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Legal Blog: Real Estate

Jun
24
2020

Irving Fox Speaking at Restaurants Canada’s Rapid Recovery Series Webinar: Navigating Landlord and Tenant Agreements

Posted in Real Estate, SNF News

On June 10, 2020, Irving Fox, the head of our business law and commercial real estate groups, spoke at Restaurants Canada’s Rapid Recovery Series: Navigating Landlord and Tenant Agreements. Irving discussed issues concerning termination of a commercial lease and distress. More specifically, he addressed applicable legislation, types of defaults, landlords’ remedies, and tenants’ options.

A screenshot from the Restaurants Canada website on the Rapid Recovery Series: Navigating Landlord and Tenant Agreements

You may find the presentation here.

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Jun
01
2020

Realty Default

Real estate default cases keep coming. The issues are often the same: who breached, who was ready willing and able to close, was repudiation accepted, what happens to the deposit?

A key being placed in a hand.

Azzarello

The case of Azzarello v. Shawqi 2019ONCA820 had all of the issues, as well as an unusual one dealing with the deposit. Purchaser was unable to close the transaction and requested an extension, which was given. On the extended closing date, purchaser requested a further extension. Vendors agreed, but on terms that, if not met, purchaser would be in default of the agreement. Purchaser did not respond. Vendors did not tender. Ultimately, vendors re-sold the property at a significant loss.

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May
14
2020

Condo Obligations

Mohamoud v. Carleton Condominium Corporation No. 25, 2020 Ont SCJ

A unit owner commenced an application against a condo alleging that the condo had failed to meet its statutory obligation to maintain and repair the condo’s common elements and had acted towards her in an oppressive or unfairly prejudicial manner. The unit owner complained that the condo’s two roof-top exhaust fans were making a vibrating noise that caused her discomfort. Over 5 years, the condo had attempted to discern the problem and maintain the fans to satisfy the owner and spent approximately $50,000 on its efforts. Ultimately, it replaced the fans which, for the unit owner, reduced the noise to a tolerable level. The judge noted that the condo was not expected to be perfect, but only to act reasonably, and it did so. She dismissed the application and awarded the condo $70,000 in costs. The unit owner had rejected the condo’s offer a couple of months before the hearing of the application to have the application dismissed without costs; big mistake. As an aside, the judge held that the condo’s lawyers should have provided their dockets on the costs hearing, redacted as necessary for privilege, but their failure to do so was ameliorated because their claimed fees and disbursements were less than the unit owner’s.

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Apr
26
2020

Contract Frustration

Perkins v. Sheikhtavi 2019 Ont CA

In the height of the 2018 real estate boom, vendor and purchaser agreed to a sale. The federal government then changed its lending guidelines and property values declined significantly. The purchaser was unable to obtain financing to close the transaction. The vendor re-sold the property at a $620,000 loss. The purchaser claimed that the contract had been frustrated. The court held that frustration applies only when a supervening event alters the nature of the parties’ obligations to such an extent that performance would be radically different from what was originally agreed to be done. The court noted that the purchaser could have made the agreement conditional on financing and did not; the new government policy did not force the purchaser to do something radically different and the contract was not frustrated.

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Apr
26
2020

Tarion Closing Extensions

Ingarra v. 301099 Ontario Limited (Previn Court Homes) 2020 Ont CA

Neither purchaser nor vendor of a new home was ready to close on the closing date. They agreed to postpone it for 4 days and then an additional two days. The purchaser was still not ready to close and the vendor, who was ready to close, terminated the agreement and claimed the deposit. The purchaser relied on the Tarion Addendum, which called for an extension of 90 days, but allowed the parties, if they wished, to decide on their own closing date, as they did. The addendum stated, however, that the parties’ decision as to a new closing date was voidable by the purchaser – if the purchaser gave notice before the new set closing date. In this case, the purchaser did not notify the vendor that he was voiding the new closing date. Accordingly, the agreed closing date was still operative and the vendor terminated properly. The court then savaged the Tarion Addendum as a trap for the unwary.

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Apr
26
2020

Constructive Trust, Express Trust

Serbian League of Canada v. Stojanovich 2020 Ont SCJ

Three members of a charitable organisation purchased property in 1964 for the use of the charity. In doing so, they paid $3,000 and gave a mortgage of $15,000. Approximately 54 years later, the charity wanted to sell the property and realised that title was still in the name of the individuals, who were long since dead. Their estates claimed that the property was theirs. The judge found that, aside from the payment of the $3,000, the individuals paid nothing towards the mortgage or improvements to, or upkeep of, the property. The judge held that there was no bare trust or express trust. Merely because the deed had the words “in trust” appearing in it was not sufficient to satisfy the necessity for certainty of object; no one had been able to give any evidence as to the intention of the parties at the time the property was purchased because the individuals who purchased it were dead. The court also held that the trust did not comply with section 9 of the Statute of Frauds because there had to be evidence in writing signed by the owners (i.e. the individuals) evidencing the trust. The judge did find that there was unjust enrichment and, in this case, a constructive trust. Since the property had been sold and the sale proceeds held in trust, the judge decided that the estates should receive 25% of the sale funds and the charity the remaining 75%.

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Mar
02
2020

Arbitration

Deco Homes (Richmond Hill) Inc. v Mao 2019 Ont SCJ

Agreement of purchase and sale for a new house contained a Tarion Addendum. One section noted that disputes relating to the termination of the agreement under section 11 were to be submitted to arbitration. Section 11 seems to indicate that it did not apply to a breach of contract by the purchaser. The judge stayed the action in favour of arbitration because, in addition to the developer’s cause of action relating to breach of contract, the purchaser had alleged matters that came within section 11.

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Jan
27
2020

Mitigation

Gao v. Khan 2019 Ont SCJ

After default, purchaser offered to again purchase the property, but forfeit only $25,000 of his original $65,000 deposit. The vendor refused, sold the property for a $5,000 loss, and claimed the entire deposit of $65,000. Purchaser claimed that the vendor did not deal with the agreement in good faith (i.e. he should have accepted purchaser’s offer). The court held that an obligation to perform a contract in good faith does not mean that the party must accept an offer for less money than he is seeking for his property.

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Jan
27
2020

Deposit

Azzarello v. Shawqi 2019 Ont CA

Purchaser failed to close and vendor sued for damages and the deposit. The trial judge awarded the deposit in addition to the damages. The Court of Appeal held that when an agreement only calls for the deposit to be credited to the purchase price on completion, the measure of damages is based on the difference between the purchase price and the ultimate lower sale price; accordingly, the intent of the agreement is that the deposit is applied to the purchase price whether received on completion or as damages. The court gave credit for the deposit against the damages. Purchaser had also argued that vendor ought to have accepted his offer to purchase the property for a 10% reduction in the purchase price. The court held that the duty to mitigate does not oblige a vendor to accept an offer from a defaulting purchaser for less than the agreed price and then have to sue the purchaser for the difference from the original agreed price.

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Jan
02
2020

Damages Mitigation

Arista Homes (Boxgrove Village) Inc. v. Lakhany 2019 Ont SCJ

Purchaser repudiated a house sale. The developer vendor did not attempt to re-sell the house aggressively because it might have caused difficulties with other buyers in the development whose purchases had not yet closed. After an appraisal obtained by the vendor, the parties agreed that the value of the house on the closing date was $800,000 rather than the sale price of $1,204,000. The vendor claimed the difference of $404,000 in damages and, in addition, forfeiture of the purchaser’s $100,000 deposit. The vendor made no claim for the house’s carrying charges after the closing date. The court held that the damages were $404,000 and that, given that the value of the property as at the date of closing was agreed, there was no necessity to mitigate. Indeed, the defendant had the onus to show that the plaintiff’s mitigation would have resulted in the sale of the property at a price greater than its value on closing and had supplied no evidence in that regard. The vendor tried to retain the deposit, in addition to the damages, relying on a clause that noted that the deposit monies were deemed not to be partial payments. The judge refused to do so; merely because the deposit was not a partial payment did not mean that it was not be credited towards the purchase price or the damages.

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