In the recent decision of the Ontario Court of Appeal (“ONCA”), Nguyen v. Zaza, 2023 ONCA 34, the ONCA dismissed the appellant’s appeal from a decision of a judge of the Ontario Superior Court of Justice to grant the respondent’s summary judgment motion and order forfeiture of the appellant’s deposit of $50,000 to the respondent (among other relief). The appellant was the purchaser and the respondent was the seller of the subject property. The agreement of purchase and sale at the center of the dispute between the parties specifically indicated that time was of the essence. Originally, the agreement was conditional on the appellant arranging financing and a satisfactory home inspection, but the appellant waived those conditions prior to closing. The motion judge found that on the closing date the respondent was ready, willing, and able, to close whereas the appellant did not tender the purchase price required from her … Read More
Five Reasons People Sue After Buying or Selling Real Estate
In a heated real estate market where blind bidding and unconditional offers are necessary to compete, often times purchasers are vulnerable to pulling the trigger and asking questions afterwards. Conversely sellers are looking to capitalize on market highs and looking to sell for top dollar which often comes down to timing. These competing interests can lead to litigation when a real estate transaction doesn’t go as planned. Here are five common reasons that litigation arises from real estate transactions: 1) Breach of Contract Litigation often arises because a seller or purchaser has breached the purchase and sale agreement. There are many contractual terms that set out the rights and obligations of the respective parties in a real estate transaction including the closing date, title clearance, deposit requirements, inclusions, exclusions, and conditions. A Plaintiff commencing suit over a breach of the contract must prove that they have complied with all of … Read More
Ontario Introduces Bill to Update Rules for Realtors
Last week, the Ontario government introduced the Trust in Real Estate Services Act, 2019 to update the current legislation that governs Ontario’s more than 86,000 real estate professionals. Yesterday, the bill passed second reading and was referred to the Standing Committee for witness testimony and further amendments. The stated goals of the proposed legislation include improving consumer protection and choice in the market and improving professionalism among real estate professionals and brokerages through enhanced ethical requirements. Some of the more significant proposed changes include: Disclosing Details of Competing Bids – At the seller’s option, the seller’s real estate agent may disclose the details of competing offers to other bidders. Currently, the seller’s agent is required to disclose the number of competing offers to all buyers who have submitted a written offer but the purchase price and conditions remain confidential. Clients vs. Customers – There will no longer be “clients” and … Read More
Nick Poon Comments on Real Estate Wire Fraud for Yahoo!
Nick Poon was recently asked to comment on real estate wire fraud for Yahoo News Canada. Read the Yahoo News Canada article here: ‘The prospects of recovering the money are near zero’: The scam homebuyers need to be aware of. If you have a fraud claim or a real estate dispute, please contact us for an initial consultation.
Deposits In Failed Real Property Transactions
The recent Ontario Court of Appeal decision in Azzarello v. Shawqi, 2019 ONCA 820, illustrates the purpose of providing a deposit when purchasing real property and under what circumstances a purchaser will lose their deposit or be refunded the deposit if the sale does not go through. There are some important general principles that purchasers and sellers should be aware of regarding deposits in a real estate transaction: 1) Contemplation Regarding The Deposit In the Contract Is Important Purchasers and sellers should carefully consider the terms to be included in the purchase and sale agreement regarding the deposit. The contract should be clear about what happens to the deposit in all possible scenarios. In cases where it is not, the courts will look to implied terms in the contract and existing case law which governs how deposits are dealt with. 2) The Reason The Sale Fell Apart Is Important The … Read More
Latent Defects or Hidden Damage in Real Property Transactions
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
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
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
Ontario Court Decides on Appropriate Use of Mini-Trial in Summary Judgment Motions
In Crisafi v. Urban Landmark Realty Inc., 2018 ONSC 191, the Ontario Superior Court of Justice addressed a summary judgment motion brought in a real estate litigation matter and provided guidance on when the Court will use its enhanced fact-finding powers set out in the 2010 amendments. Background This case involved a claim by a real estate agent against his former real estate brokerage for unpaid real estate commissions in the amount of $60,000. The brokerage took the position that the agent breached his contractual, statutory and fiduciary duties to its clients and was negligent in handling four transactions which caused it to suffer damages. The brokerage argued that the agent failed to properly advise one of its clients while in a multiple representation situation including the anticipated sale price of the house and an estimate of whether the client could afford to purchase a subsequent property. The house ended up sitting on the market even after several reductions in the listing price. As is commonplace in the industry, this resulted in … Read More
Bhasin v. Hrynew and the Duty of Good Faith in Real Estate Agreements of Purchase and Sale
The Supreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71, recognized the duty of good faith in contract and the obligations of the parties to act honestly in the performance of their contractual obligations. The duty of good faith applies to any contract, including real estate contracts such as Buyer Representation Agreements, Listing Agreements and Agreements of Purchase and Sale. As discussed in a previous blog post, Agreements of Purchase and Sale generally include a “time is of the essence” clause which means that time limits will be strictly enforced by the courts. Problems often arise when vendors refuse to agree to seemingly minor indulgences requested by purchasers such as an extension of the closing date or an extension of the deadline to provide the deposit. Two recent decisions in the Ontario Superior Court of Justice have addressed the duty of good faith, as expressed in Bhasin v. Hrynew, in the performance of Agreements of Purchase and Sale. Unfortunately for purchasers, it appears that … Read More
New Measures of Ontario’s Fair Housing Plan Take Effect Today
On April 20, 2017, Ontario’s Fair Housing Plan was announced by the current Ontario government in an attempt to cool the housing market and make housing more affordable, particularly in the Greater Toronto Area (GTA). It has been widely reported that the average purchase price for all types of homes in the GTA has dropped significantly since the announcement. Most of the attention on the housing affordability plan has been focused on the 15 percent Non-Resident Speculation Tax (NRST) imposed on the purchase or acquisition of an interest in residential real estate by a foreign individual, foreign corporation or a taxable trustee. The NRST only applies to residential real estate, containing one to six single family residences, located in the region around Toronto known as the Greater Golden Horseshoe which includes Barrie, Brant, Dufferin, Durham, Guelph, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Toronto, Waterloo, Wellington and York. There are certain exemptions and rebates to the NRST available including circumstances where: (a) the foreign individual jointly purchases the property with a … Read More
Timing is Everything in Real Estate Agreements of Purchase and Sale
The recent Court of Appeal decision in Preiano v. Cirillo, 2017 ONCA 615, involved a residential real estate Agreement of Purchase and Sale which required the purchasers to deliver a deposit of $25,000 in the form of a negotiable cheque to the vendors’ brokerage within 24 hours of acceptance of the agreement. The closing date was scheduled to take place about three months later. The agreement included a “time shall be of the essence” clause. The purchasers had initially submitted a personal cheque in the amount of $25,000 with the offer but the vendors’ brokerage requested the deposit be paid in certified funds. The purchasers subsequently delivered the deposit in the form of a bank draft to the vendors’ brokerage but it was about one day late. The vendors’ brokerage did not take issue with the late delivery and provided a receipt for the deposit. Six days before the scheduled closing date, the vendors took the position that they would not be closing … Read More