107: Why a Good Lawyer is Crucial in a Real Estate Transaction with Pushor Mitchell LLP's Patrick Bobyn

00:00:00 Hosts

Welcome back to the Colonial Real Estate Podcast. I'm your mortgage broker host, Hosts.

00:00:17 Hosts

Drywall dust, I love it. Yeah, how's it going over there?

00:00:26 Hosts

You're on time and on budget like all renovations.

00:00:33 Hosts

I mean, it's a value add for your clients. Like, you know, it's nice to have a real estate agent that has done renovations or gone through like permanent process and can kind of understand some of the pain points.

00:00:49 Hosts

Yeah. It's harder like when you're living in the home, but it's not really affecting your living conditions and your kids.

00:01:05 Hosts

Yeah, totally.

00:01:16 Hosts

Yeah. And you guys are converting it to a suite, right? A basement suite?

00:01:25 Hosts

Yeah. Yeah, I mean, your kitchen in the main is awesome, but it's like that was pre -kids and... You know, it's like something that you have a lot of passion about because you're going to be using it like immediately. You wear a basement suite. You're like, huh. Yeah. Well, good luck, man. Yeah. Speaking of luck, wearing a Blue Jays hat today.

00:01:47 Hosts

We're heading down actually tomorrow to see game four. So they need some luck at this point. They're not playing as they should be.

00:02:00 Hosts

They just need to start hitting the ball. So I'm confident they'll win too in Seattle. And then they'll bring it back to Toronto for Game 7.

00:02:12 Hosts

Okay, well, we want to jump into this show. We recorded with Patrick Bobbin from Pusher & Mitchell and Kelowna Chamber of Commerce. So with Pusher & Mitchell, he's a lawyer there, partner, and then Chamber of Commerce, he's vice president on the board. I work a lot with Pat and he is awesome. And I think one of the big things that I want to communicate, and we've talked about this a bunch on the show before, is like you really want a team of professionals that are on the same page. They communicate with each other like they're working collectively. get the job done you know we have some great lawyers in town to do these transactions but yeah i've worked with pat a ton and uh yeah his team's awesome i can't say enough about them so just find someone you trust and you feel is going to get the job done because you do not want things blowing up at the last minute and somebody's law firm not being able to handle it so maybe you can speak to that as well because i know yeah times get a little stressful at the end of it

00:03:31 Hosts

Yeah. Prusher & Mitchell is a huge firm. Like they do everything. They've been in Kelowna for 50 years or something. And yeah, they're involved in the community as well. Like, you know, for Pat to be in with the Chamber of Commerce, like working with small businesses kind of has his finger on the pulse. So I brought up some awesome points near the end of the show too. Like pretty interesting suggestions on clauses or how to structure deals. So yeah, I think well worth the listen. You guys are going to enjoy the show.

00:04:03 Hosts

I don't know if he has time for it, man. Like he's got two young kids as well. His wife's a lawyer who's an amazing lawyer as well. They're doing great things in the community, but yeah, I can't say enough good things about that. Like he's just been awesome to work with. So yeah.

00:04:51 Hosts

Okay, Patrick Bobbin, it's been a long time coming trying to get you on the show, but glad we could sync up schedules. How are you?

00:04:57 Patrick Bobyn

I'm doing well. Thanks, Taylor. Matt, it's great to be on here. And it has been a long time coming, but really looking forward to it.

00:05:03 Hosts

I think good busy guests are hard to get. So yeah, you tick the box. Maybe we'll just jump straight into, I mean, you kind of have two roles that we wanted to discuss today. And one is on the Chamber of Commerce. So can you kind of give us a high level view of... Yeah, what your role is there and what is the Chamber of Commerce? No,

00:05:20 Patrick Bobyn

absolutely. Great question in that regard. And for those who don't know, Kelowna Chamber of Commerce, business community is really what that is. And so the Chamber is where businesses of all sizes, from sole proprietorship to hundreds of employees, can be a member in terms of what the Chamber provides. I would say are three main things. Advocacy, benefits. and connections and so depending on what a business is looking for whether it be all three or one of those things the chamber provides that where our intent our revision is to be the catalyst of the business community and so my role i'm a director it's a volunteer board but typically there is a lawyer or lawyers on that board we actually have three right now to practicing the smart ones, not practicing, but something that my firm push for Mitchell has been involved with for a long period of time. We typically have a lawyer on that board. And so it's my turn right now.

00:06:14 Hosts

Like you must have your finger on the pulse in terms of small businesses in Kelowna. Like what is the current vibe? Are people worried economically? Are people thriving? Do people see opportunities? Like, yeah, what are the discussions you guys are having?

00:06:27 Patrick Bobyn

No, it's a good question. It really is something that it's not a one size fits all, but. A big part of our model is we intend to be the voice for the business community. And so really, I'd say a big thing we do is listen. We always say, what is keeping you up at night to our members? And there's, we have over a thousand members. So you think of the business community, I mean, that impacts a lot of different sectors. I think what you see right now, and in a lot of ways, not surprising, but it's just that business uncertainty. You look at the States, what's going on down there and the ripple effect that it has up here. You look at rising costs. A lot of business owners, big and smaller saying, my margins are shrinking and shrinking and shrinking. Expenses are going up. How do I keep the lights on going forward? So while there is a lot of optimism and there's a lot of great success stories in this town, I do think our business community is still very much in that cloud of uncertainty in terms of going to 2026 and what that looks like going forward. And so the Chamber's role is really, going back to those three things, advocacy. What are the issues? What are keeping our members up at night? How can we relay that to the proper channels? Is that a municipal issue? Is that something that we should be going to the federal level, proposing a policy or trying to get a distinguished speaker in to talk about that issue? Those are all things as the chamber we try to facilitate.

00:07:41 Hosts

That's awesome. And so I guess in the last couple of years, I'm just kind of assuming, but have we seen kind of tourism go down, you know, forest fires, Airbnb, stuff like that? Like, is that what is also impacting small businesses or do you guys have some of that data?

00:07:54 Patrick Bobyn

yeah there's a lot of good intersections so Tourism Kelowna is really focused on the tourism side of things but we very much work hand in hand and there's a lot of issues that are relevant for their members and our members and we also share a lot of members as you can appreciate there in that regard so I think certainly you look at this past year and especially with the states per se and you know that's a big part of our tourism there was concern there now obviously I think on the flip side that did promote cross jurisdiction in terms of Canada and Canadians coming out this way, which is good. But like you said, there's always barriers we have to consider here. There's the short term rentals, which is a big part of our community. And our mayor actually spoke about that a couple of weeks ago at one of our chamber luncheons and hurdles in that regard. And we're always asking what more can we do to promote tourism within the city?

00:08:48 Patrick Bobyn

You kind of hit a buzz topic there. And so one of the things the chamber does at both a provincial and a federal level is promote policy. So chambers throughout BC once a year will go to an annual general meeting of BC chambers where certain policies can be promoted. And that actually happens at the federal level as well. It actually happened last week where our president and our CEO went to Mississauga and were at the federal level there where they can promote certain policies. And so one of the ones that we have been pushing for a long period of time is that inter -provincial cross -border trade. And obviously the barriers that we see, you think of the wine industry per se, or alcohol in that regard. And so I think we've been hammering on that in addition to many other chambers and entities, but that's been something we've been trying to push for years. And obviously with everything happening in the States. it does look like there's been a little bit of movement there now obviously uh the federal level you had to get 13 provinces and territories on board there but we do feel that locally that's been an issue that we've been on top of and something we've been quite vocal about and hopefully we're starting to see some movement there yeah you think it would have happened like at a much more rapid pace like you think you know tariffs would have been the the catalyst to like get inner provincial trading going here you know but it hasn't come to fruition

00:09:54 Hosts

you think it would have happened like at a much more rapid pace like you think you know tariffs would have been the the catalyst to like get inner provincial trading going here you know but it hasn't come to fruition

00:10:06 Patrick Bobyn

No, I mean, again, as much as it's something that we advocate for at a local level in terms of a policy, it does work its way up. I think right now it's really between the federal level and all your provinces trying to figure out how to make that work. I'm not a politician by any means, but I think it'd be appreciated that a lot of moving parts there. But I think there's a general consensus that it's something that has to get figured out. It's just we got to get there.

00:10:48 Patrick Bobyn

You know, Matt, I think it's one of those things too, is like you said, it's always the ripple or the unintended consequences or how that impacts other industries. We obviously look at tourism again and how, especially in the summertime, short -term rentals provided an alternative avenue for accommodations, which obviously I would say has a good impact on surrounding business, whatnot. And again, as a chamber, we also have to appreciate that we have many members who are hotels or other forms of accommodation. So you're trying to find that balance between all the various considerations per se. But another avenue is short -term rentals at time would provide other accommodations for work reasons, whether they're here for a certain period of time to do their job or whatnot. And so with the restrictions we have, that does add another hurdle on that end, which can have impacts from an economic perspective as well.

00:11:54 Patrick Bobyn

On our end, I'm kind of wearing my legal hat as well in terms of just the businesses I advise per se. You know, Kelowna, obviously in the greater Okanagan, a lot of the focus is on tourism, but year round. a lot of those issues don't go away and so i know the chamber is a big proponent of shop local and contribute to the local economy not just in the four summer months but year round i think back to your question there it's definitely something that impacts us year round and on multiple levels including the restaurants absolutely do you see the chamber like when everyone's

00:12:22 Hosts

you see the chamber like when everyone's profitable and, you know, economy is good on the small business side. Does that correlate directly to like you guys doing more transactions and closing on the legal side, like real estate's booming as well? They kind of go hand in hand or is there any connection between those two? I think,

00:12:39 Patrick Bobyn

think, I mean, honestly, a good economy is good for all, you know, obviously on the, you know, the chamber and we want to see business thrive at all levels. Our main viewpoint there is a business is good. That's going to have a ripple effect on various professions per se. I mean, look at the three of us in our profession. As real estate goes up, it benefits all three of ours. And so I do see that here. I mean, when you look back to COVID or in times of uncertainty, I think on the transactional side, you do see a bit more creativity per se. Things like vendor financing or other ways of potentially getting deals done if you have a motivated buyer and seller. But certainly if the economy is good and business is doing well. That definitely is going to have a positive effect on the legal side from a transaction point of view.

00:13:20 Hosts

Maybe to kind of wrap up on the commerce side, how do people connect with you, small business owners, or maybe not you specifically, but how do they get involved in the Chamber of Commerce and what does that look like? The Chamber is a not -profit organization, so we do have a small team led by our CEO of George Greenwood.

00:13:29 Patrick Bobyn

Chamber is a not -profit organization, so we do have a small team led by our CEO of George Greenwood. And I will say our team is small in number, but they all punch well above their weight class. The work they do on a daily basis is unbelievable from an operational perspective. perspective and a lot of big events that we host whether it be luncheons or educational events or speaker series you know our big event actually at the end of this month is the business excellence awards which is always a fantastic night to really celebrate a local business there's over 16 awards that are presented and I've been going for a couple years now that event is always so amazing to see the type of business out there the awards are quite diverse in terms of the categories typically what happens is your finalists each one for each award it's a long night But you do get a video overview of what each business does and their story, their individual story. It's inspiring, actually, just to hear the different stories and different successes our community has in that regard. Those are operations. And then from a board governance model, myself, in addition to other directors, were there to really guide the chamber from a governance perspective. And so I'm the vice president this year. That's certainly something that if people are interested, they have just general questions on how the chamber works or if they want to. get involved as a member or as a volunteer i mean they can certainly reach out to me or just reach out to our ceo george in general through our website awesome man i love it yeah and that is one thing like i see in kelowna and maybe you know we live in a bit of a bubble and people aren't so aware but like there are some awesome entrepreneurs in okanagan is such a good community that way so yeah it must be exciting to see them grow i will finish with one more thing on the chamber and this is i'm going to throw a question at you we're celebrating a you know milestone next year as a chamber

00:14:50 Hosts

man i love it yeah and that is one thing like i see in kelowna and maybe you know we live in a bit of a bubble and people aren't so aware but like there are some awesome entrepreneurs in okanagan is such a good community that way so yeah it must be exciting to see them grow i

00:15:04 Patrick Bobyn

will finish with one more thing on the chamber and this is i'm going to throw a question at you we're celebrating a you know milestone next year as a chamber How old do you think the Kelowna Chamber of Commerce is? Oh, 25 years. Next year will be our 120th anniversary.

00:15:28 Patrick Bobyn

I know, I didn't want to go too high. I said 125, not 25. That's incredible. So yeah, I mean, you look at that. So it's been around in some shape or form for a long period of time. Obviously, you know. Well, for that, it's had to adapt and change and in terms of providing value to its members. But as a chamber, we're very excited for next year. Already, there's a lot of talk about the different ways we can celebrate quite a significant milestone, so to speak.

00:15:54 Hosts

Congrats. That's awesome. I don't know how you have time for that and legal and a couple of kids like you're... And Pontiac.

00:16:02 Patrick Bobyn

Pontiac. That laugh was hard. No. Well, you know what it does? I hinted earlier, Pusher Mitchell, where I'm a partner at, it's only been around for 53 years, I believe, but has had a longstanding relationship with the Chamber. I mean, it does go hand in hand. We don't just share a parking lot, as I like to say, but many lawyers have served on the board, or I believe we've had five or six past presidents that have led the board in that regard. And especially as someone, I call myself a business lawyer, I think it goes hand in hand. My expertise definitely contributes nicely to a governance board, but at the same time, in terms of advising my clients from a business perspective, to have that sort of insight as to really how all the levers work from a chamber and a municipal standpoint definitely helps. Yeah,

00:16:46 Hosts

that's awesome. On the legal side of things, before we put you in the hot seat and just fire questions at you, do you kind of want to let us know any current legal updates or anything in the pipeline that you might want to fill us in on?

00:16:57 Patrick Bobyn

No, absolutely. And so the overlap we all have is real estate is part of my practice. I advise businesses really at that commercial element. But on real estate side, both residential commercials, a big part of my practice. And so we're always seeing what's changing or shifting in that regard. And two things I think I'd raise, and I appreciate you've had a lot of great lawyers on in the past in terms of a timestamp. And here we are in October of 2025. You know, a big thing actually is more on the administration end is compliance. And so. Title insurance, which is something that you see typically in all transactions. Now it's something that lenders require as part of any sort of financing per se. The title insurance, which really ensures title to the property. We have to get various information on the client, individual information. That's now really a FinTrack regulated element. And so when we provide that information to the insurers, it's not just to get the insurance bound per se, but now the title insurers have to. relay that information through FinTrack. And so I think as it can be appreciated, it's something that is adding on another administrative layer, so to speak, another item that we have to address. And so part of our role as legal counsel, which gets the back end of these transactions as we're getting ready for closing, is you just want to be proactive in terms of getting that information and making sure that's not going to be something that potentially holds up a prospective closing.

00:18:18 Patrick Bobyn

As of October 1st, 2025.

00:18:24 Patrick Bobyn

Typically, my understanding, Mac, the realtors are not really involved with the title insurance aspect. I mean, obviously, you have to have your own hoops. You have to jump through from an ID verification standpoint. I think the big thing is it really does impact the lawyers because we're the ones that work directly with the title insurers to get the policy. Given now that that is a piece of personal information that's now going to be shared with a third party and shared with FinTrack, it's something we actually have to get approval from our client right off the bat. And so it's something where... I think in the past, you weren't as concerned about addressing that item right off the bat. It's definitely something that's more at the forefront now because, you know, some transactions, you don't have a lot of time turn around between condition removal and closing, and you need title insurance in place for closing if you have a lender.

00:19:08 Hosts

I speak for all mortgage brokers. We apologize on tight timeframes, you know, especially this fall. Yeah, you get. certain promos by certain lenders that you have to close within 30 days to get specific rates and you know it puts the legal side under a lot of pressure because you know we're constantly trying to push to get instructions sent to you guys as soon as possible but there are conditions that you know we have to meet before they send those instructions but if you have you know piles more compliance paperwork like title insurance you know that's why you guys really need that like 10 business days you know before closing right so Yeah.

00:19:42 Patrick Bobyn

And like you said, Taylor, I mean, every transaction is different in terms of timeline. Sometimes there is certain things that will dictate the timeline per se. I mean, I would say a lot of the information we're getting is information we'd be getting in any event. A lot of the compliance over the past few years, and whether that be the law society, ID verification requirements, disclosure from a transparency perspective, these are all things we'd be collecting in some shape or form anyway, but it's just now that extra what we're doing with that information. And that's not to... That's not to scare clients in that regard, but it just is part of the process now in terms of doing a transaction. Yeah.

00:20:15 Hosts

What about GST? You got anything interesting there for us?

00:20:19 Patrick Bobyn

Everyone's favorite GST, right? And then in terms of whether it's applicable or not. You know, one thing that's sort of come up, it's not here yet, but back in the spring, there was actually discussion. They knew first time home buyers GST rebate. And so typically on new builds per se, there is GST. payable. PTT is not payable at certain times, property transfer tax. And again, not a politician, but part of the new carny coming in and whatnot, there was some proposed legislation about first -time homebuyers where really between one and $1 .5 million new homes, there could be a prospective GST rebate if you are a new homebuyer. Now that is not in effect yet. So if you were buying a new home today and you are a first -time homebuyer, you are paying GST on that. but it is something that has been proposed with the house of commons and theoretically if it does get passed at some time i think that would definitely help be a catalyst in terms of getting first -time home buyers into the market because oxygst is a part of the consideration in terms of what your budget is per se

00:21:47 Patrick Bobyn

Now you nailed that, right? I'll say my favorite legal answer is we don't know yet. Now it depends on the legislation, how it works, but you're right because a rebate in essence is really you're paying it and getting the money back. There is a first time home buyers rebate right now. It's quite a bit smaller on new build homes, but that's how it works is you are paying the GST upfront typically, and then you get a rebate after. Would that work in this case? I mean, again, you think if we're looking at homes up to 1 .5, that can be quite significant GST. And so if the whole... thought process from a policy standpoint is to try to get more people in the market and also sure then paying it up front and then getting a rebate afterwards that's just that yeah yeah it should be an exemption for sure from a lending point of view generally lenders don't finance the gst anyway so it wouldn't be like you know the lender funds it and then you're getting that cash back as a client like you have to come up out of pocket

00:22:24 Hosts

should be an exemption for sure from a lending point of view generally lenders don't finance the gst anyway so it wouldn't be like you know the lender funds it and then you're getting that cash back as a client like you have to come up out of pocket

00:22:41 Hosts

No, we typically don't see it unless it's incorporated in the purchase contract of just the price itself.

00:22:50 Hosts

I mean, Pat, you've seen way more transactions than I have. Maybe I've got this wrong, but the ones that I've done with GST, the client has to come up out of their own pocket. It won't be facilitated from the mortgage.

00:23:00 Patrick Bobyn

Yeah. I mean, what will happen is from a more of a mechanical perspective, when we're meeting with a client, you look at a statement of adjustments, there is a separate line item for GST in that regard, whatever it ends up being. And so that is added. I mean, obviously we factor in whatever the mortgage proceeds are, but that is certainly an item that is added on top in terms of what the ultimate. breakdown of cash that a client has to bring in is it's like property transfer tax right like that's not going to be financed from a lender so recently i have seen a few times as you're seeing motivated developers that are trying to move in recovery is they sell to collect the gst but they'll be now offering a credit a buyer's incentive call it what you will

00:23:21 Hosts

like property transfer tax right like that's not going to be financed from a lender so

00:23:29 Patrick Bobyn

recently i have seen a few times as you're seeing motivated developers that are trying to move in recovery is they sell to collect the gst but they'll be now offering a credit a buyer's incentive call it what you will That coincidentally equals the 5 % value of the purchase price. We have a line item for GST. That GST is getting paid to seller per se, but then they are getting a credit, which washes it out. That is something I've seen a few times now quite recently in terms of developers trying to move product.

00:23:57 Hosts

Yeah. Hypothetically, what does a transaction look like? Like a client gets an accepted offer, you know, they send it over to you because... You know, hopefully every real estate agent puts in a condition for a legal review. You open up a file with a client, what are kind of the next steps? You nailed it there,

00:24:12 Patrick Bobyn

nailed it there, Taylor. I mean, ideally there is a condition or a due diligence period that has a legal element to it. And really that is our opportunity from the legal end to really look at contract, make sure we're comfortable with what that looks like. Look at title, make sure we're comfortable with what title looks like. And the way I like to frame it to our clients are, are you legally informed? Can you make a legally informed decision to move forward with this purchase if you so choose? And so that's really our task to really, you know, are there any flags, anything we should raise? Do we have all the information? And so that is our role during the due diligence period. Typically the client is also at the same time doing their inspection. They're financing an order, making sure they can get insurance on the property and any other sort of asks that go with that. And so ideally we have that timeframe and we work with the client to then provide the information. They decide then whether they want to move forward or not. If they do move forward and they remove conditions or in the alternative where they didn't have any conditions to deal with, and it was an unconditional offer. Really at that point, then we shift from the due diligence aspect to facilitating the close. And so what has to be done to get a closing in place? Is there a lender we're working with and which we need instructions and we're looking at conditions for financing and whatnot. And then working with the client, getting that personal information, preparing the purchase documents, finalizing a figure so they know what they have to do leading up to closing.

00:25:31 Hosts

Yeah. And I mean, during that process, you know, when we get a commitment letter, we usually forward it to our legal teams that we're working with and say. you know, Hey, expect instructions shortly, but to go back to the purchase contract, any pro tips on putting in little clauses, whether that's like a hold back, like where do hold backs come in place? Like at what kind of monetary value? Yeah. Just kind of walk us through some of that.

00:25:55 Patrick Bobyn

No, it's a great question. And, you know, looking at you there, Matt, in terms of your world, a little bit per se, but the standard form contract, I think does a good job of really getting the general essence of what a purchase transaction should look like. Of course, it's always those additional items there that we have to put some thought to in terms of what that looks like. And so I think the one you raised, Taylor, was a hold back. And, you know, typically you see a hold back if there's some sort of action step, usually on a seller for something to be done to the property. And really the incentive is of that if said thing is not done by closing or by a period of time after closing, money is held back as sort of a mechanism to ensure that that thing is done. And so that's where you see holdbacks is, you know, does something have to be replaced? Does something have to be repaired? Is there an outstanding permit or something that is really needed for the buyer to really fit their intentions of what this property is and really what the transaction is? Unfortunately, holdbacks, you know, the essence makes sense. We're holding back money until something's done, but they get incredibly technical because unfortunately what happens is deal closes holdbacks in place. and then what happens if seller doesn't do what they say they're going to do or seller says what they're going to do and buyer doesn't think it was done properly and you really have nothing to point to in the contract or the holdback language and so there unfortunately are a lot of disputes or ongoing issues with holdbacks if they're not drafted properly or really just have fully encompassing consideration for how that process is to be played out so definitely i tie that back to legal like if we have a due diligence period And that's something the lawyer is looking at as part of the contract. Absolutely. If there's holdback language, part of our role is to think that through and sometimes wear our worst case scenario hat, make sure that that holdback language would address that properly.

00:27:41 Hosts

You said something there that, I mean, it's kind of the expectation, like the seller thought they did something to the right standard and the buyer thinks they didn't. Like unit has to be professionally cleaned or carpets have to be cleaned before, you know, possessions taken over. Like, what is the recourse there? Because really it comes down to the buyer comes in and says, I don't think this was clean. Show me a receipt. And then they show him a receipt. And then like, they're in this, I'm going to take you to small claims for 400 bucks kind of thing. Like, obviously you guys are probably not going to get involved at that level. That's kind of like where the buyer and the seller agent, you know, put their heads together and see what they can resolve. are clauses like you know a unit being professionally cleaned like is that reasonable to put in like i would say definitely reasonable and any of these clauses that do get in the contract i mean that is evidence to a court if it ever goes there what was the intention of the parties as it relates to the transaction specifically an item in the contract whether it be the cleanliness of the home or otherwise but it's something that you know on the buyer's side you do have to

00:28:21 Patrick Bobyn

would say definitely reasonable and any of these clauses that do get in the contract i mean that is evidence to a court if it ever goes there what was the intention of the parties as it relates to the transaction specifically an item in the contract whether it be the cleanliness of the home or otherwise but it's something that you know on the buyer's side you do have to advise your clients to a certain extent as you get to closing and obviously there's terms in the contract and rights and obligations of both sides and there is a discussion of clients that this is what you're legally entitled to contractually this is what is supposed to happen but what happens if it's not and so first off for the vast majority i would say 99 of these terms they are not material In the sense that you cannot back out of a deal if the home is not professionally clean when they say it's going to. Or there is some damage found to the property. I mean, material, it's got to go to the essence of the contract. Are you still getting the home you said you were going to get? Or the contract contemplated you getting? And so that is something that, you know, client has to understand is that if you do find out about an issue, whether before closing or on the day of closing, it's not material. It doesn't give you an out. You can't not close on that basis. Yep.

00:29:47 Patrick Bobyn

They are. I mean, you know, the walkthrough can always be a good thing. Like you said, you can be proactive in that regard to see what are we getting them into here as we get to closing. And sometimes, you know, that can lead to discussion between counsel as to, hey, it's not clean contracts as their client will be in breach of a term. Can we negotiate a hold back at that point? Is this something that the seller is willing to engage in that regard? But if not, if there's a refusal, there's a rejection in that, and ultimately you're going to close on a deal. And then it's up to the client, a buyer at that point, if they want to pursue a remedy. I tell clients like, ultimately you're going to have to decide how much time, money, and emotion you want to put into this. I mean, so now some clients. will pursue a $300 cleaning bill. It's on principle and something they're comfortable pursuing through small claims and they're fully entitled to do that. Other times, it depends on the price tag. If there's water damage that's discovered once we're in there and it was clearly contemplated or it was a misrepresentation that could cost tens of thousands of dollars, then obviously there's potentially more of an appetite to pursue that through legal means. And so every client's different, but... I think part of our job as part of the closing process is just to be very clear of how that works. Because I think to your point, Taylor and Matt, there's sometimes this, unfortunately, as much as we wish we were the Harvey Specter, the bulldog, we can't just magically make the place clean and they're going to pay for it on closing, you know, for your example there.

00:31:07 SPEAKER_00

Yeah.

00:31:18 Patrick Bobyn

And you assume that, you know, parties are going to work in good faith. There actually is a common law doctor and courts have looked at this in terms of parties have to negotiate and engage in a transaction in good faith. And sometimes that comes up too. And they're going to say, well, I'm going to go after the other side because they weren't acting in good faith. And that can be appreciated. But, you know, again, the practical element of that and push for Mitchell, we're a full service firm and we have litigators who can help. A bad faith argument, you know, you're looking at 10 to 20 grand minimum just to start that claim, right?

00:32:02 Hosts

Well, even if you win in small claims, then how do you then collect? It's just... an ongoing thing forever i think the point of the contract from where i stand is two people communicating expectations right and if one person doesn't kind of follow through with that exactly how the other person doesn't want to you know you kind of take it on the thin unless it's yeah a bigger line item obviously i think you nailed it there taylor it is and i mean we're we almost all sound a bit jaded here talking about the process but i think circling back to really our role is just to ensure our client understands that process that the pros and the cons

00:32:24 Patrick Bobyn

think you nailed it there taylor it is and i mean we're we almost all sound a bit jaded here talking about the process but i think circling back to really our role is just to ensure our client understands that process that the pros and the cons And I mean, ultimately they can decide how they want to go forward if that situation were to arise. And obviously with good advisors, with the realtors, if they can identify an issue as part of the initial contract stage and going back to that hold back language, that's something that's always good if the lawyer can get involved in that too. And you can kind of work through those different iterations of what could happen and making sure that the client is protected there.

00:33:28 Patrick Bobyn

You nailed it, right? I mean, we're here to try to facilitate what the parties have agreed to, but no, intentional or otherwise, things happen. I mean, unfortunately, one that is, I'd say, more on the extreme side is one of the seller's main obligations when they convey a property pursuant to the standard form contract is they will provide clear title. That means any financial encumbrance or otherwise will be discharged. Now, as much as they are contractually obligated to do that, there are some rare circumstances where that actually does become an issue and they financially can't. And now they are in breach of their own contract, which they said they're going to do. And that's something you have to deal with. And so, you know, you don't see that typically when there's one mortgage on title, but sometimes you pull a title and there's liens and judgments and multiple mortgages and you sort of get a sense. And again, the conversation there to a client is contractually seller has to do that, but there is a possibility that this could be an issue.

00:34:20 Hosts

Yeah. Well, and that's an interesting point, especially in the last couple of years, if you know, you bought and. 2022 and you wanted to sell a year later could be short on that for sure absolutely right i'm not talking the foreclosure aspect where there actually is a lender that's closed but i would say the seller's very close to that and now they've come to the really the closing and financially what each charge holder is saying may need to clear title you're counting the numbers i'm going we're not going to get there and so that's a tough one yeah yeah

00:34:29 Patrick Bobyn

right i'm not talking the foreclosure aspect where there actually is a lender that's closed but i would say the seller's very close to that and now they've come to the really the closing and financially what each charge holder is saying may need to clear title you're counting the numbers i'm going we're not going to get there and so that's a tough one yeah

00:35:09 Hosts

Well, in that regard, Ben, do you do a legal review for a seller? And is that part of that as well to say like, hey, we're going to pull title and can you provide like a current mortgage statement? Like you're getting ahead of that before like subjects are removed from the buyer.

00:35:26 Patrick Bobyn

There certainly has been circumstances where we're providing a due diligence review or review of a contract to a seller. Often realtor has put in a. a seller's legal condition and usually because there's some other strange thing going on or they want to make sure it's kind of a fail safe. Often we're getting the sale contract after conditions have been removed and really it is binding at that point where we're saying, hey, you have to do this, right? But I've said to my clients and. The realtors I work with that, you know, even if the deal is conditional and we're on the seller side, send it to us. Like, let's say make sure there's no conflict. And just, is there anything that we see based on a quick review just to make sure that there is no surprises at closing, which I think is what we're trying to avoid there.

00:36:05 Hosts

Yeah. I want to ask one more question and this is hopefully more to help the conversation with real estate agents and mortgage brokers and lawyers so we can all be on the same page. Do you want to talk a little bit about price reduction and credit at closing? Because, you know, I get this. not often, but say like one out of 20 deals. And I just had it, you know, a week ago where, you know, Scotia Underwriter called me on day of funding and was like, hey, why is the purchase price, you know, $5 ,000 less than what you originally submitted? I'm like, no idea. So I have to reach out to the real estate agent and say, oh, you know, found out on a home inspection that the furnace was bad. So we did a price reduction. Well, now like everyone's scrambling last minute. You know, and it was okay on that deal because the down payment was, I think like 30%. So we're not on that border of like insured or uninsured. But how does that look in your terms? Like how much of a pain in the ass is that for you?

00:36:59 Patrick Bobyn

No, absolutely. And it really is something that almost touches all parties here from a real estate agent to broker to lawyer there per se. I mean, on our end of the back end is obviously we have a contract that we look at and big part of that is purchase price. You know, what do we have to factor in terms of crunching the final numbers if something happens? your example you know price reduction is where parties have agreed that the purchase price has gone down or up is a reduction it's gone down and you know that matters for a couple reasons number one from a purchaser perspective you pay property transfer tax on fair market value and so your purchase price is a million dollars you are paying property transfer tax on a million dollars you do not factor in the adjustments so to speak so utilities and taxes and things like that you factor in for the sake of closing but from a fair market value of what that property has conveyed for the purchase price remains and so if you reduce the purchase price you are reducing how much you pay from a property transfer tax perspective which is beneficial for a buyer however that can have negative impacts on what you've been approved for from a mortgage because part of the lender's aspect is depending on the lender they're going to have certain asks or requirements and It does happen, Taylor, to your point that certain lenders will say, you know, if there is a price reduction or a change in price, we must know because that might impact the loan to value ratio or what they're looking at on their end. And part of, you know, residential conveyance as lawyer, we act for buyer, but we also act for the lender in terms of registering that mortgage on title. And so we are obligated if we're aware of a price reduction vis -a -vis amendment to the contract, we have to share that with the lender and that can potentially cause issues from a funding perspective.

00:38:51 Patrick Bobyn

Well, fair market value. And so, I mean, appraisals you get for the sake of your mortgage or approval might be different in terms of what the fair market value is. I mean, ultimately, fair market value in the open market is what if two parties agreed to for this transaction. That's what's documented in the contract. And so you can have that in an appraisal before or after, whatever that is that's different. But ultimately, if the parties then agree upon a reduction, they amend it, then that's obviously the new fair market value for the sake of what that property is being conveyed for in that transaction. To your other point there, Taylor, and so what you often see, and this kind of ties back into the holdback issue we talked about too, is, you know, for various reasons, something has to be repaired. Something has to be replaced and the parties agree, you know, it's just going to be easier. The buyer says, let me do it. We agree it's going to cost $5 ,000. Give me $5 ,000 and I'll do it. And so parties will do that. And if it's worded, it has a credit. The buyer will be credited $5 ,000 as part of closing for the sake of this specific thing. They're still paying the purchase price. The fair market value, what the property has been conveyed for is still original purchase price, but it's treated arguably as an adjustment as opposed to a reduction in the purchase price.

00:40:00 Hosts

Yeah, I've had difficulties with that in the past, lender to lender. And you know, one of them. again, came up at time of funding, but fortunately, you know, we have great lawyers in the Okanagan, so we're able to get on top of it. But one comment that comes from lenders is... I don't recall that one,

00:40:15 Patrick Bobyn

recall that one, Taylor. I'm thinking of that deal.

00:40:18 Hosts

Yeah, that was at your wife's firm. Fortunately, they were pretty good too. You know, they look at it as incentivizing... the sale of a property. So lenders obviously don't want to see that, even though it's a very small amount. And then the other one that we struggle with, it goes back to that insured mortgage. You know, like if you're getting a cash back, essentially the lender, you know, let's say it's on that 20 % down payment, but you're getting the cash back. Well, you know, you're less than 20 % down because effectively the lender is financing a larger portion and you're walking away with, with less down payment. So I've had personally a harder time with the credits or cash back. So I, I always encourage the price reduction. it's harder for the client obviously because they're thinking great i want to cash back of five grand instead of a five thousand dollar price reduction you know they're two very different things because one you have the money in your hand and the other it just reduces your mortgage amount so when you're looking at replacing like a furnace you know it'd be nicer if it was done prior to closing so we don't have to deal with any of that and then the other little caveat to all that is if there's a price reduction the lender wants to know why there's a price reduction if it's because of mold Oh my God, we're in a heap of trouble. Like now we need a remediation report and we got to make sure the lender is okay with it. So like, it's just a conversation that needs to be brought to everyone's attention sooner than later. And, you know, loop everyone in so we can not have those issues.

00:41:44 Patrick Bobyn

I think for all parties, and I mean, Taylor, you kind of stole my thunder there, but you nailed it. I mean, I think there's a big piece of this is the communication is that if there is something coming down the line or reduction or an adjustment, whatever you want to call it, I think all parties, advisors really got to be on the same page for the exact reasons you brought up. And, you know, on my end too, as a lawyer, and again, I bring up that dual role. We are acting for lender, not to say we're trying to pull a fast one at all with the lender, but like really what we as a lawyer are always looking at when we get our loan packages. What are the instructions? What is the lender telling us? And often, to your point, they are going to be very clear to say, we must be notified if there is a price reduction, or we must be notified if there's amendment or terms. And so we're obligated at that point to notify them. And so to your point there, it can come as a surprise upon closing, we realize that there's been an amendment or something's happened. And whether it's the lawyer not talking to broker or real estate, you know, whatever way it goes, it's important that we're all. talking throughout the process. I think that's probably the best point to leave this whole conversation on is,

00:42:39 Hosts

I think that's probably the best point to leave this whole conversation on is, you know, have the team around you, make sure everyone's in constant communication. And even with, you know, like when I send you guys a commitment letter, I know that's like bare bones, right? Like I don't see the instructions that are sent. So it, you know, it's obviously pages and pages longer. So yeah, for the client. you know, have a good team, surround yourself with those people, and then just be transparent and, you know, let the professionals kind of take it from there. Yeah, we're kind of running out of time here, Pat. Absolutely loved having you on, man. Thank you so much. Yeah, I'm interested into hearing more about the Chamber of Commerce as well and your guys' event coming up.

00:43:14 Patrick Bobyn

Absolutely. I noticed in closing, neither of you two are nominees, so we'll have to work on that for next year.

00:43:21 Hosts

Yeah. Yeah, maybe I'll nominate Matt.

00:43:28 Patrick Bobyn

Fantastic. All across the board. Absolutely.

00:43:32 Hosts

Well, thanks so much for coming on again, buddy. And yeah, we'll chat to you soon.

00:43:36 Patrick Bobyn

Take care. Thanks.