 2019, with the first closing taking place on or after November 1, 2019.

The definition of “first time homebuyer” is quite broad, and in fact includes buyers who have actually owned a home before:

  • you have never purchased a home before;
  • you have gone through a breakdown of a marriage or common-law partnership; or
  • in the last 4 years, you did not occupy a home that you or your current spouse or common-law partner owned.

If you’re looking to buy a new home soon, remember to ask your mortgage lender or broker about this incentive!

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Tourists and US gun ranges

Criminal Law /

It can be tempting to go to a gun range in the US and shoot some guns, especially fully automatic weapons such as machine guns which are prohibited in Canada. Gun ranges near Las Vegas cater especially to the tourist crowd, and a simple Google search turns up at least half a dozen all promising a very exciting time.

Unless you’re a US resident or citizen, try to resist the temptation and stay away from firearms while in the US.

The highly promoted American 2nd amendment “right to bear arms” does not apply to non-residents or non-citizens of the United States. As a Canadian tourist, you were likely admitted into the US as an alien under a non-immigrant visa (aka a tourist visa).

It’s not prosecuted often, but 18 USC 922(g)(5)(B) makes it unlawful to possess or even receive a firearm or related ammunition by tourists:

TITLE 18 – CRIMES AND CRIMINAL PROCEDURE
PART I – CRIMES
CHAPTER 44 – FIREARMS
§ 922. Unlawful acts
(g) It shall be unlawful for any person—
(5) who, being an alien—
(B) except as provided in subsection (y)(2), has been admitted to the United States under a nonimmigrant visa (as that term is defined in section 101(a)(26) of the Immigration and Nationality Act (8 U.S.C. 1101 (a)(26)));
to ship or transport in interstate or foreign commerce, or possess in or affecting commerce, any firearm or ammunition; or to receive any firearm or ammunition which has been shipped or transported in interstate or foreign commerce.

“receive” seems like the broadest term, and would likely cover a tourist borrowing or renting a firearm at a US gun range.

There is an exception, but only for hunting or for shooting competitions and only if this was done at the US border:

TITLE 18 – CRIMES AND CRIMINAL PROCEDURE
PART I – CRIMES
CHAPTER 44 – FIREARMS
§ 922. Unlawful acts
(y) Provisions Relating to Aliens Admitted Under Nonimmigrant Visas.—
(2) Exceptions.— Subsections (d)(5)(B), (g)(5)(B), and (s)(3)(B)(v)(II) do not apply to any alien who has been lawfully admitted to the United States under a nonimmigrant visa, if that alien is—
(A) admitted to the United States for lawful hunting or sporting purposes or is in possession of a hunting license or permit lawfully issued in the United States;

Interestingly, this exact issue came up in a recent hearing for Marcus Hutchins. Mr. Hutchins is a security researcher from the UK who was arrested in Nevada and accused of being the author of the Kronos malware. Fortunately for him, the court was lenient based on his lack of past criminal history but it is nonetheless technically prohibited:

USA v. Marcus Hutchins
Case 2:17-MJ-0825-NJK on August 4, 2017
Page 8
18 During his time here in Las Vegas,
19 Mr. Hutchins, according to tweets that he made to his Twitter
20 account under the handle of “Malwaretech”, Mr. Hutchins
21 indicated that he had visited firearms ranges twice and used
22 firearms here.
23 As a foreign national who’s not accepted under 18
24 U.S. Code 922(y), he is a prohibited person for purposes of 18
25 United States Code 922(g)(5)(B).
[…]
Page 13
5 Regarding the gun range, the Court agrees with
6 Ms. Lobo. People — there are advertisements in the airport
7 about shooting at the range. And he showed his passport.
8 People are, of course, charged with knowing the law. However,
9 shooting guns at a range in Las Vegas is very different from
10 carrying guns on the street in Las Vegas.

United States 18 USC 922(g)(5)(B) USA v. Marcus Hutchins P8 Line 23

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Police can search smartphone without a warrant on arrest

Criminal Law, Litigation, Privacy Law /

Smartphones today hold our entire digital lives. Not only do they hold our intimate emails and text messages, but much more importantly our smartphones also contains apps such as Dropbox and OneDrive which are already logged in and allows access to a treasure trove of our most personal files in the cloud. What happens when the police get a hold of our smartphone?

The good news is that the courts realize our smartphones are used to do more than just make phone calls, and recognize that a search of a smartphone is much more intrusive than, for example, a simple search of a bag. In R. v. Fearon, 2014 SCC 77, the Supreme Court wrote at at para 51:

[…] the search of cell phones, like the search of computers, implicates important privacy interests which are different in both nature and extent from the search of other “places” […]. It is unrealistic to equate a cell phone with a briefcase or document found in someone’s possession at the time of arrest. As outlined in Vu, computers — and I would add cell phones — may have immense storage capacity, may generate information about intimate details of the user’s interests, habits and identity without the knowledge or intent of the user, may retain information even after the user thinks that it has been destroyed, and may provide access to information that is in no meaningful sense “at” the location of the search […]

Moreover, the Supreme Court at para 53 recognizes that the law should not treat a smartphone differently whether it is password protected or not:

An individual’s decision not to password protect his or her cell phone does not indicate any sort of abandonment of the significant privacy interests one generally will have in the contents of the phone.

But the good news ends there. In a ruling released today, the Supreme Court held in R. v. Fearon, 2014 SCC 77 at para 64 & 83 that the police can search a smartphone without a warrant when arresting a suspect, and that this does not infringe on our constitutional rights against unreasonable search and seizure (which is what s. 8 of the Charter is all about):

I therefore reject the idea that s. 8 of the Charter categorically precludes any search of a cell phone seized incidental to a lawful arrest.

[…]

To summarize, police officers will not be justified in searching a cell phone or similar device incidental to every arrest. Rather, such a search will comply with s. 8 where:

(1) The arrest was lawful;

(2) The search is truly incidental to the arrest in that the police have a reason based on a valid law enforcement purpose to conduct the search, and that reason is objectively reasonable. The valid law enforcement purposes in this context are:

(a) Protecting the police, the accused, or the public;

(b) Preserving evidence; or

(c) Discovering evidence, including locating additional suspects, in situations in which the investigation will be stymied or significantly hampered absent the ability to promptly search the cell phone incident to arrest;

(3) The nature and the extent of the search are tailored to the purpose of the search; and

(4) The police take detailed notes of what they have examined on the device and how it was searched.

This is in contrast to a series of rulings by the Supreme Court recently in R. v. Spencer, 2014 SCC 43, R. v. Vu, 2013 SCC 60, and R. v. Telus, 2013 SCC 16, where the court concluded that searches of a computer in a residence required a separate warrant for computer data, and searches of records at a telecommunications provider also required a warrant.

Fearon was a narrow 4-3 decision with a strong dissent, and in time it may be overturned. However,  given the state of the law at the moment, it would be prudent to lock your phone with a strong password (instead of a biometric feature like a fingerprint or a weak 4 digit passcode), and to enable strong data protection/encryption.  Finally, keep in mind that if questioned by the police, you are under no obligation to answer any questions, incriminate yourself, or to disclose your password to the authorities.

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Supplementary tax bill for new house or condo

1 Comment / Real Estate Law /

A new house or condo can be very exciting. If you’re a first time homebuyer as well, that’s doubly exciting. But as an owner of a new house or condo, there are also special challenges as well.

One of the things that an owner of a new house or condo must plan and budget for is the Supplementary Tax Bill. At the time of closing, the property is likely assessed as “vacant land” for the purposes of property taxes. Therefore, the first few property tax bills you receive only takes into account the value of the land, but not the value of the buildings or improvements made to the land.

About 12 to 18 months after title to the property is transferred to you, the Municipal Property Assessment Corporation (MPAC) will perform a re-assessment of your property, taking into account the value of the buildings or improvements made to the land.

Once the MPAC assessment is completed, you will receive a “Property Assessment Notice” in the mail, setting out the reassessed value of your property. A Supplementary Tax Bill will follow, using the reassessed value of the property and calculating the amount of property taxes owed from the date of occupancy. Depending on the type of building or improvement made to the land, the Supplementary Tax Bill can be many thousands of dollars. The due date for the Supplementary Tax Bill is also relatively short considering the amount payable, and can be as short as 90 days from the date the bill was issued.

It is very important that homeowners of new homes plan and budget for this expense.

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Don’t sign a new cell phone contract until Dec 2, 2013

4 Comments / Telecom Law /

In a consumer-friendly move, the Canadian Radio-television and Telecommunications Commission (CRTC) released some new rules today governing new cell phone contracts.

The new rules will apply to new cell phone contracts that start on December 2, 2013.

In particular, the new rules:

  • allow consumers to terminate their cell phone contracts after 2 years without cancellation fees, even if they have signed on for a longer term
  • cap extra data charges at $50/month
  • cap international data roaming charges at $100/month
  • allow consumers to have their cellphones unlocked after 90 days, or immediately if they paid for the device in full
  • allow consumers to return their cellphones, within 15 days and specific usage limits, if they are unhappy with their service
  • allow consumers to accept or decline changes to the key terms of a fixed-term contract (i.e., 2-year)

Remember, in order to take advantage of these new rules, the cell phone contract must be signed on or after December 2, 2013.

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Telus records all your texts

15 Comments / Litigation, Privacy Law, Telecom Law /

Yesterday, the Supreme Court in R. v. Telus, 2013 SCC 16 made an interesting ruling on what types of warrants are applicable to text messages under the Criminal Code.  What’s interesting isn’t the ruling – as expected, the Court decided that text messages are “private communications” and require a more specific warrant authorizing the interception of private communications rather than a general warrant order.

What’s really interesting is this case provides a glimpse into the internal workings of Telus as it processes text messages from its mobile subscribers.

It starts off quite normally, just like any other service provider:

When Telus subscribers send a text message, the transmission of that message takes place in the following sequence.  It is first transmitted to the nearest cell tower, then to Telus’ transmission infrastructure, then to the cell tower nearest to the recipient, and finally to the recipient’s phone.  If the recipient’s phone is turned off or is out of range of a cell tower, the text message will temporarily pause in Telus’ transmission infrastructure for up to five days.  After five days, Telus stops trying to deliver the message and deletes it without notifying the sender.

But then things get interesting:

Unlike most telecommunications service providers, Telus routinely makes electronic copies of all the text messages sent or received by its subscribers and stores them on a computer database for a period of 30 days. Text messages that are sent by a Telus subscriber are copied to the computer database during the transmission process at the point in time when the text message enters Telus’ transmission infrastructure. Text messages received by a Telus subscriber are copied to the computer database when the Telus subscriber’s phone receives the message. In many instances, this system results in text messages being copied to the computer database before the recipient’s phone has received the text message and/or before the intended recipient has read the text message.

This is interesting for a few reasons:

  1. If the sender or recipient of a text message is on Telus, then the text message will be stored for at least 30 days, and
  2. In light of this SCC ruling, Telus will give up the contents of all your text messages for the last 30 days when given a specific warrant under Part VI of the Criminal Code that authorizes the interception of private communications. However, for other mobile providers which don’t routinely store text messages like Telus, even when given such a specific warrant for the interception of private communications, they will be unable to supply the police with the contents of your previous text messages because no record of it exists.

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Are emails at work confidential or privileged?

3 Comments / Business Law, Employment Law, Litigation /

A reader wondered about communicating with her lawyer from work.  In particular, she wondered if such communications are confidential or privileged.

Generally, communications between a client and her lawyer are subject to solicitor-client privilege, and may not be revealed in court.

However, if the client contacts her lawyer from work, and in particular uses her work smartphone, work computer or her employer’s Internet connection, her employer may have access to her communications with her lawyer.   This applies even if the client uses her work computer but uses her own web-based email (like Gmail or Hotmail) to send and receive emails with her lawyer.

This is because most employers have an information technology policy which allows the employer to have access to all data stored on an employee’s work computer, as well as access to all data transfers in and out of an employee’s work computer.  There is likely a similar policy with respect to smartphones issued by the employer as well.

If an employee absolutely needs to contact a lawyer while at work, I recommend that the employee use their own personal email account on their personal smartphone to do so.

And please remember to make sure the personal smartphone is using your cellular provider’s network, and not the employer’s wifi network.

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New fee to play recorded music at parties

Copyright Law, Marketing /

Weddings are expensive.  Thanks to a recent decision by the Copyright Board, it’s going to become a little bit more expensive starting this summer.

The Copyright Board of Canada has recently allowed new tariffs to be collected for playing recorded music at events such as weddings, parades, karaoke bars, and fairs. The cost varies depending on how many people attend the event, the type of event, and interestingly, would double if people are dancing at the event. For example, a wedding where the DJ plays a song from a CD with less than 100 attendees and at least one attendee dancing would cost an extra $18.50 per day, and a parade where recorded music is played on at least one float must pay at least an extra $32.55 per day.

It’ll be up to the event organizers to self-report and pay the royalty on their own initiative. If you have a wedding this summer, be sure to ask your event organizer whether or not these new tariffs apply to you.

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Colbert and Stewart: Copyright fair dealing

Copyright Law, Telecom Law /

Have you ever wondered how Stephen Colbert or Jon Stewart can reproduce news clips without being sued for copyright infringement?

Just because something is under copyright doesn’t mean it cannot be copied or used by someone other than the author. Colbert and Stewart, as pundits who report on current events, criticize and perform parodies and satire, can rightly claim “fair use” under US copyright law in their use of news clips on their shows to avoid copyright infringement.

Similar to fair use in the US, under the fair dealing provisions of the Canadian Copyright Act, the Canadian general public can also use a copyrighted work without infringing copyright.

In general, fair dealing for the purpose of research, private study, criticism or review, or news reporting does not infringe copyright.  As long as the reproduction was “fair”, there is no copyright infringement.

The second step, whether the dealing is fair, depends on the facts of each case.  In CCH v. LSUC, 2004 SCC 13, the Supreme Court of Canada set out six non-exhaustive factors to determine whether a dealing is “fair”:

  1. the purpose of the dealing;
  2. the character of the dealing;
  3. the amount of the dealing;
  4. alternatives to the dealing;
  5. the nature of the work; and
  6. the effect of the dealing on the work.

These “fairness” factors mean that, for example, a wholesale copying of an entire show would probably not be considered “fair”, even if it was for the purpose of news reporting or criticism. But it does allow for short reproductions of clips a few seconds long, just like the clips reproduced on The Daily Show or the Colbert Report.

 

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