Part Two – Timing is Everything in Real Estate Agreements of Purchase and Sale

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.Appeals, Business Litigation, Civil Litigation, Commercial, Commercial and Contract Litigation, Commercial Contracts, Commercial Litigation, Contract Disputes, Contract Termination, Injunction & Specific Performance, Real Estate | Developers, Real Estate Litigation, Specific Performance, Summary Judgment0 Comments

I had written a previous blog on the “time is of the essence” clause in real estate agreements where it was discussed that the strict adherence to any agreed upon time limits was generally the case. A recent Ontario Court of Appeal case, Fortress Carlyle Peter St. Inc. v. Ricki’s Construction and Painting Inc., serves as a reminder that the “time is of the essence” clause is not absolute and unfettered, and there are preconditions that must be satisfied for a party to rely upon and insist on time being of the essence. The facts are not overly complicated in this case.  The respondent was a condominium developer in the process of acquiring properties for a proposed project in downtown Toronto.  The developer entered into an Agreement of Purchase and Sale (“APS”) with the vendor to acquire the subject property.  Although the APS required the vendor to provide estoppel certificates five days prior … Read More

Deposits In Failed Real Property Transactions

Sabrina Saltmarsh, B.A. (Hons), J.D.Broker and Agent Claims, Commercial, Contract Disputes, Contract Termination, Cottage Purchase and Sale, Professional Liability, Real Estate Agent and Broker, Real Estate Litigation, Recreational Property Litigation0 Comments

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

Prompt Payment Regime Takes Effect For Construction Projects

Sabrina Saltmarsh, B.A. (Hons), J.D.Arbitration, Condo Construction, Construction Equipment & Machinery, Construction Litigation, Cottage Litigation, Heavy Machinery Disputes, Mining, Infrastructure and Projects, Real Estate | Developers, Real Estate Litigation, Recreational Property, Recreational Property Litigation0 Comments

A major shift has been underway in Ontario since the legislature ushered in reforms under Bill 142, the Construction Lien Amendment Act, 2017, S.O. 2017, c. 24., perhaps none of which is more significant than the prompt payment regime which took effect on October 1, 2019. Changes To Lien Period: Effective July 1, 2018 Changes to the previous legislation (The Construction Lien Act) have come into effect in phases, with the first set of changes having taken effect in July of last year. We are now in the midst of transition rules which apply depending on the commencement date of a construction project to determine the applicable lien period which changed from 45 days to 60 days for prime construction contracts entered into after July 1, 2018. There were several additional notable changes which took effect as of July 1, 2018, including the extension of the period to perfect a … Read More

Latent Defects or Hidden Damage in Real Property Transactions

Sabrina Saltmarsh, B.A. (Hons), J.D.Agents and Brokers, Broker and Agent Claims, Civil Litigation, Commercial, Condo Litigation, Contract Disputes, Cottage Litigation, Cottage Purchase and Sale, Misrepresentation, Professional Liability, Real Estate Agent and Broker, Real Estate Litigation, Recreational Property, Recreational Property Litigation0 Comments

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

Three Ways Out of An Agreement of Purchase and Sale

Fatima VieiraCivil Litigation, Condo Litigation, Real Estate Litigation0 Comments

A recent decision of the Ontario Court of Appeal in Jung v. Talon demonstrates at least three ways out of an agreement of purchase and sale with return of deposits. The Ontario Court of Appeal considered appeals in two related cases. The first case, “A.” involved Jung and a numbered company as the purchasers of two commercial condominium units at the Trump International Hotel. The second case, “B.” involved Jung as the purchaser of a residential unit in the same property. The developer in both cases was Talon. In A., Talon delayed closing and ultimately scheduled a later occupancy date.  It then provided a revised disclosure statement indicating changes in the condominium building and the commercial units. Jung took the position that these were material changes which entitled the purchaser to rescission under s. 74(7) of the Condominium Act, 1998 and he delivered Notices of Rescission. In response, Talon brought … Read More

Fork In the Road: Critical Considerations by Condominium Corporations in Anticipatory Failed Closings

Mahdi Hussein, B.A. (Hons.), JDAppeals, Appellate Advocacy, Civil Litigation, Commercial, Commercial Contracts, Condo Construction, Condo Litigation, Contract Disputes, Real Estate Litigation0 Comments

In 1179 Hunt Club Inc. v. Ottawa Medical Square Inc., 2019 ONCA 700, the purchasers, Ottawa Medical Square Group, entered into an Agreement for Purchase and Sale to purchase condominium units owned by the vendor, 1179 Hunt Club Inc. The value of the commercial condominium units in the Hunt Club Project was $5.6 million dollars. Five days before closing, the purchasers, sent a request to the vendor, requesting an extension of time as the purchasers had not yet finalized their arrangements for financing. Three days before closing, the vendor advised that it would insist on closing, and if the purchaser could not close, it would exercise its rights and remedies under the Agreement for Purchase and Sale. On the date of closing, the vendor learned that the Land Registry Office had made an error in assigning parcel identification numbers. Although this error was ameliorated later that day, this mishap, prevented … Read More

Guidance from the Court – Procedure to Resolve Mortgage Discharge Issues under the Mortgages Act and the Rules of Civil Procedure

Mahdi Hussein, B.A. (Hons.), JDAppeals, Appellate Advocacy, Real Estate Litigation0 Comments

In Sub-Prime Mortgage Corporation v. 1219076 Ontario Limited, 2019 ONCA 581, the Ontario Court of Appeal was asked to determine, the proper procedure to discharge a mortgage or contest the discharge of a mortgage, under the Mortgages Act, and the Rules of Civil Procedure. In the lower court decision, Sub-Prime Mortgage Corporation (“Sub Prime”), the second mortgagee, issued two urgent applications against 1219076 Ontario Limited (“121”), the first mortgagee, to obtain an immediate discharge of two mortgages on two properties placed by 121, by paying money into court, pending further court orders, or a resolution between the parties, at para 1. In its application, Sub-Prime did not specifically seek an order determining the balance owing for each mortgage. To support its application, Sub-Prime cited and relied on section 12(3), 12(9) and 22 of the Mortgages Act, R.S.O. and Rule 14.05(a), (d), and (e) of the Rules of Civil Procedure, at para … Read More

Ontario Cottage Litigation Lawyers: Able to Assist in Disputes Involving Cottage Owners, Purchasers, or Sellers

Mahdi Hussein, B.A. (Hons.), JDCottage Litigation, Real Estate | Developers, Real Estate Litigation, Recreational Property, Recreational Property Litigation0 Comments

From our office in Toronto, Ontario, we are able to provide efficient and result-oriented solutions with respect to the unique issues arising from cottage and recreational property disputes. Failures to Close Failures to complete an agreement of purchase and sale may be due to the Vendor or the Purchaser.  Failures of the Purchaser are often attributable to the Purchaser’s inability to obtain financing that was anticipated from a mortgage or another property sale.  In some instances, the Vendor may retain the deposit and claim damages for losses sustained from the failure to close. Failures to close may also be due to the Vendor.  Frequently, the Vendor’s failure to close is due to the Vendor’s inability to provide clean title to the property or to perform the necessary repairs prior to closing.  In some instances, a Purchaser will seek to recover damages for any resultant loss, while in other cases the … Read More

Can a Pre-Incorporation Contract Prevent the Forfeiture of a Deposit on the Failed Closing of a Property?

Mahdi Hussein, B.A. (Hons.), JDCommercial Contracts, Real Estate | Developers, Real Estate Litigation0 Comments

In Benedetto v. 2453912 Ontario Inc., the Ontario Court of Appeal considered whether a pre-incorporation contract could prevent the forfeiture of a deposit provided pursuant to an agreement of purchase of sale of real property. In this case, the purchaser signed an agreement for purchase and sale of real property, indicating that he was signing as a buyer “in trust for a company to be incorporated without any personal liabilities”. The purchaser then provided $100,000.00 as the deposit to secure the purchase of the property. The purchaser subsequently advised that he would not be closing on the transaction and sought the return of the deposit. The vendor refused and commenced civil proceedings resulting in a summary judgment motion, which was held in favour of the vendor. The Ontario Court of Appeal upheld the findings of the lower court and indicated that: A forfeited deposit does not constitute damages for breach … Read More

Court Considers Nuisance Test for Neighbours’ Tree in Allen v MacDougall

Yona Gal, J.D., LL.MCottage Litigation, Real Estate Litigation, Recreational Property Litigation0 Comments

In the recent case of Allen v MacDougall, 2019 ONSC 1939, a neighbour applied for a court order authorizing the destruction of a maple tree growing amid two Toronto properties. The Ontario Superior Court refused. In its decision, the Court clarified the applicable test for nuisance and confirmed that “the tendency of courts today is that trees are not lightly ordered removed on the basis of being a nuisance.” Facts The large maple tree sat jointly on the land of two neighbours.  According to s. 10(2) of The Forestry Act (“Act”), the maple is therefore owned by both neighbours: “Every tree whose trunk is growing on the boundary between adjoining lands is the common property of the owners of the adjoining lands.” The Applicants, as part of their home renovations and extensions, wanted the tree chopped down.  The Applicants claimed that their intended home addition on the north side of … Read More

Prescriptive Easements in Ontario Cottage Country

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.Civil Litigation, Cottage Litigation, Real Estate Litigation, Recreational Property, Recreational Property Litigation0 Comments

The Ontario Superior Court of Justice decision in Arcon Property Holdings Ltd. v. Nelson, 2019 ONSC 2267, involved a dispute between cottage owners over easement rights related to a 15 foot wide strip of land near Grand Bend. The right-of-way was mainly a paved road used by the cottage owners to access their properties from the road but it also extended past the pavement to the waterfront.  The applicant complained that the respondents parked their vehicles on the right-of-way which prevented them from accessing the beach, launching their boat, building ramps and structures to facilitate launching their boat and parking a trailer in their driveway. The applicant sought an order prohibiting the respondents from parking on the right-of-way and interfering with their easement rights.  The Court found that the applicant’s easement was merely for “ingress and egress, in, over and upon” the property and did not provide the applicant with the right to access … Read More

7 Things To Consider Before Buying A Condo

Sabrina Saltmarsh, B.A. (Hons), J.D.Condo Litigation, Real Estate Agent and Broker, Real Estate Litigation0 Comments

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

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.Certificate of Pending Litigation, Civil Litigation, Commercial and Contract Litigation, Contract Disputes, Contract Termination, Real Estate | Developers, Real Estate Agent and Broker, Real Estate Litigation, Specific Performance, Summary Judgment0 Comments

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

Canadian Court Shuts Down Loan Shark’s Law Suit

R. Lee Akazaki, C.S., B.A. (Hons.), J.D.Business Law, Business Litigation, Casino Debt Recovery, Civil Litigation, Commercial Lending, Commercial Litigation, Debt and Enforcing Judgments, Real Estate Litigation0 Comments

In Canada, it is not everyday one witnesses a loan shark resorting to judicial process to collect on outstanding obligations.  In fact, outside cases involving payday loans and hidden credit card fees, where legitimate loans might inadvertently cross the 60% interest rate threshold under s. 347 of the Criminal Code,  we have to date not seen any cases where the court has considered enforcement of blatantly usurious loans bearing interest of, say, 2,000% APR, as the Superior Court did in Ikpa v. Itamunoala, now available on line. Gilbertson Davis successfully obtained summary judgment rejecting the bid by the plaintiff, a resident of the United Kingdom (where laws banning usury no longer exist), to recover USD$500,000 on a USD$100,000 promissory note that had remained outstanding for four months before the start of litigation.  The plaintiff sought to have an equitable mortgage securing the note paid out in priority to the defendants’ registered mortgage.  … Read More

Popack v. Lipszyc: Recognition and Enforcement of Arbitration Awards – Clarifying the term “binding”

Janice Perri, B.A. (Summa Cum Laude)Appeals, Appellate Advocacy, Civil Litigation, Commercial and Contract Litigation, Commercial Arbitration, Commercial Litigation, Enforcement of Foreign Arbitral Awards, Real Estate Litigation, UNCITRAL0 Comments

Popack v. Lipszyc appears to be the first Ontario Court of Appeal case on the recognition and enforcement of arbitration awards under the 2017 International Commercial Arbitration Act (“ICAA”). The ICCA includes the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) and the 2006 amended version of UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). The appellants used articles 35 and 36 of Model Law to apply for the recognition and enforcement of the international commercial arbitration award they received in August 2013 against the respondents. While the application judge dismissed the application, the Court of Appeal allowed the appeal. The Court of Appeal stated that “in Ontario, a strong “pro-enforcement” legal regime” exists for the recognition and enforcement of international commercial arbitration awards, as grounds for refusal are “to be construed narrowly”. Importantly, the Court, and not the tribunal, is the proper avenue to … Read More

Entire Agreement Clause Upheld in Manorgate Estates Inc. v. Kirkor Architects and Planners

Janice Perri, B.A. (Summa Cum Laude)Appeals, Appellate Advocacy, Business Torts | Economic Torts, Civil Litigation, Commercial, Commercial and Contract Litigation, Commercial Contracts, Commercial Law, Commercial Litigation, Construction | Builders, Construction Litigation, Contract Disputes, Misrepresentation, Negligence, Real Estate | Developers, Real Estate Litigation0 Comments

Entire Agreement Clauses are meant to prevent negotiations that occurred prior to the contract being formed from influencing the Court’s interpretation of the terms set out in the final contract. In other words, past discussions are to have no bearing on the understanding of the contractual terms. In theory, a fully integrated agreement of this kind supplants any earlier oral or written agreements. There is competing jurisprudence in which Entire Agreement Clauses have been both effective and ineffective. However, Manograte Estates Inc. v. Kirkor Architects and Planners is a recent Ontario Court of Appeal decision where an Entire Agreement Clause was effective. In Manograte Estates Inc. v. Kirkor Architects and Planners, the Ontario Court of Appeal upheld the Motion Judge’s decision that the Entire Agreement Clause in the relevant agreement, regarding architectural consulting for a construction project, operated as a complete defence to the appellants’ claim of alleged negligent misrepresentation. The Entire Agreement Clause … Read More

What Does the Illegal Substances Clause Mean in OREA Agreements of Purchase and Sale?

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.Agents and Brokers, Appeals, Broker and Agent Claims, Civil Litigation, Commercial, Commercial Litigation, Contract Disputes, Contract Termination, Misrepresentation, Negligence, Real Estate Agent and Broker, Real Estate Litigation0 Comments

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