Who Owns the Tree Growing on a Boundary?

One Tree – Two Neighbors – Big Problems!

We have all heard the old addage good fences make good neighbours.  But what about trees? Trees can sometimes make good fences, but they don’t always make for happy neighbours.

Katherine Hartley is neighbours with Hilary Cunningham and Stephen Scharper (the “Scharpers”).

Katherine Hartley wanted to cut down a mature Norway maple whose trunk grew at the boundary with her neighbours.  The Scharpers were opposed to the destruction of the tree.  Ms Hartley sought and received a permit from the city of Toronto and notified her next-door neighbour that she planned to cut down the maple.boundary tree

Ms. Hartley argues the tree is entirely on her property, is unhealthy and a safety risk.  The Scharpers maintain the tree is perfectly healthy, safe and cannot be easily replaced.

This tree has lead to a drawn out legal battle between these neighbours regarding the fate of this Norway Maple tree.

At issue in this matter is the right of the Scharpers to assert an ownership right to a Norway Maple Tree that the respondents assert straddles the property line between the applicant’s and the respondents’ back yards. More specifically, the issue is whether the Sharpers enjoy an ownership right to the tree at all and therefore whether they can be heard to object to Ms. Hartley’s intention to have the tree removed.

In May of 2013 Justice J. Patrick Moore, the presiding Judge at the Superior Court of Justice who heard this dispute decided that a “boundary tree” (a tree whose trunk straddles a property line) is jointly owned by both property owners.  Therefore, it would require the consent of both neighbours in order to cut it down.  What was most interesting is that Justice Moore found that the tree was a “boundary” tree because part of the trunk rose over the property boundary, whether or not the trunk was on both properties at ground level.

This decision was upheld by the Ontario Court of Appeal in December of 2013.

This can prove to be problematic.  It is easy to foresee how the canopy of a mature tree may extend into a neighbour’s property.  Or, how the root system may begin to creep into the neighbour’s lawn.  However, if the simple act of a tree ageing will lead to co-ownership, it is also easy to foresee disputes about how to deal with that same tree.

 

 

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. 

If a Building Permit is Not Closed – The Sale May not be Final

What does an Open Building Permit Mean for your Real Estate Transaction?

An open municipal building permit (where the city has not done a final inspection and closed the file) may be a serious title defect, and allow a purchaser to back out of a real estate transaction. 

Building Permit

A June of 2013 decision Ontario Superior Court of Canada, 1854822 Ontario Ltd. v. The Estate of Manuel Martins, 2013 ONSC 4310 highlights this issue.  In this case, 1854822 Ontario Ltd. signed an Agreement of Purchase and Sale to purchase a home from the Estate of Manuel Martins. 

Prior to closing the buyer’s lawyer discovered an open building permit for work on the property’s rundown garage. The buyer’s lawyer requested that the permit to be cleared by a city inspector prior to closing. The garage on the property had to be demolished and rebuilt at a cost of approximately $110,000.  The purchaser knew of  the condition of the garage when the agreement of purchase and sale was signed

The seller’s lawyer replied that an open building permit was not a valid title objection and said that although the permit was issued, no work was ever done and the permit did not force the buyer to perform any work.

The issue in this case was whether an open building permit, which has not been acted upon, affects title.  Justice Wilson held that an open building permit creates potential risk and exposure:

 “it is not clear that the permit can be closed quickly and easily; it is not clear what type of work needs to be done to satisfy the City that it is appropriate to close the permit; if demolition and construction is required, it is not clear what needs to be undertaken and its cost; and it is not clear whether the City will be satisfied by the work proposed or completed to make the changes or whether a work order will be issued.”

Further, Justice Wilson concluded that the open building permit creates a risk of litigation, and is not a minor defect, but rather it goes to the root of title and constitutes a valid objection to title, and the buyer is not obliged to close. 

Does an open building permit facilitate a potential “out” for buyers?

An open building permit does not have to signal the end of a deal as evidenced in the March 2013 decision in Thomas v. Carreno, 2013 ONSC 1495.  In this case, Ms. Thomas signed an agreement to purchase a house in Toronto from Ms. Carreno and Mr. Jennings.

Prior to closing, Thomas discovered that there was an open building permit for construction on the property that took place in 2007. Her lawyer wrote to the sellers’ lawyer requesting a final building inspection by the city of Toronto so that the outstanding permit file could be closed.

Acting under the terms of the purchase contract, the sellers’ lawyer arranged for a title insurance policy and a $100,000 holdback of funds to be used to repair any problems so that the deal could close.

While in this case, the deal did not close, the issue for the Court was whether the existence of the open building permit placed the sellers in default, and if so, did the fact they arranged title insurance for the buyer remedy that default?

In the end, the court ruled that the buyer was not entitled to kill the transaction once the seller had arranged for title insurance and a holdback of funds.

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

What must be disclosed to potential purchasers? Patent Defect and Latent Defect

We have all head the story of someone who purchased a house, only to have extensive renovation bills due to basement flooding shortly after closing.  The question that is often asked is what must be disclosed to a potential purchaser? 

What Information Must a Seller Disclose?

The courts have determined that what a vendor must disclose is determined on whether the information is patent (obvious) or latent (hidden). 

Patent v. Latent Defects:patent defect or latent defect

There are two categories of defects.  Patent Defect and Latent Defect. 

A Patent Defect, is an obvious flaw, that would be discovered by a superficial inspection of the property by an ordinary purchaser, for example, a hole in the wall, or a crack on the side of the home.  It is assumed that a potential buyer can observe this defect and raise any concerns as they see fit. 

The general principle here is caveat emptor, or “buyer beware.” This means that as a purchaser, if the problem would have been revealed by an inspection, (either by yourself or a licensed inspector) it is your obligating as a purchaser uncover the defect.  A seller has no obligation to advise a potential purchaser of patent defects. 

A Latent  Defect is one that is not known to either the seller or purchaser at the time of sale.  Sellers do not generally have to voluntarily disclose most latent defects, the Courts have found an obligation on sellers to disclose material latent defects of which they are aware.  Particularly those that pose a serious health or safety risk, for example, mould.  . 

A seller is not liable for any defect that they had no knowledge of. 

Sellers can be liable for misrepresenting the property, which would include lying when specifically asked about something or actively concealing known defects. 

What if the property is stigmatized, for example, if a murder or suicide had taken place in the basement of the property?  The sellers have no obligation to volunteer this information.  However, if asked directly, they are required to be honest. 

What Information Must the Seller’s Agent Disclose?

Disclosing defects is a more difficult issue for real estate agents since they are bound by their Code of Ethics. 

Real Estate agents are not permitted to knowingly make inaccurate representations of any property, nor shall they be party to any agreement to conceal facts pertaining to a property. 

Therefore, if they are aware of any defects of a property, they have an obligation to advise potential purchasers, if they are asked.  This is an important distinction.  Generally speaking,

 An Ontario Court of Appeal Decision looked at the liability of Real Estate Agents in Krawchuck v. Scherbak et al. 2011 ONCA 352.  The agent was aware that the home had plumbing issues and settling problems dating back some seventeen years.  The vendor failed to disclose these issues in the Property Seller Information Statement, and, the agent, having knowledge, failed to make the purchaser aware of the defects prior to the sale.  The Court in this case found that the real estate agent’s lack of diligence in reconciling the misleading statements in the Property Seller Information Statement amounted to Negligence.  The real estate agent was found to be 50% at fault for failing to warn the vendors of the implications of false statements, and failing to bring these issues to the attention of the purchaser. 

Note:  Property Seller Information Statements are not mandatory in Ontario.  However, as a purchaser, this form is beneficial if after the deal closes, issues arise with the property. 

As a purchaser, ask questions AND get a home inspection to protect yourself as much as possible from any unwelcome surprises.  Remember, if it is not in writing it does not exist.

Contact Us to discuss how you can protect yourself when purchasing or selling real estate. 

 

Ontario Real Estate Closing Costs

Closing Costs 

What Will I have to Pay When Closing a Real Estate Transaction

Many of my clients are surprised when they find out just how many additional closing costs there are when purchasing a home.  It’s important to plan ahead and budget for these costs prior to signing the Agreement of Purchase and Sale.

According to the Canadian Mortgage and Housing Corporation, closing costs range from 1.5-4% of the selling price of your home.  This includes the legal and administrative costs you will need to pay when your house closes.

In addition to the agreed upon purchase price, there are additional legal and administrative costs that will have to be paid on the closing of your real estate transaction.

The following is a list of closing costs that are may be incurred when purchasing real estate in Ontario:

  1. Title Insurance –  While it is optional, today, many lenders require title insurance to protect against losses in the event of an ownership dispute.  This is purchased through your lawyer, and costs approximately $150-325 for homes up to $500,000.
  2. Land Transfer Tax –  This is calculated as a percentage of the purchase price of your home, and is payable on closing.  If your property is located in Toronto, Ontario, there is an additional municipal land transfer tax.
  3. Adjustments – You will be required to reimburse the seller of the property for any pre-paid property taxes or utility bills.
  4. Home Insurance – For the protection of your home and contents.
  5. Legal Fees and Disbursements – At Frost Law, we provide a flat fee (legal fees and disbursements) to prepare the legal documentation, with no hidden fees.  This way, you know exactly to expect.  Click Here to obtain a quote, or call us at (905) 224-2077 for a free initial consultation.

Contact your local real estate legal professional at Frost Law, Professional Corporation to discuss what closing costs you can expect for you real estate transaction. 

 

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