Condominium: Owners Allege Didn’t Get What Promised

New Condominium:  When you don’t get what you were promised

Or Led to Believe

Wendy Ji, purchased a condominium unit Emerald City Condominiums at Don Mills Road and Sheppard Avenue in 2010 for $460,000.00.  One of the reasons she bought from this development was the advertised “easy underground access” to the Sheppard subway line and the proximity to Fairview Mall.  This was advertized in the sales brochures.  Ms. Ji believed that she would be able to access the subway through the condominium itself, without having to go outside.  A promotional video for the project showed a subway train pulling into a station with stairs marked Emerald City. 

In February, when the purchased closed, and she went into her new condominium, she discovered that there was no tunnel to the subway, as she alleges she was lead to believe. Condominium

Ms. Ji along with some 60 other residents have commenced a class action lawsuit against the development seeking a 10-15% rebate, saying the lack of direct subway access has devalued their units. 

The only way she could get access to the Don Mills Subway station was by walking outside across Sheppard Avenue or through the TTC pathways that ended in outdoor mall parking lots. 

As almost all contracts for new constuction, the agreement of purchase and sale contained the usual clauses stating that the builder chan change the plans and specifications of the building at its sole discretion or as required by the government, as long as it is not a materal change. This would include anythign that is promised in the sales brochure.

As noted in a Toronto Star Article by Susan Pigg, the lawyer for condo developer Elad disputes the claim saying, “there was never any representation that there would be underground access” from the condo building to the subway or directly to Fairview Mall: Both are easy to reach by walking out the lobby doors and six metres to the subway entrance right out front.

“The station isn’t far. It’s not going to kill me to walk there. But it’s the failure of the promise and the fact we paid a premium for that building because it was supposed to have underground access… Most people would just accept it and keep complaining, but this just pushed my buttons and, I thought, we have to speak up for ourselves.” said Ji in an interview with the Star.

Toronto Condominiums – Ceiling Heights Lowered on some projects

The Sky is Falling – Be Prepared to Duck

How Toronto Condominium Developers are Saving Space

Now we aren’t talking about Chicken Little, but it comes as no surprise to people who have been seeing new Condominium developments over the years that on average,  units are getting smaller.  

RealNet Canada Inc. released its latest stats for new condos in Toronto… and the numbers showed that the average size of a unit has shrunk to about 797 square feet, from closer to 900 square feet five years ago.

However, as noted in a recent Globe and Mail article, there is a new trend that is slowly creeping into new Condominium developments.  The ceiling heights are being lowered.  Toronto Condominium construction

When purchasing a Condominium pre-construction, you often only see two dimensional floor plans which will show you how large the unit will be.  What people often fail to consider, is the height of the ceilings.  Particularly if you are not aware of what a “normal” ceiling height ought to be. 

According to Matthew Slutsky, president of BuzzBuzzHome, “Nine feet is normal, 10 is luxury,” he says. “It’s gone up, eight used to be the norm about a decade ago. Around 2007 to 2008 it started to change to 9 being the standard.”

Why would developers be lowering ceiling heights?

When you think about it, it makes sense.  If a project is approved for a certain height, and they take six inches off per floor over 18 storeys, they can add another floor.  This allows developers to add condominium units, without making them smaller than they already are. 

What does that mean for you?

Nobody likes surprises when it comes to real estate.  If you don’t know to look for ceiling heights in the agreement, you may not turn your mind to the issue. This demonstrates why it is so important to have a real estate lawyer review your Agreement of Purchase and Sale.  

When you purchase a new condominium from a builder you have 10 days to have the document reviewed.  For more information about the 10 day cooling off period, click here.

Make sure you know what you are getting into.  Protect yourself.  

 

Selling your home? Be careful what you say.

When Selling Your Home, be careful what you say about the property.

What you say, can in fact hurt you.  If you are selling a home, be mindful of what you say/write about the property. 

Here is an example of what can happen.

In September 2009, The defendant, Hussain Al-Saffar (“Hussain”),  purchased a property for $439,000.00 in Toronto, Ontario.  When Hussain purchased the property, the basement was unfinished and was sold to him “as is”. 

Hussain obtained the relevant permits and hired contractors to extensively renovate the property,

Of importance to this case, the basement was completely finished, including drywall and carpeting, with the exception of the furnace room area where the interior foundation wall remained exposed and visible. Included in the description of the attributes of the Property were words that the house was “gutted to the bare bone(s)”, which became the focal point of this case.

Although Hussain oversaw the renovations, he never in fact lived in the Property.  Hussain subsequently put the house on the market.

The plaintiffs, Clare Angela Mauro and Anne Delores Mauro (“Mauro’s”),  signed an agreement of purchase and sale to purchase the property from Hussain on or around August 18, 2010 in the amount of $658,000.00. The Mauro’s had an inspection performed on the property.  The report alerted the plaintiffs to potential leakage problems with the basement, including that it was unpredictable and should be monitored. The closing took place September 3, 2010. Agreement of Purchase and Sale

Almost immediately after closing, the Mauro’s smelled must and dampness.   No further investigation was done behind the drywall because  they did not want  to do any unnecessary damage to the finishes of the basement.

On year after closing, there was a major flood.  Most of the costs incurred to repair the damage were covered by insurance.  When renovating the damage, it was discovered that the  north foundation wall leaked water into the basement. In addition, they found cracks in the mortar between the cinder blocks, including one crack that appeared to have been crudely plugged with a piece of wood to stop the flow of water.

The Mauro’s claimed Hussain must have known about it if he gutted the basement to the bare bones, as he claimed. Hussain claimed that he had not seen any leaks and did not notice the piece of wood because he did not strip the basement walls to the cinder blocks, but rather just insulated and dry walled the area in front of the existing plaster.

The Decision:

This case Mauro v. Al-Saffar was heard at the Toronto Small Claims Court.  The plaintiffs claimed $8,659.00 for damages in repairing a leaky basement wall, including damp proofing, treatment for mold, and content removal and replacement in the property purchased from the defendants, in addition to $1,000.00 in punitive damages. 

Deputy Judge Prattas found that even though Hussain did not know the problem existed with the basement walls, he was still responsible to pay.   Deputy Judge Prattas:

Since the defendant testified that he went only to the plaster, which I have accepted, then the defendant’s statements in the MLS Sheet and Sales Brochure were under the circumstances of this case untrue and inaccurate; they were made carelessly and negligently and misled the plaintiffs as to the true condition of the Property and more particularly the basement.  In my view the plaintiffs were misled into believing that they were getting a basement which did not have a latent defect with water leakage potential.

However, because of the warnings of the home inspector, the Mauro’s should assume part of the risk, since they chose not to do any further inspections. 

Deputy Judge Prattas found Hussain 50% liable for the damages, or $4,329.50. No punitive damages were awarded. 

What does this mean?

Typically, A seller is not liable for any defect that they had no knowledge of. if a seller does not know about a problem with the property.

What distinguished this case, was the fact that Hussain had made representations (although carelessly untrue and inaccurate) that the purchasers relied on. 

For more information about patent and latent defects, and what must be disclosed to potential purchasers click here. 

What can be learned is that you should always be careful and truthful about what you say about the property. 

 

When Things go Wrong After Closing – Closing Non Merger

What Conditions Survive Closing?

It is something that I hear about all too often.  I just closed the deal on my new home and X, Y and/or Z are not working.  The Agreement of Purchase and Sale promised that everything would be in good working order.  What can I do?

The answer isn’t what you probably want to hear. After Closing

Even if the Agreement of Purchase and Sale contains a warranty that it will survive closing, there isn’t much that can be done.  What this “warranty” promises is that X, Y and/or Z will be working on the day of closing, but not a second after closing.  So if they worked, and then a day later broke.  It becomes your responsibility to fix it.  What the seller is promising is that  X, Y and/or Z are working, and will work until closing, the promise will survive closing.  However, it does not mean that the seller is promising that X, Y and/or Z will work after closing.  When you are the purchaser this can seem frustrating, however, put yourselves in the seller’s shoes.  Would you want to or be able to promise that something that is no longer in your control or care will work?  Likely not.  This is the same principle. 

If the Agreement of Purchase and Sale does not contain a condition that it will survive closing, then the issue must be negotiated between the parties prior to closing. 

Recommendation:  The day of closing, go to the house.  Check that everything is as it should be and is working.  It becomes a harder sell when a day, a week, a month goes by and only then did you realize that a particular appliance doesn’t work.  If something isn’t working on the day of closing, contact your real estate lawyer.  It is often difficult to prove when something broke, which brings me to my next point. 

Home Inspections are so omportant.  If there are issues they can be addressed between the parties before closing.  It also provides proof whether certain things/appliances were in good working order prior to closing.  If you are still on the fence about including a clause about home inspections, Click Here to see more information about why it is so important to have a home inspection.  

When will a warranty extend beyond closing?  There are certain circumstances where warranties will extend beyond closing.  For example, if the closing is in the winter and the pool has been closed, the seller may promise that the pool is in good working order, and provide a date in the future (in that circumstance likely sometime in the summer) where the pool will be operational.  

Whether you are buying or selling property, the terminology or “jargon” may not make a lot of sense unless you know what to look for.  It might sound self serving, but I always recommend having a real estate lawyer review Agreements of Purchase and Sale.  Protect your investment.   Contact Us to ensure your rights are protected. 

Tarion Warranty – Just What Does It Cover?

What is a Tarion Warranty? tarion

Purchasers of real estate from a builder, whether it be a home or a condominium, are often confused about the warranty protection programs available on their newly built units.  

Tarion is a non-profit, private corporation established in 1976 to protect the rights of new home buyers and regulate new home vendors and builders according to the terms of the Ontario New Home Warranties Plan Act (the “Act”). Not only does the Act require builders in Ontario to provide new home warranty coverage, but they must also be registered with Tarion and enrol every new home prior to the start of construction. Tarion is also responsible for managing a guarantee fund to ensure that builders honour the statutory warranties, and for enforcing the overall terms of the Act. For more information Click Here.   

Who is covered under a Tarion Warranty?

Homes, this could be a detached home, a townhome, a row-home or a unit in a quadruplex are covered.  Residential dwelling units in a standard condominium project or a dwelling built on a vacant land condominium unit will have coverage if they meet the “new home requirements.” For more information about which homes are covered, or to determine whether your new home will be covered under the Tarion Warranty, Click Here

When does the coverage start?

The clock starts ticking when the home is “completed for possession”.  What this means is that for a home, coverage usually starts when the deal is closed and you own the home.  For condominiums, coverage begins at the date of occupancy.  If you are unsure about when your warranty started, ask Tarion to confirm their position before any warranty claiming periods expire.

What does a Tarion Warranty Cover?

Deposit Protection:

In the event that your builder goes bankrupt or breaches the terms of the purchase agreement, Tarion will protect your deposits to a maximum of $20,000. Deposits paid for all other new homes are protected to a maximum of $40,000.

However, any funds given to hold a condominium unit before you have an official signed purchase agreement are not protected under the warranty.

Delayed Closing or Occupancy:

Under the delayed closing and delayed occupancy warranty, your builder guarantees that your home will be ready for you to move in either by a date specified in the purchase agreement or by a date that has been properly extended if circumstances occur that delay the home’s completion. In many cases, your builder will be required to compensate you if a delay occurs. Be sure to read the Tarion Warranty Critical Dates that are included in the Agreement of Purchase and Sale. 

Unauthorized Substitution

This protects the purchaser from a builder unscrupulously substituting items specified in the purchase agreement. For example, if a particular back-splash color or material was agreed to, substitution without your written authorization is not allowed. This also extends to the inclusion of specifics (think stainless steel appliance by a notable brand, shutters or blinds of a particular suasion etc.). Your recourse as a purchaser is to demand that the original items specified be included or that cash compensation be given. In practice, your Agreement of Purchase and Sale will often include a clause allowing the builder to provide you a close match, or the next best substitute, often deemed by availability.

Common Elements

For most condominium projects, warranty coverage also includes the shared areas of the building, referred to as Common Elements.   

How long am I covered?

One Year Warranty

  • Requires a home is constructed in a workman-like manner and free from defects in material;
  • Protects against unauthorized substitutions.   
  • Requires the home to be fit for habitation;
  • Protects against Ontario Building Code violations; and
  • Applies for one year, beginning on the home’s date of possession even if the home is sold.

Two Year Warranty

  • Protects against water penetration through the basement or foundation walls;
  • Protects against defects in materials that affect windows, doors and caulking and defects in work that results in water penetration   into the building envelope;
  • Covers defects in work or materials in the electrical, plumbing and heating delivery and distribution systems;
  • Covers defects in work or materials that result in the detachment, displacement or deterioration of exterior cladding (such as   brickwork, aluminum or vinyl siding);
  • Protects against violations of the Ontario Building Code that affect health and safety; and
  • Applies for two years, beginning on the home’s date of possession.

Seven Year Warranty

Your home’s seven year warranty covers major structural defects (MSD) and begins on the date you take possession of the home and ends on the day before the seventh anniversary of that date.

For example, if your home’s date of possession is January 1, 2005, the seven year MSD warranty begins on January 1, 2005 and remains in effect until and including January 1, 2012.

A major structural defect is defined in the The Ontario New Home Warranties Plan Act  as:

In respect of a post June 30, 2012 home, any defect in work or materials in respect of a building, including a crack, distortion or displacement of a structural load-bearing element of the building, if it,

  1.  results in failure of a structural load-bearing element of the building,
  2. materially and adversely affects the ability of a structural load-bearing element of the building  to carry, bear and resist applicable structural loads for the usual and ordinary service life of the element, or
  3.  materially and adversely affects the use of a significant portion of the building for usual and ordinary purposes of a residential dwelling and having regard to any specific use provisions set out in the purchase agreement for the home

The seven year MSD warranty includes significant damage due to soil movement*, major cracks in basement walls, collapse or serious distortion of joints or roof structure and chemical failure of materials.

In addition to the general exclusions, the seven year MSD warranty specifically excludes: dampness not arising from failure of a load-bearing portion of the building; damage to drains or services; and damage to finishes.

What is Not Covered By Tarion?

Normal Wear and Tear

  • Normal shrinkage of materials that dry out after construction such as nail “pops” or minor concrete cracking
  • Settling of soil around the house or along utility lines (other than subsidence beneath the footings of the home)
  • Scuffs and scratches to floor or wall surfaces caused by moving, decorating or day-to-day use of the home by the homeowner

Damage Caused by Improper Maintenance

  • Dampness or condensation caused by failure to maintain proper ventilation
  • Damage resulting from improper maintenance

Damage Caused by a Third Party

  • Damage caused by municipal services or utilities
  • Damage caused by floods, “acts of God”, acts of civil or military authorities or acts of war, riot, insurrection, civil commotion or vandalism
  • Damage caused by insects or rodents, unless it is the result of construction that does not meet the Ontario Building Code

Secondary Damage Caused by Defects that are Under Warranty

  • Personal or property damage, such as personal injury, loss of income and other secondary loss associated with warranted defects or repairs

(However, your homeowner insurance may cover such secondary or consequential damage.)

Supplementary Warranties

  • Warranties or agreements provided by your builder over and above the statutory warranties.  Such matters are between the builder and the homeowner and are not enforced by Tarion

Deficiencies Caused by Homeowner Actions

  • Alterations, deletions or additions to the home that were made by the homeowner
  • Changes by the homeowner to the direction of the grading or the slope of the ground
  • Defects in materials, design or work that was supplied or installed by the homeowner

Elevators

  • The seven year MSD warranty does not extend to elevating devices

HVAC Appliances

  • The seven year MSD warranty does not extend to appliances that form part of the heating or cooling apparatus, equipment or systems, whether for water, air or other substances, including furnaces, air conditioners, chillers and heat recovery ventilators

Specific Defects Accepted in Writing

  • Ascertained defects in work or material accepted in writing by the homeowner

 There is a lot to cover, and this has only  scratched the surface.

If you need more information about Tarion, Click Here. 

Big Five Banks Unwilling to Give Mortgages for Micro Condos

What are Micro Condos?

Many developers are building what has been referred to as “micro condos”.  These are condominium units that are less than 400 square feet.  These micro condos have seen success in over populated areas such as Tokyo and New York, and are beginning to come to urban centres such as Toronto and Vancouver. 

Many people are surprised to find out that the big banks are often unwilling to provide financing for these micro condos.  This has led to purchasers, realtors and developers being frustrated and confused. 

“There are certain Canadian banks that won’t fund condominiums below a certain size but there are a lot of B-lenders that will and so the biggest mistake that the A-lenders are making is not funding those,” Brad Lamb of Brad J. Lamb Realty told , Canadian Real Estate Wealth. “They don’t actually know what they are doing.”

According to Mr. Lamb “They are greatly mistaken and poorly informed of where they should be putting their money,” he explains. “The funny thing is that they are prepared to lend money on the products that take the longest to sell and hardest to sell, yet the properties that rent instantaneously and sell instantaneously are the ones that the most people can afford.”micro condo

Lamb says the demand for micro-condos is “unlimited” in downtown urban centres, with young professionals craving these compact spaces.

So what does that mean for you?

Whether you are thinking of purchasing one of these units as an investment or to live in, in order to avoid any unexpected surprises, make sure you speak to a mortgage professional in order to ensure that you will be able to secure financing. 

While you can still get private financing or a B lender, it may not come with the interest rates or conditions that you would have gotten had you received a mortgage from one of the Big Five banks. 

Always make sure you make your offer is conditional on financing in order to avoid surprises. 

Who is a First Time Home Buyer – For Land Transfer Tax Refund Purposes

Who qualifies as a first a first time home buyer in order to qualify for the Land Transfer Tax refund?  Seems like a simple question.  However, the answer isn’t as simple as the question implies. 

What is Land Transfer Tax

The Provincial Land Transfer Tax applies to all transfers of land in Ontario.  If the transfer of land is in Toronto, there is an additional Municipal Land Transfer Tax. first time home buyer

In general, if you buy land or an interest in land in Ontario, you must pay  land transfer tax (provincial and possibly municipal), whether or not the transfer is registered at one of Ontario’s land registry office. 

Land includes any buildings, buildings to be constructed, and fixtures (such as light fixtures, built-in appliances and cabinetry).

The land transfer tax payable is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.

For more information about Land Transfer tax, and how it is calculated Click Here.

Who Qualifies for a Frist Time Home Buyers Credit? 

First-time homebuyers may be eligible for a refund of all or part of the tax. For transfers where:

  • the agreement of purchase and sale was entered into after December 13, 2007, the refund applies to all homes, whether newly constructed or resale.
  • the agreement of purchase and sale was entered into before December 14, 2007, the refund only applies on the purchase of a newly constructed home.

Applications for a refund must be made within 18 months after the date of the transfer.

To claim a refund, the requirements are as follows:

  • The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
  • If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world, while he or she was the purchaser’s spouse. If this is the case, no refund is available to either spouse.
  • The purchaser must be at least 18 years of age.
  • The application for a refund must be made within 18 months after the date on which the conveyance or disposition occurred. (Note that an application for the refund can be completed upon the electronic registration of the conveyance).
  • The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
  • The purchaser cannot have previously received an Ontario Home Ownership Savings Plan (OHOSP) based refund of land transfer tax.
  • If the agreement of purchase and sale is entered into before December 14, 2007, the home must be newly constructed.

First time home buyers or new and resale homes are eligible to receive refunds of the provincial and Toronto Land Transfer Taxes.

Am I a First Time Home Buyer?

Do I qualify for the First Time Home Buyers Refund?

There are several situations which have come across my desk where clients have been surprised that they did not qualify for the First Time Home Buyers Land Transfer Tax Refund.  I have accumulated some of the common questions/concerns below. 

1.  I am purchasing a property for the first time, but my parent has to be put on title at the insistence of the bank.  My parent is not a first time home buyer. 

In this situation, it will be necessary to pay land transfer tax at the time of registration and apply for a refund from the ministry.

If the parent did not acquire a beneficial interest in the property as a result of the conveyance:

  • the ministry will accept the fact that the parent was on title as a trustee for the child, and
  • the child would qualify for the newly constructed home refund, provided that evidence of the trust is submitted (e.g., a letter from the bank confirming that the parent is on title for mortgage purposes).

For example, where a parent who is not a first-time purchaser and a child who is a first-time purchaser, purchase a home with equal 50/50 interests, the child may claim a refund of 50% of the land transfer tax payable. The child’s claim cannot exceed 50% of the maximum allowable refund (i.e. 50% of $2,000).

2.      I inherited a property from an estate, but did not “purchase” the property.  Can I still claim the first time home buyers refund when I “purchase” my first home? 

To claim a refund, you cannot have owned a home, or an interest in a home, anywhere in the world. Previous ownership in a property means you do not qualify. The method of acquiring the property (e.g., purchase, gift or through an inheritance) is not considered.

3.      I am purchasing a property and I have never owned a home previously. However, my spouse has a property that he/she purchased prior to us becoming spouses. 

Your partner’s eligibility for a first time home buyers refund depends on whether you are “spouses” as defined in section 29 of the Family Law Act.

For land transfer tax purposes, “spouse” means either of two persons who are married to each other, or who are not married to each other and who have cohabited:

  • continuously for a period of not less than three years; or
  • in a relationship of some permanence, if they are the natural or adoptive parents of a child.

If you are not spouses according to the definition above, then your partner may claim a refund based on his/her interest acquired in the home.

If you are “spouses”, and the home was owned by one of the partners while you were spouses with each other (no matter how long ago or for how long), then you do not qualify for the first time home buyers refund, even if you did not live in the property together.   

For example if a husband owned a property prior to getting married, and sold it the day after he got married.  His wife has never owned interest in a property.  The wife would not be entitled to a first time home buyers refund.  (See Number 4 if the property was sold prior to becoming spouses). 

The situation does not change if title to the property is in one partner’s name alone. 

4.      I am purchasing a property, and I have never owned a property before.  My spouse owned a property prior to us becoming spouses, however he/she sold the property prior to us becoming spouses.   

In this circumstance, you are entitled to the first time home buyers refund, even though the first spouse is not a first-time homebuyer.  You can claim a refund up to the maximum, as long as the property was not owned  while you were each other’s “spouse.”

What this means is that if a husband who is a first time purchaser, and a wife who is not a first time home purchase a home, they can claim the  full land transfer tax refund if the home was sold prior to becoming spouses. 

It is important to remember that for land transfer tax purposes, “spouse” means either of two persons who are married to each other, or who are not married to each other and who have cohabited:

  • continuously for a period of not less than three years; or
  • in a relationship of some permanence, if they are the natural or adoptive parents of a child.

5.      I moved to Canada from another country.  I previously owned property in that country, however, sold it prior to coming to Canada. 

You would not be entitled to the refund.  A purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.

Contact Us to determine your eligibility for the land transfer tax first time home buyers refund.

The Real Estate Contract Must be Valid to be Enforceable

Ensure that your Real Estate Contracts are Valid

An Agreements of Purchase and Sale, like any other contract, requires a proper offer, and acceptance. 

What are the requirements of basic contract law?

This question takes me back to my first year of law school.  In order for there to be a valid contract, three things are required.

  1. Offersign here
  2. Acceptance
  3. Consideration

This holds true, regardless of whether the contract was sent via email, or fax. 

To further complicate things, according to the Statute of Frauds, R.S.O. 1990, Chapter S. 19, all real estate contracts must be in writing.  While in many circumstances verbal contracts can be enforced, a contract of real estate must be in writing. 

How can this affect your real estate transaction?

The January 8, 2014 decision of Pilon v. Rosu by Deputy Judge Sebastian Winny at the Ontario Small Claims Court depicts what can happen when an offer is not properly accepted, even due to an innocent error or omission. 

This case shows what can go wrong when important things are missing from the contract.

Facts of The Case:

The Plaintiffs in this case, Mr. and Ms. Pilou (the “purchasers”) put an offer of $400,000 with a closing date of November 16, 2011 on the home of the Defendants Mr. and Ms. Rosu (the “sellers”).  The sellers signed back the offer amending the purchase price to $420,000 and the closing date to December 16, 2011 to accommodate a tenant that resided at the property.  It was scanned and emailed to the purchasers. However, Ms. Rosu failed to sign page 4 of 6 (the signature page). 

The purchasers did not accept the sellers’ counter offer, and signed the Agreement of Purchase and Sale back with a counter offer of $420,000, leaving the December 16th closing date unchanged. 

The sellers’ real estate agent then told the purchaser’s real estate agent that the sellers accepted the price change, and emailed the offer to the purchaser’s agent by email.  However, the sellers did not initial the price change on page 1 of the offer and the signature page was still missing Ms. Rosu’s signature.

The purchasers thought they had a contract for the purchase of their intended new home from the sellers.  The sellers in turn also believed there was a deal albeit at a different price. 

Prior to closing the sellers asked the purchasers to extend the closing date, as they could not give vacant possession becayse the tenant remained in the property.  Consent was refused. 

The purchasers were forced to find temporary accommodations due to the fact that the purchase did not close as scheduled.  They sued the sellers for $17,082.80 for various wasted expenses and the return of their deposit. 

Was there a Valid and Enforceable Contract?

After reviewing the facts of the case and hearing the testimony of the parties involved, Deputy Judge Winny held that because no valid contract was formed, the purchasers cannot sue for the failure to close. 

“For a legally-binding contract to be formed, an offer must be accepted.  But also, the acceptance must be communicated to the offeror.  If a party executes an agreement which simply then remains in the possession of that party’s agent and is not transmitted to the offeror, there has been no communication of acceptance and contract formation has not occurred”.

What this means is that verbal confirmation of acceptance is not enough.  It has to be in writing.  In this particular circumstance, because the last change was not initialled by the sellers, the contract was cancelled. 

The purchasers’ claim was dismissed, and it was ordered that the deposit be returned to the purchasers.  However, Depute Justice Winny did say that had the contract been valid, he would have awarded them $13,002.02 for damages as a result of not closing on time, moving costs, storage, legal fees, renting alternative accommodations and mental distress. 

Conclusion:

 Real estate contracts are complicated documents, and the outcome of mistakes can be quite costly.  Always make sure you review that the important terms of the contract are initialled, particularly the price, closing date and that the Agreement of Purchase and Sale is signed.  It is equally important when sending any documents either by email or fax to ensure that all pages were sent. 

In Real Estate Transactions – If it isn’t in writing – it doesn’t exist!

We recommend that you have a lawyer review the Agreement of Purchase and Sale to ensure that your rights are protected. Contact us to review your Agreement of Purchase and Sale.

Do I Have Right to A View?

One factor many people consider when purchasing a home or condominium, is the view.  Whether it be the mountains, the lake or a skyline, often purchasers pay a premium for this luxury.

Right to a View

However, an interesting case has developed in the Ottawa area, shows what can happen when the home owners “right to a view” was not put in writing. 

Several purchasers in the Sandgate Ridge community in Nepean purchased new homes from Monarch Corporation next to the Stonebridge Golf and Country Club.  Many of the existing homeowners paid a premium for their lots (in some cases $100,000 more than other homes in the development) for the view, and the verbal promise made by Monarch that the other land wouldn’t be developed.  Many homeowners now say that they paid this premium because they wanted the peace and quiet that these particular homes offered.  However, these promises were never put in writing. 

However, Monarch now intends to build 11 new homes just behind the fifth tee of the Stonebridge Golf and Country Club. 

Can there be a right to a view?

Technically, in Canadian law, there is no entrenched “right to a view”.  In most cases, it would be impossible to make those types of guarantees.  This is often due to the fact that the developers do not own all of the surrounding land, and cannot control what a neighbouring owner may do in the future. 

In most cases when you buy a new home, the developer cannot make these kinds of guarantees, often because they do not own all of the surrounding land. Nor do they have control over what neighbouring owners might apply for in the future.

What should I do to protect myself?

If you are looking to purchase a property, and one of the selling features is the view, it is smart to look around the development, and think about what may happen in the future. 

  1. Ask yourself questions. For example, if your neighbour were to sell their land and it was developed into a condominium, or build a second storey addition.  What can happen to the neighbouring land.
  2. Do your research.  Confirm the zoning of the adjoining land, and ask whether anyone has applied to rezone the land in the area. 

With regards to the existing homeowners from the Stonebrdige Community, it remains to be seen what will happen.  Currently the Stonebridge Community Association submitted a letter to the City of Ottawa in opposition to the Monarch plan, raising traffic and safety concerns.

Depending on the outcome, the homeowners may decide to sue Monarch, which is a costly endeavour.  However, without anything in writing, it will be difficult for their case to be successful. 

Be careful.  Sales people will often talk about the wonderful view you get, however they don’t usually guarantee that these views will be there in perpetuity.

Interim Occupancy Fees for Condominiums

What are Interim Occupancy Fees

When you purchase a pre-construction condominium from a developer, there is a period of time between when you take possession of the unit and when you take final ownership of the unit.  This is known as the “occupancy period” or “interim occupancy”.  During this period you will be requested by the developer to pay occupancy fees also known as “phantom rent”.

The Condominium Act requires condominium developments to be constructed to a substantial level prior to registration of the condominium plan. Title (or ownership) of a unit cannot be transferred until the condominium is registered.

You cannot own something that does not exit.  In Ontario, a real estate property does not exist until it is registered.  Thus, with newly built condominium apartments, there are two “closings”. The “interim closing”, which occurs at the time of occupancy and the “final closing”, which occurs at the time of final registration.

Once your unit is ready and livable, you take possession of it.  So you can live in it, but technically, you don’t own it.  Therefore, you have to pay the developer “phantom rent” to live in the unit. 

How much can I expect to pay?

The amount of the occupancy fee is roughly based on the following:

  1.  Interest on Unpaid Balance of Purchase Price – for example, if you purchased the condominium for $500,000, with a $100,000 down payment, you will pay a monthly occupancy fee that is roughly equal to the interest payments on $400,000;
  2. Estimate of Common Elements Fee – this amount may be adjusted at closing; and
  3. Estimate of Property Taxes (apportioned monthly).

How long will it last?

The duration of occupancy varies.  Typically, higher floor units can expect a shorter occupancy period.  There is no way to say exactly how long the occupancy period will last.   Condominium

The occupancy period ends when the building is registered, you get title to the property, and you start paying your mortgage. 

Hiring a real estate lawyer that will protect your rights is vital. Contact Us to ensure your rights are protected.

 

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