Money: Financial hazards

There are many financial hazards that await newcomers to Canada.

In the first few months of their arrival, they are at their most vulnerable since they are about to make decisions that are likely to have a great impact on their ability to eventually become successfully established here.

Accordingly, whenever one of my clients gets landed, I always try to spend a few minutes to share some cautionary words of advice about money matters.

Here are my main suggestions.

1. Get legal advice before signing any "offer" whether it is for the purchase or lease of an apartment, house, or business. I have seen so many new immigrants who come to me asking for help after they have signed what they were told was "just an offer". They weren't aware that once an offer is accepted by the other party, it becomes a binding agreement that is enforceable by Canadian courts. Often, after signing such an offer the client discovers that he may have overpaid or may have been otherwise taken advantage of. When he tries to withdraw his offer, he finds that he is contractually bound to a bad or even crippling long-term deal.

2. Choose a reputable and experienced lawyer who specializes in the field of law that relates to the offer i.e. a real estate or commercial lawyer and get him/her to review the offer before you sign it. Many newcomers retain the services of business brokers, real estate agents, or lawyers primarily because they share a language and culture. While these are nice attributes to have, this is not enough. Newcomers may feel a sense of security with someone who speaks their language but it is far more important to have the advice of a lawyer who has extensive experience in reading certain types of agreements and deciding what should and should not be in them. One hour of experienced legal advice can avoid years of financial hardship.

3. Newcomers should be wary of someone who tells them "it's a standard agreement". Of course, the form of the agreement may be standard. However, such agreements almost always need to be supplemented by schedules or additional terms which include essential protections for one of the parties. For example, when buying a business, say a store, the vendor may need to have the consent of the landlord before selling the business. If the buyer doesn't add a clause that requires the vendor to obtain the consent of the landlord in writing as required by the lease, the buyer may be paying a hefty price for a great business that may have to immediately vacate the leased premises. Without the consent, the buyer will be at the mercy of a landlord who will likely try to take advantage of the purchaser's vulnerability by significantly increasing the rent or demanding concessions that the buyer would not otherwise have agreed to. These concessions may make the business less profitable or viable than the buyer initially thought.

4. Newcomers who plan on going into business for themselves or wishing to sign any kind of commercial agreement should consider doing so in the name of a company which they own or have incorporated. It is fairly inexpensive to incorporate a company especially when considering how much protection they offer. By establishing a corporation, the incorporator is creating a new legal entity apart from himself. If the company signs an agreement which it cannot fulfill, only the assets of the company are generally reachable by creditors. The personal assets of the shareholders of a company are not usually available to satisfy the company's contractual obligations.

5. Newcomers should not lend their money or surrender control over it to anyone without first obtaining independent legal advice. In many foreign countries the method of documenting a loan may be more basic and the avenues of collection may be more summary and effective due to local cultural norms. In many countries there are strong social stigmas attached to people who do not repay their debts. This is not necessarily so in Canada. Here, the legal process is complicated, hugely expensive, and extraordinarily lengthy. In Canada, a person cannot be put in jail for defaulting on a debt. A borrower can easily avoid repayment of a debt by making sure that they have no major assets in their name which are available to satisfy the debt or by simply declaring bankruptcy.

6. Newcomers should take their time when it comes to money matters. Sure something may sound like a good deal. But other such opportunities are just around the corner. A good deal which is executed badly, can become a very bad deal in very short order. Someone who is being pressed to sign something without legal advice should proceed with great caution. There is almost always an experienced lawyer available to see a new client on short order in appropriate circumstances.

Canada is a land full of great opportunities. If they are properly taken, life here can be very good indeed.

CNM