Source: http://www.forces.gc.ca/en/about-policies-standards-benefits-relocation/2011-2012-directive-ch8.page
Timestamp: 2017-12-17 21:37:58
Document Index: 442871059

Matched Legal Cases: ['art 3', 'art 8', 'art 8', 'art 8', 'art 13', 'art 7']

Relocation Directive - APS 2011/2012 - Chapter 8 | DND CAF
Relocation Directive - APS 2012/2013 - Chapter 8
8.01 In this chapter
The purpose of the Sale and Purchase of Principal Residence is to assist CF members in the sale and the purchase of a principal residence when transferred from one place of duty to another and the residence is within the geographical boundaries of the unit unless otherwise authorized under the section 2.6.
Section 8.1 Administrative commonalities
Section 8.2 Sale of principal residence
Section 8.3 Purchase of replacement residence
This section contains all the administrative commonalities and is divided into the following blocks.
8.1.02 Additional entitlements
8.1.03 Time limitations
8.1.04 Mortgage portability
8.1.05 Lots and lot size
8.1.06 Income property
8.1.08 Attending Fees and Power of Attorney
In addition to the benefits outlined in this chapter, CF members may be entitled to professional cleaning as per art 3.4.04
CF members may claim benefits in this chapter provided that the closing date of residence sold or purchased is no more than one year before or two years after the:
change of strength (COS) date; or
the date of the shipment of HG&E to the new place of duty
Note: If the CF member is tasked (attach posting, TD) outside the geographical area of the new place of duty and the time limitation has not expired, the time limitation may be extended by the corresponding number of days tasked away from the new place of duty. A written statement that there is no intent to post for 12 months from the time of the request is required from the CM.
Most financial institutions currently offer portable mortgages where the members can avoid or reduce any charges or penalty by arranging to transfer all or part of the mortgage to the replacement residence. When securing a mortgage, CF members must make every effort to obtain a portable mortgage. When selling a residence, CF members must make every effort to port their mortgage when it is practical and reasonable to do so.
The reimbursement of expenses is limited to a lot size of:
1.25 acres (½ hectare); or
up to four acres (2.47 hectares) where required by zoning laws and city bylaws.
If additional land is sold or purchased, CF members are entitled to reimbursement only for that portion of costs which would have been reimbursed within the above limitations.
CF members who sell or purchase an income-producing property which is also CF members' residence, shall only be reimbursed expenses for that part of the building used as their principal residence except for fees outlined in art 8.2.05.
Where the principal residence is or was co-owned by CF member's spouse, common-law partner or dependant, reimbursement shall be at 100%.
CF members are expected to be present at the closing of the purchase or sale transaction. As such, fees for the preparation of a Power of Attorney are not normally reimbursable. However, when there is a requirement for CF members to be present and they are prevented from being in attendance the following costs may be reimbursed:
Cost to courier documents between legal firms;
Mandatory attending fees as per provincial requirements.
The BComd/BAdmO must certify that CF members could not attend the closing of the purchase or sale transaction.
8.2.01 Purpose
The purpose of Sale of Principal Residence benefits are to assist in the disposal of a principal residence.
This section is divided into the following blocks.
8.2.02 Occupancy requirements
8.2.03 Real estate commission
8.2.04 Legal fees and disbursements
8.2.05 Appraisal fees
8.2.06 Mortgage early repayment penalties
8.2.07 Temporary Dual Residence Assistance (TDRA)
8.2.08 Return trip to finalize sale
8.2.09 Building/ structural inspection
8.2.10 Capital improvements
8.2.11 Home staging
8.2.12 Marketing incentives
8.2.14 Real Estate Incentive
8.2.15 Private sales
CF members or their dependants must occupy the principal residence immediately prior to the sale, in order to be entitled to reimbursement of expenses related to the sale.
Reimbursement of real estate commission is not to exceed the pre-negotiated corporate rates.
Expenses associated with obtaining clear title to the property are reimbursed as:
Land survey costs, if CF member's lawyer or notary certifies that:
the last survey is more than five years old,
there have been observable changes to the lot since the last survey, or
the seller is required by law to provide a survey.
Charges levied by a lender for the disposal of a first or second mortgage on the property, but not both, such as administrative fees and/or mortgage disbursement fees as per applicable provincial laws, excluding mortgage breaking penalties (article 8.2.06) (custom benefit for a move to an Intended Place of Residence (IPR)).
Legal fees necessarily incurred as the result of deed transfer to Land Titles System.
Municipal fees associated with municipal name change for tax rolls.
Charges levied by a lender for the disposal of a first or second mortgage on the property, but not both, such as administrative fees and/or mortgage disbursement fees as per applicable provincial laws, excluding mortgage breaking penalties (article 8.2.06); or
Charges levied by a lender for the disposal of a second mortgage when:
The first mortgage has been reimbursed from core funds;
100% of the equity on the first mortgage had originally been transferred; and
CF members are posted to a location where prohibited from purchasing.
Additional expenses excluding those related to reimbursements at pre-negotiated corporate rates.
Appraisal fees are paid in order to:
help establish market value;
facilitate disposal;
establish a home value for funding purposes; and
develop the financial worksheet.
One professional appraisal not exceeding the pre-negotiated rates including 100% of fees for a co-owned or an income-producing property.
Any additional appraisals requested by CF members.
When more than one appraisal is obtained, the funding shall be calculated using an average of the appraised values.
(TB amended , effective 1 September 2012)
Mortgage early repayment penalties and mortgage breaking penalties are not reimbursable.
Actual and reasonable expenses associated with maintaining two residences are reimbursed provided that the former residence remains unsold, vacant and actively marketed. The sale of a residence is not considered final until the transfer of ownership occurs.
TDRA offsets expenses associated with dual residency for a period up to six months, such as:
Interest charges on a first mortgage (or on a second mortgage if there are no charges on a first mortgage);
Taxes (i.e., property, school);
Utilities (i.e., electricity, heating, alarm monitoring);
Property maintenance (such as lawn cutting, snow removal, and minor maintenance);
Insurance (house insurance including additional insurance costs for empty residence); and/or
Rental of a mobile home pad.
Expense beyond six months.
Real estate incentive - CF members may receive either TDRA or the Real Estate Incentive, but not both.
CF members and/or their spouse, as required, are authorized to return to their previous place of duty to finalize the sale. CF members must take annual leave for the period of this benefit. The following conditions apply:
qualified for TDRA;
subsequently sold the former residence;
could not arrange to courier documents/materials between legal firms;
could not complete the sale by a power of attorney; and
clearly demonstrated that all other avenues were exhausted.
Maximum reimbursement is as follows:
up to two days travel, meals and incidentals;
one night lodging; and
return transportation by the most economical means.
Reimbursement, not exceeding the applicable pre-negotiated corporate rates, exists for a:
building/structural inspection if it is a condition necessary for the sale of the property as recommended by CF members' realtor and supported by the relocation consultant; and
a pyrite inspection.
Limited capital improvements may be reimbursed in accordance with the table below:
Capital Improvement Benefit Formula
+ Eligible capital expenses
= Reimbursable loss (if result is negative)
The following is an all-inclusive list of eligible capital improvements:
Additions - bedroom, bathroom, deck/patio, porch, walkway, storage shed, garage.
Installations - new windows, driveway (including paving), central air conditioning.
Complete modernization – kitchen (new cupboards, countertops, sink, taps, etc) or bathroom (new cupboard/vanity, countertop, sink, shower/tub, etc).
Heating System – change from hot water radiator to forced gas or upgrade to high efficiency furnace and required ductwork.
Basic Landscaping – other than decorative including the installation of a perimeter fence. (On new home construction excludes initial landscaping which occurs within one year of occupancy when not identified by Building Agreement.)
Capital improvements must have been carried out after CF members have taken possession and before the sale of the residence.
Original receipts are required for all capital improvements.
Professional home staging consultation fee.
When no reasonable offer has been received within two months, it is recommended that CF members use the marketing incentive benefit to meet the criteria of actively marketed.
When the real estate agent recommends and the service provider supports using marketing incentives to sell the property, reasonable expenses are reimbursed.
All marketing incentives must be clearly identified on the original or amended Property Listing Agreement and the Offer to Purchase documents.
As per the HEA calculation criteria listed below, CF members who sell their home at a loss are entitled to reimbursement for up to 100% of the difference between the original purchase price and the sale price from specific funding envelopes as follows:
80% of the loss, to a maximum of $15,000; and
100% of the loss, in places designated as depressed market areas by Treasury Board Secretariat (TBS).
HEA calculation criteria
Properties selling for less than 95% of the market value require DCBA approval prior to qualifying for this benefit. Market value is to be based on the appraisal provided by CFIRP.
Capital improvements shall not be included in the calculation of HEA but may be claimed separately as per art 8.2.10.
Any reductions of the sale price based upon deferred maintenance shall not be included when calculating HEA.
The original purchase price for new home construction consists of costs:
identified in the Building Agreement, and
for initial landscaping which occurs within one year of occupancy (when not identified in the Building Agreement).
Depressed market, as established by Treasury Board Secretariat, is defined as a community where the housing market has dropped more than 20%.
Depressed market status may be evaluated when:
A CF member and the Realtor build a case for depressed market status by submitting the following documentation to DCBA through the CF Relocation Coordinator for review, DCBA will forward it to IRP Program Authority at Treasury Board Secretariat:
Personal introduction including an outline of changes in the local economy evident during the time at origin.
All pertinent information with respect to the purchase of the subject property. This would include the original purchase agreement, the current appraisal report, list of the capital improvements made to the property and the related costs. Also, the appraised value when originally purchased and any property assessments since the time of purchase. Regarding cost of construction, this will require submission of original receipts to confirm the original purchase price, if a building contract was not used. Capital improvements must be supported by original receipts only.
General and specific information on the geographic location and local economic state; i.e. the circumstances that may be happening in the surrounding areas such as mill closures, unemployment rate, school closures. Include relative newspaper articles, memos, and objective evidence of market decline. Also, include sale date, date offer received, listing date list price, lowered list price and any home equity loss paid.
Letter from Realtor expressing his/her professional opinion of the overall decline in the market since time of purchase;
Copies of comparable sales (similar type homes) that were concluded within the past 6 to 12 months;
Number of current listings in various price ranges and number of days on the market;
Number of sales (year-to-date) in various price ranges and number of days on the market;
Number of sales during previous 2 years in various price ranges and number of days on the market;
Number of foreclosures (year-to-date) and same for previous 2 years; and
Current vacancy rates, and similar information from previous years.
Note: All items must be labelled with a table of contents.
CF members are entitled to receive 80% of the real estate commission, to a maximum of $12,000, based on the appraised value when they do not claim for the real estate commission. The following conditions apply:
CF members or dependants must have occupied the residence immediately prior to official notification of the posting.
The decision to apply for this incentive shall be made within 15 working days after receipt of the appraisal.
CF members must sign a waiver foregoing any future reimbursement of real estate fees, legal fees or other related disposal costs for the property. Should CF members choose to re-occupy this residence on a subsequent posting, the residence would be designated as a principal residence for any further relocation that might occur after re-occupancy.
This incentive is paid into personalized funds.
CF members who decide to sell their principal residence privately are entitled to reimbursement of actual and reasonable costs related to the sale. Reimbursement shall not exceed the real estate commission that would have been paid had the residence been sold by a licensed real estate agent.
8.3.01 Purpose
The purpose of purchase of replacement residence benefits is to assist in the acquisition of a principal residence.
8.3.02 Eligibility
8.3.03 Occupancy requirements
8.3.04 Purchase after move
8.3.05 New home construction
8.3.06 Reverse TDRA (RTDRA)
8.3.07 Legal fees and disbursements
8.3.08 Building/ structural inspection
8.3.09 Mortgage interest differential
8.3.10 Mortgage Loan Insurance (MLI)
8.3.11 Interest on a short term loan
8.3.12 Bridge financing
8.3.13 Second mortgage
8.3.14 Interest on home relocation loan
8.3.15 Mortgage interest buy-down
8.3.16 Home renovations for the disabled
CF members are entitled to the benefits outlined in this section under the following conditions:
posted inside Canada;
posted for more than one year, unless:
the appropriate posting authority provides confirmation in writing that CF members should remain at the same place of duty immediately following the original tour of duty for a further period of one year or more, or
CF members are subsequently posted to a new place of duty within the same geographical boundaries of the area, for a further period of one year or more.
purchase within the geographical boundaries of the area unless otherwise authorized as per section 2.6.
CF members or their dependants must occupy the replacement residence for a minimum period of one year, unless service reasons prohibit the requirement. Failure to meet this occupancy requirement will result in recovery of benefits paid under this section.
CF members who originally moved into rental accommodation at the new location and subsequently purchase a residence may be entitled to the reimbursement of legal fees for the purchase within the established time limits as per art 8.1.03 (for Regular Force members) or as per art 13.06 (for Reserve Force members). When CF members have already been reimbursed rent in advance of move and/or rental agency finding fees, the provisions of art 7.04 and 7.05 apply.
CF members who construct a principal residence are entitled to the same benefits related to the purchase of the land and the construction of the home, which would have been reimbursed if a resale home were purchased. However, all costs identified in the building agreement are deemed as part of the original purchase price and are not to be reimbursed separately.
New home warranties.
CF members are responsible for the expenses associated with one residence. Where CF members take possession of a purchased replacement residence prior to the COS date (for Regular Force)/commencement date of the period of employment (for Reserve Force) and the RFD or the COS dates cannot be changed to meet the possession date, RTDRA expenses at destination shall be reimbursed as follows:
Expenses for a period up to one month:
Taxes (i.e. property, school);
Utilities (i.e. electricity, heating);
Expenses associated with obtaining clear title to the property are reimbursed as follows:
Sheriff's fees;
Land Transfer Tax/Welcome Tax;
Name change fee when transferring ownership from builder to purchaser;
Deed transfer charges;
Survey costs or Title Insurance Premium (both cannot be claimed unless they are deemed necessary to obtain clear title);
Certificate of execution;
Appraisal and water test fees incurred at the request of the lender to obtain a first or second mortgage; and
Legal fees incurred as a result of deed transfer to Land Titles System.
Additional expenses excluding those that relate to reimbursement of pre-negotiated corporate rates.
Failed purchase transaction
When the purchase transaction fails based on the legal conditions of the purchase (i.e., home inspection, financing, etc), expenses above may be reimbursed from core funds. All costs associated with a subsequent purchase will also be reimbursed from core funds.
When CF members submit an offer to purchase, costs for a structural inspection of the residence shall be reimbursed as follows:
First structural inspection on each residence where an offer to purchase is made (including occupied new homes under warranty);
Well, water potability, and septic system inspection (including the pumping when required for the inspection); and
Follow-up termite and pyrite inspections, when recommended in writing by the building inspector.
Second structural inspection on the same residence and any inspections that are not payable as a core benefit.
When the new mortgage is higher than the one discharged at the former place of duty, CF members are entitled to reimbursement of the interest differential, to a maximum of $5000, as described below:
The interest rates on the two mortgages
• the outstanding mortgage at the former place of duty; or
• the new mortgage principal
the remaining term of the mortgage at the former place of duty, not exceeding 5 years
To a maximum reimbursement of:
Mortgage Loan Insurance is not reimbursable.
(TB modified, effective 1 September 2012)
CF members are entitled to reimbursement of the interest on a short-term personal loan or a personal line of credit required solely to pay the minimum deposit on the purchase of a principal residence or a new house construction at the new place of duty.
The required minimum deposit amount must be in accordance with the written contract to purchase and shall not exceed the minimum amount required by the local market.
For new construction, when the building agreement describes a payment schedule or advance payments, the interest on those payments is not considered reimbursable.
When the proceeds of the sale of the principal residence are not immediately transferable to the purchase of the replacement residence, CF members will be reimbursed for the interest on a bridge loan or a line of credit and the associated administration fees charged by the financial institution, provided that:
interest on the bridge loan does not normally exceed 14 days; and
the amount of loan does not exceed the amount which is frozen.
When CF members purchase a replacement residence at the new location before selling their principal residence, they will be reimbursed for the interest on a bridge loan or a line of credit and the associated administration fees charged by the financial institution, provided that it does not exceed the lesser of the:
When a bridge financing loan cannot be obtained and the principal residence has not sold and it remains actively marketed and unoccupied, CF members may be reimbursed:
interest, legal and administrative costs for:
a second mortgage; or
a home equity line of credit (HELOC) used as a second mortgage.
Be aware that in order to qualify for reimbursement of this benefit, CF members must use the service provider's third party contractor who has agreed to adhere to CRA reporting requirements.
Interest on a home relocation loan. The loan shall not exceed $25,000 per purchase transaction.
Interest expenses to buy down a mortgage and associated legal fees shall be reimbursed. Buy-down amount shall not be below the prescribed rate as determined by Canada Revenue Agency (CRA).
Disabled CF members or dependants requiring special modifications on the replacement residence to allow proper access/use are entitled to reimbursements directly related to the renovations for the disability.
Original and detailed receipts are required for reimbursement including details of requirement.