Definition of Sale Date

Topic

Definition of Sale Date

Case Number

• 2020-184 (F&R date: 2021-02-17)

Description

During its examination of several grievance submissions, all involving the catastrophic loss of equity by Canadian Armed Forces (CAF) members selling their homes on posting from Cold Lake, the Committee became concerned by the way the CAF was defining the “sale date” as it pertains to claiming the Home Equity Allowance (HEA) benefit under the Canadian Forces Integrated Relocation Program (CFIRP) Directive. Effectively, the CAF was using the home sale closing date to define the sale date of a home.

Given that grievors were disputing the use of the closing date by the CAF to determine HEA eligibility, the Committee undertook an examination of the issue. The Committee received confirmation from a DCBA staff member that the Treasury Board Secretariat (TBS) has not provided the CAF with any specific written policy direction regarding whether the sale agreement date or the closing date should be used to determine whether a home was sold in an area designated by the TBS as a depressed housing market. This lack of a TBS definition of “sale date” for application to the HEA policy has left a critical void in the CAF’s understanding of how the HEA policy should be applied to its members

Following a close review of the relevant portions of the pre-19 April 2018 version of the CFIRP Directive, the Committee determined that although “sale date” was not well defined in the policy, it appeared evident that the closing date did not represent relevant information. However, the market conditions existing at the time of the offer to purchase was very clearly relevant information since it was required in order for a CAF member to submit an HEA claim for selling in a depressed housing market.

Notwithstanding this finding by the Committee, regrettably, the current CFIRP HEA benefit uses the closing date as a determining factor for eligibility. In that regard, the Committee noted that there is a discrepancy between the English and French versions of the current HEA benefit, whereby the French version states “… la date de vente de la maison …”.

Furthermore, the Committee noted that other sections of the CFIRP Directive appear to support the view that the “sale date” is considered to be the signing date of the offer of sale. The Committee found that the CFIRP Directive has conflicting positions regarding when a house is considered to be “sold”, and that the conditions described in one article do not necessarily translate directly to the next article. In particular, article 8.2.13 - Home Equity Assistance, does not specify when the TBS considers a home to have been “sold” in the context of determining a sale within a depressed market.

Similarly, in examining the TBS documents obtained by grievors through Access to Information Act requests, the Committee could find no evidence that the TBS ever specified that the closing date is the defining date for the sale of a home. Finally, when asked, the DCBA staff advised the Committee that it was the CAF who decided to use the closing date rather than “sold” in an attempt to avoid confusion over HEA eligibility.

While understanding the motivation for this decision, the Committee found that using the closing date to define the “sold” date was out of step with the real estate industry. The Committee noted that the Residential Purchase Contract is a legal document that sets out the terms and conditions of the real estate transaction, and that it binds the CAF member to the obligations contained within the document at the time the member signs and accepts the offer.

Lastly, the Committee noted that the TBS letter of 17 July 2018, extending the dates of the depressed market status, defined the matter as follows; “Homes sold after April 18, 2018 are subject to the new provisions”. The Committee found this wording very relevant because it was open to the TBS to have used the term “closed” in the letter, specifying that homes that close after 18 April 2018 are subject to the new provisions. But the letter did not use the term “closed”. Accordingly, the Committee found that the date the sale agreement is signed is the date that should be used to determine when a home has been “sold” for the purpose of making a depressed market sale claim under the HEA policy.

Recommendation

The Committee recommended that the English and French versions of the CFIRP HEA benefit be amended to reflect that the signing date of a real estate agreement is considered to be the date that a residence has been “sold”.