What Are Latent Defects Or Hidden Damages? Latent defects or Hidden Damage are defects to a property that are not generally discoverable by a prospective purchaser on a reasonable inspection and ordinary vigilance. This can include issues such as, faulty electrical wiring hiding behind the walls or a well-hidden termite or mold problem. Many real estate purchases include a buyer’s right to inspect the property to be purchased. However, these inspections are not exhaustive, and may not reveal latent defects or hidden problems with the property that are not readily visible. Why Do Participants In A Real Estate Transaction Need To Be Concerned About Latent Defects Or Hidden Damage? The problem latent defects or hidden damage can pose for a prospective real estate purchaser is that no amount of vigilance on a visual inspection can uncover such a defect, even one conducted with a home inspector (who’s inspections are typically … Read More
Fork In the Road: Critical Considerations by Condominium Corporations in Anticipatory Failed Closings
In 1179 Hunt Club Inc. v. Ottawa Medical Square Inc., 2019 ONCA 700, the purchasers, Ottawa Medical Square Group, entered into an Agreement for Purchase and Sale to purchase condominium units owned by the vendor, 1179 Hunt Club Inc. The value of the commercial condominium units in the Hunt Club Project was $5.6 million dollars. Five days before closing, the purchasers, sent a request to the vendor, requesting an extension of time as the purchasers had not yet finalized their arrangements for financing. Three days before closing, the vendor advised that it would insist on closing, and if the purchaser could not close, it would exercise its rights and remedies under the Agreement for Purchase and Sale. On the date of closing, the vendor learned that the Land Registry Office had made an error in assigning parcel identification numbers. Although this error was ameliorated later that day, this mishap, prevented … Read More
Guidance from the Court – Procedure to Resolve Mortgage Discharge Issues under the Mortgages Act and the Rules of Civil Procedure
In Sub-Prime Mortgage Corporation v. 1219076 Ontario Limited, 2019 ONCA 581, the Ontario Court of Appeal was asked to determine, the proper procedure to discharge a mortgage or contest the discharge of a mortgage, under the Mortgages Act, and the Rules of Civil Procedure. In the lower court decision, Sub-Prime Mortgage Corporation (“Sub Prime”), the second mortgagee, issued two urgent applications against 1219076 Ontario Limited (“121”), the first mortgagee, to obtain an immediate discharge of two mortgages on two properties placed by 121, by paying money into court, pending further court orders, or a resolution between the parties, at para 1. In its application, Sub-Prime did not specifically seek an order determining the balance owing for each mortgage. To support its application, Sub-Prime cited and relied on section 12(3), 12(9) and 22 of the Mortgages Act, R.S.O. and Rule 14.05(a), (d), and (e) of the Rules of Civil Procedure, at para … Read More
Ontario Cottage Litigation Lawyers: Able to Assist in Disputes Involving Cottage Owners, Purchasers, or Sellers
From our office in Toronto, Ontario, we are able to provide efficient and result-oriented solutions with respect to the unique issues arising from cottage and recreational property disputes. Failures to Close Failures to complete an agreement of purchase and sale may be due to the Vendor or the Purchaser. Failures of the Purchaser are often attributable to the Purchaser’s inability to obtain financing that was anticipated from a mortgage or another property sale. In some instances, the Vendor may retain the deposit and claim damages for losses sustained from the failure to close. Failures to close may also be due to the Vendor. Frequently, the Vendor’s failure to close is due to the Vendor’s inability to provide clean title to the property or to perform the necessary repairs prior to closing. In some instances, a Purchaser will seek to recover damages for any resultant loss, while in other cases the … Read More
Can a Pre-Incorporation Contract Prevent the Forfeiture of a Deposit on the Failed Closing of a Property?
In Benedetto v. 2453912 Ontario Inc., the Ontario Court of Appeal considered whether a pre-incorporation contract could prevent the forfeiture of a deposit provided pursuant to an agreement of purchase of sale of real property. In this case, the purchaser signed an agreement for purchase and sale of real property, indicating that he was signing as a buyer “in trust for a company to be incorporated without any personal liabilities”. The purchaser then provided $100,000.00 as the deposit to secure the purchase of the property. The purchaser subsequently advised that he would not be closing on the transaction and sought the return of the deposit. The vendor refused and commenced civil proceedings resulting in a summary judgment motion, which was held in favour of the vendor. The Ontario Court of Appeal upheld the findings of the lower court and indicated that: A forfeited deposit does not constitute damages for breach … Read More
Court Considers Nuisance Test for Neighbours’ Tree in Allen v MacDougall
In the recent case of Allen v MacDougall, 2019 ONSC 1939, a neighbour applied for a court order authorizing the destruction of a maple tree growing amid two Toronto properties. The Ontario Superior Court refused. In its decision, the Court clarified the applicable test for nuisance and confirmed that “the tendency of courts today is that trees are not lightly ordered removed on the basis of being a nuisance.” Facts The large maple tree sat jointly on the land of two neighbours. According to s. 10(2) of The Forestry Act (“Act”), the maple is therefore owned by both neighbours: “Every tree whose trunk is growing on the boundary between adjoining lands is the common property of the owners of the adjoining lands.” The Applicants, as part of their home renovations and extensions, wanted the tree chopped down. The Applicants claimed that their intended home addition on the north side of … Read More
Prescriptive Easements in Ontario Cottage Country
The Ontario Superior Court of Justice decision in Arcon Property Holdings Ltd. v. Nelson, 2019 ONSC 2267, involved a dispute between cottage owners over easement rights related to a 15 foot wide strip of land near Grand Bend. The right-of-way was mainly a paved road used by the cottage owners to access their properties from the road but it also extended past the pavement to the waterfront. The applicant complained that the respondents parked their vehicles on the right-of-way which prevented them from accessing the beach, launching their boat, building ramps and structures to facilitate launching their boat and parking a trailer in their driveway. The applicant sought an order prohibiting the respondents from parking on the right-of-way and interfering with their easement rights. The Court found that the applicant’s easement was merely for “ingress and egress, in, over and upon” the property and did not provide the applicant with the right to access … Read More
Court Finds Waterfront Cottage Sufficiently Unique for Specific Performance
In Carr v Rivet, 2019 ONSC 1546, the Ontario Superior Court recently dismissed a motion to discharge a certificate of pending litigation (“CPL”). In doing so, the Court held that a waterfront cottage on Talon Lake was sufficiently unique to form the basis of a claim for specific performance. Importantly, in addition to finding that the particular cottage was specifically unique to the plaintiffs, the Court noted that most waterfront properties are, by their nature, unique. Unlike mass-produced properties, each waterfront property possesses different exposure and other water-related features that make it unique. Facts The day after their real estate transaction was supposed to close, the Plaintiffs commenced an action seeking specific performance. Subsequently, the Plaintiffs successfully brought an ex parte motion to register a CPL against the property. The Defendant then moved to discharge the CPL arguing, among other things, that the property was not sufficiently unique to support … Read More
Court Clarifies “Clean Hands” Doctrine Applies to Post-Breach Conduct
In 232702 Ontario v 1305 Dundas, 2019 ONSC 1885, the Ontario Superior Court of Justice recently considered the “clean hands” doctrine in the context of a terminated commercial lease for non-payment of rent. Importantly, the Court clarified that the doctrine of “clean hands” is not restricted to conduct occurring prior to the breach, but encompasses subsequent conduct as well. The Test for Relief from Forfeiture Under s. 98 of the Courts of Justice Act and s. 20 of the Commercial Tenancies Act, a court may grant relief from forfeiture, including forfeiture of a lease for non-payment of rent. The court’s power to relieve from forfeiture is an equitable remedy. It is discretionary, fact-specific and granted sparingly. The party seeking relief must prove that enforcing the contractual right would lead to inequitable consequences. In Saskatchewan River Bungalows Ltd. v Maritime Life Assurance Co., the Supreme Court of Canada held that a … Read More
7 Things To Consider Before Buying A Condo
As condominiums proliferate as the home of choice for many, it is important to realize it is a different kind of ownership than a house or freehold townhome. To make sure you’ve made the right decision here’s 7 things you should know before purchasing a condo: 1) Read the declaration, by-laws and rules Every condo community is unique. The declaration, by-laws and rules provide critical information about the restrictions and allowances within the community. Some condo’s may have strict rules regarding pet ownership, other’s may entirely prohibit short term rentals, while some may specifically protect such use of the unit within the declaration. There will likely be rules about smoking whether it be cigarettes or cannabis. Most condominiums also have rules about visitors, whether they can use amenities independently or can only do so with a resident. These are just some examples of rules that can have a major impact … Read More
Real Estate Litigation: Failure to Give Extension of Closing Date is not Bad Faith
The recent summary judgment motion decision in Time Development Group Inc. v. Bitton, 2018 ONSC 4384, involves a situation that arises quite often in failed closings of real estate transactions. One of the main causes for an aborted real estate transaction is the failure of the purchaser to obtain the required financing to close on the transaction, possibly influenced by the Ontario Fair Housing Plan and the new mortgage lending rules. In this case, the plaintiff entered into an agreement to purchase three adjoining properties for a residential home redevelopment project. There were a series of amendments to the agreement with the terms as follows: (a) purchase price of $10.55 million; (b) deposit of $500,000; (c) two vendor take back mortgages; and (d) closing date of July 31, 2017. The plaintiff had secured a commitment letter to finance the transaction, however, six days before the closing date, the plaintiff was dismayed to find out that their financing had been withdrawn because the market conditions had changed. … Read More
Canadian Court Shuts Down Loan Shark’s Law Suit
In Canada, it is not everyday one witnesses a loan shark resorting to judicial process to collect on outstanding obligations. In fact, outside cases involving payday loans and hidden credit card fees, where legitimate loans might inadvertently cross the 60% interest rate threshold under s. 347 of the Criminal Code, we have to date not seen any cases where the court has considered enforcement of blatantly usurious loans bearing interest of, say, 2,000% APR, as the Superior Court did in Ikpa v. Itamunoala, now available on line. Gilbertson Davis successfully obtained summary judgment rejecting the bid by the plaintiff, a resident of the United Kingdom (where laws banning usury no longer exist), to recover USD$500,000 on a USD$100,000 promissory note that had remained outstanding for four months before the start of litigation. The plaintiff sought to have an equitable mortgage securing the note paid out in priority to the defendants’ registered mortgage. … Read More
Popack v. Lipszyc: Recognition and Enforcement of Arbitration Awards – Clarifying the term “binding”
Popack v. Lipszyc appears to be the first Ontario Court of Appeal case on the recognition and enforcement of arbitration awards under the 2017 International Commercial Arbitration Act (“ICAA”). The ICCA includes the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) and the 2006 amended version of UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). The appellants used articles 35 and 36 of Model Law to apply for the recognition and enforcement of the international commercial arbitration award they received in August 2013 against the respondents. While the application judge dismissed the application, the Court of Appeal allowed the appeal. The Court of Appeal stated that “in Ontario, a strong “pro-enforcement” legal regime” exists for the recognition and enforcement of international commercial arbitration awards, as grounds for refusal are “to be construed narrowly”. Importantly, the Court, and not the tribunal, is the proper avenue to … Read More
Entire Agreement Clause Upheld in Manorgate Estates Inc. v. Kirkor Architects and Planners
Entire Agreement Clauses are meant to prevent negotiations that occurred prior to the contract being formed from influencing the Court’s interpretation of the terms set out in the final contract. In other words, past discussions are to have no bearing on the understanding of the contractual terms. In theory, a fully integrated agreement of this kind supplants any earlier oral or written agreements. There is competing jurisprudence in which Entire Agreement Clauses have been both effective and ineffective. However, Manograte Estates Inc. v. Kirkor Architects and Planners is a recent Ontario Court of Appeal decision where an Entire Agreement Clause was effective. In Manograte Estates Inc. v. Kirkor Architects and Planners, the Ontario Court of Appeal upheld the Motion Judge’s decision that the Entire Agreement Clause in the relevant agreement, regarding architectural consulting for a construction project, operated as a complete defence to the appellants’ claim of alleged negligent misrepresentation. The Entire Agreement Clause … Read More
What Does the Illegal Substances Clause Mean in OREA Agreements of Purchase and Sale?
The Court of Appeal decision in Beatty v. Wei, 2018 ONCA 479, involved the failed closing of a residential property in Toronto and the proper interpretation of an illegal substances clause that is commonly found in OREA Agreements of Purchase and Sale. Illegal Substances Clause in OREA Agreement of Purchase and Sale In this case, about a month after entering into the Agreement of Purchase and Sale, the purchaser’s real estate agent discovered the property had been previously used as a marijuana grow-op in 2004. The purchaser sought to terminate the agreement and demanded the return of the $30,000 deposit. The sellers refused to terminate the agreement and commenced an application for a declaration that the purchaser breached the agreement by failing to close and an order that the sellers were entitled to the deposit and related damages. In response, the purchaser commenced a competing application for similar relief. The dispute was in respect to … Read More
Real Estate Litigation – Ontario Court Decides Dispute Over House Flipping Profits
The Ontario Superior Court of Justice decision in Ballestin v. 1304478 Ontario Inc., 2018 ONSC 2969, involved a dispute between parties that entered into an arrangement for the purposes of flipping a house during the surging real estate market in 2016. In the fall of 2016, the Plaintiffs were interested in purchasing, renovating and re-selling a property for a profit, however, they were unable to obtain financing for their house flipping venture. During an open house, the Defendant homeowner suggested that they enter into an agreement with an extended closing date to provide the Plaintiffs with sufficient time to renovate and sell the property to a third party prior to the closing date. The terms of the agreement included: (a) a deposit of $25,000; (b) a purchase price of $600,000; (c) the balance owing to the Defendant was $605,000 less the deposit and less the difference between $5,000 and actual legal fees paid; and (d) any profit above … Read More
Selling A Home That Used To Be A Cannabis Grow-Op
The proliferation in recent years of residential homes being used as a cannabis grow-op has created confusion and uncertainty for buyers, sellers and real estate agents as to how far the obligations of a seller extend regarding information about a home’s history. In the recent Court of Appeal Decision of Beatty v. Wei, 2018 ONCA 479, the Court offered clarity in response to the question: What is the effect of an illegal substances clause in a standard form Ontario Real Estate Association/Toronto Real Estate Board Agreement of Purchase and Sale (“APS”)? The “Illegal Substance Clause” is a commonly included clause in such agreements and typically reads as follows: The Seller represents and warrants that during the time the Seller has owned the property, the use of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and that to the … Read More