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Verify condo units in your offer, deed

Once upon a time not very long ago, there was a court case involving the purchase of a condo townhouse with a third-floor attic conversion that did not comply with the condominium’s declaration.

Ontario’s Court of Appeal found in favour of the new owner, Kelly, who was not shown the condo plans by her lawyer and was not aware that the third-floor loft had been built into space she did not own.

The court awarded Kelly the difference between in value between a two-storey and three-storey unit. As well, an earlier ruling requiring her third floor be closed and restored to vacant attic space was set aside. The damages are payable jointly by the law firm and the condominium corporation.

Two lessons that emerge from this case and the recent experiences of major title insurers are:

Never purchase a new or resale condominium without comparing with your lawyer the numbers on the deed against the surveyor’s floor plans for the condominium levels. They don’t always match.

Registered numbers for parking and locker spaces can and do get mixed up. Always verify unit numbers and location at the time the offer is signed – and again at closing. Larry Ginsler, claims counsel at Stewart Title Guaranty Company in Toronto, expressed his shock about deeds and offers not being thoroughly checked: “I cannot believe how many claims we get related to wrong units being purchased (and) missed parking and/or locker units.” “Clearly”, he noted in an email “lawyers are not receiving status certificates and not obtaining the relevant condominium plans and reviewing them with their clients. It is very frustrating. In one case Stewart Title paid out $38,000 to rectify the purchase of the entirely wrong unit.

It is an easy assumption in a condominium purchase that unit 1201 is legally known as unit 1, level 12. But in many condo corporations the numbering on the door differs from the registered title. This is especially the case for parking and locker units where numbering is random, or where the units are not deeded, but their use os assigned in the condo declaration. It is not unusual, for example, to see a parking or locker space with a painted”99” to be shown on the registered title as Unit 53, Level A. It is also common for parking and locker spaces to be registered as exclusive-use common elements, without any separate title documents.

John Tracy, legal counsel at First Canadian Title, said: “In some instances the lawyers will not review, or properly review, the condo plan… with the client so there is no opportunity for the client to verify if the correct unit is being transferred.”

This is an extract from an item written by Toronto real estate lawyer Bob Aaron. He can be reached at



Be prepared when you go to Small Claims Court

Buyers will typically sue sellers in Small Claims Court over problems that arise after closing when the amount in dispute is $25,000 or less. The main reason is that you can make the claim without a lawyer and the costs are relatively cheap. However, you are much better off using a lawyer or paralegal to represent you.

Here’s why:

Some of the common mistakes people make when doing this themselves are as follows:
1. They forget that most lawsuits must be brought within 2 years of the action arising, or you forfeit your ability to sue.
2. They do not sue the right person; for example, they sue a corporation without the word “Limited” at the end. Any judgement obtained may be worthless.
3. Failing to provide sufficient evidence; ie. Invoices, receipts to justify their claim.
Michael Abrams, an experienced paralegal at tells me that since Small Claims Court hearings are open to the public, it is a good idea for anyone thinking about filing a claim to go watch a typical trial to learn what is being done correctly and what judges frown upon.

An experienced paralegal or lawyer will review with you right at the start whether your claim has merit, but more importantly, will ask whether you will be able to collect any money if you win?

If you win in court, sometimes after two years, the judge does not ask the loser for a cheque. You have to collect this money separately.

There is little point spending money and time to get a judgment against someone if you can’t collect. To garnish wages, you need to know where they work. To go after their bank accounts, you need to know where they bank. To go after real estate, you need to know where they may own property.

The cost to file a claim in Small Claims Court is $75. To file a defence cost $40. If you use a lawyer or paralegal and you win, the fee will vary up to $2,500 but if you do win, you can ask the judge for part of your costs, up to 15% of the actual claim; but judges have a lot of discretion to vary this amount up or down. For example, if you make an offer of settlement that is refused and you end up getting more at trial, you can ask for double the fee.

Jordan Farkas, a lawyer with tells me that some tips for people making a claim are as follows:
1. Remember that your initial claim is the first document that will be read by the judge. Make sure it is not scribbled in a hurry. Make it clear and attach all receipts or documents that support what you are asking for.
2. Every case will have a pre-trial settlement conference to try and settle the matter. Be prepared for this. Review your opponent’s evidence at the hearing and ask questions, so that you will not be surprised by anything at the trial.
3. Make sure that any final argument you make at trial is supported by the evidence, receipts or invoices, so that it clearly sets out your position.
Also remember before making any claim that most judgements become available on the internet. If you lose, a lot of people may read about it.

Be prepared before going to Small Claims Court, so that you have your best chance to succeed.

Mark Weisleder, Lawyer

Be prepared when applying for any government tax rebate

New home buyers and owners renovating their own homes continue to be confused about the GST/HST rebate.

There are different rules when you are moving into the home as your primary residence, when you are renovating an existing home, or whether you intend to rent your new home as an investment property.When you buy a new home or condominium and plan to make it your primary residence, the rebate is usually included in the price. So if you paid $400,000, the real price including the tax is closer to $427,000. In your agreement with the builder, you likely agreed to transfer your rebate to him, bringing your price down to $400,000. If you do not move in on closing, you will have to pay the full amount. If you decide to rent out your new home, you are still eligible for the HST rebate, under a different program, called the HST new rental residential rebate. If you substantially renovated your own home and paid the contractors yourself, you may also be entitled to up to $16,000 in HST rebates. In all cases, you have up to two years from closing your new home or completing your renovations to apply.


Figuring out what to do can be tough, says Michael Beallor of Rebate4U, a company that has helps homeowners collect the HST rebate.  He says it can be difficult for the average person to find their way through the Canada Revenue Agency and deliver the documents to support any claim for the HST rebate. Beallor says he’s helped owners get $6 million in tax rebates. The company does not charge a fee up front, but collects when the rebate is paid. Another company that provide the same service is Custom Business Solutions at In addition, lawyers and accountants also provide this service to their clients, as I do in my own law practice.

Some buyers intend to move in when they buy a condominium, but when it is ready years later, their circumstances have changed and so they sell. In these cases, the CRA typically says the buyers are no longer entitled to the HST rebate. But there is a way to fight that, says Toronto author and tax lawyer David Sherman.  Sherman says if you can show that you intended to make the house or condo your primary residence, but that circumstances changed, requiring you to sell, then you may be able to fight a reassessment. You may have been relocated for work, there may have been a death in the family, or a child may have intended to use the unit for university but then was accepted to a university out of town. What is very important is that you have the right documents to support your claim when dealing with the Canada Revenue Agency. You may need advice from a lawyer or accountant.

Speaking about first-time buyer rebates related to the Ontario Land Transfer Tax. Scott Blodgett with the Ministry of Finance, clarified an example used in an earlier column which referred to a situation where a couple marry and buy a house. One spouse has already claimed the rebate but sold that home before they got married and one has never owned a house. Blodgett says the spouse who has never owned a home can still claim 100 per cent of the land transfer tax rebate, even if they do not take 100 per cent ownership of the property.

If anyone has overpaid land transfer taxes, you have eighteen months to apply to the Ministry of Finance for an overpayment.

Be prepared when applying for any tax rebate.

Click here to read the article:

Photo by Dreamtime

Tenants can legally pay year’s rent up front

A recent decision of the Ontario Superior Court should have a major impact on lease negotiations between landlords and tenants in Ontario. This could assist credit challenged tenants and tenants with pets from obtaining approval to their rental applications.

Here’s what happened:

A young woman agreed to rent a home in Mississauga Ontario from May 1, 2013 to April 30, 2014 for $7,500 per month. The landlord initially refused the woman’s rental application as a result of the fact that shewas from the UK, working in Ontario and was on a visitor’s visa and the landlord was concerned as to whether she would maintain the payments. The would-be tenant then paid one years’ rent in advance, being $90,000 to demonstrate her good faith. This was accepted. The tenant also paid a security deposit of $7,500 up front to cover potential damages to the unit.

The problem is that under Ontario’s Residential Tenancies Act, a landlord cannot request more than first and last month’s rent before a tenant moves into the property. The Act also states that anything in a lease that violates the Act is void. As such, after moving in, the tenant brought an application to court to pay the extra months’ rent and the security deposit back to her, as she claimed that this was all demanded by the landlord. In an original decision dated October 7, 2013, Judge Kofi Barnes of the Superior Court of Ontario looked at a text sent by the tenant’s real estate agent to the landlord’s agent that said “My client will pay 12 month’s rent up front.” Based on that, he decided that since the tenant offered the money up-front, it was legal. However, since the security deposit was not offered by the tenant, this amount had to be paid back.

The case was appealed and in a decision dated February 12, 2014, Superior Court judge Frank Marrocco agreed with Justice Barnes and explained that while a landlord could not “require” a tenant to pay more than first and last month’s rent as a condition of the tenancy, if the tenant “offered” to pay more money in advance and the landlord accepted the payment, then it would be legal. In addition, the court held that interest on the entire prepayment of rent had to be paid by the landlord, in accordance with the rate prescribed under the Act, which was 2.5% in 2013 and .8% in 2014.

The lawyer who acted for the landlord on the case, tells me that both judges relied on a prior decision in 2009 of Royal Bank v McPherson in support of this position. In the McPherson case, the tenant prepaid a years’ rent of $24,000 to the landlord and then the landlord lost the property to the bank after defaulting on his mortgage. The tenant said he did not owe any rent as he had prepaid it for a year. The bank argued that since the payment was illegal, it should not be binding. The court disagreed, and said that the bank must step into the shoes of the landlord and be bound by the prepayment. It would be unfair to penalize the tenant by not recognizing the prepayment.

As a result of the McPherson case, lenders who sell a rental property after an owner defaults will typically state that the buyer accepts any tenancy arrangement. A buyer in this situation must do due diligence in advance to try and verify what payments were made by the tenant to the prior landlord so that they are not faced with a similar situation where the tenant has prepaid rent to someone else and now they are stuck with it.

Here are the lessons to be learned from these cases:

  • Landlords cannot advertise that they will require more than first and last month’s rent in advance of the tenant moving in. This includes any security deposit.
  • If the tenant offers to pay extra money up front, make sure that it is clear that the offer is coming from the tenant. This could include a deposit to cover any damages or clean the unit when the tenant wants to bring a pet.
  • Tenants need to keep a receipt for the payment as proof that the amount was paid, in case it is ever challenged later by anyone.

Click here to read the article:

Is using your RRSP to buy a house passé?

The Financial Post

by  Gary Marr, January 29th, 2014

The $25,000 Ottawa allows you take out of your retirement fund to buy your first home sure doesn’t go as far as it used to.

Under the home buyers’ plan, Canadians can take $25,000 out of their registered retirement savings plan and pay it back over the next 15 years without incurring any penalty. For a couple that means $50,000.

But the dollar amount has been stuck at $25,000 since 1999 while house prices have continued to escalate. At $50,000, you’re barely making the minimum downpayment if you are buying a home in Vancouver with a mortgage backed by the government.

The Canadian Real Estate Association says the average price of a home will climb to $391,000 next year, meaning that $50,000 is less than 13% and not enough to avoid costly mortgage default insurance.


“I don’t know how effective the plan is now, so I’m not sure what would happen, if you increase the amount,” says Don Lawby, chief executive of Century 21 Canada.

It’s not just the amount. The tax-free savings account is now just as an effective savings vehicle. As of 2014, Canadians were allowed to contribute $31,000 and the amount increases every year. You can also withdraw money from a TFSA and put it an equal amount back later.

“I think you almost need a combination of the two plans together to fund that kind of investment,” said Mr. Lawby, about buying a house. “It depends on where you live in Canada.”

The home buyers’ plan was launched with a $20,000 withdrawal limit and it jumped to $25,000 in 2009.

One of the arguments against increasing the limit is it will encourage young Canadians to rob their retirement savings to buy a first home. Paying the money back over 15 years — there are significant penalties if you don’t — means you might not have the money to make current contributions.

“Some people say the RRSP is not the most efficient way of saving for a house,” says Benjamin Tal, deputy chief economist with CIBC World Markets.

He says there hasn’t been an acceleration in the use of the home buyers’ plan because first-time buyers are being squeezed out of the market.

“Older people and people buying second properties don’t use their RRSPs to buy homes,” says Mr. Tal. “You would expect, given rising prices there would be more use [of the plan.”

Vince Gaetano, a principal of, says the home buyers’ program is mostly being used by people as a tax loophole.

“This is the most popular time of the year to do it. They manipulate the system to deliver a tax return on the downpayment they will (already be) making on their purchase,” he says.

If you know you are buying your first home in the next 90 days, you make a $25,000 contribution or $50,000 for two people. That means a big refund in April. You then withdraw the $25,000 or $50,000 to pay for that initial home.

“Most people have the RRSP room. If you are buying a house by June and you have the downpayment in cash, you make the contribution to trigger the refund,” said Mr. Gaetano, noting the $25,000 has to be in the plan for 90 days before you can take it out.

“You can garner $20,000 in refunds,” said Mr. Gaetano, pointing out it will depend on what your marginal tax rate is.

Canada & USA are both contemplating changes to the way we finance housing

By Robert Hof

An interesting article from the Financial Post, October 1, 2013.

These are steps on the way to what market-watchers call the Holy Grail of housing finance – a residential mortgage-backed securities market that contains little or no taxpayer risk exposure.

Last Wednesday Scotiabank sold the first Canadian bonds backed by consumer lines of credit in 12 years. The highly rated issue sold at market, according to a Bloomberg report, at an impressive 78 basis points over similar-term Canadian government bonds.

Critics may worry that such events signal a continuing explosion in household debt and a return of the boom and bust “wild West,” U.S.-style marketplace.

But there is another way to see it. The bonds’ risks will be borne by the issuer and investors, not unwilling and unknowing taxpayers, who back most of the mortgage risk in Canadian and U.S. housing markets.

And change is afoot in the North American housing finance system. The U.S. and Canada are market-testing new ideas, while more of them bubble through the heads of policymakers and legislators.

In the U.S., the Obama administration had swept into office amid a housing-triggered financial market crisis. Other than defending the ubiquitous and dubious middle-class “right” to home ownership and a 30-year mortgage, the administration has until recently mostly been wishing the issue away.

More activity in Congress. The most aggressive house bill, the “PATH” act championed by Jeb Hensarling, would attack head-on Fannie Mae and Freddie Mac, the government-controlled, taxpayer-backed mortgage insurers and securitizers. The agencies would be gone in five years – too long for some. A good idea, but unlikely to survive aggressive lobbying by U.S. homebuilders and mortgage originators and brokers, or to make it through the Democrat-controlled Senate, or to survive administration foot-dragging.

How long is a banking day?

By Robert Hof

Sheri-Lee Weslock agreed to sell her home in Burlington to Neil Sexton on March 30, 2008, for $647,500. The deal was conditional for 4 banking days on the buyer obtaining satisfactory financing. If the notice was not delivered, the deal would be cancelled. Mr. Sexton claimed that his real estate agent told him that the clause meant that he had until 4 pm on the last day, being April 3, 2008, to deliver the waiver, or the deal would be cancelled. There was no reference to 4 pm in the condition. Mr. Sexton admits that he faxed his waiver to his agent at 3:30 pm on April 3, 2008 but that he then immediately changed his mind and told his agent not to send it after all, because he did not have confirmation that he had obtained his financing. The waiver was however, faxed to the seller’s agent at 6:30 pm on April 3, 2008. This was not disputed.

Mr. Sexton attempted to cancel the deal the next day, saying that he did not get his financing, did not intend to send the waiver and if it was sent, it was sent too late, because the banking day already ended.

Ms. Weslock then re-sold the property for $520,000 because the market turned and sued Mr. Sexton for her loss, which including carrying and other costs, which exceeded $180,000.In a Superior Court decision dated February 7, 2012, Judge William Hourigan determined that a banking day is no different than a regular day and ends at 11:59 pm. If Mr. Sexton had wanted the condition to be time sensitive, such as 4 pm, it should have said so in the condition. Therefore, the waiver sent by Mr. Sexton was in fact sent in time and he could not get out of the deal. Mr. Sexton thus had to pay the entire buyer loss of $180,000 plus $14,000 in costs. Mr. Sexton represented himself, without a lawyer.

There are many lessons to be learned from this case. Under the Real Estate and Business Brokers Act, a business day means a day that is not Saturday, Sunday or a statutory holiday. However, that is not the universally accepted definition of a business or banking day. There are also arguments as to when you start counting the days. In addition, many banks are now open on Saturdays and Sundays.

In my opinion, not only should the words “calendar day” be used in any condition, it is better to pick an exact date when the condition will expire and it should also be clear that the condition is open until 11:59 on the final day, so that there is no confusion or misinterpretation. Never send in a waiver for a financing condition until you have a written signed commitment from a lender agreeing to give you your money.

Click here to read the article:

Seller financing can be a win-win for buyers and sellers

By Robert Hof

As a result of further restrictions announced by CMHC, it may be time for sellers to consider offering a seller take back mortgage as a means to entice more potential buyers to their property. It can also lead to tax savings for the seller if they are selling an investment property, However, as the attached article indicates, seller financing is not for everyone and the terms must be clearly specified in any agreement of purchase and sale.

Click here to read the article:

Thanks to Mark Weisleder

Pre-Approved Financing may not be enough for home purchase

By Robert Hof

Something not everyone may be aware of – thanks, Mark Weisleder.

Lenders are more frequently asking for an appraisal of a property just prior to closing. If the appraisal is less than what the buyer paid for it, then the lender may either reduce the amount of the mortgage loan or just cancel the loan altogether. Just because you are pre-approved for a mortgage does not mean you will get the full amount. Make sure that your lender has completed its appraisal before you waive any financing condition:

Please read my article on what can happen when lenders change their minds just before closing:

Tax time is approaching…

By Robert Hof

Some great advice from The Toronto Star’s Evelyn Jacks, brought to my attention my our mortgage whiz, Gemma Riley-Laurin. Thanks, Gemma.

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