Special offer

Related Parties Under REBBA 2002

By
Commercial Real Estate Agent with RE/MAX West Realty Inc., Brokerage (Toronto)

Related Parties Under REBBA 2002

Cousin Vinny


By Brian Madigan LL.B.

Are you related to cousin Vinny? Well, you were until 31 March 2006 and now you're not. That's the "correct" real estate answer!

Who are you related to? That seems to be a simple enough question.

However, the entire matter of who is a "related party" under REBBA 2002 is somewhat confusing.

So, let me give you the simple scheme:

· Lineal Descendants are included

· Lineal Ascendants are included

· Collaterals are included only to the first degree (brothers and sisters)


If that didn't make a whole lot of sense, then an example might work:

A is related to B if:

B is

earlier ascendant (ie. Greatgrandparent)
grandfather
grandmother
father
mother
child
Grandchild or other descendant
Brother
Sister

..............of A

Additional rules:

adoption counts
Marriage counts
Conjugal relationship counts
Associated counts (controlled corporations)


Now, one thing that is very interesting here is that uncles, aunts, nephews, nieces and cousins don't count. For anyone who remembers the old rules, they were included. So, this new approach seems somewhat strange.

Essentially, this simply doesn't make any sense. If your father, twenty years after divorcing your mother lives with someone in a conjugal relationship (either a woman or a man), then that individual's greatgranparents (whom I'm sure you've never met) suddenly become your relatives (related parties) under REBBA 2002.

At the same time, your good friend cousin Vinny is not related to you anymore.

One other issue arises when it comes to related parties. All associated parties are included. Essentially this means corporations that are owned or controlled by related parties. In addition it includes voting trusts so the definition of "control" is expanded to some degree.

This issue is important to a registered salesperson under the Act, since they are required to make certain disclosures in their dealings with third parties.

 

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through  Royal LePage Innovators Realty 905-796-8888
www.OntarioRealEstateSource.com

 

Comments (5)

Chris Smith
Re/Max Chay Realty Inc., Brokerage - New Tecumseth, ON
South Simcoe, Caledon, King, Orangeville Real Esta

Thank You for your time explaining the impact of REBBA 2002 on who is considered a "related" party.  Just another of your posts that are added to my "invaluable resource" file =)

Apr 26, 2010 08:25 AM
FN LN
Toronto, ON

Brian - I'm sure you were expecting me to make a few comments.  :)

When reading your post, it is important to realize that you are only discussing the term "related" as defined in REBBA 2002.  Of course, the definition of "related" for other purposes such as the Income Tax Act, the Excise Tax Act and other legislation is different.  Those definitions can include many other situations that are not dealt with in REBBA 2002.

Things that are dealt with in the Income Tax Act include same sex marriage, related due to being parents of the same child, complex definitions of "associated" in various circumstances, ability to elect out of being associated and much much more.

Your post doesn't discuss in any detail the term "associated" but I'm sure that you could have a post of that word for real estate purposes.  In any event, it is likely different in scope than the same term used for tax purposes.

In addition, the term "control" has been the subject of many court cases over the years including whether "de facto" or "de jure" control exists.  I was heavily involved in one "control" court case that ended up being appealed to the Federal Court of Appeal and then became a major topic in tax conferences for a couple of years.

Apr 26, 2010 09:48 AM
Jo-Anne Smith
Oakville, ON

hi Brian,

I've dealt with this issue quite a few times in the last year, acting on behalf of the buyer, and the listing sales reps always seem quite thankful that I've disclosed. Perhaps it's not yet common practice even though it's now required?

I hope your week is going well!

Jo

Apr 26, 2010 10:54 AM
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

Chris and Jo,

Thanks very much.

Marc,

You raise some good points. I'll post this in your Tax Group. It's important to know that there are two sets of rules.

And, "yes" we should have one for the tax act.

Brian

Apr 26, 2010 02:33 PM
Sherry Siegel, Managing Broker, EcoBroker, ABR
BrokersGroup, serving Sequim and Port Angeles - Sequim, WA

Speaking from the state of Washington...huh? When making referrals, we have to disclose if we're related to lenders, escrow & title people, home inspectors, etc. Doesn't mean we can't provide the contact information, but that we do need to disclose.

Apr 27, 2010 04:41 PM