As critics fumed over what they see as flaws in British Columbia's new tax on foreign home buyers, banks, law firms and the provincial land titles office are rushing to push through real estate deals before the tax takes effect on Tuesday.
The Land Title and Survey Authority of B.C. extended its hours and put off scheduled technical maintenance after a surge in demand overloaded its network on Thursday, two days after the tax was announced. The LTSA said it would make its online system available over the long weekend and that technical support staff would be available from 9 a.m. to 1 p.m. on those days.
A new 15-per-cent tax on real estate purchases by foreign buyers begins on Tuesday. When it announced the levy on July 26, the provincial government said it would help manage foreign demand "while new homes are built to meet local needs."
Realtors, developers and others in the industry quickly raised concerns about the tax, ranging from the potential impact on B.C.'s reputation as a safe place to invest, to the fairness – and even the legality – of applying a tax retroactively. The tax applies to deals that were signed, but not yet closed, before Tuesday.
The deadline triggered a rush for notaries and law firms.
"We have had probably 30 to 36 inquiries from clients – and people who became clients all of a sudden, as they phoned the fifth law firm to see if we were able to do it," Richard Bell, a real estate lawyer with Vancouver-based Bell Alliance, said on Friday.
Bell Alliance was able to push through additional transactions by extending its hours and steering some purchases to other law firms. It did not charge extra for the work, nor did the other firms to which it referred files, Mr. Bell said, adding that he considered it "inappropriate" to do so.
July was already shaping up to be busy for Bell Alliance, which is one of the city's largest real estate law firms and had about 370 closings on its to-do list before the tax was announced. With the new tax in play, that total will likely be closer to 400.
Mr. Bell said the legislation is flawed because it fails to exclude, or grandfather, deals signed before the tax was announced and because it could make it more difficult for B.C. companies – in technology, medicine, sports or other sectors – to recruit and retain skilled employees.
"We attract a lot of foreign workers on work permits," Mr. Bell said. "They may be from Australia, Asia, Europe, anywhere in the world, and they're coming in at very senior levels. ... We have this work permit process that is there to ensure that we are getting people that we need.
"Now we are going to penalize them," he added.
The B.C. government was "draconian" in failing to exclude deals signed before the tax was announced, said Richard Goluboff, a lawyer with Goluboff & Mazzei in West Vancouver. "I think it is absolutely, fundamentally wrong to bring in a tax without grandfathering it," he said, adding that he would not be surprised to see legal challenges.
Mr. Goluboff said he had not seen a significant increase in demand since the tax was announced, as foreign buyers do not make up a large part of his firm's business
If foreign buyers find a lawyer to complete their deal before Tuesday, they could end up paying more.
Tony Spagnuolo, of Vancouver-based real estate law firm Spagnuolo & Co., said his firm was already working flat-out to complete deals before the end of July. The new tax brought requests to take on additional work.
For those transactions that the parties want completed before Tuesday, he said his firm will charge a commission – likely 5 per cent of the money that clients will save by not having to pay the tax.
"What we are saying is, we'd rather not do it, find someone else," Mr. Spagnuolo said. "But if you can't, we'll do our best, but we are going to take a percentage of the savings," he said.