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www.Pinskylaw.ca Business and Intellectual Property Law Forum 2018-03-04T15:56:11-05:00 http://www.pinskylaw.ca/forum/feed.php?f=33 2018-03-04T15:56:11-05:00 2018-03-04T15:56:11-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=633&p=667#p667 <![CDATA[Residential Real Estate • Easiments]]> 1. INTRODUCTION

There are basically three kinds of non-express easements created by operation of law. The first is “prescriptive easements", the second is “implied easements” and the third is “easements by estoppel”.

In Ontario there are two ways a prescriptive easement can be created. The first is by operation of the Real Property Limitations Act and the second is by the operation of the doctrine of modern lost grant. The test for creating prescriptive easements under the Real Property Limitations Act and the doctrine of modern lost grant is identical. The test is exactly the same. It is actual use for 20 years combined with acquiescence by the servient owner. The use cannot be secret or hidden, it cannot be by force, it cannot be by permission and it cannot be interrupted. Once established it is as good an easement as an express easement and cannot be lost by non-use but only by release, implied release or abandonment.

The only real difference between the a prescriptive easement under the Real Property Limitations Act and a prescriptive easement under the doctrine of lost grant is the 20 year period runs backward from the date the claim (statement of claim or application to establish the right) is filed for prescriptive easements established under the Real Property Limitations Act and the doctrine of lost grant runs forward for any 20 year period. As such, if there is a break in use at any time during the twenty years before the court proceeding is instituted you cannot use the Real Property Limitations Act. But if you can establish use for any 20 year period, then it does not matter if there has been break in use thereafter.

The tests for prescriptive easements are similar to the test for establishing adverse possession. In adverse possession exclusive and open use of your neighbour’s land for 10 years gives the trespasser rights akin to ownership. These rights arise by operation of the Real Property Limitations Act as well which prevents the real owner from obtaining possession of his property after exclusive use for 10 years by the trespasser.

One difference between adverse possession and prescription is that in prescription, rights are acquired (an easement) but the servient owner continues to own the fee simple subject to the easement but in adverse possession, the true owner’s fee simple rights are lost forever.

The fundamental concepts in easement law have not changed in the last 150 years and no legislative changes have occurred to alter the fundamental concepts. The law is in many ways esoteric, complex, steeped in feudal jargon and very fact driven. While the principles are generally settled, the application to particular facts is unpredictable and often surprising. However, unlike some areas of law, justice often prevails by twisting or massaging the facts to fit the fundamental principles. A solid knowledge of easement law is essential in a conveyancing practice. The following problems occur with surprising regularity

(a)the travelled “road” leading to the property from the public highway doesn’t follow the deeded access;
(b)the underlying servient lands do not reflect the easement;
(c)there is no deeded access only use over a lengthy period of time.
(d)the original owners of adjoining property have an understanding arising out of friendship or family relationships which is disputed by subsequent owners;
(e)wells are shared without documentation;
(f)water pipes run over adjoining property without documentation;
(g)the existence of woods or rugged terrain makes the demarcation of property lines unclear;
(h)cars are parked from time to time on deeded easements or even adjoining property;
(i)seasonal uses may be carried on without knowledge of the servient owner;
(j)absentee ownership or occasional use leads to misunderstandings when the use becomes permanent; and
(k)licenses are miscast as easements or easements miscast at licenses.

2.KINDS OF EASEMENTS CREATED BY COURTS

There are many different kinds of easements that the Courts will recognize in the absence of an express grant. Basically, if the parties could have created the easement by express grant, the Court will recognize the same kind of easements through implication, prescription or estoppel. The following are some of the easements that the Courts have recognized absent an express grant:

(a)access easements, rights of way, driveway easements;
(b)access easements to the water;
(c)parking easements;
(d)easements for waterlines or pipes;
(d)hydro or utility easements;
(e)easements for wells and septic systems;
(f)maintenance easements;
(g)easements for storm or sanitary sewers.
(h)support easements;
(i)telecommunications easements:
(j)recreational easements (i.e. sharing or access to recreational facilities);
(k)fire escape easements; and
(l)facility repair easements.

The categories or kinds of easements that can be created by operation of law are open to meet the changes in society and the needs of landowners. There appears to be no restriction on the kinds of easements that the Courts can create. This is especially true where creative easements are necessary to make projects function properly. Unfortunately, the criteria for determining if a use is an easement or not (as opposed to the kinds of easements once the criteria are met) is fixed and cannot be expanded.

It is fair to say that express easements being creatures of contract can be far more sophisticated and complex than easements created by the Courts. While the Courts can create any kind of easements, it cannot create the complex relationships between dominant landowner and servient landowner that express easements can create. Nor can the law deal with complex issues relating to repair, relocation, maintenance and the termination of easements that can be dealt with in an express grant.

Easements created by the Courts must still contain the four specific characteristics that make a right to use land an easement. If the right does not fall squarely within these four characteristics of an easement, then it is not an easement and does not get the fundamental benefit that makes easements so valuable: the right to bind the land without privity of contract. It should be noted that there is some disagreement in the cases and in the legal texts as to whether in fact the categories of easements are closed or not. While new forms of property interests cannot be created, it is generally accepted that so long as the four characteristics of an easement exist, the categories or kinds of easements are open to the imaginative judge.

3.QUALITIES OF AN EASEMENT CREATED BY THE COURTS

The English Court of Appeal decision in Re Ellenborough Park sets out the four essential elements of an easement whether express or created by the Courts. An easement, whether by implication, prescription or estoppel, must meet each of these criteria.

The tests identified in Re Ellenborough Park are:

1.there must be a separate dominant and a servient tenement;
2.the right claimed must accommodate the dominant tenement, that is, be connected with its enjoyment and for its benefit;

3.the dominant and servient owners must be different persons; and

4.the right claimed must be capable of forming the subject matter of a grant.

If the right claimed does not contain these four elements, it is not an easement but something less than an interest in land that does not bind subsequent owners of the servient tenement. It will likely be a license terminable “with” or “without notice”. Alternatively, if the use granted to the dominant owner is exclusive and the servient owner is excluded, it could be either a lease or even a grant of the fee simple.

4. WHAT IS A RIGHT-OF-WAY AND IS IT DIFFERENT FROM OTHER EASEMENTS ?

A right of way is merely an easement for access to the property. As such, it complies with all of the rules and restrictions discussed regarding easements generally. Rights of way however seem to have a special place in the caselaw arising out of the fact that access to land is of such fundamental importance. As such, a great deal of the caselaw dealing with easements by implication, necessity or prescription involve rights of way. In addition, there is a great deal of caselaw dealing with ancillary rights related to rights of way. Notwithstanding that the following matters relate specifically to rights of way, it is the writer’s position that these factors should also apply to other easements in the appropriate circumstances.

1.The obligation to construct and repair a right of way falls on the owner of the dominant tenement who receives the benefit of the right of way.

2.A right of way includes such ancillary rights as are necessary to enjoy the right of way. For instance, such reasonable access to a right of way must be provided in order to construct the roadway and where necessary, the right to excavate the right of way to a reasonable grade is implied.

3.The servient tenant may maintain gates across the right of way to preclude use by others provided that the owner of the dominant tenement has full use of the right of way. This is generally satisfied by providing a set of keys to the owner of the dominant tenement.

4.On a severance of the dominant tenement, the benefiting rights of way over the servient tenement is attached and benefits each of the severed lots. This general rule, however, may be limited where the benefit of the right of way is intended to benefit some but not all parts of the dominant tenement.

5.The owner of the dominant tenement may increase the use or burden of a right of way provided it is not a radical change to the character or the use of the right of way. However, this rule will only apply once the prescription period has run or the equitable easement has been established. This means for instance, that a right of way for pedestrian traffic may not be used for vehicular traffic. However, a right of way benefiting a single family home may be increased to benefit others using the property although at some point, if access is provided generally to the public or for commercial purposes, the use of the right of way may go beyond what is considered reasonable. The Courts are also more likely to restrict the use of a prescriptive easement or an equitable easement to the actual use which established the right and not permit the same increase in use that might be permitted for an express grant.

6.Where a right of way is created to benefit a residential property, it may not be permissible to tear down the residential building, build a commercial establishment and use the right of way for commercial purposes.

7.The law has taken the position that the right of way benefits the dominant tenement only and therefore cannot be used by any other person other than the owner of the dominant tenement even where the owner of the dominant tenement has granted a right of way over its own property to an adjoining landowner.

8.Where the owner of the lands (“Parcel A”) adjoining the dominant tenement leased part of the dominant tenement for the purposes of parking motor vehicles and constructing a garage, to benefit the use of Parcel A, the Ontario Court in Jengle v.Keetch concluded that the use of the dominant tenement was a bona fide use and was not really intended as a cross-over of the dominant tenement to get to Parcel A and therefore a right of way benefitting the dominant tenement could be properly granted by the tenant of the dominant tenement.

9.As a general rule, the holder of the dominant tenement has the right to improve the easement in order to utilize it. This includes the implied right to enter on the servient tenement to do so.

10.The owner of the servient tenement has the right to do anything on the right of way that the servient tenement owner wishes to do provided it does not interfere with the use of the right of way by the dominant tenement landowner. For instance, the servient tenement landowner cannot construct a building on a right of way which has the effect of preventing the use of the right of way. Even if the use by the servient landowner did not interfere with the use of the right of way if it prevented the right of way being repaired or maintained, the use by the servient landowner would be prohibited.

11.The dominant tenement landowner cannot require the servient tenement landowner to repair an easement. However, if the use by the servient landowner effectively puts the right of way into disrepair, the dominant tenement landowner would be entitled to demand that the easement be repaired.

12.The dominant tenement owner cannot force the servient tenement owner to pay for maintenance of the right of way. The obligation to maintain and repair is solely that of the dominant tenement landowner. Interestingly, the failure of the servient tenement landowner to pay realty taxes cannot give rise to a claim by the dominant tenement landowner even where the failure to pay realty taxes could result in the property being sold free of the easement. In these circumstances, the owner of the dominant tenement has the right to pay the realty taxes and charge them back to the servient tenement landowner or maintain a first charge on the servient lands in the place of the City. The problem of course is in obtaining the information as to the status of the realty taxes on the servient tenement.

13.As a general rule, the dominant tenement landowner cannot block a right of way for his benefit where the right of way is for passage or egress or ingress. For instance, motor vehicles cannot be parked in the right of way. The servient tenement owner cannot be precluded from using the servient tenement. Temporary parking, however, may be permissible.

14.The owner of the dominant tenement cannot require the servient tenement landowner to provide an alternate easement where the easement is blocked or flooded unless caused by the activity of the servient landowner.

15.The owner of the servient tenement does not have the right to substitute another location for the easement where the location of the easement is impractical or where the easement is a burden on the servient tenement landowner. Nor can the dominant tenement landowner require a substituted easement where the easement is impractical.

16.The responsibility for injury to a person on the easement lands falls upon the owner of the dominant tenement as the occupier or user of the easement. This rule, however, should not generally be relied upon and the owner of the servient tenement should ensure that liability insurance is available. In is likely in the event of injury to a person using the right of way that both the Dominant Owner or the Servient Owner would be the subject of a lawsuit. This issue will depend upon who the occupier is. The definition of occupier in the Occupier and Liability Act is a person who is responsible for control over the condition of the premises or the activities therein carried on or control of a person’s use of the premises notwithstanding that there is more than one occupier of the premises. The definition of premises in the Occupier and Liability Act means lands and structures and in accordance with this rule, it would apply to a right of way. The issue then is whether the dominant tenement landowner or the servient tenement landowner is the person responsible for the control of the condition of the right of way. Since the dominant tenement landowner has the obligation to repair, it would appear that the owner of the dominant tenement will be responsible for any damages to occupiers on the easement.

Statistics: Posted by Pinskylaw.ca — 04 Mar 2018, 15:56


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2018-03-04T14:27:15-05:00 2018-03-04T14:27:15-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=632&p=666#p666 <![CDATA[Residential Real Estate • Tax Considerations After Purchase of Rural Property]]> 1. Capital Gains

The income tax implications of purchase or sale of cottage properties and farm properties - particularly to family members - can be significant. Such dispositions can trigger substantial capital gains tax liability in the hands of the transferor. The purchaser and/or the vendor should discuss any such consequences or implications with their accountants. The Canada Revenue Agency also supplies Guide, numbered T4003, dealing with farming income and capital gains.

2. Harmonized Sales Tax (HST)

1. Personal use Property

Sales of personal use property by an individual or a trust are exempt from HST. "Personal use property" includes any real property other than a residential complex, capital property used primarily in a business or real property sold or leased in the course of a business. Most vacation properties and hobby farms qualify as a personal use property.

2. Farmland

Generally speaking, sales of farmland previously used by the seller in a farming business are taxable transactions, unless an exemption applies. For these purposes, "farmland" means land that is regularly used by a person for the purpose of gaining or producing income from a farming business carries on by him or her. It may also include vacant land such as a bush area that may not be used directly in a farming business, along with any buildings that form part of the farmland. Where the land is used by the buyer in a farming business, the buyer is eligible for an input tax credit. However, if the land is sold as an ongoing farming business, (and provided both the buyer and seller agree and make an election accordingly using Form GST44 , no HST will apply. In such cases, the buyer must acquire possession or use of all or substantially all (90 percent or more) of the property required to carry on the business being purchased. The election is not available in situations where the seller is registered for HST, but the buyer is not. If the sale of farmland includes a residence or house, then the sale is viewed as two separate sales - (1) the portion that includes the house plus additional land needed for the use and enjoyment of it; and (2) the remaining portion of the land. Because the sale of used residential housing is generally exempt from HST, the rules respecting HST on farmland sales pertains to the remaining portion of the land only.

Under the Excise Tax Act, there are scenarios which are exempted from HST. They are:

- Sale or transfer to a person or former spouse/common-law partner. The farmland must be acquired from a relative who was in the business of farming prior to the transfer, and must have been purchased for the buyer's individual use and enjoyment. The farmland may not have been used in any other commercial activity immediately prior to the transfer. In some circumstances, the exemption can cover sales by individual farmers to his or her spouse, or a conversion of land from its use in the business of farming, to personal use by the same owner.

- Sale by a partnership, trust or corporation to a partner, beneficiary, shareholder or related person. This exemption covers those sales where, immediately prior to the transfer, all or substantially all of the property belonging to the partnership, trust or corporation is used in the business of farming. The purchasing partner, beneficiary, shareholder or child of that individual must be actively engaged in the farming business. For these purposes, "all or substantially all" means 90% or more of the property.

- Sale or transfer of personal use property by an individual or a trust. This exemption only applies where the land that is sold or transferred that has not been primarily in a farming business. The exemption does not apply to land held by corporations or partnerships, or to land previously subdivided or severed into more than two parts, except where those parts were sold to a related person, former spouse or common-law partner for their own personal use and enjoyment.

Assuming the farmland is not eligible for one of the available exemptions, the process for collecting the applicable HST will vary according to the circumstances, Specifically:

- If the farmland is being sold to a person who is registered for HST, the seller is not required to collect the HST generated by the sale. Rather, the buyer will report the HST payable and will claim an offsetting income tax credit in the first HST return after the sale has closed. In such circumstances, it is therefore prudent for the seller to confirm prior to closing that the buyer is officially registered for the HST. Buyers who are using 90% or more of the farmland in a farming business are eligible to claim the full input tax credit.

- If the sale is to a buyer who is not registered for the HST, then the seller must collect and remit the HST to the Canada Revenue Agency. If the land be used in a farming business, the buyer can then register for the HST, and can claim an input tax credit in order to recover the HST that been paid on the purchase and sale. Generally speaking, Canada Revenue Agency will back date an HST registration for up to 30 days in order to facilitate the buyer's recovery of the HST paid in such scenarios.

3. Land Transfer Tax

A with other kinds of real estate transactions, the purchase and sale of farmland is subject to the provisions of the Land Transfer Tax Act, which imposes a tax obligation tied to the value of the property. Previously, different considerations applied so that non-residentbuyers were subject to a higher rate, but this distinction has now been removed. In this same vein, the Non-Resident Agricultural Land Interests Registration Act - which previously required non-residents to file a registration report within 90 days - has been repealed, along with its General Regulation which had authorized the collection of relevant information.

Statistics: Posted by Pinskylaw.ca — 04 Mar 2018, 14:27


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2017-09-23T16:05:13-05:00 2017-09-23T16:05:13-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=629&p=663#p663 <![CDATA[Residential Real Estate • Surveys]]> 1. Introduction

A buyer in a real estate transaction wants to ensure that his or her client receives a good and marketable title to the property purchased. This is accomplished by a search of title. Title consist of two components (a) chain of title or quality, and (b) physical extent of title. A search of title, however, will not reveal the extent of the title i.e. quantity and boundaries of the land. To determine this, reference must be made to a survey which represents the surveyor's opinion as to the extent of the title.

As a preliminary point, vendor should be aware that where doubt exists as to the true location of a boundary, pursuant to the Boundaries Act, an application in the form specified by the Director of Titles may be made for a survey or to obtain confirmation of the boundaries. The application may be made by the landowner, by a surveyor with the landowner's consent, by the relevant municipal council, or by the federal or provincial Surveyor General.

In O'Brien v. Morrison [2002] O.J. No. 1162, the appellant appealed from the decision of the Deputy Director of Titles under the Boundaries Act, confirming the westerly limit of the respondent's property, and the easterly limit of the appellant's property, to be along a former fence rather than in accordance with the courses and distances in the deeds to the respondent and her predecessors. The Divisional Court dismissed the appeal, holding that the findings of fact of the Deputy Director should be accorded a high degree of difference. See also Little v. Serre, [2005] O.J. No. 57, rev'g [2002] O.J. No. 5865 for a discussion of the hierarchy of evidence that must be applied by surveyors to re-establish a boundary.

2. Re-Establishing Original Monuments and Boundaries

The surveyor's objective is to determine the boundaries of the land by obtaining the best evidence possible with respect to the location of the original monumentation. The surveyor must conduct research for the best evidence, including and examination of the title documents for the land and any adjoining lands, reviewing any previous plans of survey and accompanying notes made by the surveyor or other surveyors for the subject land and adjoining lands, and reviewing any other applicable documents. the surveyor must also attend at the property and examine any visual evidence which may be available. In this regard, the surveyor must consider the best evidence and re establish the boundary on the ground in the location where it was first established, and not where it was necessarily described, either in the deed or on a plan. Survey law has developed a hierarchy of evidence from most compelling to least compelling as follows: (1) natural boundaries; (2) original monuments; (3) fences or possession that can be related reasonably back to the time of the original survey; and (4) measurements (as shown on the plan or as stated in the metes and bounds description) Nicholson v. Halliday, [2005] O.J. No. 57.

3. Preparation of Survey

When the surveyor has completed his or her search , field work monumentation and measurement, the surveyor will prepare a plan in accordance with the requirements of the Surveys Act and Regulations, which will show the extent of the title at that point in time. the plan will be a compilation of the surveyor's research. Accompanying the drawing will be a surveyor's report pointing out any anomalies. By regulation the surveyor is obligated to point out on the survey and/or the report all problems and issues which have been revealed, including any encroachments on the property and onto adjoining properties.

Although the term "survey" is not defined by legislation, a survey is generally understood to consist of an illustration prepared by a land surveyor depicting the boundaries of a property. For a document to be called a "survey" - it must be prepared by a qualified Ontario Land Surveyor under Surveys Act, and must consist of two parts: (1) a plan showing the physical improvements on the land and any registered easements in relations to boundary lines; and (2) a written report outlining the property's details. It will be the result of the qualified land surveyor actually attending at the property, conducting through measurements, conducting a search of title, and conducting a search for registered easements and plans relating to the location of the property boundaries. The survey must be embossed with the surveyor's seal to be considered an original survey. Similarly, "cadastral surveying" has been held to include the marking of corners and the staking of property lines.

Although the Surveys Act does not contain a definition of the "survey" or plan that does not meet the requirements set out in the Act is not a survey. Older plans may not meet these requirements or may be a "plan showing", a "sketch" a site plan showing the proposed site of the building or a "compiled plan". What must be kept in mind is that not all drawings are plans, and not all plans are plans of survey. A survey may only show the boundaries of the property and not the location of any buildings thereon. Alternatively, the surveyor may prepare a building location survey, which is not required to show the monumentation of all corners of the property. The surveyor must identify the type of drawing that he or she has prepared and the land registry system in which the subject land is found on the face of the drawing. The surveyor will also show his or her name, the scale of the drawing, a legend, the bearing of the North, and will indicate the reference used for the bearing (currently astronomical bearings are used).

4. Types of Surveys and What they Disclose

The type of survey usually obtained in a purchase of a property in an urban area is a plan showing building location. Although this type of survey is not required by the regulations to include monumentation for all four corners of the property, such a survey should show the frontage, depth and area of the lot, the location of all buildings or other structures on the property and their respective setbacks, the location of any fences or hedges on the property, any encroachments onto the property or to any adjacent properties, any discrepancy between the boundary on the ground and the measurements and distances set out in the deed, any rights-of-way or easements to which the property is subject or of which the property has a benefit.

For vacant property or in rural areas, a plan of survey showing the boundaries of the property and the monumentation of all corners of the property may be of more assistance. What type of survey is obtained will depend on the purpose of which the survey will be used. A surveyor prepares various other types of surveys or plans, including plans of subdivision, reference plans, Certificate of Title plans and condominium plans. Defects that are disclosed by an updated survey allow a prospective buyer to evaluate whether or not he or she wants to conclude the deal. It is intended to supply the potential buyer with information before the deal closes.

Note that a survey is not equivalent to title insurance. The survey is a fundamental tool for informing the potential purchaser whether the deed accurately reflects the property to be purchased. The survey tells the buyer what he or she is getting and - more importantly - not getting. Title insurance may indemnify a party from defects in title, but it does not guarantee title or cure defects that would be revealed by the work of a qualified surveyor. the defects that are revealed by an updated survey allow the prospective buyer to determine whether or not to proceed with the deal.

5. Survey Clauses in Agreements of Purchase and Sale

If the purchaser consults the solicitor prior to the execution of an agreement of purchase and sale, the solicitor must suggest that a provision be added to the agreement requiring the vendor to provide at his or her own expense an up-to-date survey of the property showing location of all buildings, structures and other improvements within a specified period of time. This time period should be sufficient to allow the survey to be reviewed and submitted to the municipality for review and a response to be received prior to the date for submitting requisitions. Note that an increasing number of municipalities do not review any survey submitted to them with building and zoning inquiry.

The purchaser must appreciate the benefits of an up-to-date survey and the risks of not having a survey or of using an old survey. The ramifications can be serious: for example in Holmes v. Walker, [1998] O.J. No. 4725 the purchaser - who had not obtained an updated survey for closing - was not allowed to rescind the agreement even though almost 100% of the cottage she bought was actually located on a municipal road allowance. Note that title insurance is not a substitute for obtaining a proper survey. While title insurance may indemnify a party from defects in title, it does not guarantee title or cure defects that could have been revealed by a qualified land surveyor.

If the agreement does not obligate the vendor to provide an up-to-date survey, the first step is to determine exactly what survey will be provided, if any. The standard wording of the universal agreement of purchase and sale put out by the Ontario Real Estate Association stipulates in clause 12 only that the vendor will provide any survey in his or her "possession and control", and that any survey within the vendor's control will be delivered "if requested by purchaser" as soon as possible and prior to requisition date.

In order for the purchaser to understand the significance of his or her decision whether or not to bear the experience of an up-to-date survey, the purchaser should first understand what a survey is and what it may tell the purchaser about the property. Problems relating to encroachments, boundary disputes, the location of fences, adverse possession problems, the contravention of setback requirements or other violations of the zoning by-laws are just some of the deficiencies or problems which could be revealed by a new survey. If these problems are discovered and requisitioned within the time period for submitting requisitions, the vendor will be responsible for resolving them. However, if the purchaser only discovers the problem at a later date, either in a dispute with a neighbour over a boundary or when the purchaser sells the property, the purchaser will not have recourse to the vendor and may be required to expend monies or make application to resolve the problems or may have difficulty selling the property because of problems revealed in the survey.

An updated survey cannot necessarily be dispensed with simply because title insurance has been purchased in respect of the particular property. Although title insurance guarantees good title as of the date of closing, it does not protect the owner from damage claims resulting from misplaced border fences, party walls or retaining walls. Moreover, without a survey, a title-insured purchaser remains uninformed as to exactly how farther existing buildings are from the property lines, nor whether certain intended additions to the property (such as garages or pools) can be added after the deal has closed.

6. Review of the Survey

The survey, whether old or new, must be examined carefully by the solicitor on receipt. the solicitor should compare the survey with the description in the vendor's deed and with the dimensions set out in the agreement of purchase and sale to determine any inconsistencies. Any other problems revealed by the survey should be noted and requisitioned. The survey has to be reviewed to identify any problems with it. The location of easements and rights of way on the property may effect the purchaser's use and enjoyment of the property and therefore should be noted by the purchaser.

As the purchaser has, in most cases, inspected the property, this survey review should be used as an opportunity to verify what the purchaser is purchasing. In addition, the purchaser may be able to pint out any discrepancies between what is shown on the survey and what he or she saw on the ground. this is especially important when the purchaser is relying on an old survey together with the vendor's declaration that there have been no external additions, alterations, or improvements on the property since the date of the survey.

A careful review of the survey at an early stage may enable the parties to arrive at a mutually satisfactory solution to any problems which may arise. The survey may reveal an encroachment onto neighbouring property, over a right of way, onto the street, or on public utilities easements. An encroachment onto neighbouring property or by the neighbouring property owner onto subject property may signify that the vendor or the neighbour, as the case may be, has acquired possessory title to the strip of land on which the encroachment exists by "adverse possession". Adverse possession may have been obtained where the encroachment has existed for ten years or more with the knowledge of but without the permission of the actual titleholder and where the possessor has used the land exclusively with the intention of excluding the title holder.

Statistics: Posted by Pinskylaw.ca — 23 Sep 2017, 16:05


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2017-09-21T15:25:16-05:00 2017-09-21T15:25:16-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=627&p=661#p661 <![CDATA[Residential Real Estate • Real Estate FAQ]]> 1. What is an Agreement of Purchase and Sale?

An Agreement of Purchase and Sale is the contract for the purchase and sale of the real estate property you are interested in selling or purchasing. The Agreement sets out the purchase price, the closing date and the length of time the purchaser will have to examine the title of the property to make sure that they are getting a property without any title problems. A purchaser may include conditions in the Agreement of Purchase and Sale such as financing as the purchaser may not have the cash to complete the purchase and will not want to agree to purchase the property until they have obtained confirmation from a lender that they will in fact have the money to complete the purchase. They may also want to have the property inspected prior to waiving their conditions and making the Agreement firm. In making the Agreement firm and binding they are confirming that they will proceed to complete the transaction in accordance with the terms of the Agreement of Purchase and Sale. As indicated above the Agreement of Purchase and Sale may contain conditions such as financing, confirmation that you can insure the property or to have the property inspected. If you have a concern with respect to the property you can make it a condition. Generally the conditions are for the purchaser who has to take steps to satisfy those conditions. If the conditions are not satisfied then the proposed transaction will be at an end and any deposit should be refunded.

2. What is Tarion Warranty?

Where you are purchasing a new home or one that is less than 5 years old the original builder will have had to register the home with Tarion, a government mandated insurance company established to ensure that any problems or complaints with respect to new homes will be remedied in a timely fashion by the builder or if the builder is not able to do the work by a representative of Tarion.

3. Do I need a house inspection?

Whether a building inspector is engaged is a matter of personal preference. There are businesses in this area who, for a fee, will conduct a visual inspection of the property and prepare a report indicating to you what they have observed with respect to the property you are proposing to purchase. Often, an inspector because of their expertise is able to see problems that you may not be able to see. If the inspector can test for moisture it is generally prudent to pay for that testing to be done as moisture behind walls may not be visible. Where there are finished basements it may be wise to have moisture readings taken to determine if there is any water penetration into the basement. It is important to note that such inspections are not guarantees and often inspectors limit their liability so that if there are problems you cannot sue them. It is extremely important to carefully select a building inspector.

4. When can I move in to my new house?

The length of time between entering into an Agreement of Purchase and Sale and the time you move in is variable. It depends on the needs of the purchaser and seller. Generally speaking at least a month is required so that all the necessary paperwork can be completed. It is recommended that if you are selling a property and buying a property that you buy the property before you complete the sale of the property you currently own and utilize bridge financing so that you are able to move from your existing property to the new property in a less pressured manner.

5. Do I need title insurance?

Generally speaking the Law Society of Upper Canada recommends that purchasers obtain title insurance. Title insurance is much like any other insurance except there is only a one-time fee. The title insurance covers problems with the title or with the property subject to certain limitations.

6. Can I sue for basement water leaking?

If water has been leaking into the basement and the seller knows that it has been leaking into the basement and does not tell you then you may be able to sue the seller for the cost of repairing the problem. If the seller does not know that water has been leaking into the basement then you may not be able to successfully sue the seller.

Statistics: Posted by Pinskylaw.ca — 21 Sep 2017, 15:25


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2017-09-09T10:59:40-05:00 2017-09-09T10:59:40-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=621&p=655#p655 <![CDATA[Residential Real Estate • Checklist for Purchase of Cottage or Rural Property]]> Statistics: Posted by Pinskylaw.ca — 09 Sep 2017, 10:59


]]>
2017-08-21T13:18:31-05:00 2017-08-21T13:18:31-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=620&p=654#p654 <![CDATA[Residential Real Estate • Purchase of Cottage or Rural Property]]> I. Access

The purchase of rural property, whether a cottage or a farm, can represent special challenges and problems for the buyer. There are various special enquiries and searched to be made respecting such rural property.

1. Public Roads and Road Allowances

Problems relating to access to and from the property are of primary concern to the buyer, and can significantly impact the land's value. First, the buyer should review the available survey information and should consider additional survey and/or title insurance if warranted. Second, the issues relating to roads should be dealt with in the agreement by way of a condition, or a representation and warranty that there is a legal access to the property. The usual questions which may arise relate to: (1) whether there is a road of any kind to the property; (2) whether it is a public or a private road; (3) whether it is opened or unopened; and (4) who has the obligation to maintain and repair the road. The buyer also should discuss with the seller whether he intends to use the property year-around, or just for seasonal use, and must then make the appropriate enquiries to determine whether the road is maintained during those times.

Notably, after January 1, 2003, land may only become a highway by virtue of a municipality passing a by-law, and not by the activities of the municipality or any other person in relation to the land, including the spending of public money. In some instances a highway may have been used by the public, but has never been opened by the municipality. Such a road would not constitute a public highway, although there would be a public right of passage. Improvement to unopened roads may not be made without the consent of the municipality. A search at the Land Registry Office and the appropriate municipal office should determine whether the road has been opened. The fact that a road has been dedicated a public highway does not automatically give rise to an obligation on the municipality to maintain it. A municipality has no obligation to maintain the surface of a highway unless it has assumed the jurisdiction and responsibility to do so. Moreover, it is also not uncommon to find roads in rural or cottage areas which appear to be maintained by the municipality but may not be public roads at all. In both of these instances, an enquiry to the municipality or Ministry of natural Resources can ascertain the status of the road.

2. Private roads

Although the right to use a private road generally resides in the owner of the land on which the road is situate, the Road Access Act broadens this right in connection with "access roads". Section 1 of the Act defines "access road" to mean "a road on land not owned by a municipality and not dedicated and accepted as, or otherwise deemed at law to be, a public highway, that serves as a motor vehicle access route to one or more parcels of land." Section 2 of the Act prohibits anyone from blocking an access road to the point of obstructing road access to one or more parcels of land or to boat docking facilities, unless: (1) the affected owners have agreed in writing; (2) a road closure order has been applied for an issued by a judge; (3) the closure is temporary. Finally, there are also provisions in s.3 of the Act relating to the conditions that attach to obtaining a court-ordered closure of a road.

3. Right-of-Way/Easements

Where the search discloses that the road is neither a public road nor an access road to which the Road Access Act applies, the owner of the road must be determined. The buyer should review all prior deeds in the chain of title for the property, to determine if the subject property has the benefit of a registered right-or-way. The description of the right-or-way should also be reviewed for adequacy and registrability, and should be compared to the travelled road and any survey to ensure that the right-or-way as described in the deed is in the same location as on the ground. Buyers should take care to note that over the passage of time, the use of rights-of-way often extend to properties that were not part of the original grant. The buyer should also ascertain whether there are any limitations on how or when the right-of-way can be used. Also, if the land is lakefront property, the description should include reference to the 66-foot reserve to the Crown for the road allowance along the lake shore. Also, if right-of-way or easement has been registered on title, it may be possible to establish a "prescriptive easement" for lands located in the registry system pursuant to s. 31 of the Real Property Limitations Act if there has been more than 20 years of uninterrupted, open, and continuous use, with the knowledge of, but without the permission of the owner of the servient tenement. Statutory declarations from prior owners of the property for the 20-year period should be obtained.

4. Access By Water

Many Ontario cottage properties can only be reached by water. In such cases, the buyer make enquiries respecting the availability of parking and boat-docking facilities, and will want to include either a condition, or else a representation and warranty, covering such facilities in the agreement. Access by water will also be governed by municipal by-law in many cases. Some allow for the limited development of waterfront landings abutting the highway; others permit boat launching from an original road allowance that leads to the water. Some municipalities prohibit entirely the use of public docks as access facilities for private properties. The potential buyer will want to ask the seller about these matters, and will want to amend the agreement accordingly so that they are addressed in a satisfactory manner.

II. Waterfront Property

1. Shore Road Allowances

If the property abuts a lake or navigable river, then the buyer becomes a riparian owner with certain additional rights and privileges. Whether a body of water is "navigable" can be determined in common law or by statute (Navigable Waters Protection Act), which includes a canal and any other body of water that was created or altered as a result of the construction of any work. However, the buyer should obtain assurances that the property boundaries do in fact reach to the water's edge or beyond (especially since he or she will likely be paying a higher purchase price based on water frontage). Historically, shoreline allowances were laid out by Crown surveyors along lakeshores and navigable rivers, and measure 66 feet in perpendicular width from the natural boundary, usually the high water mark. The existence of shore road allowances or Crown reserves can come as a surprise to the potential buyer, and can give rise to unforeseen issues. For example, if it is presumed that a shore road allowance exists on the seller's property, but search shows that one was not reserved to the Crown, the seller may be retaining an interest in the abutting land in contravention of the Planning Act. As such, the buyer should ensure that the agreement sets out the buyer's entitlement to this water frontage without interference from a shore road allowance or any other right-of-way or access rights by any other parties. If applicable, an updated building location survey or plan of subdivision will also reveal the existence of an unopened shore road allowance or Crown reserve.

2. Shoreline Boundaries

Generally speaking, because some water boundaries relate to specific natural topographic features, the nature and extent of the boundary will depend on the original description of the property as set out in the original Crown patent. However, the boundary may change gradually due to the natural process of erosion and accretion, both of which involve the slow gradual and natural change over the course of time. If the original Crown patent has defined the property boundaries with reference to the "water's edge" or the high-water mark, then the owner of land bounded by water is presumed by law to be entitled to any extension arising by accretion. However, if the property boundaries are not defined in this manner, they will not vary with the change in the water level and will be unaffected by accretion and erosion. As the result, the buyer of waterfront property should always verify the Crown patent for indications of shorefront land in favour of the Crown. It should be noted that in cases where there is an issue as to the re-tracking and locating of a boundary, and where evidence is used to establish such a boundary, physical measurements are usually given the least evidentiary weight, while monuments in their undisturbed locations are given more weight.

Because the bed of the lake is reserved to the Crown, any deliberate in-filling of land has the legal effect of suspending the legal rights that would arise through normal accretion, and instead constitutes an encroachment on that land, and one which does not give rise to ownership. Both buyers and sellers should review the agreement, as well as an updated survey, to determine whether any infilling has created problems, e.g. part of the cottage or boathouse is actually on filled land rather than deeded land. If so, it may be possible to purchase the in-filled land, subject to the approval of the Ontario Ministry of Natural Resources.

3. Water Potability and Flow


The state of the water on the property can be a significant concern, and a potential buyer should confirm the relevant information with the seller well in advance of closing. Specifically, the buyer should obtain assurance that his water supply and treatment system are adequate both as to potability and volume. This will be mandatory if the buyer is obtaining an institutional mortgage, because lenders will refuse to advance funds unless the proper confirmation has been made. As such, the source of the property's household water supply must be determined. Water may be available from lakes or streams or from ground water, if the buyer is fortunate, it may be available from the township water supply.

First of all, the buyer should include conditions (or alternatively, have the seller make warranties) in the agreement of purchase and sale to the effect that there will be an adequate supply of potable water to the dwelling located on the property. The seller must provide a well driller's certificate as to the adequate flow of water as well as satisfactory test results on the potability of the water from the Department of Public Health. In situations where the water is drawn from a lake or cistern, no reliable potability certificate will be available. Water drawn from lakes and streams must be treated in order to be safe for consumption; it is more likely to be contaminated than water from ground sources. There are numerous treatment systems available which remove bacteria from the water supply, but the water should be tested bacterial content by the Public Health Unit.

Ground water is usually obtained from a well, which can either be dug, drilled or bored. In all cases it should have a water-tight concrete casting to prevent flooding. A drilled well is usually installed by a well driller who is licensed by the Ontario Ministry of the Environment, and who reports to the Ministry and provide a well driller's certificate upon completion of the work. If available, the buyer should ask the seller for a copy of this certificate on closing. Alternatively, the same information can be obtained from the local Ministry of Environment office. Also, private owners may have installed their own wells, in which case the Ministry will likely have no record of it.

A dug well is shallow and therefore more likely to become contaminated, raising significant potential health concerns. it is often advisable to have a treatment system in place for the well water to protect against bacteria and pollution. There is no formalized or mandatory government inspection of wells, so the owner must check the water supply on a regular basis. Water samples can be submitted to the local Public Health Unit for testing.

There are several additional items that should be confirmed by the lawyer as part of any potential purchase and sale. Chemical contamination may occur if the well is located near a road, or near a stream that drains from a road. In these cases testing is usually arranged through a private laboratory. Wells which supply multiple properties may be subject to the provincial Clean Water Act and to easements for pipes which emanate from neighbouring, registered wells. The Ministry of the Environment also keeps owner-submitted well records, containing information on the location and construction of existing wells, which can be searched.

4. Septic and Sewage Systems

Of equal concern to a buyer is the system for sanitary disposal of sewage from the property, which is usually a private sewage system. As of April 6, 1998, these sewage systems are regulated by the Building Code Act and by the Building Code enacted under it. Section 1 of the Act gives definition of "building" and its sewage system. Section 10 of the Act prohibits anyone from operating or marinating a sewage system except in accordance with the Act and the Building Code. Section 15 of the Act deems "unsafe" any sewage system not maintained and operated in accordance with this legislation. Section 15 also prohibits the construction, installation, repair servicing or employing of sewage systems except by qualified persons who meet the requirements of the Building Code.

The agreement of purchase and sale should contain representations and warranties to the effect that the septic system is in good working order and complies with all applicable laws, and that any applicable certificates have been obtained and will be provided on closing. the seller should be obliged to provide the buyer with the following: (1) a warranty attesting to the age of the sewage system; (2) copies of any relevant documentation in his or her possession or control; and (3) information on when septic tank was last pumped, and by whom.

The buyer should also conduct a search with the local office of the Ministry of Environment or the local health unit to obtain a copy of an installation report showing when the septic system was installed, its location specifics, and whether there are any work orders or violation notices on file. However, if a cottage is older, it may have been constructed before modern legal requirements were in effect, in which case there may be no records and/or the septic system may no longer comply with current requirements. Also, if possible, there should be a provision in the purchase and sale agreement allowing the buyer to conduct an independent inspection of the septic and sewage systems. This will usually involve a visual inspection around the boundaries of the system, to look for pools of liquid, damaged vegetation, evidence of leakage and damages, or evidence that the septic bed may be partially located on a privately-owned road allowance.

Statistics: Posted by Pinskylaw.ca — 21 Aug 2017, 13:18


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2016-12-09T13:39:24-05:00 2016-12-09T13:39:24-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=533&p=562#p562 <![CDATA[Residential Real Estate • Real Estate Fraud]]> Fraud Defined

Fraud is broadly divided into fraud for shelter and fraud for profit. The motive behind fraud for shelter is gaining ownership of a house by providing false information. Fraud for shelter includes misrepresentations to mortgage lenders regarding employment status, assets and home value to qualify for mortgages to buy a home, refinance or pay debts. The frauds that have gained attention recently are not for shelter, but schemes by fraudsters aimed at stealing value from members of the public by setting up fraudulent real estate transactions. Frauds for profit are simply for the purpose of acquiring large sums of money as quickly as possible. This type of fraud is generally more complex than fraud for shelter.

Types of Fraud

Identity Fraud

This type of theft is probably the most widely known. Generally, one or more fraudsters use forged identification to impersonate existing property owners, or the directors and officers of a corporate owner. In the latter case, the fraudsters may make false corporate filings and even produce a forged minute book. The fraudsters then purport to sell and/or mortgage the property. Another well-known form of identity fraud involves the fraudulent discharge of a mortgage from title, and its replacement by a new mortgage from another lender. This can be repeated several times with the same property, using different lenders and lawyers each time. When each transaction closes, the lawyer pays the proceeds to the client, who makes a few mortgage payments, then disappears with the funds. A subset of identity fraud that has garnered much attention over the past few years is “rent/steal fraud”. A defining feature that allows this type of fraud to be so effective is that the fraudster is able to get physical possession of the house, thereby avoiding any problem associated with the lender inspecting the property. This type of scheme will usually involve the fraudster renting a home that is free of any mortgages. Typically, several months’ rent will be paid in advance to ensure that the real owner does not have his or her attention directed to the property during that time. The fraudster may then agree to sell the property, or arrange a mortgage. In either case, the fraudster impersonates the true registered owner. When the transaction closes, the proceeds will be paid to the fraudster, who vanishes. The true owner usually does not become aware of the fraud until the prepaid rent runs out, and he or she visits the property, to find it either abandoned, or occupied by an innocent purchaser. To prevent “rent/steal fraud”, clients who intend to rent a property should be advised to visit it at regular intervals. If the clients cannot check up on the property personally, a friend or neighbour should be asked to help out. Clients should obtain and check references from prospective tenants before renting to them. If clients intend to leave a property vacant for several months, they should arrange for someone else to check the property regularly, as vacant properties are often the target of fraud.

Value fraud

In this type of fraud, a fraudulent agreement of purchase and sale is prepared in which the
“purchaser” is either non-existent or complicit in the fraud. The property is usually transferred at a price exceeding its real value. The fraudster then obtains a mortgage from a financial institution or other lender based on the inflated property value, and finances most or the entire purchase price. A few payments are made, and then the fraudsters disappear with the funds. In this case, the lender obtains a valid mortgage on the property and will usually sell it under Power of Sale, but will not recover all of its investment in the property. Value fraud is usually easier to perpetrate in an active real estate market.

“Straw Buyer” Fraud

A relatively new trend in mortgage fraud in Canada is the use of “straw buyers”. The usual scenario involves a fraudster paying a few thousand dollars in cash to someone who is in need of money, such as an unsophisticated, unemployed or homeless person. The fraudster promises that the buyer will have no liability, and merely asks him or her to attend at a lawyer’s office to “sign a few papers”. The buyer becomes the owner of a property, often one that is undesirable or in bad repair. The fraudster provides the buyer with forged employment letters and other material to support the granting of a large mortgage to finance the purchase. In some cases, the “straw buyer” is an accomplice in the fraud. “Straw buyer” fraud is often found in concert with value fraud.

A fraudster may use the same “straw buyer” several times, with different properties and lenders. The fraudster takes the mortgage money, makes few or no payments, and the buyer never moves in. Upon default under the mortgage, the buyer has no assets to satisfy the mortgage debt, and will often declare bankruptcy. One of the greatest challenges regarding “straw buyers” is that until the fraudster behind the scheme is exposed, s/he can use multiple “straw buyers” to carry out numerous frauds. Royal Bank of Canada v. Welton8 illustrates the sheer volume of fraudulent transactions that can be carried out in this way. In this case, it is alleged that the defendant solicitor for the bank, together with a number of co-defendants, fraudulently deceived Royal Bank into giving 33 mortgage loans for over $5 million on generally run down properties. The bank alleges that in 22 instances, the properties were transferred to the straw person at well above market value. Additional properties were purchased at market value, and then sold to other straw buyers. The outcome of these allegations has yet to be decided, but the case highlights the danger of this type of fraud.

Equity Stripping

This type of fraud occurs when a spouse who is going through a separation seeks to encumber property and take the proceeds for him/herself, so that the equity in the property is not subject to the other spouse’s property claims. Equity stripping is not new, but can still be factor in situations that make it possible. For example, where a spouse owns investment properties in his/her own name and a separation from the other spouse is imminent, the titled spouse may seek to place new mortgages on the properties without the other spouse’s knowledge. Equity stripping may also occur in a business context, when partners or business associates have come to a parting of the ways. Power of Attorney Fraud This mode of fraud can either involve a genuine power of attorney that is being used improperly, or a form of identity theft in which the fraudster forges a power of attorney to allow him/her to sell or mortgage a property. This form of fraud has been identified in case law over the past few years and there is some uncertainty surrounding it. The case of O’Brien v. Royal Bank of Canada9 provides an example of how a power of attorney can be fraudulently used to affect title. In this case, title to a condominium was held in one-third interests by a husband, wife and daughter. The father had left Canada. The daughter was going through financial difficulties and wished to mortgage the property further, but the mother objected. The daughter held a valid power of attorney from her father, and forged a power of attorney from her mother authorizing her to enter into transactions on her behalf. In 2005, the daughter transferred the interests of her parents to herself and refinanced the property with Royal Bank of Canada. This mortgage went into default, and the mother challenged the validity of the mortgage. The court held that the mother was entitled to have the mortgage set aside, but that the bank was entitled to an equitable charge to preclude the mother’s enrichment at the bank’s expense. However, the bank was not permitted to enforce its equitable charge against the mother’s interest in the property.

Reverse Mortgage Fraud

Reverse mortgages are becoming more common. They are designed for older people who have significant equity in a property, but lack income. The mortgage allows the owners to use their home equity to generate the income they need. The mortgagors are not required to make payments under the mortgage; instead, they receive regular or lump sum payments from the lender. The accumulated principal and interest becomes due when the homeowners sell, move, die, or fail to pay taxes or insurance on the property. The fraudster in a reverse mortgage fraud may impersonate an elderly or deceased person who owns a property, or use a power of attorney. The fraudster then steals the proceeds of the reverse mortgage. This kind of fraud is often committed by relatives, caretakers or financial advisors who are familiar with the older person’s affairs and may have access to their records. Because no regular payments are due under the mortgage, a fraud of this type may not become known for several years.

Internal Fraud

While real estate fraud often involves cunning clients or detailed schemes, it can also involve lawyers, law clerks or other support staff in law offices who have access to information, documents and money. Internal frauds may be motivated by the need for cash, generated by:

· personal stress, such as divorce, business reversals, gambling or substance abuse;
· unrealistic lifestyle expectations; or
· feeling that the person is overworked and underpaid and is “setting things right”.

Opportunities for internal fraud occur when lawyers:

· work in “silos” isolated from other parts of the firm;
· only inform staff of what they are doing;
· are able to avoid or override internal controls; or
· deal with suspicions or complaints through direct client contact, and when staff:
· take advantage of flaws in internal controls; or

Some signs of possible internal fraud include:

· not taking holidays, especially for several consecutive days;
· sudden change in a staff member’s lifestyle or personality;
· receiving mail for a corporation that has no client file;
· receiving past due account notices;
· changes to documents or cheques; or
· missing original documents.

“Red Flags” of Fraud

Some “red flags” involving the client include:

· new client (offshore or otherwise);
· client presses for closing quickly, sometimes promising more business in return;
· client having no interest in the property, price, mortgage interest rate, legal or brokerage fees, or the lawyer’s explanation of mortgage documents;
· cell phones are the only contact numbers provided;
· client cannot produce title documents, survey, reporting letter, tax or utility bills for property;
· client cannot produce photo identification;
· funds are directed to one or more third parties with no apparent connection to the transaction;
· client’s mailing address is a post office box;
· client is “out of sync” with property (i.e., does not appear to be the type of person who usually purchases property of this type); or
· client refuses to allow contact with prior lawyer.

The transaction itself can present “red flags”, such as:

· repeat activity on a single property, or by a single client or set of clients;
· someone other than the buyer appears to control the transaction;
· client makes no inquiry about picking up keys or moving in;
· deposit not held by real estate agent or lawyer;
· no deposit, or small deposit relative to purchase price;
· immediate resale without re-listing;
· one lawyer acting for many parties;
· tenant paying more than 1 or 2 months’ rent in advance;
· title shows several recent mortgage discharges, without reasonable explanation;
· Agreement of Purchase and Sale with no handwritten changes;
· Amendments to the original Agreement of Purchase and Sale, lowering the price or granting credits to the vendor;
· municipality or utility companies have no knowledge of client’s ownership of property;
· funds provided to lawyer by way of temporary cheque without a pre-printed name or address;
· name of purchaser spelt differently throughout the transaction;
· unusual adjustments in favour of the vendor, or large vendor take back mortgage;
· purchaser supplies little or no of his/her own money to close;
· lack of access by purchaser to property, or unusual restrictions on access;
· “private agreement” with no real estate agent involved, or real estate agent named in agreement has no knowledge of deal; or
· Agreement of Purchase and Sale between relatives or business associates.

Detection and Prevention

Some simple and effective methods that real estate lawyers can use to assist in detecting and preventing fraud include:

· Comply with the Law Society of Upper Canada client identification and verification requirements;
· Insist on the client producing original documents and identification, not just photocopies;

· Hold the card or document – if it is forged, there may be a burning sensation due to chemicals used;
· Review date of birth, picture, address and other personal details to ensure they match the client;
· Check for misspellings, in client’s name or in standard form wording – they may mean the document is a fake;
· If in doubt regarding the authenticity of an Ontario driver’s licence, check it on the Ontario Ministry of Transportation website at: https://www.dlc.rus.mto.gov.on.ca/dlc/OrderForm.aspx or call 1-900-565-6555 The charge is $2.00 for a website check and $2.50 for a check by phone;
· Ask questions on deals where the client is pressing to close quickly;
· Do not allow documents to be taken outside your office for execution;
· If a party cannot come to the office and you cannot meet with them, have them execute documents before another lawyer or notary who is qualified in the jurisdiction where they are located. If documents are signed in another lawyer’s or notary’s office, obtain evidence of compliance with Ontario’s Law Society of Upper Canada’s identification and verification requirements; and
· Be alert if the price or type of transaction is inconsistent with market trends in the area.
While it is difficult to completely prevent the occurrence of fraud, familiarity with the common methods of fraud and an understanding of how to recognize and avoid fraudulent transactions will thwart many attempts.

Conclusion

Real estate fraud is always evolving, but value and identity fraud remain the most dominant, sometimes combined with straw buyer or power of attorney frauds. A strong understanding of these two modes, coupled with an awareness of the new approaches and techniques and their associated red flags, will help in detecting real estate fraud and controlling its spread. A commitment to vigilance against fraudulent transactions together with new government initiatives will help ensure that real estate remains a sound and secure investment. For more information and red flags concerning all types of fraud, see the fraud section of the LAWPRO website at http://www.practicepro.ca/fraud and the Law Society of Upper Canada website at http://www.lsuc.on.ca.

Statistics: Posted by Pinskylaw.ca — 09 Dec 2016, 13:39


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2016-09-29T09:28:44-05:00 2016-09-29T09:28:44-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=512&p=541#p541 <![CDATA[Residential Real Estate • Real Eatate Closing Cost]]>
Summary

- Legal fees: $800 - $1,500

- Land transfer fees: $2,975 (on a $300,000 home). First time home buyers are exempt from the land transfer fees.

- Mortgage insurance fees: could be between $25 - $100 a month depending on age, health, and type of insurance provider.

- Adjustments fees: $0 - $1,000.

- Property appraisal fees: $175 - $500 (sometimes are included in mortgage costs).

- Home inspection fees: $300 - $500.

- Utilities and Services Setup Fees: $100 - $500.

Detailed Description

Below is a comprehensive list of closings costs that you might incur, but remember that they are estimates only and should be used as a guideline as of course they may vary depending on your own specific purchase.

Legal Fee and Disbursements

A lawyer will charge a fee for their professional services involved in drafting the title deed, preparing the mortgage, and conducting the various searches on title. The disbursements, on the other hand, are out-of-pocket expenses incurred, such as registrations, photocopies, phone calls, searches, supplies, etc., plus HST. The actual fee that the lawyer will charge will depend entirely upon the deal between you and your lawyer. Be sure to ascertain exactly what this will amount to in a worst-case situation. A typical purchase transaction for a $300,000 property with one mortgage will range between $800 to $1,500 including disbursements.

Land Transfer Fees

There is usually a land transfer fee that is charged on closing when the property is transferred to your name and it can vary depending on the price of the home, whether or not you are a first time home buyer. Normally first time home buyers do not pay the land transfer tax up to a maximum of $2,000.

Mortgage Insurance Fees


You should budget for insurance on your new home. Insurance fees can include default mortgage insurance, homeowners insurance, mortgage life insurance and title insurance. Although banks do offer mortgage insurance with your mortgage, obtain getting you own life insurance policy is often a better option. Especially for the young and healthy, life insurance can be relatively inexpensive and can grow and change with you well after the sale of your home.

Property Tax and Prepaid Utilities Adjustments

At the time of a sale, the lawyer for the buyer must confirm that local taxes have been paid up to date. If they are, a Tax Certificate is issued, from which any adjustments can be made - usually requiring the buyer to compensate the seller for any prepaid taxes. If they are not up to date, the municipality requires that the seller pay them off from the proceeds of the sale. Therefore, remember that if the previous owner has prepaid property taxes or other utilities for the year, they will be credited the prepaid portion on closing. If they paid all their taxes by the end of April, expect a large adjustment cost on closing! Again, your lawyer will confirm all this for you.

Property Appraisal

If your lender requires an appraisal report to be completed, it will have to be done before they hand over any mortgage money. They want to be assured that the property is worth what you are either paying for it, or valuing it for, and the cost normally ranges between $175 to $500 depending upon the location and complexity of the property.

Home Inspection

This is a report ordered by a property owner or purchaser, usually to verify the condition of a property prior to fully committing to a Real Estate transaction. The scope and detail may vary, but most reports indicate the specific problem and the cost to repair. This report should be prepared by a certified Home Inspector to protect your interests in your new home. Depending on the size and location of the property, a home inspection is around $300 - $500.

Interest Adjustment (IA)

If you arrange to make your mortgage payments monthly on the first day of the month, and your transaction closes after that day, your lender may charge you interest on closing up to the first theoretical payment date, called the Interest Adjustment Date (IAD). The institution your mortgage is with, will calculate this for you. Remember, that all mortgages are paid in arrears so if your possession date is June 1st, and you choose to pay monthly, then your first payment will be July 1st. In this example there is no Interest Adjustment payable. However, if you moved in on May 29th, with your first payment on the first of the month, your first payment would still be July 1st, but there will be a three day Interest Adjustment (from May 29th to the “official start date” of June 1st).

Utility and Services

When you are moving to a new home many utility companies will charge you an admin fee to setup a new account or to transfer your services from a previous address. These fees vary from company to company and region to region. You also may incur charges as you setup phone, cable, internet and other services for your new home.

Miscellaneous

The may be other costs associated with moving into your new home based on your specific. You could choose to hire a mover, have your new home and/or carpets professional cleaned, or the home freshened up with a paint job. Make sure to include these costs when calculating how much money you will need to set aside for the closing.

Statistics: Posted by Pinskylaw.ca — 29 Sep 2016, 09:28


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2016-09-27T12:04:49-05:00 2016-09-27T12:04:49-05:00 http://www.pinskylaw.ca/forum/viewtopic.php?t=511&p=540#p540 <![CDATA[Residential Real Estate • Be carefull adding parents to title]]>
1.A young couple (husband and wife) are purchasing a house but they do not have enough income to qualify for the mortgage they need;
2.They decide to add the wife’s father’s income to qualify for the mortgage;
3.The Lender agrees but wants the father to be added to title rather than getting a guarantee from the father;
4.A lawyer that represents the young couple is instructed to add the father as a 1% owner with the couple owning the remaining 99% as joint tenants.

Question - in what capacity does the father hold his 1% interest in the Property?

Issues & Concerns - there are only two capacities under which the father could hold his 1% interest in the Property. Both capacities present their own issues and concerns to be addressed before closing.

The father either owns the Property:

1.As a trustee for the couple; or
2.As a co-owner on his own behalf.

If the father owns the Property as a Trustee, which is most likely the situation, then the following must be done:

·Need evidence of the trust - Declaration of Trust;
·Need to advise the Lender;
·Need to verify if this meets the Lender’s requirement that the father be a part owner;
·Need for father to provide a separate guarantee;
·Need for father to obtain an Independent Legal Advice as to whether he is to be liable for entire mortgage debt.

If the father owns the Property as a Co-Owner, then the following must be done:

·As a co-owner, the father needs co-owners agreement setting out his rights. Especially relevant if the father dies or becomes incapacitated (must deal with fathers personal representatives, attorney or trustee of his estate);
·Co-owner has absolute right for Partition Act order for sale of the Property;
·As a co-owner, the father needs either Independent Legal Advice or Independent legal representation for this transaction;
·The young couple needs either Independent Legal Advice or Independent legal representation for this transaction.

The lawyer if involved in the transaction must remember that he now may have 4 clients to balance their interests and to protect them:

1.The Lender;
2.The father;
3.The husband;
4.The wife.

The lawyer must make sure he provides his advice in writing, as well as record his warnings and the instructions he receives.

Statistics: Posted by Pinskylaw.ca — 27 Sep 2016, 12:04


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