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Archive for August, 2012

How to avoid home closing day anxiety

By Robert Hof

Lots of things can go wrong on closing day. If you’re careful and think ahead, you can avoid a lot of anxiety later. Sometimes, though, you have to go with the flow.


They only left us one key. The front door has two locks!

This happens more often than you think. Calling the sellers won’t help because they usually left the rest of the keys on the kitchen counter. The best option is to call a 24-hour locksmith and then send the bill to the sellers.

Lesson: Sellers must make sure they give their lawyer enough keys to provide access to the buyer after closing.

We walked in and the house smelled awful.

It is hard to sue for these kinds of issues, unless the seller did something to conceal the smell when the buyers were visiting the home in the first place.

Lesson: Be wary when you smell air freshener during an open house. Ask questions and make sure you have the home inspected.

The house is filthy, there’s junk in the garage, the mirrors are gone.

If the seller leaves any junk behind and you have to pay to remove anything or clean it, you can send the sellers the bill. When it comes to mirrors, it depends on whether they were permanently attached to the wall. If they are hanging on a hook, the seller can probably take them.

Lesson: Include a contract clause that says your seller will leave the home in a broom swept condition. Describe everything you expect to remain after closing when you prepare your agreement in the first place.

Oops, we forgot to tell the lawyer.

We recently acted for the seller of a home and when we called the buyer’s lawyer on closing day and asked where the money was, he told us we were a week early. The buyer and seller had signed an amendment moving the closing date up one week, but the buyer hadn’t told his lawyer. My client agreed to a one-week extension, but the buyer had to pay the lost interest.

Lesson: Whenever a change is made to your contract, make sure that your lawyer knows about it right away.

Doesn’t everyone buy and sell on the same day?

That’s the problem. Let’s say A is buying from B; B is buying from C; C is buying from D and D is buying from E. If A can’t close for any reason, none of the other deals close either. Real estate lawyers call these train wrecks.

Lesson: Arrange bridge financing. This means you ask your bank to lend you all the money to close your home purchase and then you pay all or part of it back a day or two later when your sale closes. It is worth the interest for a few days to make sure that you close both deals without stress.

Reprinted from Moneyville Magazine

Mark Weisleder is a Toronto real estate lawyer. Contact him at

Good home inspections find water problems

By Robert Hof

You can never be too careful! Home inspections are so very important. Another word of wanring from Mark Weisleder. Robert

Reprinted from Moneyville Magazine Fri Aug 17 2012

When you talk to any home inspector, you will learn that for resale home buyers, it is all about finding potential water problems. No one wants to move into their dream home, only to discover leaks from the basement or roof, mould behind the walls, sewage backups from the street or toilets flooding inside the house. Water damage is expensive to fix, both inside and outside your home.

That is why you need a good inspection firm. It can spot the signs that indicate whether you may have problems now or later, including when renovations may have been done to cover up old problems.

However, the home inspection industry is not licensed, so you will need to rely primarily on word of mouth. Besides your friends and relatives, ask your real estate agent and lawyer for referrals.

Alan Carson of Toronto inspection firm Carson Dunlop gives a checklist of items to look for:

1. A roof is not meant to last more than 15 years. Shingles falling off and water getting into your interior walls can get expensive to repair. Some inspectors do not even go onto the roof during the inspection, so ask them how they’re checking the roof.

2. Water in the basement is usually caused by improper grading. The ground may slope towards the house, water from the roof may not drain properly into the downspouts, and the downspouts may not point away from the home. All of these issues can cause runoff against the foundation wall over many years, which later cause leaks. Any outside cracks in the concrete can also lead to water penetration. On the inside of the house, look for signs of water marks on baseboards, rust, stains or mould.

3. Be wary if there has been a recent renovation in the basement. The seller may be trying to cover up existing problems without correcting them. In addition, take note if the seller has put up drywall and not upgraded the water pipes or the electrical wiring behind the drywall.

4. Watch out for old plumbing, such as galvanized steel for the pipes bringing water into your home and cast iron pipes that take waste water. If the basement is unfinished, it does not cost as much to replace these pipes. If the home is finished, then it will cost much more to get behind the walls. A plumber once told me that if the kitchen has two sinks, check the piping underneath to see that one pipe joins into the second pipe before going down into the floor. If the pipes join together in the middle and then go down, this is a sign of poor workmanship that usually results in clogged drains.

5. Sanitary sewer backups can destroy your basement. You can get a video made of your drainage systems to see whether there may be future problems. This $300 is well worth it.

6. Buyers should ask sellers point blank if they have had any water leakage, and ask the seller to provide a report from their home insurer confirming that no claims have been made against the property for water damage or sewage backups. Also ask the neighbours, because old outside pipes have a way of affecting other homes on the street.

Ask the right questions when you have your home inspection done and avoid a lot of headaches later.

Mark Weisleder is a Toronto real estate lawyer. Contact him at

How to win a landlord-tenant dispute

By Robert Hof

No-one wants to be in this position but sometimes it can’t be avoided. Just make you’ve got your ducks lined up before you go before the board. Robert

Whether you are a landlord or a tenant, if you expect to win before the landlord and tenant board, you better be acting in good faith. Here are some recent decisions that make that clear.


10 per cent recent rent hike denied: In a case heard in Waterloo, the tenant had a pet and lived in a building that was not subject to rent review. The landlord tried to raise the rent by 10 per cent claiming that since pets were damaging his property, he needed to raise the rent of those tenants who had pets to pay for it. The tenant complained to the board that the landlord was imposing a pet tax arbitrarily. The Board agreed and the increase was disallowed.

Who pays for hydro? In a case heard in Windsor, the tenant agreed to put the heat and hydro bill in his name. The tenant had poor credit and so he asked the landlord to put the hydro bill in the landlord’s name temporarily. The understanding was that the tenant would pay all utility bills as well as the security deposit. The landlord agreed to help out, but the tenant did not pay the bills. The landlord asked the utility to suspend service. The utility gave one week for arrears to be paid and then cut off the power. The tenant went to the board, claiming that the landlord cut off a vital service, which is forbidden by law. The judge ruled that since it was the tenant’s obligation to pay for the utilities and he hadn’t, the landlord had not breached the Act.

When can you evict? In a case heard in Whitby, the landlord terminated a tenant’s lease because he was selling the property and the buyer wanted the unit for his own use. In fact, the buyer had signed a rent-to-own agreement, where he would become the landlord’s tenant with an option to buy the property at the end of the rental period. This was not considered to be a good faith buyer. As a result, the landlord had to pay the tenant $3,000. It broke down as $1,200 for the higher rent the tenant would have to pay for their new apartment and moving costs of $225. As well there were damages of $1,600 for the inconvenience of having to move, the extra costs incurred getting the tenant’s kids to school and the fact that the tenant’s daughter had to give up a part-time job.

When to do repairs? In a case heard in Toronto, the tenant complained about the inconvenience caused by the landlord’s repair of the balcony in a small co-op unit. The 384-square foot bachelor apartment had a balcony that made up more than 25 per cent of the total area of the apartment. The tenant had no use of her balcony for 20 weeks and asked for a rent rebate. The landlord claimed he had no choice since this was a decision of the co-op board. He did not however, give the tenant, among other things, the required 60 days’ notice before the repairs started. The tenant was able to obtain a rent rebate of 25 per cent of the total rent, for the entire 20 week period, totalling about $1,000.

The moral of these stories is that when you come to enforce your rights before the landlord and tenant board, make sure good faith is on your side.

– Mark Weisleder is a Toronto real estate lawyer. Contact him at

Avoiding property fraud 101

By Robert Hof

Very interesting and informative article published in Canadian Real Estate Wealth magazine. It’s something we have heard about but probably don’t know too much about how to prevent. Robert

Written by Peter Mitham, Canadian Real Estate Wealth magazine.

No breaks for offshore condo investors from the taxman

By Robert Hof

This is something that buyers, sellers and their agents should be aware of – Robert.

There have been a lot of stories of foreign citizens buying Canadian condominium units from floor plans and then reselling them, for a profit, as soon as the building is registered. These sellers must be aware that the Canadian taxman must be paid before they get their money. In some cases, the entire deal could be delayed until this gets done.


In general, you are a resident of Canada for tax purposes if you have lived here for at least 183 days in the past year. If you are a resident, and you sell any Canadian real estate, you do not have to pay any tax owing until you file your tax return at the end of the year.

For instance, if you are a resident and sold a property in July 2012, you would owe income tax, if any, by April 30, 2013 — the deadline for filing your 2012 income tax return.

However, if you are a non-resident, you must clear up your taxes before a real estate sale closes. This means applying to the Canada Revenue Agency (CRA) for something called a Certificate of Compliance. In general, you need to pay 25 per cent of the capital gain on your sale in order to get the certificate.

If the certificate is not received prior to closing, the buyer will insist on a holdback, typically 25 per cent of the entire purchase price, until the certificate is in fact produced. (In some cases the holdback amounts to 50 per cent of the purchase price.)

In more and more cases that I see in my practice, these certificates are not available for closing, owing to a backlog in processing the requests by the CRA. The reason the buyer insists on the certificate, or the holdback, is that if the seller sells without paying the required taxes, the tax burden then becomes the buyer’s responsibility.

Let’s look at an example: the non-resident buys a condominium for $300,000 in 2010 and wants to sell it now for $400,000. The gain is $100,000. The tax on the $100,000 must be paid before closing in order for the seller to receive the certificate. However, if the certificate is delayed, then the sum of $100,000, being 25 per cent of the total purchase price, will be held back on closing until the certificate is delivered.

If there is a mortgage on the property, this might require the seller to come up with his own money to pay off the balance of the mortgage before closing, since there may not be sufficient funds left after the holdback to do this.

Even if the property is sold at a loss, the seller must still obtain the certificate or else the same 25 per cent of the purchase price will be held back on closing.

The CRA may also delay the delivery of the certificate if the seller owes outstanding income tax for prior years, or if the seller has not, for example, paid the proper withholding taxes on any rental income he received from the property during his years of ownership.

How is all this tracked? In every real estate deal in Canada, the seller is required to provide a sworn declaration that, on closing, he will not be a non-resident of Canada. When such a declaration is made, the seller may receive the full purchase price from the buyer and he has until April 30 of the following year to pay the taxes. However, if the seller is not a resident, then the taxes must be paid early, as described above.

Real estate agents should explain this process immediately to clients selling a property in order to ensure that lawyers and accountants are aware in advance that tax filings must be made before any deal closes.

If you are buying from a non-resident, you should also ask questions to make sure that there is nothing that might delay your anticipated closing.

Foreign citizens might make a profit buying and selling Canadian real estate, but they will not escape Canadian taxes. In all cases, seek professional advice before signing any agreement to sell a property.

– Mark Weisleder is a Toronto real estate lawyer. Contact him at