May, 2023

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Factors to Consider When Buying Land Lease Cottages

Disclaimer: This article on land lease cottages is intended for the purpose of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

At Beeksma Law, we assist in various areas of real estate law. Real estate is a broad area and includes many facets, from residential purchases and sales to commercial leases

Another area of real estate law is that of land leases. In this and the following two articles, we will discuss three different types of land leases: 

  • Land lease cottages
  • Retirement communities
  • Tiny Homes

First, let’s consider land lease cottages. 

What is a land lease cottage? 

A land lease cottage is a cottage situated on a First Nations reserve. It is leased by the band rather than owned by the cottage owner. In this arrangement, the cottage owner owns the cottage itself but does not own the land it sits on. Instead, they pay a rental fee for the use of the band, which retains ownership of the land.

For example, there are two Saugeen reserves near Sauble Beach: Chief’s Point 28 and Saugeen 29. Both reserves have land that the band leases to cottage owners using this arrangement. 

Their current lease agreement provides that cottagers can live in the cottage from May 1st to October 31st.

They can also either:

  • stay for ten days per month from November 1st to April 30th for recreational purposes; or
  • pay an additional fee of $600+ per month to extend the season for up to two months.

Additionally, all cottage owners must pay an annual service fee of $1,000. This fee covers services such as policing, fire, garbage pick-up, and lighting.

The annual lease fee ranges depending on how close the property is to the lake, but the fee is similar to what property taxes are in the same area.

the view of a lake from a land lease cottage

Why consider a land lease cottage?

Purchasing a land lease cottage in Ontario can be an affordable and enjoyable way to enjoy a waterfront cottage without the expense and responsibility of owning the land. 

For the two reserves mentioned above, a land lease cottage allows you an excellent selection of properties close to or right on Lake Huron. The initial cost is three to four times lower than purchasing a traditional home or cottage. 

Restrictions when purchasing a land lease

There are some factors to consider before purchasing a land lease cottage. 

Your land lease will have restrictions in place regarding access to your cottage. For example, you may only have access to your cottage from May until October.  Additionally, you cannot get a mortgage for the purchase price of a land lease – you must pay the full amount. 

If you buy a home that is on leased property, it’s important to note that you cannot – and likely will never be able to – buy the land.

Additionally, you cannot use your cottage on leased lands as a short-term rental (for example, placing the property on AirBNB) and there may be limitations on how you can change the structure itself.

Factors to Consider Before Purchasing

There are several important factors to consider before making a decision.

Firstly, it’s essential to understand your lease terms. The lease will outline the length of the lease, the rental rate, and any rules or restrictions on the use of the property. It’s important to review the lease carefully with a lawyer to ensure that you understand your rights and responsibilities.

Secondly, it’s crucial to assess the condition of the cottage and any improvements on the property. A professional inspector should conduct a thorough examination of the cottage to ensure that it is in good condition and free of any defects or damage.

Finally, it’s essential to understand the risks associated with owning a land lease cottage. When you lease the land, you do not own the property, and the landowner may have the right to terminate the lease or sell the land. It’s important to ensure that the lease is renewable and transferable and to have a contingency plan in case the band decides to terminate the lease.

Understanding your Real Estate Options

Purchasing a land lease cottage in Ontario means you can enjoy a waterfront property without the expense and responsibility of owning the land. At Beeksma Law, we would be happy to discuss your real estate needs with you and provide any legal advice as you navigate your options. Contact Beeksma Law today to book your complimentary call!

Rural Real Estate: Do You Need a Shared Well Agreement?

a rural property that is likely the party of a shared well agreement

DisclaimerThis article on whether you need a shared well agreement is intended for the purpose of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

Our firm handles many real estate transactions – from helping families purchase their first home in Hamilton to handling the unique challenges of purchasing rural real estate, such as in Owen Sound. 

Rural real estate has its own unique challenges. Many lenders require specific documents before approving a mortgage, such as a survey of the property and a septic tank inspection. 

One of those complexities is the existence of shared wells. 

Your rural property may have water provided by a well instead of the municipal water supply. You may even have a shared well, meaning that the well on one property provides water to neighbouring properties. 

This article will discuss how this affects your purchase and how to protect your interests.

a rural property that would need a shared well agreement

Buying a home with a shared well

If you are considering buying a home with a shared well, you should consider several factors. Firstly, it’s crucial to determine if there is a shared well agreement in place. 

If there is no shared well agreement in place

In some cases, a shared well agreement may not exist, which can create problems down the line. Without an agreement, there may be confusion about who is responsible for maintenance and repairs, or disagreements about water usage. It’s important to ensure that a shared well agreement is in place before finalizing your purchase.

If the other parties refuse to sign an agreement or you cannot agree on the terms, it may be necessary to explore other options. 

What if there is a shared well agreement in place?

If there is, you will need to obtain a copy of the shared well agreement. Review it carefully with a lawyer to ensure that you understand your rights and responsibilities. The agreement should outline who is responsible for maintenance and repairs, how the parties will split costs, and any limitations on water usage.

Secondly, it’s important to assess the condition of the shared well and the water quality. If the well or water quality is in poor condition, you may need to negotiate repairs or upgrades with the other parties.

It is essential to consider the potential risks associated with a shared well. When multiple parties use the same water distribution system, there is a risk of contamination or overuse. 

It’s also important to note that shared well agreements can limit your ability to expand or modify your property. For example, consider how the agreement will handle a situation if one of the properties serviced by the will wants to install and fill a swimming pool, you may need to get permission from the other property owners who use the well. The agreement may also limit your ability to drill a new well or expand the existing one.

Title Restrictions for Shared Well Agreements

Access to a neighbouring property – such as a shared driveway – is typically formalized by registering an easement on title and having an easement agreement. 

Currently, there are no provisions to register a shared well agreement on title. However, we still strongly encourage you to have such an agreement prepared. The agreement would then be kept and would pass on from owner to owner. 

Make Your Next Real Estate Transaction A Success With Beeskma Law

Beeksma Law is a trusted and experienced law firm that has helped many families purchase properties – including rural properties. Our team of experienced legal professionals can provide you with expert legal advice and guidance throughout the buying process. We will help you make informed decisions and protect your rights.

Contact our offices today to discuss your transaction. 

The real cost of not having powers of attorney in Ontario

a couple who are stressed because they do not have powers of attorney

Disclaimer: This article on the powers of attorney is intended for the purpose of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

One of the only constants in life is change. Our circumstances can change at any moment. And we cannot understate the importance of preparing for whatever comes our way.

At Beeksma Law, we want you to be able to protect your families, your assets and your wishes. That is why we strongly encourage our clients to have powers of attorney for personal care and for property. 

Because the cost of not having them in place is too high. 

In this article, we will talk about why it is imperative that you have powers of attorney prepared. Then we will discuss what can happen if you fail to do so. If you would like to discuss your estate planning, please get in touch with our office. We would be more than happy to help you discuss your options. 

Why you may need a Power of Attorney

The Power of Ontario Act governs powers of attorney in Ontario and gives someone (an attorney) the power to act and make decisions on your behalf if you become mentally incapacitated. You may be deemed mentally incapable and unable to decide about your property or personal care for various reasons. For example, it may be because of an accident or the result of an illness. 

To be fully protected, you will want to prepare each type of power of attorney: a power of attorney for property and a power of attorney for personal care. 

A power of attorney for personal care covers decisions about your personal care. For example, it may include decisions about your medical treatment, health care, where you will live, and the type of care you will receive. 

On the other hand, a power of attorney for property covers decisions related to your finances and property. This can include paying bills, managing investments, and buying or selling property. 

What happens if you do not have a power of attorney? 

As noted in this article, this is where powers of attorney and wills differ. If you die without a will, the Intestacy Act outlines what happens to your estate.

However, if you are incapacitated and do not have a power of attorney, there is no corresponding legislation that applies. 

Becoming incapacitated without a power of attorney can significantly and negatively impact many areas of your life. If you are being treated for any health issues, your treatment may be delayed and your care may not be aligned with your beliefs or wishes. Another major consequence is that your property and finances may be left in limbo. 

To remedy this situation, one of your loved ones will need to file a guardianship application with the courts to give them permission to act as your guardian and handle your affairs. Alternatively, the Office of the Public Guardian and Trustee (OPGT) may also be appointed to act on your behalf. 

How much does a guardianship application cost? 

The cost of a guardianship application can vary. However, your costs will be significant – and many times more than the cost of preparing your powers of attorney. This cost can be especially burdensome for families who are already struggling to manage the expenses of a loved one or family member who is incapacitated.

Even an uncontested guardianship application (meaning one where no one has any objections) will cost several thousand dollars. Contested guardianship applications can cost significantly more, and the expenses can quickly add up. The costs of a guardianship application may include attorney fees, court costs, and other expenses related to the application process, such as a capacity assessment.

In addition to the financial cost, there is also an emotional cost to not having a POA. The stress and uncertainty of not knowing who will manage your affairs can take a toll on everyone involved. It can also lead to family conflict and legal disputes, which can be especially painful during a time of crisis.

To avoid preparing powers of attorney to save money now – only to pay much more later – would be penny wise, pound foolish.

Why everyone needs a power of attorney? 

We often think about estate planning as being a priority for the elderly. However, the truth is that we do not know what the future holds for any of us. The fact is, we want to protect our loved ones. We do want to make sure that our wishes are respected – not only if we pass away, but if we are alive and unable to make our own decisions. 

That is why we encourage you to have all of the essential legal documents prepared at the same time. The cost to prepare powers of attorney – especially if you prepare wills at the same time – is much lower than the alternative. And we cannot put a price on the peace of mind that comes from knowing that you have cared for your loved ones and your own future.

At Beeksma Law, we understand the importance of these legal documents and strive to make the process as easy and stress-free as possible. Our team will create customized legal documents – such as powers of attorney, wills, and trusts – that reflect your individual wishes. Contact our team today to get started.

A Will vs. A Power of Attorney: What’s the difference?

a couple shaking hands with their lawyer as they have completed their power of attorney and feel confident about their future

Disclaimer: This article on the difference between a will and a power of attorney is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

When people think of estate planning, they think about their wills. When speaking to new clients, we ask, “Do you have a power of attorney?” 

The answer, more often than not, is no. In fact, only 40% of Canadians (and a mere 9% of those under 35) have drawn up powers of attorney. 

After all, is a will not enough? The answer is no, in order to protect yourself, your family, and your property, you need: 

  • A will; 
  • A power of attorney for personal care; and 
  • A power of attorney for property. 

We outlined what those documents are here, but in this article, we will talk about how powers of attorney differ from wills. 

(Of course, if you would like to discuss any of your estate planning needs, please contact our office today). 

What does each document cover? 

Each document has a distinct purpose. 

Your will outlines your wishes and how to distribute your estate after you have died. An executor is appointed to ensure those wishes are followed. 

Both powers of attorney outline what happens if you are alive but incapable of making decisions for yourself. An attorney is appointed to make decisions on your behalf – you can have the same individual or choose different individuals for each power of attorney.

When do they go into effect? 

A will goes into effect when you pass away. 

Powers of attorney go into effect while you are still alive. When it specifically goes into effect depends on how your document is drafted. You can have it go into effect upon signing or upon becoming incapacitated. 

There are pros and cons to each. If your documents allow your attorney to act immediately, they will be able to make decisions on your behalf much more quickly. This can be handy if, for example, they need to access your bank account to pay your bills if you are incapacitated. If your documents require your attorney to prove that you are incapable, this can cause delays and have an impact on many areas of your life. 

However, allowing your attorney to make decisions on your behalf at any time comes with its own risks. Carefully consider your circumstances when preparing your power of attorney.

How are these estate planning documents prepared? 

You may have heard the term “holograph wills”. (In fact, we talked about them here.)

While there are certain requirements that must be met, you can have a legally binding, valid holograph will that is only signed by the testator (meaning there are no witnesses). However, there is no such thing as a “holograph” power of attorney. The Substitute Decisions Act requires that your power of attorney be signed by two witnesses. 

What happens if you do not have a power of attorney? What happens if you don’t have a will?  

We will cover this in more detail in our next article, but in many ways, it hurts you more to be incapacitated with no power of attorney compared to dying without a will. 

Distributing your estate if you die without a will (or die intestate) is governed by the Intestacy Act and outlines how your estate should be split amongst your closest relatives. Of course, this may not always be ideal, and it is always better to have a will in place. 

However, there is no corresponding legislation if you become incapacitated and do not have a power of attorney. You have then triggered a series of long, costly legal battles for your loved ones to handle. 

It is important that you fully protect your loved ones, no matter what happens.  

Understanding Your Will and Powers of Attorney With Beeksma Law

At Beeksma Law, we know that anything can happen at any time. We know you want your loved ones and your interests to be protected and that is why we work with you to create an estate plan that fits your needs. 

To learn more about getting started on these essential estate planning documents, contact our office today.