Transcript of video with guest Iselle Manuel (05 May 2021)
Francois: Actually, Jennifer and I, we work with Noel and Associates. So, we're thrilled to meet Iselle Manuel, someone we've never met in person only virtually, doing business with them remotely. Iselle is originally from Bay St. John, New Brunswick. A busy mom,and lawyer, and she's part of a boutique law firm, Noel and Associates, and they're dedicated to the practice of real estate law, representing builders, investors like us private lenders, developers, landlords and property owners across New Brunswick.
And she's here to share what real estate investors need to know legally when investing in New Brunswick, either as a resident of New Brunswick or from someone investing from outside of the province like us. So, there's a few different things you have to remember. So, welcome Iselle.
Iselle: Hi everybody.
Francois: Thank you. Thank you for joining us. Maybe Jennifer, you can help me. Do you want to ask question number one?
Jennifer: Are there any differences to be aware of when investing in New Brunswick as opposed to other provinces?
Iselle: So, there are quite a bit of differences. Like I said, I normally know what's going on in this province here. And I'm just going to mention a few things that we think are important and that some of our clients mentioned that work a little bit differently in our province.
So, first of all, I would like to touch on taxes. So, in New Brunswick, one of the most important things to note is that when you purchase a piece of land, whether it has a property or not on it, you pay 1% of either the purchase price or the assessed value. According to the province, whichever is highest of the two, gets paid directly to the province of New Brunswick. So, it's 1%. I know that's not the case in all of the provinces, so that's something interesting you might want to keep in mind, depending on how high the prices are because 1% can be not very much, but it can be quite a lot.
Another thing that I'm going to be mentioning is the property taxes. So, I have been told by a lot of people that they think that property taxes in our province are quite a bit higher than in other provinces.And when it comes to an investment property, if it's not going to be your primary residence, which is most likely the case.
If you're investing, if it's a secondary home or if it's a rental property, the property taxes will actually be double as much as they would be normally if you would be living at the home. So, that is something to consider thinking about. So, I think that there's a lot of different things, but I think that's probably one thing that should be definitely mentioned.
Francois: And Jennifer was telling me, I don't know if you're right, but let's say you have a duplex and you live in one of the units, then you're paying double tax on the second unit and the unit you live in. You pay a single tax.
Iselle: Exactly. So, one, if it's a two unit or multiple unit. House or complex, you're going to be paying double taxes on the units that you're not occupying, but whichever is owner occupied. you will get a tiny bit of a discount, but not as much as if it would be completely owner occupied.
Francois: You have to stick your toe in there or something. And then I lived there.
Iselle: Yeah. And actually, to be considered owner occupied, you actually have to occupy it at least half of the year.
Francois: Oh, okay. Yeah. So, you can't just say, oh, I'm there and you don't. Yeah. It's like vacant,
Iselle: And sometimes they double-check. So, I would be careful because obviously we're not going to tell you to lie, but I would just 100%, they will probably make sure to check on that. And they're going to verify if you own any other properties. So, you can't, there's no way of sliding that.
Francois: When we're closing on properties in New Brunswick versus other markets, like some stuff I've noticed is you guys need letters like finance and insurance, which we normally don't provide in other provinces?
Iselle: That all depends on your agreement of purchasing sales. So, there are conditions in your agreement which we are noticing that there are less conditions and people leaving conditions more and more because there's so many buyers and so little sellers. So, people are trying to jump on, jump in.
So, a lot of sellers will say we're only selling if there's no conditions for financing, for example, usually that's dealt with between the realtors, but you would have to provide a financing letter or if one of the conditions is insurability, you would have to prove provide them with an insurability letter from your insurance company, or if it's an inspection, then you would get an inspector to inspect the property. You would either say that you're satisfied with the results of the inspection or that you would wait for the condition.
It all depends on how your agreement is written. Like I said, there's a lot less conditions nowadays.
Francois: So, it's part of that. Okay. I thought it was like a legal requirement, but it depends on the actual contract. So, you have to read the contract. There you go, good tip.
Iselle: You have to read the contract. And yeah, to make sure those conditions are met, that's why those letters are provided because it proofs the conditions have been met, which make the agreement legal and binding because it's not buying, it's not found you're not bound by the agreement until it can all their conditions are met or the conditions are waived one or the other.
Jennifer: So, lawyer, notary lawyer? What's the difference?
Iselle: Actually, in New Brunswick you get called to the BAR association. You are both. So, you are a notary public and a solicitor. So, on all of our documents at the bottom, it will say that it is a manual notary public being a solicitor.
So, every solicitor in the province is also a notary public. I know that's a little bit different in other provinces. Sometimes you need both, but also, it's just all in one.
Francois: That's an easy package, perfect. And other questions, differences in insurance requirements when investing in New Brunswick versus other markets?
I'm not sure if you would know about that, but if there's something else or.
Iselle: No, I'm not really sure how I saw the question. I wasn't really sure how to answer it. The only thing I can say is for insurance requirements, it all depends on the lender. So, it all depends on what lender you're working with. Some lenders will require certain things to be written on the insurance.
For example, like liability would have a lot of investment properties. The lenders require that there's like a $2 million liability on the insurance policy. It's not always the case, but it depends on the lender. So, that was my best way of trying to answer that question compared to other markets.
Francois: And I think as well something, a lot of people forget is when we're buying and there's a lender, you guys actually represent the lender first, not us. So, sometimes it feels weird. You're like, oh yeah, that's right. I'm representing the bank first and then you,
Iselle: We have to represent both. So, for example, a lot of people will be like, oh, we'll get insurance after it closes. We're not able to do that. We need proof of insurance before closing the transaction or else we were not able to. And that's become a little bit problematic that I've seen recently for the amount of the insurance because for investment properties, sometimes they will not insure at that level or that amount if the property is vacant.
So, some of the property is vacant and there's no tenants on the property. It's a little bit more difficult with insurance companies to get what the bank requires.
Jennifer: So, what do you see from a legal standpoint in the market? Is there anything that's maybe changing or evolving?
Iselle: Because we've seen, like I said, there's a lot more purchasers. And a lot of the sellers have an upper hand right now. They have an upper hand in a lot of things. So, we're seeing that the prices are going way up. I’ve seen just an article the other day about something, a Toronto house selling for 477,000 over asking price.
I don't think we see that in New Brunswick, but we do see no, not yet, but we have seen 60, 70 over asking price. So, for us, that is quite a bit, plus the prices have gone up in the last year. Last year and a half, I have seen for example, semi detached, which are quite popular in the Moncton area, they have gone up almost a hundred thousand dollars in the last year or so.
Francois: Yeah. And I think one thing too, that is newer is more of the virtual signing of documents. I don't think that was allowed as much in the past?
Iselle: That wasn't allowed at all in the past ever since. So, one of the most positive things to come out of COVID is that the law society has now allowed us to do virtual signups, which saved the clients’ money.
Since they don't have to go see a notary in their own province to get documents notarized or witnessed, we can do it online. The way that it works is that we can't do DocuSign. That the realtors have assumed that we can do that. Unfortunately, we can't, the way that it works is that we send you all of the documents that you need. You print them off yourself. We do exactly this zoom. I actually physically watch you sign the document and then you have to send a scan copy to us so that we have a scanned copy for now and then courier the originals back to us. There will be a courier fee and it seems a little bit like a hassle, but it's a lot easier than what it used to be for out of town.
Francois: We've seen that in Ontario where there's this software as you sign, it's cool. It's a tablet and I'm not sure what it's called, So, it's filming as I sign and that was sufficient.
Iselle: We definitely don't have that here. We still need the hard copies. Unfortunately, the law society is not up to date on that technology yet.
We have found that for example, in a week I can see like almost half of my clients will be online. So, it has helped a lot.
Francois: But like us, we couldn't even really physically go, we'd have to quarantine for two weeks.
Iselle: Yeah. Even people in the province who are four or five hours away, it's easier for them to print it and drive all the way here.
Francois: Purchase and sell, like selling to can sometimes be easier. You're just not available.
It helps. Definitely helps. That's what we're seeing right now.
Excellent. What else does our community need to know? Do you have any tips or tricks for investors?
Iselle: My tips and tricks. I know that I heard your introduction earlier. You said, take action. Take action, but in every sense of the way. So, if you're planning on purchasing an investment property out of province, I would say, you need to contact your realtor or if it's a private sale, get something signed. Don't assume that everything is going to happen very quickly. If you're not contacting your lawyer ahead of the time, because if you're not able to the lawyers, like I'm not just saying our firm, every lawyer in this city here is crazy busy and not a lot of the time.
They're not getting everything done on time. So, I would say plan ahead, call your lawyer, call your realtor, even if it's only happening in three months, make sure you book it ahead of time so that we have it in our calendar, because if you call us in a week and say, I'm buying this property tomorrow, probably not going to be able to take my time for you.
Francois: Yeah. It's just crazy. Thank you so much. And it's great. You guys have a full-service team. You really focus on their real estate corporations as well. So, thank you.
Iselle: Yeah, that's just another thing. If you are purchasing with a corporation here, I would just suggest that if you want to purchase with a corporation in New Brunswick, the corporation has to be registered as extra provincial.
So, it's just something that you might want to look into doing before you start doing the purchasing process. It's not something that's very complicated, but usually you want to get that done before you get to the purchase.
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