Office: 165 Pretoria Avenue, Ottawa ON. K1S 1X1

Phone: 613.238.2801

Fax: 613.238.4583

email: roberthof@royallepage.ca

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For rent: 429 Somerset Street #1411 $1,800 /month

Excellent apartment in a great location! Vacant and available right now!  Well managed condominium. One bedroom plus den and a balcony with unobstructed views!  This apartment has an insuite laundry, storage locker and garage space. Large enclosed patio with sitting areas at the rear of the building. Space for bike storage. 

Call me, Robert Hof, at 613-294-9746 for an appointment.


The pandemic has dramatically changed how home buyers and sellers close their property deals

Anyone who has bought or sold a property since the COVID-19 state of emergency was declared in Ontario last March will have experienced a sea change in how these deals are legally closed.

Prior to the pandemic, buyers and sellers of houses and condominiums would go to their lawyer’s office to sign hard copies of the necessary documents to prepare their deals for closing. Personal visits were necessary because some closing documents — such as affidavits or statutory declarations concerning HST and residency — had to be sworn in the presence of a lawyer or paralegal authorized to administer an oath.

When COVID-19 hit Ontario, it suddenly became risky if not impossible for lawyers to administer the necessary oaths in person. The Law Society of Ontario immediately issued a statement interpreting the legislation to mean that the lawyer, or paralegal, could use videoconferencing and did not have to be in the physical presence of the client. The government subsequently amended the legislation to the same effect.

And with that, 200 years of precedent changed overnight and clients no longer had to meet their lawyers in person to swear affidavits or declarations.

Buyers, sellers and lawyers had to quickly learn how to do videoconference-signing meetings using Zoom, WhatsApp, FaceTime, LawyerDoneDeal, Microsoft Teams and other platforms. After closing documents are signed remotely, buyers and sellers have to scan and return them by email, fax, courier or personal delivery.

This presents challenges for some clients who are not computer literate. For instance, one client of mine was in a nursing home without a computer and with a no-visitor policy.

In another transaction, I had nine family members selling a piece of land to a municipality which refused to accept anything but ink signatures. We all met in my driveway, everyone wearing masks and socially distanced, and signed one at a time on a TV tray.

The exchange of house keys, done by courier before COVID, is now done using lock boxes at the properties.

In the pre-COVID days, buyers would deliver closing funds to their lawyers in person by certified cheques or bank drafts. Sellers would receive funds the same way, or by direct bank deposits. With some exceptions, bank wires have become commonplace. This has created its own set of problems since the wiring of funds can be problematic. It turns out that wiring funds is not instantaneous, and some transactions have had to be postponed due to delays when funds go missing in cyberspace.

In one case, I wired closing proceeds to a seller client. After a week when the funds failed to arrive, I asked the bank to return the money to me. Within a couple of days, the funds appeared in my trust account and the client’s account at the same time. It took another week to straighten that one out.

While it’s certainly more convenient to meet electronically, many of my clients tell me they miss the personal touch. So do I.

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.


Homebuyers should get clear details about fixtures and appliances — including HVAC — in their property deals

When homeowners agree to sell but neglect to note the property’s heating and cooling system is rented, chances are they will eventually have to buy out the rental contract.

That’s what happened in October, 2016, when Mr Y. agreed to buy a house in Richmond Hill, from Mr and Mrs B., for $2,175,000. Some appliances were listed as being included in the purchase. No fixtures were excluded in the contract.

The buyer only discovered that the sellers did not own the HVAC equipment after the agreement was signed and his lawyer did a title search.

A warranty clause in the purchase agreement stated that any contractual rights survived the closing of the transaction, and were binding on all parties. The sale contract was never amended to say the HVAC system was subject to a registered lien in favour of Enercare — the owner of the equipment.

On closing, the Mr and Mrs B. delivered to Mr Y. a standard bill of sale transferring ownership of the appliances and the fixtures. But it contained the handwritten words “except HVAC.” The bill of sale did not match the terms of the purchase and sale agreement.

When sellers refused to close unless the notification was withdrawn, he reluctantly withdrew the notice.

After closing, Y. sued the Bs. for the cost of buying out the HVAC rental from Enercare. The case was heard in Small Claims Court in December, 2018, and the court’s decision was released in March last year.

In an extremely detailed ruling of more than 9,300 words and 28 pages, deputy judge Davis ruled in favour of the buyer.

Davis noted that the sellers were fully aware that the HVAC system was subject to a rental agreement.

The judge awarded Y. damages of $17,488.27 for the HVAC system buyout, as well as five chandeliers the sellers had removed — contrary to the terms of the agreement.

Unhappy with the decision, the Bs. appealed to the Ontario Superior Court. Justice Mulligan dismissed their appeal this past February, and awarded the buyer costs of $3,500.

Both sides had to pay lawyers for two court appearances, but clearly a matter of principle was at stake for Y. Nevertheless, the case does provide a number of lessons to future buyers and sellers:

  • When sellers list their properties for sale, whether it’s a house or a condominium, the listing agreement should be very clear about what appliances and fixtures are included and which ones are rentals.
  • Sellers who remove attached fixtures, such as chandeliers, which are not excluded from a sale agreement are at risk of having to compensate the buyers for their value.
  • Particular care should be taken to clarify whether the hot water tank and HVAC systems are rentals or included in the purchase price without extra payment.
  • A buyer who is faced with having to pay for a rental appliance in similar circumstances cannot refuse to close but can sue the seller afterwards for damages.

 

Bob Aaron is a Toronto real estate lawyer. He can be reached at bob@aaron.ca 


Ensure your home purchase deal includes an inspection immediately before closing

It’s the night before closing, the seller has moved out and the buyer wants to do a last-minute inspection to ensure there’s been no damage since the last visit.

Is she or he entitled to a day-of-closing inspection if there is no clause in the purchase agreement allowing a final check?

The court case most often cited as support for a right to a final inspection is a decision of the Waterloo County Court in 1979.

Before the closing of what the court called a “simple and routine residential purchase and sale,” the buyer’s lawyer asked the seller’s lawyer for a final inspection on the morning of closing.

A standard clause in the offer said that the property was at the seller’s risk until closing, and if there was any substantial damage, the buyer could either terminate the deal or close and take the proceeds of any insurance.

The lawyer for the buyer brought a successful court application which gave his client a right to the inspection. Judge Francis Costello held that “It … seems ridiculous that (the buyer) should have to complete the transaction and pay over his money before ascertaining whether or not he had been entitled to terminate the agreement prior to completing it.”

The court case was determined under the Vendors and Purchasers Act which allows the parties to ask a court to determine a question arising out of a real estate contract. As a result, although its reasoning is persuasive, the court’s decision is not binding on any other judges.

The decision in this case was endorsed in a 2104 case in the Supreme Court of British Columbia. The dispute in the case of buyers involved the purchase of a $5,150,000 condominium on the Vancouver waterfront, with a deposit of $500,000.

The purchase agreement required the unit to be in “substantially the same condition at the Possession Date as when viewed by the Buyer on April 12, 2012.”

Prior to closing, there was extensive work being done to the unit to remedy mould and fungal damage. The unit was a construction zone and not nearly finished.

The buyer was denied an inspection by the seller and refused to close. The seller sued to keep the deposit and also for damages, but the court — relying on the Harkness case — decided that the buyer was justified in refusing to close.

The court noted that the buyers were “implicitly entitled to inspect the apartment before closing.” The sellers were not allowed to keep the deposit.

In his decision, Judge Reginald Harris wrote, “I agree with the (buyers) that they should not be expected to hand over approximately $5 million without a closing inspection. This would be analogous to purchasing a dozen eggs without an opportunity to first open the carton to ensure none are broken

There are two takeaways from these cases. The first is that there is no such thing as a “simple and routine residential purchase and sale.” Each purchase requires a high degree of due diligence.

And the second is that every purchase agreement should always contain a right of inspection immediately before closing.

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.

 


An easement hinges on whether it restricts enjoyment of the property

Can a buyer ever back out of a purchase on the basis of registered easements that entitle third parties to particular rights on the land?

My last column dealt with two recent cases where buyers refused to close their deals because there were registered utility easements, or usage rights by the local municipality, Bell Canada, hydro and cable TV suppliers.

In another case the buyers asked the court for a declaration they could rescind the purchase contract and get a refund of their deposit on the basis of two registered easements for storm and sanitary sewers. The buyers’ application was dismissed.

In another case, buyers got hit with a judgment for $430,000 after they refused to close a purchase due to typical registered utility easements.

But there have also been cases where registered easements were found to entitle the buyers to back out of their purchase agreements. The cases turn on whether the easements materially affect the use of the property.

Back in 2007, a buyer contracted to buy a Toronto property and paid a deposit of $60,000.

The title search revealed a 20-foot wide easement for storm and sanitary sewers covering 3,400 square feet which was most of the rear garden, and 26 per cent of the entire lot. In addition, a two-storey gazebo was sitting on top of the easement.

The buyer went to court to rescind the agreement. Justice Maureen Forestell set out the four legal tests for whether an easement materially affects the use of the property:

1) the location of the easement;  2) its size;   3) the point of access; and  4) the owner’s enjoyment of the property.

Justice Forestell found that the yard — an integral part of the enjoyment of the residential property — might have to be dug up to access the sewers. She decided in favour of the buyer and ordered the return of the deposit.

Another easement case went to the Court of Appeal in 2018. A buyer agreed to buy a property in Kleinberg. In the agreement, the buyer acknowledged the existence of an easement in favour of TransCanada Pipeline (TCPL). But there was an undisclosed, second easement registered on title that ran directly under the swimming pool, patio and cabana.

A letter agreement, also on title, required the owner to sign a further agreement with TCPL acknowledging that it had the right to remove the pool and cabana if necessary, with costs shared between the pipeline and the owners.

The purchase and sale agreement made no reference to the second TCPL easement or ongoing litigation between the owner and TCPL.

When this came to the buyer’s attention, he requested the return of his $50,000 deposit and the sellers refused.

At the court hearing in 2016, Justice Robert Charney ruled that the undisclosed easement could significantly affect the buyer’s use and enjoyment of the property. He ordered the return of the $50,000 deposit. The Court of Appeal dismissed the seller’s appeal.

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.

 


Expensive lessons: Courts tell buyers to pay up!

Fighting failed real estate deals in court can be futile  – and expensive – as shown by the verdicts in two recent Ontario cases concerning easements.

In February, 2020, Mr H. and Ms Y. signed an agreement to buy a property, in Newmarket, from Mr and Mrs B. The contract price was $1,755,000 with a $75,000 deposit.

The property, a two-storey home with five bedrooms and five bathrooms, a pool, cabana and above-ground hot tub, has a title subject to two usage rights, or easements, sanitary and storm sewer access by the town of Newmarket. A standard title clause in the agreement said title had to be clear except for easements that included drainage, storm and sanitary sewers. A building location survey of the property, clearly showing the easements, was attached to the agreement as a schedule. It also contained references to the registered easements.

Prior to closing, the lawyer for the buyers submitted a formal demand that the easements be removed from title. The sellers’ lawyer responded that the title objections were not valid.

The buyers then refused to close the deal and the sellers sued the buyers.

 Justice Jill Cameron concluded on June 28 there was “an inference that the existence of the easements is not the real motive behind seeking rescission of the agreement.”

Cameron noted that the sellers had good title to the property and could convey substantially what the purchasers contracted to get. The sellers were awarded the $75,000 deposit that the buyers had paid.


A similar case was heard in Newmarket court this past February. In 2017, the buyers agreed to purchase a house in Aurora, for $2,130,000. They paid a $100,000 deposit.

The title search of the property revealed two registered sewer easements to the town of Newmarket, an easement to Bell Canada for maintenance to telecommunications facilities, and easements to Aurora Hydro and Aurora Cable TV. A survey of the property attached to the offer depicted the easements and their locations.

The lawyer for the buyers demanded the easements be removed from the property’s title. The sellers refused and the deal did not close. The sellers resold the property for $1,700,000 — a loss of $430,000.

In awarding the sellers $430,000 plus $18,000 in costs without the need for a trial, Justice Gregory Mulligan found that the buyers had breached the contract and noted “there is no indication as to how the property would be serviced by the utilities, including hydro, telephone or cable TV, if the easements were removed.”

As I see it, three important takeaways from these cases are:

1. There is little point in litigating a failed real estate transaction on the basis of standard easements on title.

2. Always attach a land survey to a purchase agreement.

3. Courts do not like technical excuses for getting out of a purchase contract.

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.

 

 

 


A buyer’s hefty deposit is forfeited when a judge finds…

he “deliberately” breached his purchase contract.

A buyer of a pre-construction townhouse found out the hard way what can happen if the property is resold before its closing date and without the builder’s permission.

Virtually every Agreement of Purchase and Sale for a pre-built home or condominium contains a prohibition on resale until after the final closing of the transaction and registration of a deed to the purchaser. The reason for the prohibition is so that early purchasers will not compete with the builder’s marketing of unsold units.

In March 2016, Mr W. bought a townhouse in a pre-construction project in Markham, from a builder operating under the name 2426483 Ontario Limited. The contract price was $1,188,800.

Mr W paid the builder deposits totalling $150,000, and in July, 2019, he listed the unfinished home for sale on the Multiple Listing Service (MLS). This was a breach of a clear prohibition in the purchase agreement. The agreement also contained a clause stating that if a purchaser breached the prohibition, the builder could both terminate the agreement and keep the deposit and any other monies paid.

When the buyer was notified by the builder’s sales manager that the MLS listing was a breach of contract, he immediately removed it.

In December, 2019, the buyer requested and was refused permission to resell the property before final closing. Despite this, he again listed the property for sale and subsequently signed an agreement to sell it for $1,290,000 with an April, 2020 closing date.

When the builder saw the listing and sale posted on the MLS website, its lawyer notified Mr W that in light of his contract breach, the builder had terminated the agreement and forfeited the deposit and occupancy fees paid. Mr W was also told to surrender possession of the unit.

Mr W and the new purchaser then terminated their agreement of purchase and sale with an option to revive it if the dispute with the builder was settled.

In June, 2020, in a virtual hearing before Justice Paul Schabas in Toronto, Mr W asked the court for what is known as relief from forfeiture of his deposit. In analyzing the claim, Schabas noted that the court must consider the conduct of the buyer, the gravity of the breach of contract, and the disparity between the value of the forfeited deposit and the damage caused by the breach.

“In this case,” Schabas wrote in his decision, “The buyer knowingly and deliberately breached the agreement when he listed and sold the townhouse in December 2019 and January 2020.”

The judge noted that at the time Mr W resold the unit, the purchaser could have bought one of the builder’s nine unsold townhouses.

Schabas found that Mr W did not come to court with “clean hands” because his conduct did not demonstrate reasonable diligence to comply with the agreement.

Since the deposit was 12.6 per cent of the purchase price in the agreement, the judge found it would not be unconscionable for Wang to forfeit his $150,000 deposit plus all the occupancy fees that had been paid.

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.


Can dead people sign property deeds?

The answer: it depends who you ask about so-called “zombie deeds.”

In legal circles, a deed of land signed during the owner’s lifetime but registered after death is known as a zombie deed.

Judging by online comments in legal blogs, a significant number of real estate lawyers — myself included — would answer yes. This position is based on the 2015 ruling of Ontario Superior Court Justice Laurence Pattillo in the case of Winarski v. Sproul.

But the answer is no if you ask Jeff Lem, Ontario’s highly-respected director of titles, as well as Superior Court Justice Helen MacLeod-Beliveau in her March 2020 ruling in the Thompson v. Elliott estate case.

In the Winarski case, Ms. Sproul signed a deed to her Toronto property and gave it to her lawyer to register. Due to a minor title problem, the lawyer never registered it. Justice Pattillo ruled that the deed was valid to transfer ownership of the home out of Sproul’s estate.

In the Thompson case, Mrs. Elliott and her husband Mr. Thompson jointly owned a home in Ont. Ownership would go to the surviving spouse. Shortly before she died, Elliott signed a deed of land to split the joint ownership so that her half of the house would go to her adult children on her death, instead of her spouse.

When Elliott died three weeks later, her lawyer realized he had forgotten to register the deed, and proceeded to register it, despite the fact that she was deceased.

Justice MacLeod-Beliveau ruled that the post-mortem deed was invalid. She was highly critical of the lawyer who registered it.

The judge also referred to the administrative policy of Ontario’s director of titles, which is opposed to the registration of deeds after the death of the person who signed it. If the land registry office discovers that a deed has been registered after death — a big if, since it’s not always obvious — it will cancel the registration.

One issue that MacLeod-Beliveau seized on in the Thompson case was the statements of legal age and marital status, which are contained in every Ontario deed. At the time the deceased signed the deed, the statements were accurate. At the time of registration, they were not because the person was deceased.

The judge, along with Jeff Lem, the director of titles, take the position that those statements are wrong if the deed is registered after death. However, the judge in the Winarski case had no problem giving effect to an unregistered deed signed before death.

An online warning by the director of titles advises that lawyers cannot, under any circumstances, register a transfer of land signed by a deceased owner — even if we are “pretty sure that is what the client would have wanted.”

So now we have two decisions by judges of the Superior Court coming to opposite conclusions.

My personal view, despite considerable legal opinion to the contrary, is that zombie deeds are — excuse the expression —  alive and well in the province of Ontario.

They are a valuable estate planning tool which allows Ontarians to avoid the punitive 1.5 per cent estate tax and the court delay of eight-plus months to obtain probate.

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.

 


Your property, and your family, deserve to be protected in your will

In these times of economic uncertainty, Canadians who own their own homes may be thinking about protecting them from health risks due to the COVID-19 pandemic.

For most homeowners, their houses and condominiums are their largest single assets. In the last couple of months, many Ontario lawyers have noticed an increase in inquiries from clients who want to prepare their wills and protect their homes from the provincial government’s 1.5 per cent estate tax. That’s $15,000 on a $1 million house.

Clients typically ask:

  • who they should name as estate trustee to liquidate homes and other assets;
  • how the proceeds can be sheltered so their spouse or children will efficiently receive their share;
  • how title can be registered to avoid probate fees and the eight-plus months it takes for the courts to issue a certificate to the estate trustee, allowing the home to be sold;
  • who will look after the property during the delay.

I recommend everyone with any significant assets, like a house or condominium, preparing their wills.

Common-law spouses with separately-owned assets often do not consider the need for wills. Recently, one of my clients passed away prematurely, and without a will. He was in a long-term relationship with his common-law spouse and, unfortunately under Ontario law, she is not treated as a surviving spouse and may get little or nothing from the sale of the house in which they lived, or his other assets.

New parents — especially those who own or are about to purchase a home — should have wills, even if their debts exceed their current assets. Wills can also establish written instructions for the care of their children, and direct the care of their money and property.

Dealing with real estate, cash, stocks and other assets is problematic if there is no will or a badly drafted one.

Historically, a will must be signed in front of two adult witnesses who are not beneficiaries or spouses of beneficiaries, with all three people present in person at the same time

But under an emergency order passed by the Ontario government, wills can be witnessed in a videoconference if one of the witnesses is a licensed lawyer or paralegal. In this case, three identical documents each bearing one ink signature will, when attached to each other, be treated as one will.

Another option is for a single document to be circulated among the person signing the will and the two witnesses. The three signatures are placed on the same document during three separate videoconferences, with each person watching the other two sign.

While making a will, it’s also a good idea to prepare a power of attorney for property — including real estate and bank accounts — and a power of attorney for personal care. These documents can save considerable grief when a person is unable to make their own decisions.

Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.


Property access and security revolutionized with lockbox technology

The traditional mechanical lockbox has long been making property showings easier and more convenient for real estate agents by eliminating the need for the seller to be home or available for key collection and drop offs. However, this system has become outdated as security concerns have come to light over unauthorized use of the code, codes not being reset, rust or deterioration making the lockbox difficult to open, and no real way to track who has access.

With technology being integrated into almost every part of the real estate and home buying process, it seemed like a natural step for Master Lock to use technology to meet both industry and client expectations.

Master Lock Vault® Enterprise technology encompasses Bluetooth-enabled lockboxes and integration with the Showing Time™ mobile app, bring all parts of the showing process together in “one app, one tap.” Agents can retrieve all the details on the showing appointment, as well as open the lockbox with the app in a seamless manner, and without breaking their stride.

“When a showing agent shows up to a property with a prospective homebuyer or renter, it’s a sales call,” said Barron Robertson, Product Manager at Master Lock. “The goal is to continue the selling process and fumbling with a faulty lockbox can chip away at a good first impression.”

The lockboxes and app were designed with efficiency and security in mind, he added. Having a system where everything is in one place simplifies the process and saves time, which has proven to translate into more showings and faster sales.

These Bluetooth-enabled lockboxes also arm the agent with an added confidence surrounding the safety and security of their clients’ homes. The Real Estate Council of Ontario says agents should follow similar guidelines to those set out by U.S.-based National Association of Realtors, which recommends changing temporary access codes every 72 hours. This is a difficult task when using traditional lockboxes, but using the Master Lock system, temporary codes automatically change every 4 hours. The system relies primarily on Bluetooth credentials specific to each agent, which also allows the listing agent to track in precise detail who is coming in and out of the property, how long one person stays at the property, as well as who has approval to enter the property at any point in time.

“It’s a secure system that makes it easy for agents to adhere to best practices when it comes to the security of their clients’ homes,” said Robertson.

This new system is also making showings in rural markets much easier. The system was designed to be able to work outside of cell coverage, so you can still access a property without having to rely on a real-time connection. Because of this, the system is not only being embraced in urban and suburban neighbourhoods but in rural regions as well.

“For larger geographic areas where there’s a lot of time and space between showings, the ability for a listing agent to share credentials with somebody who could be an hour away, really starts to pay off in time efficiency,” he said.

Similar technology has typically been offered with long term contracts or hefty monthly fees, but Robertson added that Master Lock wanted the system to  not only be flexible in its capabilities, but also in its price and accessibility, so it can be adapted to the needs of any individual, group or company. As Master Lock approaches 100 years in the industry, introducing this technology is just another step in providing dependable solutions to aid in home protection and safety.

The Master Lock Vault Enterprise technology covers all the bases. It benefits the homeowner by providing an added layer of security, it’s convenient and provides an unprecedented amount of data to the listing agent, and the showing agent benefits from a seamless process, leaving potential buyers or renters with a positive first impression.

by Kasi Johnston

06 May 2020

https://repmag.ca


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