Cottage and Recreational Property Litigation Lawyers
Litigation Lawyers for Cottage Disputes
Cottage Purchase and Sale Disputes, Latent Damages Disputes

Gilbertson Davis LLP has lawyers who have experience working with local and international individuals, purchasers, vendors, concerning the purchase and sale of cottages and other recreational properties, as well as disputes and litigation relating to cottages and other recreational properties.

The lawyers at Gilbertson Davis LLP can provide efficient and result-oriented solutions with respect to resolving the unique issues arising from cottage and recreational property disputes.

From our office in Toronto, Ontario, we are able to serve the following areas (including nearby localities), with respect to the purchase and sale of properties and resolving disputes arising from the ownership and/or sale of these properties:

The lawyers at Gilbertson Davis LLP understand the unique issues that need to be addressed in the purchase and sale of cottage and recreational properties and are able to assist in advising on:

Failure to Close Sale | Refusal to Sell | Refusal to Buy
Failure to Close Because Cannot Obtain Mortgage Financing
Refusal to Close Pre Construction Sale | Failure to Close Pre Construction Sale

When the performance of an agreement of purchase and sale cannot be completed, one of the most common reasons is because the buyer was unable to secure sufficient funds in time for the closing. Sometimes this can be because the buyer was not able to obtain mortgage financing and has not terminated performance obligation within the time which may be permitted in the agreement of purchase and sale, or because the buyer was anticipating receipt of the purchase price from his or her own sale that did not close.

Generally, when a buyer is not ready, willing, and able to close at the closing date, but the seller is, any deposit will be forfeited. A seller can also pursue the buyer for any losses they sustain in having to re-sell the cottage property, including any loss in sale price, carrying costs, closing costs, and legal fees. However, real estate agents holding deposits can only release them to either party on the consent of all parties, or by court order. Some buyers may refuse to release the deposit, even after the time for closing has passed. In those cases, the seller must bring court proceedings to recover the balance.

Sellers are sometimes unable to close a sale of real estate. Some common reasons include:

• The sellers were unable to complete previously agreed pre-closing repairs
• There are previously undisclosed mortgages, interests, liens, or charges that prevented the sellers from providing clean title
• There are previously undisclosed mortgages, interests, liens, or charges that prevented the sellers from providing clean title

In some instances, sellers may be able to provide clear title with the closing funds, and the seller’s lawyer would ensure that all interest holders are paid out of the closing funds before the balance is released to the seller. Where the charges exceed the purchase price, or where the charge holder does not consent to being paid out of the sale proceeds, the seller may not be able to provide clear title.  In such cases, the buyer can claim damages for any losses in being unable to purchase the cottage property, and in some instances may be able to obtain a court order for specific performance of the agreement for purchase and sale of the cottage property. In such cases, buyers may seek injunctive relief from the court to prevent the seller from attempting to sell the property to any other person.

Misrepresentations | Warranties | Disclosure of Latent Defects in Sale of Real Estate

Many cottage purchases include a buyer’s right to inspect the property to be purchased. However, these inspections are not exhaustive, and may not reveal defects or problems with the property that are not readily visible. In some instances, buyers may seek representations and warranties that the cottage property does not have certain defects that may be of concern to the buyer. These hidden problems (known as “latent defects”) may not be discovered until years after closing.

Where a seller makes representations or warranties that the cottage property does not contain those defects, the buyer may have a claim against the seller for any losses or damages resulting from the defect. Moreover, if a seller knows that a latent defect exists (such as unsound construction, mold, infestations, or environmental damage), the seller has a duty to disclose the latent defect to the buyer, or else face potential damages for remediation.

Rent to Own Agreements

In Ontario’s rising housing market, rent-to-own and option to purchase agreements for cottage properties are becoming more common. They provide renters with the opportunity to invest in future ownership some of their rental payments into a down payment or as credits on closing, and provide a guaranteed price on the property if and when they choose to purchase. For owners, such agreements provide a higher level of rent than a traditional rental arrangement in consideration for credits on down payment or closing. In some instances, these agreements are separated into distinct option agreements and occupancy agreements, though doing so may affect how those agreements are interpreted and enforced in isolation.

Disputes often arise when a tenant or occupant seeks to exercise the option to purchase, particularly where the property value greatly exceeds the purchase price at which the option may be exercised, or where the option agreement or occupancy agreement have not been strictly complied with. In such cases, it is important to retain prompt legal advice. For tenants, legal advice can assist in ensuring the option agreement is properly exercised, and can seek injunctive relief to preserve their right to purchase the property. For owners, legal advice can assist in assessing whether or not the option agreement was properly exercised, and assist in maintaining ownership and commencing eviction proceedings if necessary.

Short-Term Rentals and Co-Sharing Agreements

With the rise of short-term rentals in Ontario, it is common for two or more individuals to agree to purchase and rent their cottage or recreational properties on a short-term basis. These types of arrangement typically do not involve a formal “contract”.

Dispute can arise from the interpretation of each party’s rights to the cottage property, obligations under the “contract”, and the profit sharing from this arrangement. Legal advice could include injunctive relief to freeze profits until a court can determine the proper profit sharing arrangement. Legal advice could also include the negotiated departure of one party to the agreement on terms agreeable to all parties.

Right of Way | Easement | Access to Cottage

Unlike residential developments, cottage and recreational properties are often access through access roads and a right of way. In some instances, access to sanitation is located across a right of way and possibly on another party’s property.

Given the right of “adverse possession”, an archaic legal principle, which allows land owners rights over a piece of land, to the exclusion of all others, if they possessed the land for 10 years. A significant amount of land has been transferred to the Land Titles System, and proper ownership of the land can now be determined. However, disputes can arise as to the proper ownership of access points, before the land was transferred to the Land Titles System, and whether any of these rights remain.

It is common for one party to deny access over a right of way to another party. For those seeking access, this could leave them with limited to no access to navigate throughout nearby properties. For those seeking denial of access, this could leave them with limited abilities to deny trespassers access to their property. Legal advice is required to obtain declarations as to the proper owner and ability to deny access. Legal advice is also required to obtain prescriptions to create easements, which can include, the ability to walk but not drive on the access road.

Misrepresentations | Material Information | Access to Road | Shoreline Ownership | Easements

Prior to a purchase of a cottage or recreation properties, purchasers are encouraged to obtain a survey, although it is sometimes not provided or is unavailable. This survey should demonstrate boundaries, road access, right of way, easements, unopened road allowance, and shoreline ownership.

Disputes often arise from misrepresentations made by vendors, agents, or solicitors, as it relates to the ability for purchasers to access the cottage, proper boundaries, right of way, and easements. Legal advice could include recession (the effective reversal of the agreement of purchase and sale) or damages, arising from the reduced real estate value and/or remediation that needs to be done to correct the misrepresentation.

Cottages Under the Family Law Act

Cottages are subject to property division under the Family Law Act. Under the Family Law Act, families can have more than one matrimonial home. If a cottage was regularly used by a family and used at the time of separation, it can be considered a matrimonial home under section 18(1) of the Family Law Act. Matrimonial homes receive special treatment under the Family Law Act, and each spouse has an equal right of possession.

Cottages may be excluded from the calculation of net family if the property is owned by one spouse or purchased with an inheritance, provided it is not considered a matrimonial home.

Misrepresentations as to Profitability

Even when an investor has made an investment that will be secured against a cottage property, they still may suffer a loss if the investment was made with the intention of making a profit, and in reliance upon misrepresentations made by the vendor, developer or promoter as to the profitability of the property or its value.

Such misrepresentations are likely to result in a greater investor loss where the investment was induced by a misrepresentation of the expected return on the investment from a share of the profits from the anticipated renting or re-selling of the cottage property.

In such cases, investors may have relied upon projections, purported analysis or representations made by the cottage property owner or developer who has made such statements without any consideration as to their accuracy.

In some circumstances, investors who have relied upon such misrepresentations may obtain a court-ordered rescission (setting-aside) of their investment agreement, and additionally damages. In some cases, the court will order only damages.

Why Gilbertson Davis LLP?

Gilbertson Davis LLP has lawyers who can provide legal services in relation to cottage and recreational property, whether in connection with purchase and sale or disputes and litigation. We are ethical, practical, and professional. We strive to resolve our clients’ disputes efficiently through the provision of quality service at reasonable rates. Gilbertson Davis LLP has over 35 years of practice in Toronto, Ontario dealing with various related practice areas.

Please contact Gilbertson Davis LLP to arrange an initial consultation.