Toronto Real Estate Litigation Lawyers

Failure to Close Sale of Real Estate | Refusal to Close Sale of Real Estate | Force Sale of Real Estate
Misrepresentation by Seller About Property | Misrepresentation by Broker or Agent
Real Estate Litigation Lawyers in Ontario | Mortgage Enforcement
Toronto Property Disputes | Ontario Property and Real Estate Litigation
Claims against Brokers, Agents, Vendors, Sellers, Purchasers or Mortgage Lenders
Real Estate Brokers Commission | Mortgage Brokers Commission
Failure to Close Sale of Property | Refusal to Close Sale of Property | Force Sale of Property

When dealing with real estate, simple disputes can quickly develop into complex issues, and require specific knowledge and expertise in order to be effectively resolved.

Our lawyers have worked with local and international businesses as well as individuals, purchasers, vendors, landlords, tenants, builders, contractors, agents and insurers with respect to a wide variety of real estate issues. We have the experience and the business-minded approach necessary to provide efficient and effective solutions with respect of any real estate issue.

Real Estate Litigation Issues- Examples

Failure to Close Sale | Refusal to Sell | Refusal to Buy

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 financing, 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 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 property, and in some instances may be able to obtain a court order for specific performance of the agreement  for the sale of the 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 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 defects or problems with the property that are not readily visible. In some instances, buyers may seek representations and warranties that the 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 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.

Misrepresentations as to Profitability

Even when an investor has made an investment that will be secured against a 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 property.

In such cases, investors may have relied upon projections, purported analysis or representations made by the 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.

Where the lack of profitability of an investment in property relates to mismanagement of the property, investors may have grounds to seek oppression remedies under the Condominium Act, if applicable, or the relevant business corporation statutes, which can include statutory urgent injunctive relief or a court-appointed manager to oversee the management of the property.

Rent to Own Agreements

In Ontario's rising housing market, rent-to-own and option to purchase agreements for real estate 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.

Property managers and property management companies are often tasked with a significant amount of authority and control over property, including:

  • Rent collection
  • Maintenance and repairs, including emergency availability
  • Responsibility over property taxes and other property finances

In many cases, the conduct of property management companies will be a central issue in a real estate dispute. Property managers can be involved in a wide variety of potential legal issues, including:

  • Condominium by-law compliance
  • Disputes between residents and condominium boards
  • Damage to units or common areas
  • Repairs and maintenance to units and common areas, including construction liens
  • Landlord and tenant disputes

Often, property managers will owe fiduciary duties to the property owners, and those duties can be explicitly set out in property management agreements. Accordingly, property managers must ensure not only that they comply with their obligations as set out in their agreements, but that they also ensure they are acting in the best interests of the property owners generally.

A common concern for purchasers is whether there are any latent defects in the property they intend to purchase – that is, any defects that are not readily observable through an ordinary inspection. Increasingly, one of the more common latent defects is former use of a property as a marijuana grow operation (“grow op”), which has been found to cause mold and electrical damage not visible on ordinary inspection. If a property is known to be a grow op, that can impact re-sale value, the availability of financing or re-financing, and other potential losses to a purchaser.

Sellers and their agents have a duty to disclose all known latent defects, including whether a property was a grow op, however some sellers or agents may intentionally withhold such information in an effort to encourage the sale of the property at a higher price. Purchasers who purchase a property where the seller failed to disclose a known latent defect may be able to seek damages from the seller or their agent for failing to disclose the latent defect, and purchasers should seek prompt legal advice regarding their rights and available remedies.

Property may have past or present problems with termites, rodents, cockroaches, or other vermin and pest infestations. Mold can also be a common issue whether the property was a grow-op or not. If these infestations or mold issues pose a serious threat to the safety of the property or the health of its residents, then such infestations may also constitute latent defects and may impose a duty to disclose on the vendor or its agent.

Real estate construction is complex, and often involves many different stakeholders engaged in many different aspects of any project. When these interests conflict, litigation or arbitration may be necessary to resolve disputes and ensure continuation and completion of the project.

In some instances, the needs of the project require prompt and immediate legal attention, and any unforeseen delays can potentially permanently disrupt the project. In these cases, parties may be able to seek immediate injunctive relief to preserve their interests and avoid irreparable harm. These remedies can include:

  • Freezing and recovering assets obtained by construction fraud
  • Enforcing and cancelling construction liens and other charges
  • Specific performance by contractors or subcontractors

The lawyers at Gilbertson Davis can provide cost-effective representation and advice to those involved in construction disputes, including:

  • contractors
  • subcontractors
  • managers and employees
  • designers, architects, and engineers
  • investors, lenders, and bondholders 
  • condominium boards
  • purchasers, tenants, and interim occupants
In order to consider and enhance the prospects of obtaining the results and remedies available to you, it is important that you do not delay in obtaining advice and representation to protect your interests. At Gilbertson Davis LLP, we can assist you to identify and seek to obtain the necessary relief and remedies required, including:

Please contact Gilbertson Davis LLP to arrange an initial consultation.