Part IX - Purchase of Replacement Residence

9.1 Purpose

To enhance an employee's mobility by assisting in the acquisition of a principal residence at the new location. Employees who were not homeowners previously are eligible for this part.

9.2 Time Limit to Purchase

The time limit on the purchase of a home is governed by subsection 2.13.1.

Employees may request an extension to the prescribed time limits in situations where the purchase of the home is delayed due to exceptional circumstances.

• the employee must submit a business case to the Departmental National Coordinator who shall forward the submission with his/her recommendation to the Program Authority at TBS for approval.
• the Program Authority will provide a written response to the request as early as possible, but no later than ten (10) working days after receipt of the submission.
• requests for extension shall not be unreasonably requested or denied, in accordance with the Principles outlined in this Directive.
• exceptional circumstances may include, but are not limited to the following examples:
  • Medical conditions of employee/dependants.
  • Education commitments.
  • Depressed housing market conditions.

9.3 Occupancy Requirements

Eligibility for entitlements under this Directive is conditional upon occupancy of the new home by either the employee or the dependants - not by a tenant.

9.4 Funding Overview

The benefits outlined in this part are paid from both the Core Fund and the Customized/Personalized Funds as follows:

Benefit	Core	Customized/ Personalized Funds
Legal Fees and Disbursements	X - IRP rates
Structural Inspection	X - IRP rates
Additional inspections per Directive	X
Attending Fees and Power of Attorney	X
Mortgage Interest Differential Up to $5,000/up to 5 years.	Where portability is not possible	Employee refuses to port when it is possible - Personalized Fund only
Mortgage Default Insurance Premium		X
Interest on Loan for Home Purchase Deposit	X
Bridging Financing - interest		X
$25,000 Subsidized Home Relocation Loan - Interest		X
Mortgage Interest Buy-down		Personalized Fund only
Professional Cleaning	$100 maximum	Amounts in excess of $100
New Home Warranty		Personalized Fund only

9.5 Lots and Lot Size

9.5.1 The benefits in this Directive shall apply equally to the purchase of a lot on which a principal residence will be constructed.

9.5.2 The reimbursement of expenses shall not exceed a lot size greater than 1.235 acres/½ hectare or, where required by zoning laws, a lot size of not more than 4 acres/2.47 hectares.

9.5.3 Where additional land or acreage is purchased on either a new construction or a re-sale home, the employee shall be reimbursed only for that portion of costs which would have been reimbursed within the above limitations.

9.6 New Home Construction

Employees who construct a principal residence at the new place of duty shall be reimbursed those expenses related to the purchase of the land and the construction of the home which would have been reimbursed if a home was purchased on the market.

• All costs identified in the building agreement shall be deemed as part of the original purchase price.
• New home warranties are reimbursable under the Personalized Fund only.
• Taxes such as GST, PST and/or HST, are not reimbursable (all taxes considered part of purchase price).

9.7 Purchase after Move

Only one type of assistance is paid for acquiring accommodation at the new location whether rented or purchased. An employee shall be reimbursed either:

Core Fund

• Expenses incurred to rent a dwelling, or
• Expenses incurred to purchase a home.

An employee who originally moved into rental accommodation is entitled to the benefits of legal fees on purchase within the time limits set out in subsection 2.13.1 However, the reimbursement of legal fees shall be reduced by any amounts reimbursed for rent in advance of the move and any rental assistance provided.

9.8 Non-Admissible Expenses

Any payments on closing that are not essential to the establishment of clear title are not reimbursable. These include:

• Adjustments for utilities and municipal taxes.

9.9 Income Properties

Employees who purchase an income-producing property such as a duplex, triplex, multiple unit building, small store or confectionery, that is also the employee's residence, shall be reimbursed related expenses for that part of the building that they use as their principal residence.

9.10 Co-Ownership

Where the principal residence is co-owned by a person who is not the spouse or common-law partner, or a dependant of the employee, only that portion of the expenses directly proportional to the employee's legal share of the property shall be reimbursed. The employee shall disclose the percentage of ownership when required.

9.11 Loss of Deposit

Employees who lose a deposit when buying a home because they fail to fulfill the purchase agreement are not entitled to reimbursement for the loss of that deposit. An exception may be made if the employee was prevented from completing the purchase because of departmental requirements.

9.12 Mobile Homes

9.12.1 Those employees who purchase a mobile home are entitled to the same benefits that apply to employees who purchase a home constructed in a residential lot.

9.12.2 The employer will not pay for moving a mobile home if there is a subsequent relocation - see Part X.

9.13 Legal Fees and Disbursements

Employees shall be reimbursed associated legal fees and disbursements, including applicable taxes, incurred to complete the purchase of a property. In addition employees shall be reimbursed for expenses of a legal nature necessarily incurred to obtain clear title to a property as follows:

Core Fund

• Sheriff's fees.
• Land Transfer Tax.
• Deed transfer charges.
• Title Insurance or survey costs.
• Certificate of Execution.
• Attending fees/power of attorney.
• Appraisal fees necessarily incurred at the request of the lender to obtain a first or second mortgage-only if the appraisal done under the Core Fund is not acceptable to the lender.

9.14 Building/Structural Inspection

An employee shall be reimbursed fees charged by a qualified structural inspector for one Building/Structural Inspection prior to the purchase of a new principal residence whether or not covered by a warranty at the time of possession.

Core Fund

• One (1) structural inspection (up to IRP established rates) including occupied new homes under warranty.
• Additional follow-up inspections for such things as termites, pyrite, inspection of the well, water potability, septic system, if the original inspection specifies a requirement/recommends it be done.

Customized/Personalized Funds

• One (1) structural inspection (IRP establishes rates) for a new home, never lived in and covered under warranty.

9.15 Attending Fees and Power of Attorney

It is expected that the employee/spouse or common-law partner shall be present at the closing of the purchase transaction. As such, fees for the preparation of a Power of Attorney are not normally reimbursable. However, such fees shall be reimbursed if the employee was prevented from being present for operational reasons.

Core Fund

• Attending Fees/Power of Attorney - actual and reasonable expenses.

9.16 Mortgage Interest Differential

In most situations the employee will be able to transfer a mortgage from one property to another (port a mortgage). When it is not possible to port a mortgage and the employee's interest rate on the first mortgage at the new location is higher than the interest rate on the mortgage at the former place of duty, the employee shall be reimbursed the difference in the interest charges between the two mortgages up to a maximum of $5,000.

Core Fund

• Up to $5,000.

Personalized Fund

• When the portability option was not used.

Calculation

• Calculation shall be based on the outstanding mortgage and the remaining term of the mortgage at the former place of duty not exceeding five (5) years.
• If the new mortgage principal is for a lesser amount than the previous mortgage principal, that lower principal will be used to calculate the differential.
• When an employee has a floating or variable rate mortgage at the new location, the initial new interest rate shall be used to calculate and pay reimbursement for the entire year. Any adjustments necessary shall be made at the time of the annual reconciliation.

9.17 Mortgage Default Insurance (MDI) Premium

The payment of a Mortgage Default Insurance Premium (MDI) is required by law where the mortgage is more than 80% of the purchase price or under some other circumstances. Employees shall be reimbursed, in one lump sum, the cost of MDI through the Customized/Personalized Funds as follows:

Customized/Personalized Funds

1. If 100% of the equity from the former residence is transferred to the new residence the full MDI premium shall be reimbursed.

2. If less than 100% of the equity from the former residence is transferred to the new residence the MDI premium shall be reimbursed in the same proportion as the equity transferred (pro-rated).

3. However, if an MDI premium is increased as a result of a decision not to apply 100% of the equity, then that difference will not be reimbursed.

9.18 Other Mortgage Provisions

An employee who purchases a replacement residence at the new location before the principal residence at the former place of duty has been sold, shall be reimbursed associated costs (not to exceed the employee's amount of equity in the former home) as follows:

9.18.a Interest on a Short Term Personal Loan - Home Purchase Deposit

An employee who secures a short-term personal loan to have funds for a deposit for the purchase of a principal residence qualifies for assistance from the Core Fund as follows:

• reimbursement of interest on the loan until the purchase date of the new principal residence; or one (1) year - whichever is earlier.
• reimbursement of necessary administration charges (to process this transaction/loan).

Note:
The amount of the loan shall not exceed the minimum amount required to confirm a commitment to purchase a residence as confirmed by the service provider.

9.18.b Interest on Short Term Bridging Loan

Bridging Loan is based on Equity or Short Term Bridging Loan:

1. An employee may secure a bridging loan to purchase a principal residence at the new place of duty.

2. This loan is based on the equity in an employee's principal residence at the former place of duty.

3. Funding assistance may be provided as follows:

Customized/Personalized Funds

• The employee will be reimbursed the interest on the loan.
• Included in the reimbursement are necessary legal and administrative fees associated with the loan, excluding third party fees charged which may be incurred in obtaining such a loan.
• The period of reimbursement shall extend to a maximum of ten (10) working days following the date the sale transaction is completed or at the end of six (6) months, whichever is the earlier.

In exceptional circumstances, this period may be extended for an additional six (6) months by the Departmental National Coordinator upon the request of an employee and based on recommendations of the CRSP.

Note:
Additional interim financing on the purchase of a new home may be required because of provincial legislation which imposes a delay on the transfer of proceeds of sale on closing because of registry requirements. Interest on this short-term loan will be reimbursed, normally for a maximum of 14 days for the amounts "frozen".

9.18.c ,000 Subsidized Home Relocation Loan

An employee may secure a second mortgage loan related to the acquisition of a principal residence at the new place of duty. An interest subsidy subject to funding availability is available to the employee as follows:

Customized/Personalized Funds

• Interest expense on a subsidized mortgage loan.

The employee must meet the following criteria to qualify for reimbursement:

• limitations as prescribed by CRA;
• subsidy is restricted to a maximum of $25,000;
• residence must be at least 40 km closer to the new work location; and
• the residence is purchased for employee's personal habitation purposes.

9.19 Mortgage Interest Buy-down

An employee who wishes to buy down the interest rate on a mortgage at the new location may be reimbursed the following costs out of the Personalized Fund:

Personalized Fund

• Interest buy down payment.
• Necessary legal fees.

Note:
The buy-down amount shall be at the prescribed rate set by CRA.

9.20 Professional Cleaning of Residence

Employees shall be reimbursed actual and reasonable expenses for the cost of professional cleaning of the former residence after the household effects have been loaded and at the new residence before or after the unloading of furniture. Reimbursement shall be as follows:

Core Fund

• Up to a maximum of $100 (inclusive of taxes).

Customized/Personalized Funds

• Expenses in excess of the Core Fund.