RESIDENTIAL REAL ESTATE

A cornerstone of our practice is residential real estate closings. The number of closings we have acted upon is in the thousands. This experience brings to our clients, especially first time buyers, the comfort of knowing that whatever might happen between the signing of the Agreement and closing, their law firm has previously seen and dealt with that issue. We also know that funds are always tight around moving time. We provide a firm quote for all residential transactions which will only increase if additional work is required to close the transaction or clear your title.

However the reason for any such increase would be clearly explained to you as soon as we become aware that the work would be required. To get a quote for your deal, click here and someone will contact you, usually the same day.

COMMERCIAL REAL ESTATE

We define commercial real estate as any transaction where the parties involved do not personally live in the property being acquired or sold. These transactions are billed based on time spent.  However a rough rule of thumb is the legal costs will be roughly one-half of one percent of the value of the property being bought or sold. Normally we will have to get a clear understanding of the nature of the transaction and the work involved before we can provide you a quote. If you have a pending transaction and would like to discuss what is involved in getting it closed, please click here to access our quote and inquiry function, or call us at 905 568-3810.

SOME COMMON REAL ESTATE QUESTIONS AND ISSUES

How To Take Title To Your Home:

I am often asked by clients as to how they should take title to their home or other real estate. The basic consierations are as follows: 

If you are married, it is very common for both spouses to go on title and to take ownership as “joint tenants”. This means that upon the death of either spouse, the surviving spouse would become sole owner by “right of survivorship”. Where property passes by right of survivorship, probate is not required and no estate fees are payable on the value of the real estate.

If co-owners want their interest in the property to pass to the beneficiaries specified in their Will and not to their co-owner, they should take title to the property as “tenants in common”. In this case their estate becomes the owner of their interest in the property upon death, and not the co-owner.

There may also be situations where someone should not go on title at all. One such situation would be where a one spouse is subject to the risk of business failure or other liabilities, and one spouse is not. In this case, only the spouse that is not subject to these liabilities should go on title.

Transaction Costs Associated with Buying a Home: These expenses are due on the closing of your purchase, and are over and above the price of the home you are buying. There are basically three types of transaction costs which you must budget for on closing:

Land Transfer Tax and Government Registration Fees: On closing you must pay the Government of Ontario government a tax equal to one-half of one percent on the first $55,000 of the purchase price plus: 1% of the amount purchase price exceeds $55,000.00 up to and including $250,000.00, PLUS 1.5% of the amount exceeds $250,000.00 up to and including $400,000.00; PLUS 2.0% of the amount that the purchase price exceeds $400,000.00. For non-residential properties, such as industrial or commercial real estate, the tax rate is 1.5% for any amount the purchase price exceeds $250,000.00. Please visit the Ontario government's webpage to access their land transfer calculator.

Purchasers of homes in Toronto will also be required to pay an additional municipally assessed land transfer tax. To calculate how much additional tax you will have to pay if purchasing property in Toronto, please visit www.toronto.ca/taxes/mltt.htm.

In addition, you must pay registration fees in the amount $70.70 for each document which is registered on closing (usually two: your Deed and mortgage). These amounts must be paid on closing or you can’t register the Deed in your name. There is however an exemption from land transfer tax available to first time buyers in Ontario up to $2,000.00. If you qualify for this exemption, you would still have to pay the registration fees. For further information please visit www.nanda.ca/land_transfer_tax_refund_ontario.htm.

Legal Costs to Close: These expenses include the lawyer’s fee to close the transaction on your behalf, and the out-of-pocket disbursements incurred by the lawyer on your behalf to confirm you will require good title to the property. To obtain a quote from us to close your transaction, click here and we will provide you the same.

Adjustments on Closing: You must also adjust with the vendor of the property you are buying for certain expenses associated with home ownership. In re-sale transactions, these will include realty taxes, monthly condominium fees (you are responsible for the condominium fee attributable to the portion of the month you will be the owner) and heating oil if your home is heated by oil. The adjustment process involves prorating the expense between the vendor and purchaser based on the portion of the year each will be the owner. To the extent the vendor has overpaid relative to his or her prorated share as of closing, an adjustment will be given to the vendor for this amount on closing. To the extent the vendor has underpaid relative to his or her prorated share as of closing, an adjustment will be given to the purchaser for this amount on closing. If you are buying a new home, the adjustments will likely also include water, gas and hydro meter hook-up charges, the New Home Warranty Program enrollment fee for the property, and potentially any number of other expenses as provided by the Agreement. If you are buying a new home, you need to demand that the vendor itemize these adjustments so you can determine exactly how much money you will need on closing.

Good Faith in Contract Law: What Does it Mean? As anyone who has ever bought or sold real estate is aware, the Agreement of Purchase and Sale is the contract that governs the obligations of both the vendor and the purchaser in a real estate transaction. The Agreement of Purchase and Sale can vary from a standard form document, published by one of the local real estate boards, such as the Toronto Real Estate Board, to a lengthy and complicated agreement that would govern the sale of a multi-unit commercial property such as a high-rise office tower or a shopping plaza. However, notwithstanding the obvious differences in the complexity and length of such agreements, they are both contracts and the negotiation, execution, completion of any Agreement of Purchase and Sale is governed by the law of contract.

As a general principle, both parties to a real estate transaction are entitled to insist upon compliance with the written terms of the Agreement of Purchase and Sale. However, the courts have imposed an over-riding duty of good faith and fair dealing upon each contracting party. At a practical level, the duty of good faith places an obligation upon each contracting party to take all reasonable steps within their control to allow the contract to be completed. It is important to note however that the duty applies to the way in which a contract, right or duty is exercised. The duty of good faith however cannot be used as a means to add a non-bargained-for term to an executed Agreement of Purchase and Sale.

The easiest way to understand this legal concept is to look at some examples where it was applied. In one recent case, the purchaser signed an Agreement to purchase a home in a new subdivision. At the time the Agreement was signed, construction of the house had not yet started.  By time the house was built and ready for occupancy, it was 18 months later. The market had fallen since the date the Agreement was signed. The purchaser was looking for any excuse to get out of the contract. At closing, the purchaser’s solicitor discovered a small construction lien registered against title. The vendor’s solicitor offered to give his personal undertaking to obtain and register a discharge of the construction lien after closing, but the purchaser instructed his lawyer not to close. At trial, it was held that the purchaser acted in bad faith by not accepting the vendor’s solicitor’s undertaking, and that he was liable to the vendor for damages.

In another case, a purchaser had agreed in the Agreement of Purchase and Sale to assume an existing mortgage upon closing. However, in order to be approved for the assumption of the mortgage by the Bank that held the mortgage, certain information had to be provided to the bank by the purchaser. The purchaser refused to provide the necessary information to allow the Bank to evaluate the mortgage assumption proposal, and upon closing claimed it was not required to close the transaction because the Bank had not approved it for the assumption of the mortgage.  The court held that the purchaser acted in bad faith by not providing all necessary information to allow the Bank to evaluate the assumption proposal, and as such, the purchaser was liable to the vendor for damages.

In a third example, a purchaser required certain information from a vendor to qualify for a mortgage in the purchase of a commercial property. Specifically, the purchaser required copies of all the leases to allow its’ mortgage company to evaluate its’ application for a first mortgage. The vendor refused to provide the necessary information, and the purchaser was unable to qualify for a mortgage. On closing, the vendor took the position that because the purchaser was unable to obtain the mortgage, the vendor did not have to close. At trial, the court held that the vendor
acted in bad faith by withholding the leases, and was liable to the purchaser for damages.

There are many more examples in the case law where the duty of good faith has been imposed upon one or the other of the contracting parties in a real estate transaction. However, the theme running through all of these cases is that provisions not specifically mentioned in an Agreement of Purchase and Sale, but which are essential in carrying out its purposes, will be implied and found to bind the parties. However, before implying such an obligation, the court will look at the whole contract to determine whether the alleged obligation was within the contemplation of the parties when the Agreement of Purchase and Sale was signed. Obviously, in any particular situation, a multitude of facts must be considered before any determination can be made as to what the obligation of good faith requires of either party. However, it is clear that if either party attempts to get out of a real estate transaction by acting unreasonably, they do so at their peril.