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Legal Blog: Real Estate

Aug
24
2020

Inspection

Pordell v. Crowther 2020 Ont SCJ

A fire occurred in a house before the closing of an agreement for sale. The agreement was based on the standard OREA form of contract. It stated that the buildings remain at the risk of the seller and that the seller holds all insurance policies in trust for the parties as their interests may appear. It gives buyer the right to terminate the agreement or complete it and take the insurance. Notwithstanding the agreement, no insurance was available because seller had left the property empty for more in 30 days. Buyer attempted to view the damage and obtain information regarding the repairs that seller made. Seller stonewalled buyer and, accordingly, buyer refused to close. The judge ordered the return of buyer’s deposit.

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Aug
05
2020

Rectification

2484234 Ontario Inc. v. Hanley Park Developments Inc. 2020 ONCA 273

Purchaser claimed rectification of an agreement relating to an easement over part of land necessary to allow access to other lands that purchaser had purchased from vendor.

The Court noted that “Rectification is an equitable remedy available to correct a document that fails to accurately record the parties’ true agreement. It is not available to correct an improvident bargain or to fill a gap in the parties’ true agreement, even when the omission defeats what one (or both) of the parties was seeking to achieve. As an equitable remedy, it is also not available when the party seeking it does not have ‘clean hands’.”

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Aug
01
2020

Frustration

Once the COVID-19 dust settles, we are going to hear a lot more about the frustration concept. However, like all court cases, it takes one to three years before we start seeing some decisions. Given that the courts are operating at a significantly reduced capacity, even this time estimate could be optimistic. Accordingly, for the moment, we will have to make do with cases arising out of circumstances that took place three years ago. One such case is Perkins v. Sheikhtavi, 2019 ONCA 925.

A pen on the signing page of a contract.

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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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