Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

June 10th - 2007

Merv’s Column: GST – CONDO Q&A

QUESTION: The buyers accepted the bank's offer on power of sale listing (price etc.) except that the bank's agent brought an offer which indicated that GST is "in addition to" the agreed up on price of a resale property "sold as is where is".

QUESTION: The buyers accepted the bank's offer on power of sale listing (price etc.) except that the bank's agent brought an offer which indicated that GST is "in addition to" the agreed up on price of a resale property "sold as is where is". Since this is a resale, NOT a newly constructed building, both the seller's and the buyer's agents agreed that GST would not apply (aside from the GST on the commission). However the buyer's agent telephoned back that it is the bank's "policy" NOT to accept offers without making GST "in addition to" (whether the buyer would incur any GST in the purchase of the resale property or not). Does the bank have any legal basis to reject an offer on the strength of an "internal policy" in spite of the usual REALTOR® buyer practice on resale properties of including GST in the price?
 
ANSWER: The parties to the contract will be required to agree on its terms despite the understanding of the REALTORS® involved. For example, there may be GST on this property depending on a number of factors of which the bank and the REALTORS® may be unaware. Those may involve such matters as the ownership, substantial renovations, commercial usage and other issues that would make this a taxable transaction. The buyers will have to decide the extent of the risk involved of GST being assessed on this transaction and subsequently payable by them. The price they negotiate may reflect this concern after discussions with their tax advisors. Further general information on GST can be found in the government relations section of the OREA Web site.

Legal Forum, Miscellaneous, GST, July 2, 2002

Merv’s Comments
This REALTOR®’s Q and my A appeared on OREA’s Legal Forum a few years ago. In simpler words, the issue is this: Mrs. Jones has her resale residential condo listed at $100,000. The bank has an identical condo listed under power of sale at $100,000.You are representing a potential buyer. Can you explain why an offer for $100k to Mrs. Jones and one for $94k to the bank are the same? Is it“... included in ....” or “... in addition to .....?”

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