What is Probate?

Probate is an application to obtain court confirmation of the validity of a Will and the authority of the executor of the Will. The application is made by filing at least two affidavits and certain other documents with the court registry. If the court approves the application and the probate fees are paid, it will issue a Grant of Probate. A more complicated procedure is required if the will is or may be disputed.

Probate usually becomes necessary because third parties, such as financial institutions, ICBC or the Land Title Office, want assurance that the executor has the authority to deal with a particular asset.

An executor’s authority, however, comes from the Will and not a Grant of Probate. There is, therefore, no requirement that every Will be submitted to probate. In fact, with proper planning, many estates can be processed without a probate application, saving thousands of dollars in probate fees. Click here to find out about some of the strategies to achieve this.

Here are some more facts about probate:

• probate fees are actually a tax

• application fee of $208, then 0.6% of estate value between $25,000 and $50,000, and 1.4% of estate value over $50,000

• fees payable on entire value of estate assets within BC (less only registered mortgages), even if probate only required to deal with only one asset

• if no will, application is for a Grant of Administration rather than a Grant of Probate (same probate fees apply)

• usually application made in “common form”

• application in solemn form may be required if will is disputed (involves a trial)

Executors – A Checklist of Immediate Duties

• Locate the last Will and confirm appointment as executor.

• Determine whether there are any special funeral directions.

• Ascertain whereabouts of beneficiaries.

• Determine immediate cash requirements of beneficiaries.

• Search for cash, insurance policies, securities, jewellery, and other valuables, and arrange for their safekeeping.

• Cancel credit cards, memberships, health insurance, cable and subscriptions and request refunds if available.

• Lock up the deceased’s residence if it is not occupied. Advise the police if it is not under proper supervision.

• Arrange for an immediate inventory of all personal assets.

• Check the insurance on the deceased’s assets (e.g., house, furniture, motor vehicle). Check the expiry dates and check the vacancy provisions to ensure that the coverage continues (a 30 day vacancy limit applies in most policies insuring residential property). Notify the insurers of the death.

• Arrange for interim management of the deceased’s business.

• Collect and deposit any outstanding cheques (e.g., pensions, dividends, interest, salary).

• Redirect mail if necessary.

• Check for mortgages (and determine if they are life-insured) and agreements for sale and make the payments to keep them up to date.

• Check leases and tenancies. Give tenants notice about where to send rent payments and give notice of termination if necessary.

• Review the last cheques written by the deceased to ensure that there were no irregularities.

• Apply for Canada Pension Plan Death Benefits, Survivor’s Benefits and Orphan Benefits, if eligible.

These suggestions apply to many estates but they may not all apply to the estate that you are administering. There may be other assets that require protection and that aren’t dealt with above. Please contact our office if you have any questions.

Living Wills (Expression of Wishes)

“Living wills” have been legally valid in BC since 2000. A living will is a written statement that expresses your wishes regarding medical treatment and personal care in case you are unable to express your wishes at the relevant time. The term “living will” is a legal term in some US states but not in Canada, and is more correctly referred to as an “Expression of Wishes” or “Health Care Directive”.

In an Expression of Wishes you can set out the treatments that should or should not be given in specified circumstances. For example, you may direct that “heroic measures”, such as cardiopulmonary resuscitation (CPR), should not be used to prolong life if you suffer from a severe irreversible condition. You may direct that medication be administered to alleviate suffering in those circumstances.

An Expression of Wishes can prevent conflict and guilt among family members. If family members ask the doctors to do “everything” to keep a loved one alive and that person dies, the family may feel guilt for putting the person through needless tests and treatments. On the other hand, if they let their loved one “die with dignity”, they may feel later that they should have done more.

Conflict can also arise if family members cannot agree. Children who have been out of contact for years may return and want the doctors to do “everything” to try to bring a parent back so they can make peace. Other family members who remained in close contact are more likely to accept the person’s death, and want only palliative care for the parent. Further complications can arise when children from divorced marriages resent stepparents or common law spouses from making decisions. These conflicts can leave lasting bitterness.

If you have stated your wishes clearly in an Expression of Wishes, your doctor and family won’t have to second-guess what kind of treatment you would want. You will receive the treatment you want and your family will be “off the hook”.

Under the Representation Agreement Act, you may make a Representation Agreement authorizing a representative to make health and personal care decisions for you. Your Representative will be need to know about your Expression of Wishes so that they can follow your wishes.

Under the (unfortunately named) Health Care (Consent) and Care Facility (Admission) Act, if you are incapable of giving or refusing consent to medical treatment, the health care provider is to go to the highest ranking of the following people who are available and willing to decide:

your court appointed guardian (committee), if any, or representative under a Representation Agreement, if any

your spouse (including common law or same sex spouse)

• any adult child

• a parent

• a sibling

• a grandparent

• a grandchild

• anyone else related by birth or adoption

• a close friend

• someone related to you by marriage

• if no one else is available, or there is a dispute about who is to be chosen, someone authorized by the Public Guardian and Trustee.

The person making the decision will be bound to comply with any wishes you expressed while you were still capable. Accordingly, an Expression of Wishes is legally valid (although it won’t authorize who can make the decision for you – that can only be done in a Representation Agreement). If you haven’t expressed your wishes, the person deciding for your must make the decision on the basis of your known beliefs and values. If your beliefs and values are not known, then the decision must be made on the basis of what is in your best interests.

We recommend that our clients who wish to plan for the possibility of disability consider making an Expression of Wishes and Representation Agreement, as well as an enduring power of attorney for financial matters. For more information, please contact us.

Home Buyers – Beware of Broken Promises

One of the most exciting decisions we make involves the purchase of a new home. While the experience can be exhilarating, finding the perfect home can be challenging even for a sophisticated buyer. We find a home we like, but often with a few small problems. For example, the landscaping is not quite finished, or there is a large pile of rubble that should be removed from the yard. Do we go ahead, or not?

To induce a buyer to sign a Contract of Purchase and Sale, a seller may be prepared to take care of minor problems with the property. A clause will be added to the Contract of Purchase and Sale indicating that before the completion date (the day the Buyer must pay the purchase price), the seller will correct the problem. In this situation, the buyer needs to beware of his or her legal rights or responsibilities if the seller does not fulfill the promise.

The standard form of Contract of Purchase and Sale provides that there are no promises or agreements other than those written in the Contract of Purchase and Sale, but that those promises and agreements that are written in the Contract of Purchase and Sale will survive the completion of the sale. In the case of a seller who breaks a promise to fix something, the second part of this clause is helpful for a buyer. The clause means the seller is legally bound to correct the problem even after the completion date. If the seller does not, the buyer can sue for damages in Small Claims Court or, if the loss exceeds $25,000, in Supreme Court. But court proceedings are time consuming, slow, and costly. Even if the buyer gets a judgment against the seller, it may be difficult to recover the money.

To avoid the need to take a seller to court, buyers should have their realtor include a clause in the Contract of Purchase and Sale that allows the buyer:

• to inspect the property before the completion date to make sure that the problem has been corrected, and

• to hold back an amount equal to the cost to fix the problem if the seller has not fixed it by the completion date.

A buyer is generally not entitled to cancel the Contract of Purchase of Sale if a seller breaks a promise to correct a problem and, unless the Contract contains such a remedy, a buyer cannot demand that the purchase price be reduced, or that a sum of money be held back from the seller.

If you are buying or selling real estate and have questions about your contract, give us a call.

Renovating Your Home

This article deals with legal issues that arise when doing a home renovation, and is based on a presentation given by Mr. Elgersma at the Canadian Home Builders Association (Victoria) Renovation Seminar.

Renovation Contracts

There are several types of renovation contracts. They include fixed price contracts (a.k.a. stipulated price or lump sum contracts), cost-plus contracts and construction management contracts.

• The stipulated price contract provides that the contractor will perform the renovations for a fixed price.

• Cost-plus contracts require you to pay the contractor a percentage of the building costs.

• Construction Management Contracts are contracts with a construction manager. The construction manager provides management and consulting services to you but is not the contractor. Instead, you contract directly with the various trades, such as the framer, electrician, plumber, drywaller and painter. The construction manager arranges the contracts but is not necessarily liable if there are problems with them. These types of contracts may be riskier for you because there is not one person that is ultimately responsible to you.

Many homeowners don’t have a contract with a general contractor, but “contract their own home”. That means that they act as the general contractor, contracting directly with the various trades, and without even a construction manager. If you are familiar with the Builders Lien Act and with construction generally, this is fine. However, there are some practical reasons for having a contractor. One is that the best trades work for contractors because contractors will hire them again. But you won’t, so you are considered a “one-off”, and so you will probably receive a trade’s lowest priority. Also, you may not get the discounts on work and materials that are available to a contractor or construction manager, and the work may not be covered by a warranty.

I will now review the most common terms of a fixed price contract:

• First of all, a detailed description of the renovations to be done by the contractor. This is usually done by referring to certain plans and specifications that are attached to the contract as a schedule.

• Next, the contract will state when work is to start, and by what date it is to be finished. If the work is not completed by the date promised in the contract, your remedies against the contractor depend on the wording of the contract. If the contract says nothing, the builder will normally be responsible for any damages suffered by you as a result of the contractor’s delay. This may include the cost of your accommodation during the period of delay. Some contracts set out a specific penalty for each day the work remains unfinished after the date promised. However, most contracts will excuse the contractor for delays beyond the contractor’s control.

• The contract then sets out the price and how it is payable. Often a deposit of some kind is payable to the contractor, with the balance payable in draws upon the completion of various stages of the work.

At the completion of these stages, you are required to pay to the builder a pre-determined amount as specified in the contract. However, you hold back 10% of each draw as a builders lien holdback.

Other provisions of the contract are also important.

• The contract should also give you the right to cancel the contract if the builder goes bankrupt. You would then hire another builder to finish the job.

• The contract should specify that the builder is responsible for clearing off any builders liens that are registered against the property by any of the trades or suppliers.

• The contract should include a warranty for the work done, so that the contractor is required to fix any deficiencies that show up.

• The contract should also set out the procedures for dealing with additions to the work, which are called extras. Of the disputes that arise between owners and contractors, a large portion of them seem to be about extras. The contractor may claim that certain work was extra and on top of the contract price, while the owner may claim that the work is not extra but is included in the original scope of work, or was not authorized. To minimize the chance of this type of dispute arising, the contract should clearly set out the scope of the work through the plans and specifications. The contract should state that no additional work will be done unless you and the contractor agree in writing, including agreement on the price.

New Home Warranty Issues

If your renovation is to repair a leaky building envelope, your contractor may need to prove that it is licensed with BC’s Homeowner Protection Office and that the repair will be covered by a warranty issued by an insurance company.

These requirements do not apply if:

• the building has less than 3 units

• the building is a rental building

• the building is covered by a new construction warranty

• repair costs are less than $10,000 or $2,000 per unit in the building

So these requirements will not apply to single-family homes.

If your home is covered by a new home warranty, check the warranty to ensure that the proposed renovation will not affect the coverage under the warranty.

Builders Liens

B.C. has had builders lien legislation in various forms since 1879. B.C.’s latest Builders Lien Act came into force in 1998. The objectives of the legislation are to ensure that construction funds are used for their intended purpose, and to protect those who add value to a building under construction.

To fulfill its objectives, the Act uses two strategies.

• First, it provides a form of security to builders, subcontractors, workers and suppliers who work on a building that is under construction – this is the builders lien.

• Second, it requires you as an owner to hold back from the contractor 10% of each payment payable to the contractor. This is called the builders lien holdback.

Builders Liens

A lien is a charge on property for the payment of a debt. A builders lien is a claim by a person who has supplied work or material to a building under construction. A builders lien may be claimed by a contractor, subcontractor or worker. These are all defined terms under the Act and may also include architects, engineers and suppliers of materials.

Under the new Act, the deadline for filing builders liens is 45 days from the date of substantial completion of the work. The lien is registered against the property for the amount of money owed to the claimant for the work or material he or she has supplied. If you have an experienced contractor there will most likely not be any builders liens, but if any of the trades are nervous about being paid, they will file a lien.

Builders Lien Holback

The builders lien holdback provides 2 functions.

• First, it ensures that there is a pool of money out of which builders lien claims can be paid.

• Second, it limits your liability for lien claims. If you comply with the holdback provisions of the Act, your maximum liability for lien claims will be limited to the amount of the 10% holdback or the unpaid balance of the price, whichever is greater, EVEN IF the total amount of all builders liens exceeds that amount.

Although lien claimants may have a valid claim against the person who hired them for the full amount owing, the lien claimants can only claim against you as the homeowner for the amount of the builders lien holdback or the unpaid portion of the purchase price. If you pay the holdback into court, the liens can be cleared from title and it is then up to the contractor and the trades to sort it out. It is no longer your problem.

You may have to pay the holdback into a special bank account. The Builders Lien Act requires that the owner and the contractor administer the account jointly, so any withdrawals will require the signature of both you and your builder.

There are 2 exceptions to the requirement to set up a bank account for the builders lien holdback. The first is where the total value of work and materials is less than $100,000. So most renovations will not require this special bank account. The second is where you have a construction mortgage and you authorize the lender (and the lender agrees) to disburse your mortgage money. In that case the lender must hold back 10% of the mortgage money from each mortgage draw.

If no liens have been filed within 55 days of the date of substantial completion, the holdback is released to the contractor. It cannot be released before that time. If liens have been filed within that period, the holdback must be used to satisfy the lien claims. If a settlement is not possible, the holdback can be paid into court and the court will then order that the liens be discharged from your title.

Mortgages

If you have a mortgage, it will say that you are not allowed to renovate without the bank’s consent.
For example, in the prescribed standard mortgage terms, the borrower/property owner promises:

• not to tear down any building or part of a building which forms part of the land,

• not to make any alteration or improvement to any building which forms part of the land without the written consent of the lender

All mortgages have similar terms, so ensure that you have obtained your bank’s consent before you get started.

Strata lots

In addition, if you are renovating a townhouse or duplex, the Strata Property Act provides that:

• you can’t alter common property or limited common property without written consent of strata council

• you can’t alter certain parts of strata lot without written consent of strata council. This includes:

  • renovations that affect the structure or exterior of a building;

  • chimneys, stairs, balconies attached to the exterior of a building;

  • doors, windows or skylights;

  • fences or railings that enclose a patio, balcony or yard;

  • floor and wall coverings and electrical and plumbing fixtures, if part of the original construction of the building.

There are many important issues to be aware of. A good contract and some knowledge of the Builders Lien Act is essential.

Homeowner Protection Act – Rules for Builders

In response to the leaky condo crisis, the B.C. government passed a new law called the Homeowner Protection Act. The Homeowner Protection Act creates the Homeowner Protection Office, and requires compulsory licensing for builders and mandatory warranty coverage on new homes. (In addition, recent regulations under the Act introduced licensing and warranty requirements for building envelope repairs – click here for more information.)

Builder Licensing

All residential builders (including developers and general contractors) must be licensed by the Homeowner Protection Office. Licenses are for one year only and must be renewed annually. The Homeowner Protection Office has the authority to monitor builders and cancel their licenses.

New Home Warranties

To obtain a building permit, builders must provide proof of third-party warranty coverage for the home. The warranty provider must be licensed with the government. Warranties must provide the following minimum coverage:

• 2 years for materials and labour

• 5 years for building envelope (including water penetration)

• 10 years for structural defects

Owner-Built Homes

The Act sets out special rules for owner-built homes. An owner-builder is a person who builds a single, detached home for their own personal use, not more than once in any 18 month period. An owner-builder does not have to be licensed or provide a third-party warranty on their home. Instead, they must file an Owner-Builder Declaration and Disclosure Notice with their building permit application. If an owner-builder sells a home within 10 years of completion, they must give the buyer a copy of the Owner Builder Declaration and Disclosure Notice. The Disclosure Notice alerts buyers to the fact that the home is not protected by a third-party warranty.

If you have any questions about the requirements under the Homeowner Protection Act, please contact us, or visit the Homeowner Protection Office.

Building a New Home

This article deals with legal issues that arise when building a new home, and is based on a presentation given by Mr. Elgersma at a Canadian Home Builders Association (Victoria) New Home Construction Seminar.

Construction Contracts

There are several types of building contracts. They include stipulated price (a.k.a. lump sum) contracts, cost-plus contracts and construction management contracts.

• The stipulated price contract is the most common. It provides that the builder will construct a house for a fixed price.

• Cost-plus contracts require you to pay the builder a percentage of the building costs. These contracts are rare because the client doesn’t know what the final price will be.

• Construction Management Contracts are contracts with a construction manager. The construction manager provides management and consulting services to you but is not the builder. Instead, you contract directly with the various trades, such as the excavator, framer, electrician, plumber, drywaller and painter. The construction manager arranges the contracts but is not necessarily liable if there are problems with them. These types of contracts may be riskier for you because there is not one person that is ultimately responsible to you.

In some cases, the builder owns the property and the contract provides that the property will be transferred to the client upon completion of the home. In these cases, it is wise for the client to register an agreement for sale, a.k.a. right to purchase agreement, at the Land Title Office to secure the payments made by to the builder. Note that the property transfer tax will be higher if the transfer takes place after construction is completed, because the tax is based on the value of the property at the time of transfer.

Some owners don’t have any type of building contract, but “contract their own home”. That means that they act as the general contractor, contracting directly with the various trades, but without even a construction manager. If you are considering contracting your own home, think twice. There are too many things that can go wrong if you don’t have experience, and you may have limited or no warranty protection for the work done. There are also practical reasons for not doing it yourself. One is that the best trades work for builders because builders will hire them again. But you won’t, so you are considered a one-off, and you will receive the trade’s lowest priority. Also, you may not get the discounts on work and materials that are available to a builder or construction manager.

A typical building contract will include these terms:

• First of all, an accurate description of the property and of the parties to the contract, which will require a title search so that the builder knows the legal description of the property and who the owners actually are.

• Second, a description of the house to be built by the builder. This is usually done by referring to detailed plans and specifications that are attached to the contract as a schedule.

• Next, the contract must state when work is to start, and by what date it is to be finished. If the work is not completed by the date promised in the contract, your remedies against the builder depend on the wording of the contract. If the contract says nothing, the builder will normally be responsible for any damages suffered by you as a result of the builder’s delay. This may include the cost of your accommodation during the period of delay. Some contracts set out a specific penalty for each day the work remains unfinished after the date promised, of say $50 or $100 per day. However, most contracts will excuse the builder for delays beyond the builder’s control.

• The contract then sets out the price and how it is payable. Usually a deposit of some kind is payable to the builder, with the balance payable in draws upon the completion of various stages of construction. The most common stages used for determining when draws are payable include lock up (which means the house is framed, roofed and can be locked up), the completion of drywall, and the final completion of the house.

At the completion of these stages, you are required to pay to the builder a pre-determined amount as specified in the contract. However, you are also required to pay 10% of each draw into a special savings account at a bank or credit union as a builders lien holdback. If you fail to do this, the Act says the builder can stop working and sue you for its damages arising from the work stoppage.

Other provisions of the contract are also important.

• For example, the contract should allow for a pre-occupancy inspection by you and the builder and require the builder to remedy any deficiencies noted on the inspection within a certain period of time. You may also want the right to hold back from the builder an amount equal to the cost of fixing the deficiencies, called a deficiency holdback. The builders lien holdback cannot be used to pay for deficiencies unless authorized in the contract and provided that no liens have been, or will be, filed.

• The contract should also give you the right to cancel the contract if the builder goes bankrupt. You would then hire another builder to finish the job.

• The contract should specify that the builder is responsible for clearing off any builders liens that are registered against the property.

• The contract should require the builder to provide proof of third party liability insurance and workers compensation coverage, so that the homeowner will not be liable for accidents.

• The contract should also set out the procedures for dealing with additions to the work, which are called extras. Of the disputes that arise between owners and builders, a large portion of them seem to be about extras. The builder may claim that certain work was extra and on top of the contract price, while the owner may claim that the work is not extra but is included in the original scope of work, or was not authorized. To minimize the chance of this type of dispute arising, the contract should clearly set out the scope of the work through the plans and specifications. The contract should state that no additional work will be done unless you and the builder agree in writing, including agreement on the price.

New Home Warranties

Under the Homeowner Protection Act, all residential builders must be licensed, and provide a warranty on homes they build from a warranty company approved by the government. Builders cannot obtain a building permit unless they can prove they are licensed and that the home they are building has the required warranty.

The warranty must be for:

• 2 years for materials and labour

• 5 years for building envelope (including water penetration)

• 10 years for structural defects

If you build your own home (i.e. without a builder or contractor), you do not have to be licensed or provide a warranty, but if you sell the property within 10 years of completion, you must notify the new owner that there is no warranty.

Builders Liens

B.C. has had builders lien legislation in various forms since 1879. B.C.’s latest Builders Lien Act came into force in 1998. The objectives of the legislation are to ensure that construction funds are used for their intended purpose, and to protect those who add value to a building under construction.

To fulfill its objectives, the Act uses two strategies.

• First, it provides a form of security to builders, subcontractors, workers and suppliers who work on a building that is under construction – this is the builders lien.

• Second, it requires you as an owner to hold back from the builder 10% of each payment payable to the builder. This is called the builders lien holdback.

Builders Liens

A lien is a charge on property for the payment of a debt. A builders lien is a claim by a person who has supplied work or material to a building under construction. A builders lien may be claimed by a contractor (builder), subcontractor or worker. These are all defined terms under the Act and may also include architects, engineers and suppliers of materials.

Under the new Act, the deadline for filing builders liens is 45 days from the date of substantial completion of the house, although in larger projects it will be more complicated than that. The lien is registered against the property for the amount of money owed to the claimant for the work or material he or she has supplied. If you have an experienced builder there will most likely not be any builders liens, but if any of the trades are nervous about being paid, they will file a lien.

Builders Lien Holdback

The builders lien holdback provides 2 functions.

• First, it ensures that there is a pool of money out of which builders lien claims can be paid.

• Second, it limits your liability for lien claims. If you comply with the holdback provisions of the Act, your maximum liability for lien claims will be limited to the amount of the 10% holdback or the unpaid balance of the price, whichever is greater, EVEN IF the total amount of all builders liens exceeds that amount.

Although lien claimants may have a valid claim against the person who hired them for the full amount owing, the lien claimants can only claim against you as the owner for the amount of the builders lien holdback or the unpaid portion of the purchase price. If you pay the holdback into court, the liens can be cleared from title and it is then up to the builder and the trades to fight over it. It is no longer your problem.

As discussed earlier, you must pay the holdback into a special bank account. The Act requires that the owner and the builder administer the account jointly, so any withdrawals will require the signature of both you and your builder.

There are 2 exceptions to the requirement to set up a bank account for the builders lien holdback. The first is where the total value of work and materials is less than $100,000. For example, renovations and small projects. The second is where you have a construction mortgage and you authorize the lender (and the lender agrees) to disburse your mortgage money. In that case the lender must hold back 10% of the mortgage money from each mortgage draw.

If no liens have been filed within 55 days of the date of substantial completion, the holdback is released to the builder. It cannot be released before that time. If liens have been filed within that period, the holdback must be used to satisfy the lien claims. If a settlement is not possible, the holdback can be paid into court and the court will then order that the liens be discharged from title.

If you are purchasing a new home, it is important that the purchase contract authorize you to hold back 10% from the seller-builder, so that you are protected from any liens filed after the purchase goes through.

For more information about builders liens, click here.

There are many important issues for you to beware of, so a reputable builder, a good building contract and some knowledge of the Builders Lien Act is essential.

Strategies to Avoid Probate Fees

What are Probate Fees?

Probate fees are payable to obtain a Grant of Letters Probate (or, if there is not a Will, Letters of Administration). Letters Probate means the court has confirmed the validity of a Will and the authority of the executor of the Will. An executor’s authority, however, comes from the Will and not the Letters Probate. There is, therefore, no requirement that every Will be submitted to probate. In fact, with proper planning, many estates can be processed without a probate application, saving thousands of dollars in probate fees. Some of the strategies to achieve this are discussed below.

“with proper planning, many estates can be processed without a probate application”

Probate usually becomes necessary because third parties, such as financial institutions, ICBC or the Land Title Office, want assurance that the executor has the authority to deal with a particular asset. If probate is required, the entire value of estate assets located within B.C. is subject to probate fees. This is true even if probate is required because of only one asset, such as a car or term deposit.

The fee is 1.4% of that portion of an estate in excess of $50,000 of value, and 0.6% for that portion of an estate valued between $25,000 and $50,000. For example, the probate and filing fees for an estate worth $250,000 are just over $3,000.

Strategies to Reduce or Avoid Probate Fees

The following strategies can be used to reduce or avoid probate fees:

Gifts Prior to Death

You can reduce the value of your estate by giving assets away prior to death. Certain legal requirements must be met for the gift to be valid. For example, you must actually give up control of the gift. You should also remember that if the fair market value of the gift exceeds its cost, the accrued gain may be subject to tax. Gifts of real estate may also require payment of property transfer tax.

Joint Tenancy

Property can be owned jointly in two ways: joint tenancy or tenancy in common. On the death of one joint owner, property held in joint tenancy normally passes by right of survivorship to the surviving joint owner(s). It is normally not considered part of the estate of the deceased joint owner, can be transferred without probate and is not subject to probate fees.

However, joint tenancy, especially when not between spouses, may have disadvantages, including the following:

• loss of control – co-operation of the other joint owner will be required to sell or mortgage the property;

  • future litigation – if the surviving joint owner is not the only beneficiary of the estate of the deceased joint owner, the other beneficiaries may claim that the surviving joint owner holds the property in trust for all of the beneficiaries while the surviving joint owner may claim that the right of survivorship applies. This is most common where the deceased joint owner is a parent and the surviving joint owner is a child, and there are other children;

  • tax consequences – capital gains tax and property transfer tax may become payable when property is transferred into joint tenancy. If the property is a principal residence and the new joint owner does not live there, that owner’s share of any future increase in value of the home will not be exempt from capital gains tax;

  • exposure to creditors – joint property may be subject to claims by creditors, or the spouse, of the other joint owner;

  • death of joint owner – the new joint owner may pass away before the original owner;

• the new joint owner can sever the joint tenancy, and create a tenancy in common, without notifying the other owner.

As well, recent decisions of the Supreme Court of Canada have changed the law regarding the transfer of property by a parent into joint names with their child. In these cases the law presumes that a child who contributed nothing toward the property holds his or her interest in trust for the contributing parent. An exception is the presumption of advancement (meaning that the transfer will be presumed to be a gift). However, the presumption of advancement only applies to transfers of property from one spouse to both spouses, or from a parent to a minor child.  The 2007 decisions of the  Supreme Court of Canada in  Pecore v. Pecore and Madsen Estate v. Saylor have stated that the presumption of advancement does not apply to transfers between parents and adult children.  An adult child who holds assets jointly with a parent can no longer rely on the presumption that the parent wanted the child to take the asset at death. Additional evidence is required to prove that a transfer into joint tenancy was intended to be a gift and that the survivor was intended to receive the asset on the death of the deceased.

For more detailed information about the pros and cons of joint tenancy, click here.

Multiple Wills

Thanks to a recent change in BC’s estate laws, business owners can now reduce the amount of probate fees payable by their estate by utilizing a second will.  The articles of most private companies allow for the transfer of a deceased shareholder’s shares to the estate without probate.  However, if probate is required because other assets were owned solely by the deceased (such as a vehicle, bank account or real estate), the company shares must be listed in the probate application and will be subject to probate fees.  If the company shares are dealt with in a separate will, probate fees for the shares are avoided.  In addition to business owners, individuals with expensive art collections can also use this strategy, by having a second will for their art collection.  To benefit from a second will, you must appoint a different executor under each will.

Corporate Debt

Probate fees are based on the gross value of estate assets (except for real estate for which the amount of outstanding mortgages may be deducted). Outstanding debts, other than mortgage debts, are not deducted to determine the value your estate. If you purchase an asset with borrowed money that is not secured by a mortgage, transferring the asset and the debt to a limited company will reduce the gross value of your estate. The asset and the debt are no longer owned by you, but by your company. While the company’s shares will be part of your estate and subject to probate fees, the share value would be the value of the asset less the debt to acquire the asset.

Named Beneficiaries

Designating a beneficiary under insurance policies, RRSPs, RRIFs, TFSA’s and pensions will allow the proceeds to be paid directly to the named beneficiary. The proceeds will not form part of your estate and are not subject to probate fees. Probate fees are only payable if the proceeds are payable to the estate, or if the named beneficiary dies before you. In some cases you may want to designate an alternate beneficiary to avoid the proceeds being paid to your estate.

Property Transferred to a Trust

A trust can be created to hold property on your behalf, with provisions providing for the distribution of the property after your death. Because the property is owned by the trust, it is not considered part of your estate, and is not subject to probate fees. Trusts are generally taxed at high rates and the cost of creating and administering the trust may be prohibitive. However, two new types of trusts, called alter ego and joint spousal trusts, are now available thanks to recent changes to Canada’s Income Tax Act. For more information, click here for our article on these new trusts.

These strategies will result in probate fees being reduced or avoided. However, caution must be exercised to ensure that unintended or undesirable consequences do not outweigh the savings in probate fees. As well, any strategy should only be considered in the context of an overall estate plan.

For more information on this or any other estate planning issue, please contact us at your convenience.

Do I REALLY need a lawyer to review my commercial lease?

Yes, having a lawyer review your commercial lease is highly recommended. They bring expertise that ensures legal compliance, mitigates risks, aids in negotiation, potentially saves costs, and provides peace of mind.

Here are some of the advantages:

• Time: In many cases, business owners are tied up trying to manage their new or existing business, in that they do not have enough time to look over every.single.word to ensure that the lease is not skew in the Landlord’s favour.

• Understanding Terms: A commercial lease agreement can be long and include many words that may be new or unfamiliar to a business owner. It is beneficial to have a lawyer review the lease agreement and explain particular clauses that may not be completely understandable to the lay eye.

• Finding Red Flags: Commercial leases can be 3, 5, or 10 years long, which can seem like an eternity if you are stuck in an unfavourable lease. A lawyer can identify those terms and clauses that may be arbitrary or unreasonable and advise for them to be eliminated.

• Risk mitigation: By thoroughly reviewing your lease contract, Beacon Law can identify and mitigate risks associated with the lease terms. This could include provisions related to liability, insurance requirements, maintenance responsibilities, or dispute resolution procedures.

• Cost-savings: While hiring a legal firm may seem like an added expense, it can save you money in the long run. A lawyer has the ability to maximize your return on investment by saving you money over the years. A lawyer’s review could cost less than one month’s rent which is worth the possible issues arising in the future.

• Showing seriousness: The act of having a lawyer review a lease shows the landlord that you are a serious tenant and you intend to understand and comply with your lease.

Beacon Law is specialised in commercial and business law and can assist with review of a commercial lease. Having a lawyer review your commercial lease is a wise investment for any business owner. Contact Beacon Law for more information.

Why choose Beacon Law Centre as your company’s registered and records office

As a business owner, your time and expertise are valuable assets that are best utilized in areas where you can generate the most value. However, the administrative burden of maintaining corporate records and ensuring compliance with regulatory requirements can be overwhelming and detract from your core focus. That’s where Beacon Law comes in. Here’s why entrusting Beacon Law with your company’s Registered and Records Office responsibilities can benefit you:

• Streamline Your Business: Why choose Beacon Law to act as your company’s Registered and Records (R&R) office:

• Inspection readiness: Your corporate records must be available for inspection for at least two hours every business day to the public. If your company’s R&R office is your home, anyone wishing to view your shareholder list would have the right to enter your home.

• Personal Privacy: if your house is the R&R office, your home address is disclosed to the public on a company search.

• Expertise on Record Inspection: Beacon Law has the expertise on restricting and monitoring record access to third parties. Our team ensures that the appropriate information remains confidential and secure.

• Automated Filing of Annual Reports: Eliminate compliance worries by having Beacon Law file your annual reports. Save time and reduce administration burdens while staying compliant.

• Notification of Court Notices: Beacon Law provides a reliable address for receiving important legal correspondence.

• Hub for Notices: The R&R office is a place for directors to send their notices of resignation.

• Secured and Safe Record Keeping: Keeping your records at Beacon Law reduces the risk of accidentally losing or destroying your records.

• Ongoing Record organization: Benefit from Beacon Law’s commitment to keeping your records organized. Well-maintained records will enhance the attractiveness of your company to a potential buyer.

• Document Date Stamping: We date-stamp all notices which are delivered to the R&R office. This becomes important for limitation dates and limiting liabilities.

• Address Compliance: If you operate a BC corporation, the R&R office must be located in British Columbia. This may be important if you do not normally reside in BC.

Leave a gift to charity in your will?

Often the people we meet have a cause they are passionate about. They make the world a better place, through monthly donations or as volunteers. But what is the best way to make a difference when you are gone? If you are one of those people, the logical next step may be to leave a gift to charity in your will.

You may be surprised to learn how big a contribution to shaping the future is possible, with a gift in your will of only 1% of the estate. You are still leaving 99% to support your loved ones. In this way, you are doing more to help than you ever thought possible, simply by giving in a different way.

Here are a few tools you can use to get started with thinking about leaving a gift in your will: *

• Estimate your gift. Consider how much you want to give, using this Legacy Calculator tool.

• Get inspired. Consider what purpose you want to support, using your will to do good and make a lasting difference in the world. Need some ideas? Take a look at some donor stories.

• Keep the love going. Find out what specifically your gift could accomplish at your chosen charity. Perhaps you could help preserve a natural area, research a cure, start a scholarship, or create an arts endowment. This Charity Finder tool allows you to search by cause and location, and explore ideas.

*tools provided by Will Power, a Canadian public education campaign about charitable giving.

The combination of estate planning and philanthropy is also gaining popularity in Canada as more people discover that Canada has some of the best tax incentives in the world to support giving to charity.

If even a small percentage of us Canadians left 1% their estate to charity, the result could be as much as $40 billion per year to advance the causes that we care about.

Who would have thought that a gift of 1% in a will could be a powerful tool to make change in the world? But we know that if many people each do a little, it adds up fast. “Many hands make light work!”

If you are looking for someone to talk to about charitable giving, or estate planning generally, please contact us for a free initial consultation. We can help you support your loved ones and your passion, both.

A First-Time Home-Buyer Story

Bob and Robin had been married six years when they decided to buy a home. Their daughter Zoe was two years old and both were employed as software engineers in Vancouver. Some anxiety about the home purchase did arise, but their lawyer Kelvin Scheuer helped to sort it out. Here’s how…

Down payment in the bank

Bob’s employer was opening an office in Victoria where they wanted to raise their daughter. They had saved enough to make a down payment, and found a lovely little apartment near where Robin had grown up. Their first foray into real estate, the accepted offer was for $400,000 –barely in their price range!

Aiming for a tax exemption

Though they had saved for the down payment, there was no extra money. They continued to live frugally. Even so, they were counting on an exemption from the $6,000 due for BC Property Transfer Tax. Then Robin researched the exemption on-line, and discovered (in the small print) that, to qualify, the buyer must never have owned a residence anywhere in the world. Robin was so upset: Bob and his colleague had owned a tiny apartment together in Hong Kong where he had lived for a short time several years ago for his work!

Time to panic?

Kelvin stepped in to ensure that Bob and Robin could receive the tax exemption despite Bob’s previous home ownership. He noted that Robin, a Canadian citizen who had been living continuously in B.C. for well over a year, had not owned a residence before, and explained that the exemption could still be claimed as long as Robin was the sole purchaser. The couple were both fine with this, as they had shared all their assets since they married. The seller of their condo was agreeable to having Bob’s name removed from the offer, and Bob and Robin’s bank consented as long as Bob acted as guarantor of the mortgage.

The next generation

A few months after the sale had closed and they moved in, Bob and Zoe surprised Kelvin with a visit one day. Zoe was excited to show him their new dog, and she talked about taking the dog for walks in the park where Robin had played as a child. He couldn’t be more pleased!

Note: This story is fictional, it is not the story of any Beacon Law Centre clients. But Kelvin is real, and he really does like dogs. We have a dog-friendly office!

Co-ownership Agreements

Owning a home as co-owner with family members or others

The cost of residential property on Vancouver Island and the Gulf Islands has increased dramatically. Many people are not able to buy a home, or to cover the costs of owning a home, on their own.

There is growing interest for two or more people to purchase and own a residential property together, as “co-owners”. For various reasons, multiple branches of a family often want to share a property, whether as units in one house or in separate buildings on the same property.

In the past, co-owners were usually family, and this is still popular, but persons who are not related can also be successful as co-owners.

Whether or not co-owners are related, we strongly recommend that they make a written agreement to govern their ownership and use of the property. Verbal understandings regarding real property may not be legally enforceable. Co-owners who do end up in a dispute often discover that their legal remedies are limited. Litigation can be time-consuming, expensive, and extremely damaging to relationships.

A co-ownership agreement provides valuable clarity, prompts early discussions that could otherwise turn into disputes later, and alleviates many risks that can arise for co-owners.

A legal co-ownership agreement will cover matters such as:

• how decisions are made about the property’s development and use;

• who is responsible to pay various expenses (or how they are shared);

• who is responsible for payment of the mortgage;

• whether a co-owner can share/rent their unit, and keep the rent;

• what happens if a co-owner wants to sell, and how proceeds are paid out;

• any difference between legal (on title) and beneficial ownership; and

• how any disputes that arise will be resolved quickly and cost-effectively.

We have helped many families, friends, and business associates get through the process of making a co-ownership agreement, and watched them share their ownership successfully.

Contact Beacon Law Centre for trusted advice on co-ownership agreements.

Estate Law Considerations: Executors Proceed Cautiously

Here’s What We’d Hope For

If we must die, we’d like:

• things to be organized and simple, so we can enjoy our final days with family or friends.

• our assets to transfer smoothly to our chosen family, friends, or charities.

• to save costs, if we can.

Probate Is Not Always Required

If your spouse survives you and is your primary beneficiary (or with a very simple estate), the transfer of your assets to your spouse can be easily achieved with proper planning. Minor legal assistance may be needed. The survivor spouse’s Will, Power of Attorney and Health Care Agreement may also need to be updated at this time, or new planning considered to efficiently pass the couple’s wealth to the next generation.

For the executor of a person who made their will at Beacon Law Centre, a free consultation is available to clarify the steps to follow.

When Probate Is Needed

When the last of two spouses dies (or with more complex estates) a BC Supreme Court Order, called a “Grant of Probate” (or “representation grant”), may be needed to handle the Estate. Here, the executors really should seek legal assistance in carrying out their responsibilities.

Liability Concerns Arise

Probate involves a variety of complex laws. While your executor may be bright and confident there is a high risk of personal liability if the estate incurs financial losses (even if mistakes are made innocently). Common risky behaviours exhibited by lay executors include:

• Starting to deal with the assets and then deciding not to act as executor.

• Failure to act impartially in the distribution of personal items.

• Failure to identify all the assets.

• Failure to identify (or pay) a liability before distributing funds to beneficiaries.

• Keeping risky or unauthorized investments, or failure to adequately insure property.

• Failure to include the proper parties in the Probate process.

• Failure to adhere to legally required time limits on distribution.

• Distributing without appropriate waivers or releases from beneficiaries.

• Failure to keep proper records and account adequately to beneficiaries or creditors.

• Errors in the handling of income tax matters.

• Paying out Executor fees without the proper approvals.

• Often, executors who are family or friends don’t discover that their handling of the matter was problematic until it is too late.

Family Strife Problems

When Probate is necessary, it will take several months to administer the Estate, even when the Executor is advised of all of the steps and is extremely efficient. Beneficiaries are often unaware or not sympathetic about the work required, and can be critical of the executor and the timeline and costs of proper administration. For this reason, some will-makers choose a friend or a professional advisor as executor in an attempt to preserve the relationships between their children. Others encourage their family member executors to engage an estate lawyer, to help them to avoid errors and give the others a further assurance that the estate is being well handled. We encourage our clients to think critically about their choice of executor.

Choice of Executor

The role of executor is not for the faint of heart, nor for the ’emotional one’ in the family. The most successful executors are objective and careful. They don’t let paperwork accumulate on the desk corner. They figure out what work to delegate, and what work to do themselves. They are not baited by petty displays or poor behavior, and will patiently and calmly rise above unwarranted criticism. So, look for these characteristics in choosing your executor.

Executor Fees

When Probate is involved, the person who acts as executor will nearly always decide to charge an executor fee because so much work is required. The fee (payable from your assets and regardless of who acts as executor) is usually in the range of 2% to 3.5% of the value of the estate assets. The maximum allowed (for disputed or complex estates, and also for small estates) is 5% of the value of the estate assets.

Too much emphasis is placed on avoiding or minimizing executor fees. Given the work involved, some kind of compensation is appropriate. The law has checks-and-balances to ensure the amount is reasonable. It is a much lower amount than the real estate commission payable when a house is sold, even though the executor’s duties often last for one or more years. Rather than worry about an executor fee — worry about choosing the right executor!

Opportunities and Action Steps

We advise to keep your will and other estate planning documents up to date, and to encourage your beneficiaries to do the same. Also, if your spouse or main beneficiary dies, update your documents and explore new ways to provide for your beneficiaries. The efficient passage of wealth from one generation to the next is a matter of being well informed and well organized. Contact Beacon Law to discuss further.

Roles of Godparents & Legal Guardians

Godparents and guardians can both play an important role in the life of a child but they have different origins and their roles are also different.

Although, in the Christian faith tradition, godparents were once legally responsible for caring for an orphaned child, today godparents do not have any legal responsibility. The child’s legal guardians now assume the role of the parent if the parent has passed away. A godparent can still help the parent raise a child by providing spiritual guidance and support to the child.

Godparents are usually appointed by the parent at the child’s Christian baptism. Legal guardians are most often appointed in the parent’s Will. Appointment in a Will is the best way to make sure that the parent’s wishes for legal guardians are respected.

Often godparents do not change during a child’s lifetime, whereas legal guardians can and often do change. As personal circumstances change, and families relocate and grow, that child’s legal guardians might need to change. The consent of a former legal guardian is not required to appoint a new legal guardian. Likewise, a parent who has made a Will without appointing a legal guardian for a child can change the Will at any time to add an appointment of a legal guardian.

Of course, the same person can be named as both a child’s godparent and as legal guardian! However, as they have different origins and roles, they must be appointed separately to each role.

Federal Data Breach Reporting Rules

Have you ever lost a mobile phone? had a laptop stolen? misplaced a USB drive?

If so, under (Canadian) Federal rules that took effect in 2018, you may be required to report these kinds of incidents to the Federal Privacy Commissioner in Ottawa.

Reporting is mandatory if the data breach “creates a real risk of significant harm to an individual”. The degree of risk depends on several factors, such as:

• the potential for physical or financial harm, humiliation, or identity theft,

• the sensitivity of the lost information, and

• the possibility that it is being or will be misused.

These rules currently apply only to businesses that are Federally regulated, or organizations that share or move personal information across borders. In other words, not to BC businesses who only collect and use personal information in BC.

BC businesses must comply with BC’s Personal Information Protection Act. This BC legislation does not currently require mandatory reporting, similar to the Federal rules. However, complying with the Federal rules is still considered best practice in the privacy realm, and it may well become the law in BC in the future. Contact Beacon Law for more information.

Employment Contracts – Are They Worth It?

Being an employer sure comes with many challenges. During the period of employment the challenges include following employment standards, workers compensation, and human rights legislation. When employment is ending those regulations can also apply as well as the common-law rules for dismissing employees.

Whenever an employee is dismissed, there is a risk that the employee will bring a court action against the employer. As many court decisions show, employers can end up paying substantial amounts in monetary damages. Unless the employee was dismissed for just cause – which is often difficult for the employer to prove – damages can be awarded for wrongful dismissal, as well as for mental distress caused by the manner of dismissal, and breach of human rights standards. In rare cases, where the court strongly disapproves of the employer’s conduct, punitive damages can be added to the employee’s award.

Under the common-law, damages for wrongful dismissal are calculated based on the employer’s duty to give ‘reasonable notice’ to the employee of the dismissal. Reasonable notice can be “working notice” where the employee continues to work until the dismissal date, but employers often prefer to pay the employee’s wages for the notice period or “pay in lieu of notice.” If the employee sues the employer claiming wrongful dismissal, the court will decide whether the notice period (or payment in lieu) was long enough to be reasonable notice. The court will consider many factors, including the employee’s age, level of responsibility, length of employment, any promises made to the employee by the employer, as well as the state of the job market at the time. For these reasons, it is not easy to predict what the common-law reasonable notice period is for a particular employee at a particular time.

What About Employment Contracts?

Having a written employment contract can reduce the employer’s risk when dismissing the employee without just cause. If it is effective, the reasonable notice period will be limited to an amount that is at least equal to the statutory minimum notice period, as required by the Employment Standards Act. (The statutory minimum notice period also applies when there is no written employment contract). This benefits the employer because the alternative, the common-law reasonable notice period, is generally longer than the statutory minimum notice period.

However, even a well-written employment contract will not always be enforced by the court. To be enforceable, a written employment contract must be clear in its terms, and must also demonstrate that both parties intended those terms to be binding. Ideally the contract is made at the hiring stage; an employer who wants to bring in a new written employment contract with existing employees should use extra caution. Also, the common-law considers the employment relationship to include special protection for employees, including adding implied terms to written employment contracts. Other protections are found in provincial laws such as the Human Rights Code and Employment Standards Act.

Given the challenges and complexity of the law in this area, an employer who has or wants to create a written employment contract can really benefit from legal advice.

For more information on this or any other employment-related issue, please contact us.

Marijuana and the Workplace

The use of marijuana for medical and recreational purposes is legal in Canada. If you are an employer who is concerned about how to approach marijuana use by employees, here are some relevant suggestions and information:

• Employers have a duty to accommodate employees with disabilities, up to the point of undue hardship to the employer. This may include an employee’s use of medical marijuana as treatment for a disabling condition, or an employee’s substance addiction (this applies to substances other than marijuana too).

• Zero tolerance policies may not be enforceable. A zero-tolerance policy could be discriminatory against an employee who uses marijuana for medical reasons related to a disability. However, a zero-tolerance policy may stand where sobriety is a bona fide occupational requirement, such as in safety-sensitive workplaces.

• Have a clear drug policy that treats medical marijuana like other prescriptions (which can also cause impairment). The policy can also define what it means to be “impaired.” Some forms (or doses) of marijuana use may be consistent with an employee being able to fulfil their job duties.

• Employer drug testing policies need to be kept up to date. A clear method of determining impairment is not yet available, but testing technology is advancing and the law in this area is developing. All drug-related policies should be reviewed regularly.

In one case, the employer’s drug and alcohol policy required all employees to disclose any dependency or addiction issues. Workers who did disclose would be offered treatment, but workers who did not disclose would be fired if they were involved in an accident and tested positive for drugs or alcohol. The worker was fired after he was involved in an accident with a front end loader and then tested positive for cocaine use. In a human rights claim, the employee argued he was fired due to his drug addiction, which would be discriminatory. The court upheld the firing, because the employee had not disclosed his drug use to the employer as the policy required. The court agreed with the employer that the employee was fired for violation of the policy, which was not discriminatory because he was capable of complying with the policy. This is an example of how having appropriate employee policies for drug use can help an employer.

Employee use of drugs such as marijuana is not the only area of employment law that is changing, so employee policies require regular review and updating. Contact Beacon Law Centre to discuss your current employee policies, or to create a new employee policy manual.

Is Your Business Ready for Sale?

From helping hundreds of clients sell and buy their businesses, we have seen first-hand the difference it makes when a business is ready for sale (or not!).

The seller of a well-prepared business can benefit from fewer delays, a quicker and smoother process, lower legal and accounting costs, and sometimes a higher price.

If you want your business to be prepared for a sale, here are 9 steps you can take now:

1. Bring the financial records up to date.

2. Separate personal assets and expenses from the business.

3. Ensure the corporate records are up to date.

4. Update your operations manual (or, if you don’t have one, create one).

5. Document and organize all licenses, permits and significant contracts.

6. Put agreements with key employees and independent contractors into writing.

7. Resolve outstanding business disputes (with customers, suppliers, ex-employees, etc.).

8. Prepare an up-to-date list of the business assets and inventory.

9. List any consents required for a sale (from landlord, franchisor, lender, etc.).

Beacon Law Centre offers a comprehensive Business Legal Checkup to identify outstanding legal issues, and our Business Sale Navigator® program is designed to assist business owners through the sale process.

If selling your business is on your radar, give us a call.

Protecting Waterfront Land from Erosion

Two recent court decisions in Fonseca v. Gabriola Island Local Trust Committee affect the rights of waterfront property owners to take steps to protect their land from erosion. The result is that the “ancient common law right” to take steps to prevent erosion is now limited by all applicable local government regulations, such as those governing construction of new structures.

Background

• On one side in this court case was Mr. and Mrs. Fonseca (the “Fonsecas”), who owned waterfront property on Mudge Island. On the other side was the Gabriola Island Local Trust Committee (the “Committee”), which is the local government with jurisdiction over their property.

• Under its powers under the Local Government Act, the Committee had a bylaw prohibiting any structure within 30 meters of the sea.

• Over the years the Fonsecas built a concrete boat ramp, and various other structures along the shoreline, including a deck, fences and two seawalls. They did not obtain the Committee’s approval under the bylaw.

• In 2012 a neighbour complained to the Committee about the Fonseca’s structures. The Committee took enforcement action against the Fonsecas under its bylaw, requiring that they remove the structures.

Court Decision

• Justice Masuhara ordered the Fonsecas to remove a deck and fences, but not the seawalls. The seawalls were saved because their purpose was to prevent erosion. The judge exempted the seawalls because he held that the old common law right of a waterfront landowner to protect their property from erosion had priority over the Committee’s bylaw.

• The decision was reversed on appeal. The Court of Appeal found that the bylaw had priority over the common law right, and ordered the Fonsecas to remove the seawalls. In jurisdictions where a municipal bylaw regulates the construction of a seawall, the Court of Appeal limited the common law right to disputes between neighbouring land owners. For example, the court quoted from a previous case that where “a landowner acts bona fide and does no more than is reasonably and honestly necessary for the protection of his property, then an adjoining land owner who suffers damage as a result has no claim”. However, the ability to exercise this right is subject to municipal regulation.

Our Comment

The right to prevent erosion is very important, because once land is lost to erosion, it cannot be reclaimed. It becomes part of the foreshore and is owned by the Crown. In an era of rising sea levels, waterfront properties that historically did not suffer from erosion will increasingly see it happening.

The old common law right is one of a group of rights of owners of waterfront property called “riparian rights” (Technically, riparian rights only apply to flowing water such as rivers, but the term is commonly applied to all bodies of water). The right to prevent erosion is just the latest of these rights to be overtaken (the legal term is “abrogated”) by government legislation.

Two riparian rights that still apply in British Columbia are: right of accretion (ownership of naturally deposited material that has taken on the characteristics of the uplands), and right of ingress/egress (access to and from navigable waters).

The Provincial Government has published a paper stating that “British Columbia recognizes the right of upland property owners to protect their land from erosion… to install protective structures on their own land; but they require the consent of the Crown to extend any structures below the natural boundary.” This would appear to uphold the right of owners to install seawalls.

However, the Fonseca case means that the right of local governments to regulate/prohibit seawalls (also granted to them by the Provincial Government) takes precedence over the owners’ right to prevent erosion.

Unless the Provincial Government changes the Local Government Act to modify the effects of this case, which is unlikely, the right of waterfront property owners to prevent erosion will be subject to bylaws of the relevant local government. If you are a waterfront property owner concerned about erosion, you should check with your local government to determine if it has a bylaw that regulates the construction of seawalls. If your local government does not currently have such a bylaw and you are concerned about future erosion, consider constructing a seawall before your local government adopts such a bylaw.