Relocation Directive - Chapter 8 Sale and Purchase of Principal Residence

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.

Note: The benefits contained in this Chapter may be amended (limited or enhanced) by specific provisions contained in other chapters in this directive.
(TB amended 16 September 2014)

This chapter is divided into the following sections.


Section 8.1 Administrative commonalities

8.1.01 Introduction

This section contains all the administrative commonalities and is divided into the following blocks.

8.1.02 Additional entitlements

In addition to the benefits outlined in this chapter, CF members may be entitled to professional cleaning as per art 3.4.04.

8.1.03 Time limitations

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:

whichever is later.

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.

8.1.04 Mortgage portability

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.

8.1.05 Lots and lot size

Core benefit

The reimbursement of expenses is limited to a lot size of:

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.

8.1.06 Income property

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.

8.1.07 Co-ownership

Where the principal residence is co-owned by a person or persons who are not the spouse, common-law partner or dependant of the CF member, reimbursement shall be for expenses proportional to the CF members' legal share based on the percentage of ownership as stipulated in the deed except as outlined in art 8.2.05. CF members will be required to provide legal documents that show legal share of the property.

Where the principal residence is or was co-owned by CF member's spouse, common-law partner or dependant, reimbursement shall be at 100%.

8.1.08 Attending Fees and Power of Attorney

Core benefit

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:

The BComd/BAdmO must certify that CF members could not attend the closing of the purchase or sale transaction.


Section 8.2 Sale of principal residence

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

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.

8.2.03 Real estate commission

Core benefit

Reimbursement of real estate commission is not to exceed the pre-negotiated corporate rates.

8.2.04 Legal fees and disbursements

Expenses associated with obtaining clear title to the property are reimbursed as:

Core benefit
Custom benefit
Personalized benefit

Additional expenses excluding those related to reimbursements at pre-negotiated corporate rates.

(TB amended, 19 April 2018)

8.2.05 Appraisal fees

Appraisal fees are paid in order to:

Core benefit

One professional appraisal not exceeding the pre-negotiated rates including 100% of fees for a co-owned or an income-producing property.

Custom benefit

Nil.

Personalized benefit

Any additional appraisals requested by CF members.

Higher appraisal value
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)

8.2.06 Mortgage early repayment penalties

A CF member who is entitled to receive relocation benefits under this Directive, and who, on or after 19 April 2018, is required to pay a mortgage early repayment penalty (MERP) in relation to the discharge of one or more mortgages held against the principal residence at the time of its sale, is entitled to be reimbursed the amount of the mortgage early repayment penalties incurred if :

The entitled member may be reimbursed for the penalties incurred as follows:

Core Benefit

The sum of all penalties including all related administrative fees and taxes not to exceed the equivalent of three months of mortgage interest or $5,000, whichever is less.

Custom Benefit

The sum of all penalties including all related administrative fees and taxes not to exceed the equivalent of six months of mortgage interest minus the amount reimbursed under the Core Benefit.

NOTE

“Mortgage Early Repayment Penalty” may also be referred to using different industry terms or expressions such as a “mortgage prepayment penalty”, “mortgage breaking penalty”.

(TB amended, 19 April 2018)

8.2.07 Temporary Dual Residence Assistance (TDRA)

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.

Core benefit
Custom benefit

Expense beyond six months.

Personalized benefit

When all custom funds have been expended.

Real estate incentive - CF members may receive either TDRA or the Real Estate Incentive, but not both.

8.2.08 Return trip to finalize sale

Core benefit

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:

Maximum reimbursement is as follows:

8.2.09 Building/ structural inspection

Core benefit

Reimbursement, not exceeding the applicable pre-negotiated corporate rates, exists for a:

8.2.10 Capital improvements

Custom benefit

This benefit only applies to a CF member if the closing date of the sale of their principal residence is before 19 April 2018. Limited capital improvements may be reimbursed in accordance with the table below:

(TB amended, 19 April 2018)

Capital Improvement Benefit Formula

Original purchase price

+ Eligible capital expenses

- Sale price

= Reimbursable loss (if result is negative)


The following is an all-inclusive list of eligible capital improvements:

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.)

Personalized funds
When all custom funds have been expended.

Eligible period
Capital improvements must have been carried out after CF members have taken possession and before the sale of the residence.

Receipts
Original receipts are required for all capital improvements.

8.2.11 Home staging

Personalized benefit

Professional home staging consultation fee.

8.2.12 Marketing incentives

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.

Custom benefit

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.

Personalized benefit

When all custom funds have been expended.

8.2.13 Home Equity Assistance (HEA)

A member to whom this Directive applies is entitled to be reimbursed for any financial loss incurred in relation to the sale of their principal residence if:

The reimbursable amount is equivalent to the difference between the original purchase price and the sale price minus any reduction in the sale price that is identified in the agreement of purchase of sale and attributable to anything in the principal residence that required repair or replacement.

Despite the definition of purchase price in Section 1.04, in relation to a principal residence that was a new home construction, the purchase price is the sum of the costs:

The reimbursable amount will be paid as follows:

Core benefit

80% of the reimbursable amount or $30,000, whichever is less.

Custom benefit

The reimbursable amount minus the amount paid under the Core Benefit.

Personalized benefit

The reimbursable amount minus the amounts paid under the Core and Custom Benefits.

NOTE

Payments for Home Equity Assistance may have income tax implications. Members who receive this benefit should confirm the taxation rules applicable to their circumstances.

(TB amended, 19 April 2018)

8.2.14 Real Estate Incentive

Core benefit

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:

This incentive is paid into personalized funds.

8.2.15 Private sales

Core benefit

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.


Section 8.3 Purchase of replacement residence

8.3.01 Purpose

The purpose of purchase of replacement residence benefits is to assist in the acquisition of a principal residence.

This section is divided into the following blocks.

8.3.02 Eligibility

CF members are entitled to the benefits outlined in this section under the following conditions:

8.3.03 Occupancy requirements

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.

8.3.04 Purchase after move

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.

8.3.05 New home construction

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.

Personalized benefit

New home warranties.

8.3.06 Reverse TDRA (RTDRA)

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:

Core benefit

Expenses for a period up to one month:

Custom benefit

Expenses beyond one month.

Personalized Funds

When all custom funds have been expended.

8.3.07 Legal fees and disbursements

Expenses associated with obtaining clear title to the property are reimbursed as follows:

Core benefit
Personalized benefit

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.

8.3.08 Building/ structural inspection

When CF members submit an offer to purchase, costs for a structural inspection of the residence shall be reimbursed as follows:

Core benefit
Custom benefit

Second structural inspection on the same residence and any inspections that are not payable as a core benefit.

Personalized benefit

When all custom funds have been expended.

8.3.09 Mortgage interest differential

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 difference between:

The interest rates on the two mortgages

Based on the lesser of:

• the outstanding mortgage at the former place of duty; or
• the new mortgage principal

For:

the remaining term of the mortgage at the former place of duty, not exceeding 5 years

To a maximum reimbursement of:

$5000

8.3.10 Mortgage Default Insurance (MDI)

A CF member who is entitled to receive relocation benefits under this Directive, and who, on or after 19 April 2018, is required to pay a mortgage default insurance premium in relation to the purchase of their new principal residence, is entitled to receive an amount equal to the assessed insurance premium and to be reimbursed for any administrative fees incurred in relation to the policy of insurance.

Based on the circumstances, these amounts will be paid in full from one of the following benefits:

Core benefit

Custom benefit

Personalized benefit

NOTE

Mortgage Default Insurance may also be referred to using different industry terms or expressions such as “mortgage loan insurance”, “CMHC insurance” and “CMHC fees”.

(TB amended, 19 April 2018)

8.3.11 Interest on a short term loan

Core benefit

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.

8.3.12 Bridge financing

Core benefit

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:

Custom benefit

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:

Personalized Funds

When all custom funds have been expended.

8.3.13 Second mortgage

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:

Custom benefit

interest, legal and administrative costs for:

Personalized benefit

When all custom funds have been expended.

8.3.14 Interest on home relocation loan

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.

Custom benefit

Nil.

Personalized benefit

Interest on a home relocation loan. The loan shall not exceed $25,000 per purchase transaction.

(TB amended, effective 1 September 2012)

8.3.15 Mortgage interest buy-down

Personalized benefit

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).

8.3.16 Home renovations for the disabled

Custom benefit

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.

Personalized benefit

When all custom funds have been expended.

Justification
Original and detailed receipts are required for reimbursement including details of requirement.

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