19 minute read
Off the Clock: From finance to fuzzyfaced alpacas, it’s all in a day’s work for Kathy McConnell
This is the second in our new fun series BROKERS OFF THE CLOCK . In every issue we’ll ask a mortgage broker to tell us what they like to do when they’re not behind a desk. Be it working with animals, travel to exotic places, genealogy or community volunteering, we want to know how you unwind. In this issue we explore the world of alpaca farming with Kathy McConnell from Peterborough, Ontario. Would you like to be profiled in a future edition – or suggest a fellow mortgage broker? Contact info@cmba-achc.ca
From finance to fuzzy-faced ALPACAS
Peterborough, Ontario, mortgage broker Kathy McConnell says farming is a stress relief after a busy day at the office BY KATHLEEN FREIMOND
Like most mortgage brokers, Kathy McConnell’s workdays are filled with financial details – combing through the advantages and disadvantages of a myriad potential lenders, comparing rates and considering credit histories – all to ultimately find the best product for each client. Meanwhile, back on the family farm, a herd of alpacas are nibbling hay, watched over by Hungarian sheepdogs.
McConnell, who is the broker of record at Mortgage Plus in Peterborough, Ontario, has been a mortgage broker for more than 30 years and says after a busy day at the office in Reid Street, focusing on the alpacas is relaxing.
Opposite, clockwise from top left: Alpacas grazing on the farm; mitts, gloves and hats are made from alpaca fleece; Kathy McConnel with two alpacas at an event; Komondors (Hungarian sheepdogs) protect the alpacas from coyotes; the fleece is dyed to produce an array of colours; this alpaca is enjoying the sunshine.
Not to be confused with llamas that are similar but considerably larger, alpacas are gentle South American camelids that typically reach just under a metre at shoulder height.
“Farming is actually a stress relief to brokering, which can be very busy. When you come home, you can relax with the animals – it’s a very complementary balance to a day-to-day business,” she says. Farming in McConnell’s family dates back to her grandparents, William and Florence Steinkrauss. They received a piece of land as a wedding gift in 1928 and were dairy farmers until they retired maximize fleece production and importing a new sire – called a macho – every three years.
All the animals have had their DNA analyzed and recorded in the United States and Canada.
“It’s important to know the characteristics of each animal you are breeding to get the fleece you want,” says McConnell.
Fineness, colour and length are the major determinants in quality fleece, and the animals – depending on their size and age – yield from three to 15 pounds of fleece when they are shorn in April or the first week in May, just after the show season.
and sold the property in 1966.
By chance, when McConnell and her husband Larry Hubbert were looking for a small farm in 2002, the 100-acre property previously owned by her grandparents in the beautiful Kawartha Lakes area was on the market, and they jumped at the opportunity to bring it back into the family. “We love animals and we had previously boarded horses, so we knew we would have animals on the farm; we just weren’t sure what,” recalls McConnell. After challenges for beef farmers with bovine spongiform encephalopathy (BSE) – or mad cow disease – they decided instead to farm alpacas for their fleece and laid the foundation of their herd with four females, known as hembras, in 2006.
Today they maintain the herd at about 75 animals on Hubbert Farms. They sell surplus animals to other farmers or export them to Norway or the United States. Successfully managing the herd requires documenting the bloodlines to
“Alpacas come in many different colours. The light-coloured fibre can be dyed to get some of the bright colours people like, and black and grey are also popular,” says McConnell.
The fleece is spun at a mill at Twisted Sisters’ Alpaca Ranch and Custom Mill near Edmonton, and local knitters produce the hats, mitts, scarves and gloves that are sold at Hubbert Farms, the Peterborough Farmers’ Market and at Craftworks. Socks, due to volume, are commercially made in Canada.
Sales of the alpaca wool products are handled mainly by Donna Simmonds, who used to own an alpaca farm herself, and McConnell’s sister-in-law, Carol Saunders, who also lives on Hubbert Farms.
The alpacas have brought home many awards from shows such as the Alpaca Ontario Spring Show at West Niagara Agricultural Centre, the Quebec Alpaca Show, Navan Fair and Rockton Fair.
Transferring her talents as a mortgage broker – detail oriented, organized, research and analytical skills and a flair for communication – to delving into bloodlines and handling the paperwork that comes with running a Canadian Food Inspection Agency-approved quarantine facility for the import and export of the animals may be daunting for most people, but it seems to come easily to McConnell. “I’ve done it a number of times, so it doesn’t seem like a lot of paperwork to me. There’s more to do on the multimedia side – information for marketing and advertising – and of course knowing how to care for the animals,” she says.
Alpacas are hardy and can stay outside all winter as long as they have good shelter and a safe place at night, adds McConnell.
To protect the herd from coyotes and other unwelcome intruders, she relies on her two Komondors, large Hungarian sheepdogs with a fearsome reputation as livestock guardians.
While it sounds like it’s all fun on the farm, McConnell says she doesn’t plan to give up mortgage broking anytime soon. “I’d like to have something to do when I retire – I don’t sit still for very long – but the farm will be part-time for the next 10 years or so, then I don’t know what will happen down the road,” she says. Watch this space.
Enforcing judgments against fraudulently transferred properties
BY RAY BASI, J.D., LL.B., STAFF, EDUCATION AND POLICY REVIEW
FORECLOSURE: FRUSTRATING BUT NOT FRUSTRATED
INTRODUCTION You are a lender and just finished foreclosure proceedings. The sale of the security property was not enough to pay out your mortgage, and you obtained a judgment against the borrowers for the balance.
In trying to enforce the judgment, you discover the borrowers have transferred the property into the name of someone else. You suspect the transfer is a sham, with the purpose of frustrating your efforts to enforce your judgment.
Will the sham stand? Will a court void the transfer? The British Columbia Supreme Court in Balfour v. Tarasenko, 2019 BCSC 2212 provides some guidance.
WHAT HAPPENED? By at least January 2009, a husband was aware he was the subject of an Ontario arbitration case in which a claim was being made against him.
In early 2009, his wife and he (the couple) were registered as the owners of the subject real estate property. The property was subject to three registered mortgages, a judgment in favour of the province, a judgment in favour of the first lender, and outstanding property taxes.
On February 17, 2009, the first mortgage in default and was called due.
On March 15, 2009, the couple agreed to transfer the property to the husband’s parents (parents), with the transfer being registered on May 14, 2009. The couple continued to live on the property.
In July 2009, the Ontario arbitration case resulted in a judgment against the husband for $293,000 in favour of a person not involved in this case.
In August 2014, the parents transferred the property to a company owned by a friend and business associate of their son (the husband’s friend).
On July 17, 2015, a creditor obtained judgment against the couple for $200,000. In 2016, the friend sold the property to an unrelated party.
The creditor claims that the property transfers in 2009 and 2014 were made to delay, hinder or defraud the creditors of the couple, contrary to the provisions of the Fraudulent Conveyance Act, and as such are void.
The creditor claims that the property transfers in 2009 and 2014 were made to delay, hinder or defraud the creditors of the couple, contrary to the provisions of the Fraudulent Conveyance Act, and as such are void.
LEGAL REQUIREMENTS The B.C. Fraudulent Conveyance Act provides that a disposition of property made to delay, hinder or defraud creditors and others of their just and lawful remedies void and of no effect is void and of no effect. Most Canadian jurisdictions have similar provisions. Essentially, a conveyance intended to put one’s assets out of the reach of creditors is voidable by the courts.
For the Act to apply, it is not enough that a transfer puts assets out of reach of creditors; there must have been an intention to do so. Even if there is a legitimate business purpose other than to defeat creditors, a transfer may still be fraudulent if one of the intentions was to defraud creditors.
A person who was not a creditor at the time a challenged transfer was made can nevertheless challenge the transfer.
The purpose of the Act is to provide a remedy to creditors who have been fraudulently denied access to the transferor’s assets. However, this remedy is not to be made available at the expense of a bona fide purchaser for value who did not have notice of the transferor’s intentions. A transfer is not void where a person for good consideration and in good faith lawfully transfers property to a person who, at the time of the transfer, has no notice of knowledge of collusion or fraud. n If the consideration is inadequate or nominal, the transfer is void if the transferor intended to delay, hinder or defraud creditors. n If the consideration is adequate, then the intentions of both the transferor and the transferee must be considered in determining whether the transfer was fraudulent. her assets may indicate an intent to defraud creditors. n A transfer between related parties in suspicious circumstances may indicate an intent to defeat creditors unless the parties present an adequate explanation. n The state of the debtor’s financial affairs at the time of the transaction, including his income, assets, and debts, may indicate a specific intention. n A transfer of property made in haste may be indicative of a fraudulent intent. n A transfer of property made at a time when a debt or claim against the transferor is in existence or is imminent may be indicative of an intent to defraud creditors.
OUTCOME In this case, the 2009 transfer was made with the intent to delay, hinder or defraud creditors. It is void. Indicators of the fraud include that: n The transfer had the effect of delaying,
Where the intention of the transferor is not clear, it can be inferred from the evidence of the transferor’s conduct, the effect of the transfer and other circumstances surrounding the transaction.
Some indicators of the intention to defraud creditors include: n Where a transfer of property has the effect of delaying, hindering or defeating creditors, the necessary intent is presumed. n Inadequate consideration paid for the transferred property may indicate fraudulent intent. n A transfer that renders the transferor unable to meet his liabilities or which transfers all or a substantial portion of his or
hindering or defeating creditors, including the creditor in the Ontario arbitration. n The parents knew that their son was having financial difficulties. n The transfer was not arm’s length. n The transfer was made by a son and daughter-in-law to parents. n The transfer was made at a time when a financial claim against the husband was in existence and known to him. n The consideration paid for the property by the parents was of questionable value: • The consideration paid by the parents was $85,000 less than the price contemplated by the agreement to purchase. • The parents paid no money for the property:
~The debts the parents said they had assumed in fact were continued to be treated as debts of the children. ~There was no proof of the debt owed by their son to them, which debt they said they forgave. ~The children continued to live on the property and pay the expenses for the property • After the property was transferred to the parents, the husband and wife continued to live on the property pursuant to a rental agreement with the parents. n There is no business or other financial advantage to be gained by transferring the property to the parents that could not be achieved by other means (such as the parents being guarantors under a replacement mortgage). n There is no evidence the husband and wife had significant assets other than the property. n The son entirely orchestrated matters and his parents willingly complied.
The 2014 transaction was not made with the intent to delay, hinder or defraud creditors. It is voidable, but not void. n The son’s friend and associate agreed to purchase the property for $382,000 plus any profits that came out of the further sale of the property. n The friend and associate paid the $382,000 purchase price to the parents, which appears to have been paid entirely towards clearing the title of financial charges. n There is no evidence that the friend and associate was aware of any fraud or collusion to defraud the creditors of the husband and wife.
Although the 2014 transaction was not void, the profits are not to go to the parents. The parents obtained the property by a void transfer. The profits belong to the husband and wife, but are first to be used to pay creditors.
TAKEAWAY Lenders have hope to enforce their judgments against property where a borrower has transferred it to put it out of the reach of creditors.
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Moving to the country
Ah, life in the country. Many Canadians dream of selling up and escaping large cities like Toronto and Vancouver to live a quieter life in a smaller town where houses are less pricey, the pace is slower and they have room to breathe. Amherst, Nova Scotia, where, it was reported recently you could buy a ‘mansion’ in the city for less than the cost of a Toronto condo, is an example.
Cathy LeBlanc, veteran realtor with RE/MAX County Line Realty in Amherst, says in recent years she has seen an influx of East Coast retirees who are looking for a quieter lifestyle in Atlantic Canada. She estimates this section of the market – who can sell in the city, buy a less expensive home and use the balance for their retirement – has grown from about 10 per cent to more than a third of her business. “It’s a different pace, here there’s no traffic so you get where you are going quickly – and you don’t pay for parking,” she says.
Amherst real estate listings show that while larger homes are on the market, mortgage broker David Clarke, of Clarke Mortgage Group, who has a satellite office in Amherst – a community of just under 10,000 people – says he also has steady business arranging financing for people buying homes in the $30,000 to $50,000 range. “I have seen people who have sold homes in other parts of the country buy in Amherst or neighbouring towns like Springhill and Pictou,” he says.
But while house prices in Amherst and surrounding rural areas are low compared to bigger cities, arranging a mortgage is more of a challenge than one might imagine and certainly more difficult than financing a home in Halifax, about 122 miles from Amherst, says Clarke.
“The difficulty is that lenders don’t want to give a mortgage for such a small amount, so it limits the lenders we can use – people have fewer options with a house in the $30,000 to $50,000 range than they would have with a $100,000 home,” he says.
“Banks often decline these mortgages – they don’t have the appetite for a mortgage that small. Or they don’t want to do a purchase-plus-improvements for $20,000 for a house that’s only worth $30,000,” he says. “We do a lot of creative financing for these clients that I don’t have to do for mortgages in Halifax or Dartmouth.”
But Clarke says the banks’ reluctance to lend in these communities and his willingness to put in the time and effort to match lenders with borrowers has an upside.
“Sometimes we have to use lenders who are a bit more expensive, but I try to take care of every client as they come in. I do both the city and the rural work,” he says, noting that these smaller communities are often under-served when it comes to services such as mortgage brokers.
Clarke benefits from many referrals from these clients and their friends and families for new construction and commercial mortgages. “I get more referrals from clients in rural communities than I do in Halifax. They’re talking about me, and I get a lot of organic business that way.”
With relatively stable property prices in the area, Clarke understands why towns like Amherst are attractive to buyers who have sold their homes in more expensive cities and want to downsize and live off the remaining proceeds of the sale.
As the retail centre for the Cumberland area, Amherst has several big box chains that many smaller towns in the area don’t have, like Canadian Tire and Walmart, as well as independently owned stores that contribute to the small-town charm, like Mrs. Pugsley’s Emporium and Birkinshaw’s Tea Room.
It’s a beautiful community, says Clarke, and for those who dream of retiring to the seaside, there are many towns on the coast – like Digby and Tatamagouche – just a short drive from Amherst. Referrals count in small-town markets BY KATHLEEN FREIMOND
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