June, 2023

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Cottage Dreams and Legal Realities: What to Consider Before Buying a Vacation or Investment Property in Ontario

Disclaimer: This article on buying a cottage is intended for the purpose of providing information only. It is to be used only for the purposes of guidance. We do not intend that you rely on this article as legal advice and it does not purport to be exhaustive.

Many city dwellers dream of escaping the hustle and bustle of their everyday lives for the idyllic tranquility that a cottage promises. We can almost feel the cozy campfires, see the serene lakes, and breathe in the fresh, crisp air. 

Whether it’s picturing a peaceful retreat, a place to bring family together or an investment property to diversify your income, many people dream of owning a cottage. While there are many opportunities in rural Ontario to make your cottage dreams a reality, there are also many factors to consider. 

In this article, we will talk about some of those realities and how to make sure that you are making the right real estate choices for you and your family. If you own a cottage and are wondering how to include it in your estate plan, read this article here

Buying a Cottage 

There are a couple of areas that you will want to talk to your real estate team about before buying a cottage. 

Is your property zoned seasonal? If that is the case, that means that the municipality may not provide services – such as snow removal – which may prevent you from enjoying your property year-round. 

Is your property on a shoreline? If so, you will want to confirm your access rights as as they relate to the water and the shoreline. You will also need to confirm that the local conservation authority has not placed any restrictions on how you can use the shoreline. 

Other Rural Property Considerations 

There are specific considerations that you need to think about when buying a rural property, such as the examples listed below. (This list is not exhaustive – you will want to discuss your property with your real estate professionals.)

Shared Well Agreements

As we mentioned in this article, some properties share a well with their neighbours and require a shared well agreement. This well help determine who is responsible for any maintenance that comes up and if there are any limits to its use. 

Surveys to be completed 

When purchasing an agricultural or mixed-use property, a survey is typically required. However, for other properties, a survey can be optional. It is helpful to determine accurate boundary lines, especially in large, unfenced properties. Surveys can take months to complete. Therefore, it’s advisable to discuss scheduling it after the closing date unless it’s a required zoning requirement.

Water Testing & Septic Tank Inspections

Does your property connect to the municipal water supply and sewer system? If not, your lender will typically ask for two inspections: water testing and septic tank inspections. These inspections ensure that your water source and sewage systems are safe, giving you and your lender peace of mind.

Your water test will examine various parameters such as bacterial contamination, mineral content, pH levels, and any harmful substances. Septic tank inspections are equally important when it comes to cottage properties not connected to the municipal sewer system. An inspection evaluates the overall condition of the septic system. The inspector will check for any signs of malfunction or damage that could pose environmental and health risks. 

Investment Properties & Short-Term Rentals 

Purchasing a cottage with the intention of using it as an Airbnb can be an exciting opportunity to generate income. However, before making a purchase, it’s essential to familiarize yourself with municipal requirements and bylaw restrictions. 

For example, Collingwood’s zoning bylaw defines “short term accommodation” under it’s Zoning By-law No. 2010-40 as:

“the use of a dwelling unit, or any part thereof, that is operating or offering a place of temporary residence, lodging or occupancy by way of concession, permit, lease, license, rental agreement or similar commercial arrangement for any period of 30 consecutive calendar days or less, throughout all or any part of a calendar year.”

That same bylaw only allows short-term rentals in bed and breakfast establishments.  

On the other hand, Owen Sound recently defeated a motion to limit some short term rentals. 

Each municipality in Ontario has its own set of regulations that govern short-term rentals, ensuring compliance with safety, zoning, and taxation standards. If your intention is to use your cottage as a short term rental property, make sure that you are legally able to do so. 

Beeksma Law: Helping you enjoy your vacation property

At Beeksma Law, we want to help you navigate the complexities of buying a cottage property in Ontario. We are here to ensure you can enjoy your vacation property to the fullest. We understand the unique considerations and legal requirements involved in cottage ownership. Therefore, our team can provide expert advice and guidance throughout the process.

Book your complimentary consultation with our team today to discuss your cottage property needs. Our dedicated team of professionals is ready to guide you through the process and protect your interests.

What Your Mortgage Broker Wishes You Knew

Disclaimer: This article on mortgages in Ontario 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.

Buying your next home means tapping into a team of professionals – such as your realtor, real estate lawyer and mortgage broker. Each one has an important role to play. 

At Beeksma Law, we build relationships with talented real estate professionals who understand the value of collaboration. We work closely with mortgage brokers who share our commitment to providing exceptional service and personalized attention to clients.

We recently spoke with Jacob Renshaw, Mission 35 Mortgages. Customer service driven and detailed focused, Jacob helps his clients navigate the real estate market, take control of their purchase or refinance, and achieve their financial dreams. We appreciate him sharing his expertise with us and have summarized the top takeaways below. 

Whether you’re looking for your first home or buying property to build wealth, you must find the right professionals to make it happen. Book your consultation with our team today.

a broker giving someone paperwork to sign for their mortgage in ontario

It’s never too early to start talking to a mortgage broker.

You may not yet be in the market for a home, but that does not mean you should hold off on talking to a mortgage broker. 

Even if you’re not currently prepared to purchase a home, engaging in a conversation with a mortgage broker will provide you with a clear understanding of your financial needs and enable you to take any necessary steps to get ready.

This process helps identify areas for improvement, such as credit building or increasing income, which may be crucial for a successful mortgage application. Don’t leave yourself in limbo; start the pre-approval process as soon as you consider entering the housing market.

Prequalifications and preapprovals are different.

Too often, these phrases are used interchangeably, but the reality is that there are some critical differences between the two. 

A pre-qualification will typically ask some basic questions and provide a generic response. Many first-time home buyers will use this information to begin their search for their home. While this is a useful starting point, it should not be fully relied upon. 

A pre-approval goes a step further by involving a thorough assessment of your financial background. It includes a detailed review of your income, credit history, and debt-to-income ratio. With a pre-approval, you receive a more accurate and reliable estimate of the mortgage amount you qualify for, which gives you a stronger position when making an offer on a home.

Interest rates are less important than you think. 

A lot of what we hear about mortgages in Ontario as it relates to the rates. Will the rates increase? Should I go with a variable or fixed rate? 

The current instability in the financial landscape is holding many people back, even amongst pre-approved buyers with excellent financial standing. 

Remember, the interest rate alone doesn’t determine everything. Sure, it’s tempting to focus solely on that percentage, but what really matters is the payment itself and how it fits into your overall financial situation.

Looking solely at the rates means you miss out on the larger picture. For example, a lender may approve you for a certain amount, but does that mean you can actually afford it? 

It is better to employ a payment and budget-based approach. Can you comfortably afford that mortgage? It’s not just about what’s possible but about what’s prudent for your financial well-being.

So, instead of fixating on interest rates and hypothetical crashes, let’s shift our focus to what truly matters: affordability. Can you comfortably afford to buy a home in the current market? That’s the question you should be asking, not whether rates will rise or fall. After all, rates will fluctuate throughout your lifetime, but your ability to afford a home matters most. 

Don’t start furniture shopping yet!

While we understand the inclination to begin shopping for new furniture for your new home, hold off for now! 

Do not take on any new debt, and avoid adding to your existing debt. Your lender has based its decision on your current financial situation, including your debt-to-income ratio. Additional debt can negatively impact this ratio and jeopardize your mortgage approval. 

Your lender will not hesitate to revoke your approval if a change in your financial situation causes them concern. To ensure a smooth transaction, focus on maintaining financial stability and making timely debt payments. 

This also applies to accepting a new job offer, even if the new job starts after your closing date. Your lender will typically contact your employer for a final employment verification check right before closing. If they discover that you’ve given notice or have plans to switch jobs, it can throw a wrench into things. It’s best to hold off on any job changes until after closing. That way, you can confidently transition without risking your mortgage deal.

You have (really good) options – even if you’re self-employed.

Getting a mortgage from a traditional lender, such as a bank, can be more difficult if you are self-employed. Newer businesses are especially affected, although you are more likely to be approved if you show at least two years of consistent income. Another obstacle entrepreneurs face is that banks typically only consider your net income rather than how much revenue your business generates. 

Alternative lenders usually take a different approach and look at your T4A, which shows your gross income. Alternative lenders can be a solid option for entrepreneurs, as they will operate differently from a bank and have a niche client they want to serve. They can have tailored products specific to your situation, and your mortgage broker can help you find which option is right for you. 

A mortgage broker can give you more.

While you may approach a mortgage broker to help you secure a mortgage, the truth is that they can be so much more. As early as the application process, your mortgage broker will look for opportunities you might not have considered. 

Each mortgage broker will bring their own expertise and experience. For example, Jacob is passionate about helping people to build wealth. His goal is to go beyond your initial expectations and open your eyes to the possibilities that exist in the world of real estate investment.

Securing a mortgage is more than just a transaction—it’s part of your financial journey. A mortgage broker invests in a personal connection with you. They take the time to understand your financial situation, goals, and dreams of homeownership. Picture them as your knowledgeable guide, offering tailored advice and support every step of the way. With open lines of communication and trust, the broker becomes your partner in this exciting journey, ensuring you feel confident and informed throughout the process.

Building a solid real estate team with Beeksma Law

At Beeksma Law, we pride ourselves on offering expert legal advice for all your real estate matters and fostering reliable industry connections with other professionals, such as mortgage brokers. Our team is dedicated to providing comprehensive support and guidance throughout your real estate journey

With our strong relationships within the industry, we can leverage valuable resources and networks to ensure your needs are met efficiently and effectively. Whether buying, selling, or dealing with any real estate transaction, trust Beeksma Law to be your trusted partner every step of the way.

Factors to Consider When Buying a Retirement Community Land Lease

Disclaimer: This article on a land lease in a retirement community 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.

According to recent statistics, 7 million people in Canada are 65+. This accounts for almost 1 in 5 Canadians, representing approximately 19.0% of the total population. As this segment continues to grow, the demand for suitable housing options for seniors becomes increasingly crucial. 

In response, retirement communities with land lease arrangements have gained popularity. Many see it as a viable solution for older adults seeking a fulfilling and supportive lifestyle. However, as is true with all real estate purchases, it is essential to delve into the legal implications of buying a life lease in such communities to ensure seniors make informed decisions and protect their rights.

At Beeksma Law, we understand the importance of comprehensive legal guidance for those navigating the intricacies of buying any property. Our experienced team is dedicated to informing seniors about the legal implications and potential challenges associated with this unique form of homeownership. Contact our team today to talk about your next property purchase. 

Land Leases and Retirement Communities

A land lease, within the realm of retirement or senior living communities, refers to an arrangement where you purchase the right to occupy a specific unit or property within the community for a designated period. 

Like other land leases, you would lease the land from the community while retaining ownership of the unit itself. This model is commonly employed in retirement communities to provide seniors with an affordable and accessible housing option while enabling the community or organization to retain ownership and control over the land.

Under a land lease agreement, seniors typically make an upfront purchase payment or entrance fee to acquire the leasehold interest in the property. There are usually ongoing monthly charges, similar to homeowners’ association fees, for maintenance, utilities, amenities, and community services. The duration of the lease can vary, ranging from several years to a lifetime, depending on the agreement’s terms.

If one spouse passes away

Typically, if both spouses are owners of the leasehold interest, the ownership will transfer to the surviving spouse upon the death of one spouse. This provision ensures that the surviving spouse can continue to occupy and enjoy the property. However, when the final surviving spouse passes away, the ownership of the leasehold interest will usually revert back to the land owner.

This aspect of land lease agreements is essential to grasp as it may impact long-term planning and decision-making. When considering a land lease in a retirement community, individuals should carefully evaluate the implications of the ownership transfer upon the death of the final spouse. This provision means that the property may not be passed on to heirs or beneficiaries as part of the individual’s estate, as would typically occur in traditional homeownership.

Pros and Cons of a Land Lease in a Retirement Community

It’s important to consider the advantages and disadvantages of buying in a retirement community, including the following factors. 

PRO: Lower Initial Cost 

One of the significant advantages of a land lease arrangement in a retirement community is the lower upfront cost. This affordability makes retirement communities with land lease options more accessible to seniors who may have limited financial resources.

CON: Limited Equity Building

Unlike traditional homeownership, where the value of the property may appreciate, the interest in a retirement community may not provide the same opportunity for building wealth. 

This limited equity-building potential can be a disadvantage for seniors who view homeownership as a long-term investment or a means to pass on assets to their heirs. It’s important for individuals to carefully consider their financial goals and priorities when evaluating the land lease option in a retirement community.

PRO: Reduced Maintenance Responsibilities 

In a land lease situation, the community or organization typically assumes responsibility for maintaining the common areas, amenities, and infrastructure within the retirement community. Seniors can enjoy a more carefree lifestyle, focusing on their well-being and engaging in community activities without the added stress of property maintenance.

CON: Limited Control 

In a land lease arrangement, residents have limited control over the land since they only lease it from the community. This means that you have a limited ability to modify your property or have a say in certain community decisions. Additionally, land lease agreements often come with resale restrictions and conditions. You may have a limited potential pool of buyers or have to sell the property back to the community. 

PRO: Community Amenities and Services 

Retirement communities often provide a range of amenities and services designed to enhance seniors’ quality of life. These amenities may include fitness centers, swimming pools, recreational areas, social clubs, organized activities, and on-site healthcare facilities. 

CON: Limited Financing Options 

Unfortunately, not all lenders are enthusiastic about providing a mortgage for a land lease home. This can present challenges for those seeking financing.  There are alternative lenders that specialize in these sorts of situations. However, you may find yourself with fewer options than those seeking traditional ownership. 

Understanding your Land Lease Agreement

As with any agreement, understanding your land lease agreement is of utmost importance. This legal document outlines the rights, responsibilities, and obligations of all parties involved. Failing to fully grasp the terms and conditions of your retirement community can lead to potential misunderstandings and financial pitfalls.

At Beeksma Law, we are committed to providing exceptional legal services and guidance tailored to our client’s unique needs. We understand the importance of clarity and transparency in understanding your rights, obligations, and the legal implications involved.

Our experienced team loves to empower our clients, ensuring they have a comprehensive understanding of their land lease agreements. We take the time to address any concerns and provide professional advice. Above all, we want our clients to make informed decisions that align with their goals and priorities.

We encourage you to book a call with our knowledgeable team today. Together, we can navigate the legal complexities, protect your rights, and provide you with the peace of mind you deserve.

Small Spaces, Big Questions: Navigating Land Leases and Legalities for Tiny Homes in Ontario

an image of a tiny home in ontario

Disclaimer: This article on owning a tiny home in Ontario 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.

As rents and housing prices become increasingly less affordable, more Ontarians are looking into tiny homes. For example, Ancaster’s first Tiny Homes Show was held in August 2022 and drew over 2,000 visitors and had over 20 speakers presenting on a variety of topics. Shows like Tiny House Nation have become increasingly popular and many wonder if a tiny home may be the solution. 

With their cozy interiors, clever design features, and the promise of financial freedom, tiny homes have become appealing. Many see tiny homes as a way to downsize, reduce their ecological footprint, and embrace a more intentional way of living.

However, what legal issues should you consider before selecting your floor plans? What are the challenges to legally owning and parking a tiny home? What should you consider if you want to build a tiny home in Ontario?

This article will consider these questions and more. Whether you are looking at a tiny home or a [something], it is important to have the right real estate lawyer by your side. Our team of legal experts will guide you through the intricacies of home ownership, helping you navigate the legal landscape and ensure compliance with local regulations.

What is a Tiny Home?

In Ontario, a tiny home refers to a small, self-contained dwelling that typically ranges from 100 to 500 square feet in size. These homes are designed to maximize functionality and efficiency within a limited space. Tiny homes in Ontario often prioritize sustainable living, minimalism, and affordability, making them an attractive alternative to traditional housing options.

While each municipality will have its own requirements, the tiny house construction bylaws mandate that a tiny home must measure between 17.5 ft2 (188 ft2) and 37 m2 (400 ft2 ). It must also meet these requirements: 

  • It must meet the Ontario Building Code requirements for health and safety; 
  • You must be able to live in it year-round
  • It must have an area for dining, living and sleeping and have a functional kitchen and bathroom. 
  • It must have sewage and water hookups. 

Financing your tiny home 

It’s worth noting that it’s incredibly difficult to secure financing for your tiny home. Lenders are reluctant to provide traditional mortgage loans for tiny homes due to their unique nature and less confidence in their resale value. However, there are still financing options available to help you fund your tiny home project. For example, if you are purchasing from a tiny home builder, they will typically have their own financing plans in place.

Municipal requirements for your tiny home in Ontario

The municipality where you intend to park your tiny home will have various bylaws and zoning requirements that may affect you. 

These include:

  • Minimum lot size
  • Minimum residential building size
  • Distance from lot lines and/or a public street
  • Height requirements
  • Parking needs
  • Access to municipal services (sewage, electricity etc.)
  • Architectural design
  • Access for emergency services. 

Land Lease to Park Your Tiny Homes

Finding suitable land to park your tiny home is a critical step in realizing your tiny living dreams. Whether you’re looking for a permanent location or a temporary spot, there are several factors to consider when searching for the ideal piece of land. 

However, like any agreement, you’ll want to consider carefully your land lease. Some areas to consider include: 

  1. Utilities

Can you connect to essential utilities, such as water, sewage and electricity? How will the costs be shared? Are there any restrictions to your use of the utilities? 

  1. Maintenance costs

Clarify the costs associated with the land lease. In addition to the monthly rent, are there any other fees, such as property taxes, maintenance fees, or utility expenses? Who is responsible for maintenance and repairs to the property, such as landscaping and snow removal? Discuss any potential increases in rent over time and whether there are provisions for negotiating lease terms in the future.

  1. Your use of the land

When leasing land to park your tiny home, it’s essential to discuss and understand your permitted use of the property. Are there any restrictions or limitations on the activities you can engage in on the land? Are there specific rules regarding modifications to the land or the number of occupants allowed? It’s important to clarify these details to ensure that your intended use aligns with the terms of the land lease.

  1. Lease term and termination 

Review the lease duration and termination conditions carefully. Is the lease for a fixed term or a month-to-month basis? Understand the process for terminating the lease and any penalties or notice periods involved. It’s also important to consider if there are any options for lease renewal or extension if you plan to park your tiny home on the land for an extended period.

Beeksma Law: Answering all of your big questions 

At Beeksma Law, our commitment to exceptional client service, attention to detail, and in-depth knowledge of Ontario real estate laws set us apart. Contact Beeksma Law today to schedule a consultation and take the first step towards making your home ownership dreams a reality.