(a) is the Buyer paying GST on the transaction where the Seller is an individual? If so, then the Protocol likely shouldn’t be available It is recognized that making such a determination is not a science.Įxamples of inquiries that might be made are: So long as those enquiries and determinations are reasonably made, then the protections afforded to the lawyer by the Protocol will be available. The lawyer should make reasonable inquiry and make a reasonable determination based on those inquiries. One of the gray areas is when does an acreage become “agricultural lands”. If lands are truly agricultural lands such that commercial activities are being carried on thereon, then the Protocol is not available. A client who buys and sells numerous residential houses, may well be in the business of conveying property such that the property is inventory, but that does not impact the fact that the properties are residential. When analyzing whether or not property is commercial or residential, it is important to remember that this is an analysis of the use made of the property itself, and generally, not of the nature of the character of the parties. A number of practitioners have suggested that the risk of a problem in respect of an undeveloped commercial property is low and that the Protocol should be available, but the appropriate underwriting analysis has not yet been completed in this regard.
The Protocol at present does not apply to any commercial property, whether developed or undeveloped. The potential of an intervening encumbrance would not be of major significance on a single transaction basis, whereas the potential of an intervening encumbrance on a more substantial number of units, could be significant. The maximum 4 units in a multi-family project threshold was drawn from an actuarial perspective. However, the sale of a number of residential lots to different parties, or to the same party at different times, should be acceptable. If more than four lots are being sold to the same purchaser at the same time, then it is not appropriate to use the Protocol, even if separate transfers are used. Although not specifically dealt with in Part A of the Protocol, the Protocol does not apply to the purchase and sale of more than four residential lots (by extrapolation from the prohibition against more than four multi-family units being purchased concurrently). The Protocol will apply to the sale and purchase of an undeveloped residential lot.
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