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Discussion Starter #1 (Edited)
So I own a middle townhouse. 1 of 3 I'm in the middle, but that detail is NOT important. Only to the effect that my intention is to buy the other end too when it becomes available.

I'm buying one of the end townhouses as a rental, by the way these are century homes. My lawyer advises me that I'll need to put someone else on title. Since I own the property beside it, and we register you as the owner for the property right next to a property that you own, the property will merge.

In the future, unless you want to sell them together as one property you will need to "sever" the properties at the time of sale in the future. It is expensive and will take at least 6 months and a survey will be required etc.

Complications:
Candidates for putting someone on title.
My wife - I'd rather not because it would mean that she will also need to go in the mortgage financing as a co-signer and it will occupy her credit's TDSR when she needs to buy her own property which is in the very near future.
My daughter( 23years old) - no issues in terms of buying any property in the near future BUT she will lose out her first time buyer status. Apparently that is a $4000 land transfer tax rebate or something. She wont qualify for this purchase (she needs to live there) And she won't qualify in the future either. I've been told because she now has a property in her name somewhere in the world.
Any of my numbered corporation or registered business - my mortgage broker says the mortgage application then becomes a "commercial" with higher rates and harder qualifications. Very risky to even try.

I'm completely torn between wasting my daughter's first time home buyer's status vs facing the uncertainty and cost of "severing" the properties down the road.

I need opinions, suggestions, advice or any valid emotional outburst :).
Thanks in advance
 

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I’ve never heard of this. The existing units should have their own legal description, deed and property identification number. interested to hear if it is in fact correct.
 

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Discussion Starter #3
First time for me too - I don't know how expansive this rule is. Canada-wide?, Ontario-wide. I'd love for experts to chime in. I'd really appreciate if someone can show or advise me the tips and tricks in keeping in solely on my name and also avoid the merger.

Oh and yes my mortgage specialist is aware of this rule/issue she suggested to ask my lawyer to "slightly" change my name on registration of title. Missing letter, middle name on off etc. My lawyer says that that is "essentially" ineffective becuase it still "who" has legal say so on the property is effectively the same person. Though she also suggested that when I sell the place to use a different lawyer or something that is not very thorough maybe? This lawyer has represented me in the last 5 properties that I have purchased in the last two years including the middle townhouse that is beside the one I'm buying. So maybe she is saying she cannot deny not knowing. I'm completely confused. Somebody talk to me in english about this please.

My realtor is also aware of the rule - this rule is so dumb
 

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Well, not for
First time for me too - I don't know how expansive this rule is. Canada-wide?, Ontario-wide. I'd love for experts to chime in. I'd really appreciate if someone can show or advise me the tips and tricks in keeping in solely on my name and also avoid the merger.

Oh and yes my mortgage specialist is aware of this rule/issue she suggested to ask my lawyer to "slightly" change my name on registration of title. Missing letter, middle name on off etc. My lawyer says that that is "essentially" ineffective becuase it still "who" has legal say so on the property is effectively the same person. Though she also suggested that when I sell the place to use a different lawyer or something that is not very thorough maybe? This lawyer has represented me in the last 5 properties that I have purchased in the last two years including the middle townhouse that is beside the one I'm buying. So maybe she is saying she cannot deny not knowing. I'm completely confused. Somebody talk to me in english about this please.

My realtor is also aware of the rule - this rule is so dumb
Not for me to say that your lawyer is wrong. Ontario is not the place it was when I graduated from law school there and I am happy not to go back. The silly rule you now cite only reinforces me in that view.

So, if your lawyer has it right, then if you buy every house on a city block, all of those titles will somehow miraculously be transmogrified into a single title. And the corollary is that, if you later want to sell any one or more of those houses, you must apply for a subdivision, with all the attendant cost and complexity. A subdivision is the only way I know of to "sever" (I think that was intended over "severe") a portion of a parcel into a separate parcel.

Has your lawyer identified the process by which this "merger" takes place? It suggests that the Ontario Land Registry offices (I think Ontario may still be under land registry and not a land titles system) must have someone scrutinizing titles to identify when common ownership occurs. But what if "John Doe" is the owner of whiteacre and a different "John Doe" becomes registered owner of blackacre next door? Does one receive a gift of the other's land by virtue of the common name?

Here in BC, we have long used descriptors to help to differentiate ownership. A common way of describing a purchaser on the instrument of transfer (hence on the new title that results) is, for eg. "John James Doe, businessman, of 7001 West Point Grey Road, in the City of Vancouver, in the Province of British Columbia". There is no real magic to the description of occupation or address. You are free to call yourself anything you like as it will appear on the Certificate of Title. So Mr. Doe could appear on one title as "businessman" and on the next door title as "retired" (often seen). In Ontario, such a side-by-side registration would, I suppose, spark an investigation by the merger police, to see if there is in place a nefarious plan to defeat the merger rule (the purpose of which is very obscure, unless a device to generate future subdivision fees.)

Very weird.

Lastly, I would not consider for a moment using a name with a deliberate mispelling. That could make any future dealings with the property a real headache. Say you have to prove you are the owner entitled to convey or mortgage. You are asked to produce ID. It does not square with what's shown on title. Ugh.
 

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Hi Letran,
I did the same thing that you are contemplating (Ontario).
I was also concerned about the titles merging. I did not get a clear answer from our lawyer about how big a worry that was.
In any case, our solution was to hold one property singly and the other jointly. That way the ownerships remained distinct.
One of our properties was free and clear; mortgage co-signing and TDSR were a non-issue for us.

It sounds like you have a significant and growing pile of assets. If that's the case, the $4,000 "loss" by putting your daughter on title sounds insignificant. What may be significant is that she will be the owner of the property; this can be a recipe for family heartache.

Amusingly, given MP's comment, we acquired the second with a misspelling in my name. (It was not deliberate.) It did create a headache on disposition -- I had to file an affidavit. It cost me a few hundred bucks.
 

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Discussion Starter #7
Thank you fireseeker, so at least now we know this is an Ontario thing.

When I was first advised by my lawyer to put some one else's name to avoid merging I didn't think much of it. I just thought ok just put my wife's name. But delving in to it coupled with my own personal situation it makes the purchase much more cumbersome unnecessarily. As I described in my original post, my 3 options are not ideal to my situation.

It is not so much the money ($4000) although it is still quite a good chunk to lose needlessly. So my deliberation was. Fine I'm going to lose $4000 no matter which way.

1. Rebate loss $4000 - If I include my daughter's name - disqualify for future 1st time home buyer rebate (it is $4000 value NOW, the value of the unresolved rebate might foreseeable higher or the program could be cancelled completely, idk). two while I'm carrying that mortgage her credit TDSR will be lop-sided also disqualifying her for most loans. She is currently not making that much to afford a mortgage of this size and add a car loan perhaps.

Versus

2. Possible cost of severance - $2000 -$XXXX. - Cost of lawyer, cost of application to the city. cost of required land survey, cost of any future building codes I might need to meet to sever the titles of the properties. Requires at least six months lead time to have property registry separated IF then approved.

That is what I'm currently deliberating. My question is which ones of the lesser evil or is there another way to do this. HELP.

Or of course. not buy the property.

Mind you I'm already in deep but have not waived the financing condition yet. One I do not want a pissed off neighbor AND more importantly I do want to buy it.

As reference, directly from my lawyer.

"The merging of the properties means that going forward you cannot deal with the properties separately they are considered one large parcel of land. Therefore, if you want to refinance, transfer title or sell one of the properties you must refinance, transfer and sell both parcels together, you cannot deal with one at a time. The only way to deal with the parcels separately after closing is to obtain a severance which would require an application to the City. The severance will certainly cost time and money and you would need to have the lands surveyed as part of the severance application. There is also a chance that the City may deny the severance application. The tax rolls may merge, but unlikely, as you usually have to apply to the tax department to merge two roll numbers. Generally speaking, roll numbers usually do not merge automatically.,"
 

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My daughter( 23years old) - no issues in terms of buying any property in the near future BUT she will lose out her first time buyer status. Apparently that is a $4000 land transfer tax rebate or something. She wont qualify for this purchase (she needs to live there) And she won't qualify in the future either. I've been told because she now has a property in her name somewhere in the world.
. . .
two while I'm carrying that mortgage her credit TDSR will be lop-sided also disqualifying her for most loans. She is currently not making that much to afford a mortgage of this size and add a car loan perhaps.

I strongly feel you should leave your daughter out of this, instead of involving her in some complicated gambit.

She's 23, probably too young to understand the various implications of the arrangement. She's an adult, and should have the autonomy to make her own decisions with her money and her own credit.
 

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I wonder if you could add a partner to your new purchase -- someone who would own only 1% of the property. Your lawyer, your neighbour, your dentist, anyone.
This approach is described in this RFD thread.
 

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This is a genuine question for you real estate folks, just because I don't understand real estate, and I don't own any.

Can you explain for me the basic motivations in these kinds of transactions? There are big mortgages involved, apparently the guy has numbered corporations, and clearly requires lawyers to make all this happen. You're looking for bodies to assume titles. There are many people involved, and therefore large expenses, perhaps difficulty financing the gambit, legal complications if the people don't cooperate, etc.

It all sounds very complicated. What's the goal here? Why buy a cluster of properties together? Is the idea to build a "portfolio of properties" using high leverage?

Or is the goal to do some kind of arbitrage on that cluster of houses, taking advantage of a kind of mispricing that can be turned to your advantage by merging the properties?

If the goal is simply to have a portfolio of properties, wouldn't it be more advantageous to buy the properties in different locations, so that they aren't overly concentrated on a single city block?
 

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Discussion Starter #11
I wonder if you could add a partner to your new purchase -- someone who would own only 1% of the property. Your lawyer, your neighbour, your dentist, anyone.
This approach is described in this RFD thread.
Yes I've thought of it
  • a silent minority partner
  • that I can trust
  • that is not a 1st time home buyer
  • that would qualify on a 2nd mortgage
  • and could take a hit on the TDSR
Still quite a list of conditions for a willing or even unwilling friend/partner

But hence, it is way too late - I do not have that much time to get another person approved on the mortgage my closing date was supposedly May 6th - I'm moving it till end of the month. Even then this option is a long shot

Although my RE agent did suggest putting my "lawyer in-trust" I'm just not quite sure how that will work.
 

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This is a genuine question for you real estate folks, just because I don't understand real estate, and I don't own any.
Can you explain for me the basic motivations in these kinds of transactions?
I can't speak for the OP, and I'm certainly not a real estate guy. But I suspect "these kinds of transactions" are rare and occur only in unusual circumstances.

In my case, it seemed like there was an opportunity to assemble a parcel of land that could then be used for denser development.
Turns out I was wrong.
The endeavour ended fine because the properties appreciated and I sold them individually. I was lucky.
 

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Discussion Starter #13
I strongly feel you should leave your daughter out of this, instead of involving her in some complicated gambit.

She's 23, probably too young to understand the various implications of the arrangement. She's an adult, and should have the autonomy to make her own decisions with her money and her own credit.
Thank you james4beach, for your concern.

As her parent and guardian I do lookout for her best interest.
I'm also in finance so I'm aware of what and how it could affect her.

Sadly, she is still my dependent financially so she and I both know the likelihood of her buying her own in place in Toronto.

As my child,and being around my business she is and I have fully explained if not for the purpose of educating her also of the pros and consequences of this "gambit" if you want to call it that.

But granted I do look ahead and I also plan for the unexpected. In the event that either unforeseen situation or that she is ready to buy her own place sooner than expected. I'll be very happy to execute ant of the below exit plans.

One, I'll give her the $4000 rebate that she would have qualified for. (I'm probably going to give her more than that no matter which way anyway :))
Two, I could then do one of four things
  1. Payoff mortgage outright, releasing her. Keep the property
  2. Refinance the property under my corporation, releasing her. Keep the property
  3. Find an investor/partner. Refinance the property, Keep the property
  4. Sell the property, give her a slice. Payoff mortgage outright, releasing her. (this is an investment property so that option is always mostly available)
Either which way the only effect of the "gambit" is a positive one. Her credit standing will be stronger for it.

But thank you
 

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Discussion Starter #14
This is a genuine question for you real estate folks, just because I don't understand real estate, and I don't own any.

Can you explain for me the basic motivations in these kinds of transactions? There are big mortgages involved, apparently the guy has numbered corporations, and clearly requires lawyers to make all this happen. You're looking for bodies to assume titles. There are many people involved, and therefore large expenses, perhaps difficulty financing the gambit, legal complications if the people don't cooperate, etc.

It all sounds very complicated. What's the goal here? Why buy a cluster of properties together? Is the idea to build a "portfolio of properties" using high leverage?

Or is the goal to do some kind of arbitrage on that cluster of houses, taking advantage of a kind of mispricing that can be turned to your advantage by merging the properties?

If the goal is simply to have a portfolio of properties, wouldn't it be more advantageous to buy the properties in different locations, so that they aren't overly concentrated on a single city block?
The motivation is really not that complicated. For a time there I actually didn't even think that buying adjacent or adjoining properties is that complicated either.

I buy and finance my properties solely all the time. Always, really. Never added or needed or wanted a co-signer or anybody else on title for that matter. This also pertains to my principal homes. This is just me, this is how I organize my finances. My mortgage broker knows that, my realtor knows that, my lawyer knows that.
The financing is already approved solely on my name - I would have loved to have closed and go on my merry way. As a matter a fact adding anyone complicates the mortgage side of things.
The only delay is I cannot decide how I want to lose that $4000!!! (damn it, still not happy about this)

Motivation is largely:
Convenience - managing properties that are near to each other is time, labor and financially efficient.
Control - Maintenance of roofs that are attached, driveway, fencing front yard, parking, pest control. landscaping again is time, labor and financially efficient. Imagine talking to your neighbor about repairing a shared driveway that you hardly use or a fence. Or your neighbor's garbage disposal habits invites pests etc.
Construction - This is a block of 3 century old town homes. With a large unused lot behind it and at a great location it leaves open to possibilities once you have gained control of all 3 houses in that parcel of land.

"Or is the goal to do some kind of arbitrage on that cluster of houses, taking advantage of a kind of mispricing that can be turned to your advantage by merging the properties?"
I just want to clarify. As my post title suggests I'm trying to AVOID for it to merge

Cheers,
 

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I’ve never heard of this from any of m lawyers. As for financing with a corporation you’re also getting bad advice, I’ve got a holdco for most of my properties and I get residential financing for my properties. You only get into corporate loans when you get too many properties.its the number of properties, not the name on the title that matters there. I think you need to seek better advisors
 

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I’ve never heard of this from any of my lawyers. As for financing with a corporation you’re also getting bad advice, I’ve got a holdco for most of my properties and I get residential financing for my properties. You only get into corporate loans when you get too many properties.its the number of properties, not the name on the title that matters there. I think you need to seek better advisors.

one of my relatives in Ontario owned an entire block on both sides of the street, nothing was merged and he had all of them in his own name.
 

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Discussion Starter #17
I wonder if you could add a partner to your new purchase -- someone who would own only 1% of the property. Your lawyer, your neighbour, your dentist, anyone.
This approach is described in this RFD thread.
Thanks for the RFD link, fireseeker

That is exactly the advise that I received from everyone. hence my wife, daughter or my corps.

Wait, it just dawned on me. Can I add my mom or my dad? Hmm, we just paid off their mortgage and they are not really planning to borrow for anything anymore. Brilliant. Let me email broker and lawyer.

Although, no matter which way as james4beach says. I'd really hate to involve anyone. This stupid ridiculous rule is forcing me. It should be changed.
 

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Well, given the existence of this lunatic rule, ask your solicitor if the device of a bare trust will work to avoid it. Your daughter could be trustee. It should not cost her her first buyer status to which you refer. She would not the buyer and she would hold no beneficial interest.
 

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Thanks for the RFD link, fireseeker

That is exactly the advise that I received from everyone. hence my wife, daughter or my corps.

Wait, it just dawned on me. Can I add my mom or my dad? Hmm, we just paid off their mortgage and they are not really planning to borrow for anything anymore. Brilliant. Let me email broker and lawyer.

Although, no matter which way as james4beach says. I'd really hate to involve anyone. This stupid ridiculous rule is forcing me. It should be changed.
Probably you could add mom or dad. The title could be held in your name as to an undivided 99/100ths interest and mom as to an undivided 1/100 interest, as tenants in common. But then, if mom passes while you still own the property, it will become entwined in estate probate/administration issues, and who knows what other Ontario legal craziness. If the property is at some point sold for a capital gain, mom will have to report her share on her tax return or explain why she should not. Just another layer of complication. Although it seems that Ontario law on point entails complication no matter what. It's a matter of trying to reduce the pain. The idea of relative holding as bare trustee might involve the least pain. I really do not know. Ontario has decidedly gone to the dogs. That is all I can be sure of. I think I would refrain from owning real estate there.
 

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Discussion Starter #20
Well, given the existence of this lunatic rule, ask your solicitor if the device of a bare trust will work to avoid it. Your daughter could be trustee. It should not cost her her first buyer status to which you refer. She would not the buyer and she would hold no beneficial interest.
Thank you, Looks like Money or should I say Money Hungry? :)
I have emailed my lawyer. I like that idea. hopefully that sticks.
 
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