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:

  • change of strength (COS) date; or
  • the date of the shipment of HG&E to the new place of duty

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:

  • 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.

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:

  • Cost to courier documents between legal firms;
  • Power of Attorney; and
  • 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.


Section 8.2 Sale of principal residence

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
  • 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 such as administrative fees and mortgage disbursement fees levied by a lender for the disposal of one mortgage on the property.
  • Legal fees necessarily incurred as the result of deed transfer to Land Titles System.
  • Municipal fees associated with municipal name change for tax rolls.
Custom benefit
  • Charges such as administrative fees and mortgage disbursement fees levied by a lender for the disposal of a second mortgage on the property.
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:

  • help establish market value;
  • facilitate disposal;
  • establish a home value for funding purposes; and
  • develop the financial worksheet.
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 terms of the mortgage or mortgages require MERP to be paid to the mortgage lender; and
  • at the new place of duty the member either
    • does not purchase a replacement principal residence, or
    • purchases a replacement principal residence and the transfer of the discharged mortgage to that residence was not permitted.

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
  • 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.
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:

  • 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.

8.2.09 Building/ structural inspection

Core benefit

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.

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:

  • 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.)

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 closing date for the sale is on or after 19 April 2018; and
  • the sale price is less than the purchase price paid by the member.

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:

  • identified in the Building Agreement, and
  • incurred during the first year of occupancy of the residence for initial landscaping if those costs were not identified in the Building Agreement.

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:

  • 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.

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

8.3.02 Eligibility

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.

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:

  • 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);
  • 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.
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
  • 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.
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
  • 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.
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

  • When the member sells their principal residence in relation to their current posting, and they use 100% of the equity from the sale for the purchase of their new residence.
  • When the member sold their principal residence before a posting to a new place of duty where they were prohibited from purchasing a residence, and in relation to the current posting, they use 100% of the equity from that sale for the purchase of their new residence, if this posting immediately follows the posting in respect of which they were prohibited from purchasing a residence.

Custom benefit

  • When on the date that the member finalises the purchase of their new principal residence, their current principal residence has not been sold, and
    • it is being actively marketed, or
    • it is subject to a valid agreement of purchase and sale, and the sale will be finalised at a later date.
  • When the member is renting their current residence, and they
    • are not eligible to receive benefits under the second bullet of the Core Benefit,
    • or have not received the Real Estate Incentive in relation to the posting from their last principal residence.

Personalized benefit

  • When the member received the Real Estate Incentive in relation to the posting from their last principal residence.

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:

  • interest on the bridge loan does not normally exceed 14 days; and
  • the amount of loan does not exceed the amount which is frozen.
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:

  • equity in their unsold principal residence (i.e., difference between the appraised value and the existing mortgage); or
  • purchase cost of the replacement residence.
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:

  • a second mortgage; or
  • a home equity line of credit (HELOC) used as a second mortgage.
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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