BA, MA, LL.B.
Negotiator, Mediator, Arbitrator, Lawyer
THE PROS AND CONS OF LAWYERS RE-WRITING AGREEMENTS OF PURCHASE AND SALE:
REALTOR® are aware that too many conditions and stipulations or too many requirements in an Agreement of Purchase and Sale may “blow a deal apart”. But what about a simple condition that “the Agreement is conditional for the benefit of the Purchaser for review by his lawyer”? Some REALTOR® feel that such a clause helps protect them. Maybe! And maybe NOT. Many lawyers in Toronto and, a growing number in Ottawa, use that clause to RE-WRITE the Agreement. The re-written Agreement can “blow the deal apart”, but it also raises an important question: “What part of the (re-written) Agreement can be attributed to the REALTOR® (and be covered by the REALTOR® insurance) and what part can be attributed to the Purchaser’s lawyer?” The point of this REAL WAR STORY is “nothing yields perfect protection for anyone” and re-writes, by any person unaware of the prior give-and-take, can jeopardize agreements and transactions.
CAN A PURCHASER GET AN ABETMENT IF LAND IS SMALLER THAN IN AGREEMENT?
The Purchaser signed an agreement to buy “98 acres more or less” and waived any survey requirements. After closing, the Purchaser discovered the land to be about 87 acres and sued to get part of his money back on the basis of misrepresentation by the Vendor. The Court disagreed. The Court found that the sale was for the whole parcel of land, not a sale by acres, and that the Purchaser had, in fact, received exactly what he expected to receive. The Court added: “Nothing is more clear in conveyancing law, that after completion of the transaction, the Purchaser, who has HAD the opportunity to raise abjections as to any deficiency, agreed to what was actually conveyed and has NO remedy.” (John Beattie Farms v. Stevenson)
CAN A CONDO CORPORATION CHARGE FOR NSF CHEQUES?
The short answer is probably “yes” provided the fee is reasonable and not a penalty. The condominium corporation’s bylaws govern the assessment and collection of monthly condo fees. Bylaws often deal with what can be done as part of the collection process. Certainly, if a condo corporation incurs any cost as a result of NSF cheques, this cost can be passed on to the late paying unit owner. Also, once there is documented evidence of a unit owner being a chronic late payer, legal steps can be taken to address this as well (without having to show accumulation of 3 months of arrears)..
SURE WAY NOT TO GET THE DEAL: DROP YOUR DRAWERS:
Well, it wasn’t quite as dramatic, but Mr. Li, in mainland China, thought it felt as bad. He had purchased a $78 belt and met with a woman executive from Canada to run an immigration agency, but he failed to win the $170,000 contract when his belt popped loose. He apologized, went to the washroom to fix it and tried again. Again it popped loose in the middle of his conversation with the lady executive. He is suing, in mainland China, for $32,000 compensation. He is suing the shop that sold him the belt. And you thought only Americans frequently sued!
AVERAGE LAWYER’S FEES ACROSS ONTARIO:
On a purchase, the average legal fee charged across Ontario was $825. A purchaser, in estimating closing costs should reserve about 1.5% to 2% of the purchase price to cover: Land Transfer Tax (the largest cost), other Ontario government fees, disbursements, lawyer’s fees and adjustments to the purchase price, such as prepaid city taxes.
“One who says it can’t be done, shouldn’t interrupt the one doing it” Chinese proverb
The list of items noted below are often covered by “title” insurance. The list does not tell you what a specific insurance policy covers. The POLICY itself will outline exactly what is included and what is excluded from coverage. The list below is designed merely to be instructive as to what kinds of “things” these kinds of “policies” typically cover.
These policies typically update a survey that is one, two or many years old and even cover situations where no survey is available. (A new survey now costs between $900 and $1100 dollars. Title insurance is less that $300 dollars including all applicable taxes).
MUNICIPAL WORK ORDERS:
These orders are issued by the municipality and if one is issued prior to the effective date of the Title insurance policy, defects are typically covered. (Prior to this kind of insurance, the lawyer would have to pay a hefty fee on behalf of the purchaser to the municipality to ascertain whether any orders requiring work to be done had been issued against the property).
MUNICIPAL TAXES / SPECIAL ASSESSMENTS:
On closing, here is a typical situation. The Vendor appears to have paid all the taxes, but after closing the municipality discovers the Vendor’s cheque did not clear. The Purchaser is usually covered by Title insurance in such circumstances. Similarly, if on closing, it appeared all special assessments (for new sewers, for example) had been paid or did not exist and a special assessment issues after, the Title insurance company will probably protect the Purchaser in such circumstances.
NEIGHBOR’S NEW GARAGE OR FENCE ENCROACHES:
If after moving in, a neighbor constructs his or her garage or fence partly on the purchaser’s property, some insurance policies will cover the purchaser in those circumstances. (This is a post-policy event and although post-policy events are not usually covered, this one is likely covered.)
Whether by attendance at the registry office or through electronic registration, someone might be able to effect a fraudulent change in the ownership of a property – change the name, or put a mortgage on your Title, not authorized by the property owner. Most Title or Title insurance policies protect against fraud.
If prior to the effective policy date, someone who owned the property failed to obtain a required building permit, most policies will cover up to a certain stated limit.
PLUMBING / ELECTRICAL PERMITS:
Prior owners’ failure to obtain such permits may require subsequent work or repairs, and these are often covered by Title insurance policies.
ZONING (for SINGLE FAMILY RESIDENTIAL):
For a noncommercial property, Title insurance companies will often cover against a single residential unit not being in a proper zone. (Historically, without insurance policy, purchasers paid (through their lawyers) a fee to the municipality to get a zoning compliance certificate, which often arrived after closing.)
Most policies will defend the owner’s Title in a court case, as to that part of the case that is based on the policy coverage. They will also pay costs, legal fees and expenses incurred in that defense.
The actual policy has to be consulted for exact coverage and exclusions. The above list is merely instructive material suggesting items and events that have been covered by some Title insurers.
MAKING A CLAIM:
Purchasers must retain their policy. The policy will have a number on it. The Purchasers must provide the insurer with the municipal address of the property and the legal description which appears on the transfer or deed of the property and their policy number.
This is for limited Instructional and Informational purposes only. Information is not warranted as accurate.
Nothing herein is intended as legal or other advice and nothing herein is intended as a recommendation or endorsement.
Trademarks owned or controlled by The Canadian Real Estate Association. Used under licence.”