Are you thinking about buying a pre-construction or newly constructed home or condo (as opposed to a RESALE)? Read on....
Are you thinking about buying a "RESALE" condo or loft? Read on....
Are you thinking of assigning your agreement of Purchase and Sale? Condo 'flipppers', read on....
Do you think that your basement apartment adds value to the selling price? Read on....

Do you think your 'parking pad' is legal? Read on...
General interest
Kitec plumbing in your home will cost you - This has effected many a condo owner...
Some title insurance is better than others - There may be a couple of questions to ask your lawyer 
When a detached home is not a detached home - Read about 'linked' homes; they look like detached homes!
New Mortgage Rules - Must read, especially for first time homebuyers!
* Let me know if there's a topic you'd like me to include on this page!
By: Bob Aaron, September 17, 2010, Toronto Star
It’s hard to think of any consumer purchase contract where the price on the front page is not the full purchase price, where additional charges are unlimited, and where the seller has no legal obligation to make full disclosure of extra charges to the buyer at the time of sale.
And yet this is a common practice among some Toronto-area condominium builders. It is an issue that cries out for the government to intervene in the public interest.
I was reminded of this problem once again last week while I was reviewing a client’s pre-construction purchase contract for a unit in a large mixed-use condominium development in downtown Toronto.
When I added up all the extra charges buried in the disclosure statement but not even hinted at in my client’s purchase agreement, the total came to just shy of a staggering $70,000.
The 33-page purchase and sale agreement for this project is typical for pre-construction condominium contracts. For a mere $935,300, the buyer gets a floor plan without measurements or any guaranteed size, along with an obligation to pay a number of disclosed but unlimited charges such as government taxes and levies, and the costs of utility meters and connections. In order to discourage buyers — and their lawyers — from actually reading the contract, it is written in the tiniest type face possible. (No wonder I have to use trifocals after years of reading these contracts!)
But the $935,300 cost of the condo (plus the disclosed but unlimited extras) is far from the total tab the buyer has to pay.
Under the 1998 Condominium Act, at the time a purchase contract is signed, the builder is required to deliver to the purchaser a thick volume of materials which includes the proposed condominium organization documents and a disclosure statement setting out 27 specific details of the project.
Buried in the disclosure document is a statement setting out whether the unit buyers jointly will be required to purchase assets or services from the developer.
In my experience, the vast majority of buyers find these disclosure documents intimidating and incomprehensible and do not bother to read them.
In reviewing the disclosure statement for the new downtown project with my client last week, I pointed out that after the condominium project is registered, all of the unit owners as a group will be required to purchase from the developer:
• Up to 6 guest suites at $200,000 plus HST each, or $1,356,000, plus 8 per cent interest over 10 years,
• A superintendent unit for $565,000 including HST, plus 8 per cent interest over 10 years.
• A recreation centre for an astonishing $11.3 million, repayable without interest over 10 years.
Including $860,000 in interest on the guest suites and superintendent’s unit, the unit owners as a group are on the hook to the developer for a total of slightly more than $14 million during the first 10 years of ownership.
My client’s share of the total cost works out to $69,560, or a hit of more than 7.4 per cent in addition to his purchase price.
None of these charges were disclosed in the sales office, so when I calculated it out for my client, he was in shock at the total amount of the costs.
In my experience, this project marks a new high — or low, depending on your viewpoint — in undisclosed extra charges for condominium buyers. It’s a situation which demands greater government protection for unsuspecting consumers.
And it’s also an issue which the members of the Building Industry and Land Development Association might want to tackle before the government does it for them.
Until the disclosure laws are changed, condominium buyers can protect themselves by taking several steps:
• Ask about undisclosed charges in the sales office before signing anything.
• Read the disclosure statement and especially Section 17 (about extra costs).
• Above all, always have an experienced condominium lawyer review the purchase agreement and disclosure statement within the 10 day cancellation period after signing it.
By: Bob Aaron, October 3, 2014, Toronto Star
Discipline hearings signal need for fuller knowledge about two-unit homes
The Real Estate Council of Ontario (RECO), the body that licenses and governs real estate agents, is cracking down on representatives who advertise two-unit homes without making clear whether the second unit — usually a basement apartment — is legal.
Many agents typically use wording such as, “Agents and seller do not warrant legal retrofit status of in-law suite.” Descriptions like this could disappear in the wake of two recent decisions of RECO discipline panels.
Dan Plowman has been a successful real estate agent in Whitby, Ont. for 25 years. Last year, he listed a property, describing it as having “income potential” with “separate entrance/in-law suite.” The MLS listing for the property included the disclaimer that “we do not nor does the seller warrant the legal retrofit status of the ‘in-law suite’.”
That wording, however, did not appear on Internet listings, or on
Wording like this is common in the real estate industry and is generally understood to mean that the basement suite is not legal. In my experience, Plowman’s listing used wording that thousands of Ontario agents have used and continue to use.
In a RECO discipline hearing, Plowman faced charges of acting unprofessionally by including information in an MLS listing which was either false, inaccurate, misrepresentative or misleading to consumers.
It was alleged that he failed to take steps to verify the legal status of the basement suite so that the appropriate language could be used in the MLS listing and available to consumers.
In an agreed statement filed at his hearing in June, Plowman admitted that he breached several sections of the RECO Code of Ethics and was fined $5,000.
The same thing happened this past May to Tammy Loeman, an experienced Hamilton real estate agent. She advertised a property with the remarks: “Fabulous home used as 2 family . . . own your own rental property or live in one unit and let the other one pay your mortgage.” She also marketed the home on web sites with the words “fabulous family home with income rental.”
Loeman acted for both buyer and seller in finalizing a purchase agreement. Unfortunately, the local zoning only permitted single-family dwellings. The buyer was an investor who intended to rent out both units for rental income.
His complaint was that if he knew the second unit was illegal, he would not have bought the property, or would not have agreed to the price in the contract.
At her discipline hearing, Loeman admitted that she acted unprofessionally by failing to determine and disclose material facts relating to the property. RECO fined her $10,000.
Under Ontario law, basement units that existed prior to November 1995 are exempt from meeting local zoning bylaw requirements (but not other safety standards). The discipline panel accepted that the basement apartment contravened the zoning bylaw, but in fact it may have been a pre-1995 unit and perfectly legal from a zoning viewpoint. As a result, the discipline decision could well be wrong in law.
It is not clear whether Plowman and Loeman were represented by legal counsel. What both Plowman and Loeman did is common practice in the real estate industry.
It appears that RECO now requires agents to confirm whether a basement apartment is legal — a complex taskthat involves determining whether the unit complies with zoning bylaws, fire code, building code, electrical safety requirements, and — in some municipalities — registration and licensing.
The problem is that municipalities will not tell owners or agents whether basement units are legal. How, then, can RECO require agents to verify legality of those units?
By: Bob Aaron, March 16, 2012, Toronto Star
When real estate agents prepare offers for a house with a basement apartment, they typically insert a clause stating that “seller does not warrant retrofit status.”
This results in the purchaser taking the risk of getting caught by city inspectors and having to vacate the unit and forfeit rental income.
Agents and sellers seem to think they are sheltered from liability if they do not “warrant” the basement’s so-called retrofit status.
This practice could end in the light of a recent letter to local real estate agents by Toronto Real Estate Board President Richard Silver.
Silver’s letter attempts to end the confusion over what is and what is not a “legal” basement apartment, and what’s missing if there is only partial full compliance.
Silver quotes noted home inspector Carson Dunlop, who reports that achieving a “legal” basement apartment involves five separate issues:
• Do the local bylaws permit basement apartments?
• Does the apartment comply with fire code?
Does it comply with building code requirements?
• Does it comply with electrical safety requirements?
• Has the apartment been “registered?”
Real estate agents frequently use the term “retrofit” to signify whether the basement unit is or is not fully “legal.” But in this context, its use is incorrect, and only refers to fire code — one of the five requirements.
The provincial fire code is a subset of the Ontario building code. The building code applies only to the day the unit was constructed. Only the fire code is retroactive — and this gives rise to the term “retrofit.”
As a result, a unit which does not have a fire retrofit may otherwise comply with the building code, electrical safety requirements and zoning bylaws. It’s all very complicated.
In 1994, the provincial government set new fire code rules with which all basement apartments, new and existing, must comply. A unit upgraded to comply with the fire code is called a “basement retrofit.”
Compliance with the fire code involves four requirements: fire containment, means of escape, fire detection and alarms, and electrical safety.
Drywall separations between the basement and the rest of the house must have a minimum 30-minute fire rating. A separate exit (or fire-separated shared exit) is required. A basement window is acceptable if it meets certain size and location requirements.
Fire safety rules also require installation of smoke alarms in all units in a house. They do not have to be interconnected unless the fire separation to a common exit area does not have a 30-minute rating. Many municipalities also require carbon monoxide detectors.
Once a unit has been inspected and any deficiencies corrected, the fire department will issue a retrofit certificate to verify compliance.
But a unit that has been fully retrofitted may still not comply with zoning, building code and other requirements.
Identifying whether a municipality’s bylaws permit basement apartments is also important when buying a house with a basement unit. Since 1995, municipalities have had the authority to enforce their bylaws with respect to basement apartments; however, units that existed prior to November 1995 are exempt from meeting local bylaw requirements.
Silver notes that the building code, which prescribes minimum requirements for the construction of buildings, for the most part applies only to the day the house was built, and not retroactively.
As a rule, a basement apartment’s minimum ceiling height must be 6 feet 5 inches; its entrance door must be at least 32 inches by 78 inches; bathrooms require either a window or an exhaust fan; and if there is a parking spot for one of the units, there must also be a parking spot for the other unit.
Electrical safety refers to the required inspection by the Electrical Safety Authority.
Buyers of houses with basement units, and agents marketing them, should always insist on evidence that the unit was in existence in 1995. And they should find out whether the unit does or does not comply with the fire code, building code, electrical safety requirements and municipal zoning bylaws.
Full disclosure is of the utmost importance.
By: Bob Aaron, April 9, 2016, Toronto Star
Until now, when a cousin, aunt, uncle, nephew, niece, friend or business associate is registered on title for mortgage purposes, none of the buyers can get the rebate.
A decision by the Tax Court of Canada last month has muddied the waters about who is — and is not — entitled to the new-home owner’s HST rebate.

In recent years, Canada Revenue Agency (CRA) has been aggressively clawing back HST rebates of $24,000 or more from some buyers who received them on closing.
In those cases, a third party who is not a close relation is registered on title at the insistence of a mortgage lender when the buyers do not qualify for a mortgage based on their own credit.
The rebate will be allowed only if a child, grandchild, brother or sister, spouse or common-law partner is a registered owner, but does not live in the home with the principal owner.
But when a cousin, aunt, uncle, nephew, niece, friend or business associate is registered on title for mortgage purposes, even if they have only a 1 per cent share, none of the buyers can get the rebate.
CRA has always taken the position that all of the buyers must qualify, not just most of them.
That’s what happened in 1999 when Phil Davidson bought a duplex in Calgary from a builder, but the mortgage lender required his friend Carol Waterhouse to go on title. Davidson did not qualify for financing himself.
CRA said Davidson wasn’t entitled to any of the rebate because Waterhouse wasn’t living in the property as her primary residence, and the Tax Court of Canada upheld the clawback.
Relying on this ruling, CRA has routinely re-assessed many buyers of new homes in similar situations, and ordered them to pay back the entire rebate — often as much as $26,000.
All that may change in light of a ruling in February by Justice Joe E. Hershfield of the Tax Court of Canada on almost identical facts.
Sheryl Crooks bought a property in Vaughan from a builder but did not qualify on her own for a mortgage from her Credit Union. Her friend, Donna Richards, agreed to take a 1-per-cent interest in the property so that the mortgage would be approved. She did not live in the house.
On closing, Crooks received a $24,000 credit for the HST rebate, but the CRA later re-assessed her, and ordered her to repay it. Crooks appealed to the Tax Court of Canada.
In a detailed, 4,900-word decision, Justice Hershfield ruled that Crooks was entitled to the rebate.
“There is no possible policy reason,” he ruled, “to come to a different conclusion . . . Adding a person to title to meet the requirements of a mortgagee should not result in the loss of the rebate.”
The result, he noted, is consistent with the objects of the Excise Tax Act, and ensures that the objects of the legislation have been met. The judge acknowledged that his analysis and findings “diverge” from rulings by other judges in the same court. He added, “I encourage the CRA to review its assessing practices.”
At press time, Alisa Apostle, counsel for the Department of Justice Canada, advised that the government was not going to appeal the decision. In the meantime, with conflicting court decisions, buyers of new homes who need friends or relatives to go on title for mortgage purposes, are unable to determine whether or not they qualify for the rebate.
The Minister of National Revenue, Diane Lebouthillier, needs to step up to the plate and acknowledge that the Crooks decision is correct, allowing future home buyers to plan their lives and finances accordingly. As well, all prior purchasers who have been improperly and unfairly assessed should receive a refund.
By: Bob Aaron, December 15, 2014, Toronto Star
Ontario Court of Appeal ruling affirms due diligence necessary when providing information to condo buyers.
A major decision of the Ontario Court of Appeal last week has raised the bar on the level of due diligence required by condominium corporations in preparing status certificates.
The origins of the case go back to September 1997, when Kelly Jean Rainville bought one of 39 condominium townhouses on the Toronto waterfront in the Grand Harbour development on Lake Shore Blvd. W.
The prior owner of the unit was Richard Weldon, who had bought the townhouse from the court-appointed receiver when the developer had financial problems. The unit was a two-storey townhouse with a common-element attic above the second floor.
After his purchase, Weldon improperly expanded the unit into the attic. He built new stairs, windows and skylights, a bathroom, sitting area and bedroom. The additional space totalled 862.2 square feet (80.1 square metres).
When the condominium was created in 1993, the area above the second floor ceiling in Weldon’s unit was shown on the plans as common area, and no steps were ever taken to convert the legal designation of the space into part of the unit below.
Weldon sold the unit to Rainville in 1997 for $975,000. No mention was made of the illegal construction and the estoppel certificate (now called a status certificate) provided by the property manager at the time incorrectly stated that there were no continuing violations of the condominium declaration, bylaws or rules.
Rainville went to her lawyer’s office in January 1998 and met with a clerk to sign the closing documents. She was never shown any condominium plans and was under the impression that she was buying everything from the ceiling of the third floor down to the basement parking space.
Before moving in, Rainville began a $700,000 renovation during which it became apparent that the third floor had been built into attic space which she did not own.
In 2001, Rainville sued her lawyer, the condominium corporation, the property manager and a number of individuals who were on the board or who were employees of the property manager. It wasn’t long before everybody was suing everybody else.
Rainville asked the court to legalize the third floor and award her significant damages for her losses. The trial in 2009 took 43 days and involved nine lawyers. My guess is the total legal fees were in the millions of dollars.
I was called as an expert witness at trial and testified that Rainville’s lawyers were negligent in failing to show her both the horizontal and vertical condominium plans, which would have shown that the third floor was not part of the townhouse. The court accepted my evidence.
The trial judge awarded Rainville $300,000 in damages, plus costs to close up and vacate the third floor and the lost renovation costs.
This month’s 57-page decision of a three-judge panel of the court of appeal held the condominium corporation responsible for negligent misstatement in the estoppel certificate for saying that there were no violations of the condominium declaration.
The law firm and condominium were ruled jointly responsible for the difference between the current value of a two-storey unit and a three-storey unit. In addition, the court granted an order allowing Rainville to retain the unit in its three-storey configuration without amending the condominium declaration. This was perhaps the biggest win of all.
Rainville was also awarded damages of $41,681 against the condominium corporation and $28,379 in refunds of legal fees by her lawyer.
At trial, the law firm was hit with almost $900,000 in court costs and
Rainville was ordered to pay $150,000 in court costs. In light of its decision,
the court of appeal will rule on the court costs at a later date.
Following the Rainville case, condominium corporations will now have to be even more careful in providing status certificates. In addition, lawyers who close purchase transactions without showing their clients the condominium plans do so at their own risk.
By: Bob Aaron, August 17, 2015, Toronto Star
If you plan to fight a condominium corporation, says Bob Aaron, be prepared for a ‘very risky and expensive undertaking.’
This is the story of a $47,000 dog named Peaches and its troubled stay in a Barrie condominium.
It all began back in July, 2014, when Dianna Labranche and her dog moved into a condominium unit owned by her common-law partner, Joseph Dominelli. The unit is part of Simcoe Condominium Corporation No. 89 which consists of 57 suites located in three separate buildings.
One of the condominium’s rules restricts the size of a resident’s dog or cat to 25 pounds or less.
Dominelli and Labranche were aware of the 25-pound restriction when the dog moved into the unit. Shortly after the approximately 40-pound pooch arrived, the property manager sent a letter advising that Peaches — a golden retriever/Australian shepherd mixed breed — had to leave because it exceeded the permitted weight limit and was in breach of the rules.
After a series of exchanges with the property manager, the unit’s occupants took the position that Peaches was a service and therapy dog. Labranche provided a doctor’s letter stating that the dog helped her deal with “stress and past abuse.”
Labranche requested an accommodation under the Ontario Human Rights Code. Typically, the Code trumps the rules in a condominium project if it can be proven that the applicant has a need related to his or her disability.
Since the doctor’s letter was vague about her specific disability, the condominium board denied Labranche’s request for an accommodation. They again demanded that the dog be removed from the building.
Ultimately the condominium corporation took Dominelli and Labranche to court seeking an order that the dog be permanently removed from the unit. The case was heard by Justice Elizabeth Quinlan in April and her decision was released in June.
The judge found that the doctor’s letter was insufficiently detailed to establish that Labranche had a disability entitling her to claim a duty of accommodation from the condominium. As well, even if the evidence showed she had a disability, Labranche would not have been prohibited from having a service dog, but only from having one heavier than 25 pounds.
The judge noted that stress is not a disability recognized by the Human Rights Code and that the condominium had not discriminated against Labranche. It had requested further objective information about her medical condition, and the request was refused.
After a two-day court hearing, the judge ordered that Peaches had to be removed from the building.
In a subsequent ruling released last month, the judge awarded the condominium corporation a whopping $47,000 in court costs which can be collected by way of a lien against Dominelli’s unit. On top of that, Dominelli and Labranche had to pay their own lawyers and those costs could easily have doubled the bill.
The lesson which emerges from this case is that owners who request a duty of accommodation from their condominium should make sure that they have a disability recognized by the Human Rights Code.
As well, getting into a legal fight with a condominium corporation can be a very risky and expensive undertaking.
By: Bob Aaron, November 23, 2012, Toronto Star
An Ontario real estate agent has escaped responsibility for failing to review the results of a professional home inspection with his purchaser client.
An Ontario real estate agent has escaped responsibility for failing to review the results of a professional home inspection with his purchaser client, according to a decision of the Ontario Court of Appeal earlier this year.
In a 2011 case, which sent shock waves through the real estate community, a real estate agent was ruled 25 per cent responsible for the buyer’s damages for taking a “hands-off approach” with respect to the home inspection, and because he failed to warn his client about the implications of the home inspector’s report.
It all began in 2006, when Glenda Halliwell wanted to buy a home on Dufferin St. in Toronto. She made it clear to her real estate agent, Joel Lazarus, and to the home inspector, that she was allergic to mould and wanted a dry house.Lazarus ensured that a condition was inserted in the purchase offer allowing Halliwell to terminate the transaction if she was not satisfied with the report from the home inspector.
On the recommendation of Lazarus, Halliwell hired Brian Edwards to conduct a home inspection. Except for the furnace, which the seller replaced before closing, no other serious problems were noted during the home inspection, and there was no evidence of water penetration through the foundations.
Unfortunately, two months after closing, there were clear indications of moisture, mould, mildew, rot, rust and drywall deterioration in the home. Halliwell sued her agent, the broker, the seller and the home inspector. The parties agreed on $90,000 damages prior to going to court, but not on who should pay them.
Following a 13-day trial, the judge found the home inspector liable for 50 per cent of the damages, and the purchaser for 25 per cent for failing to read the inspection report. But the part of the decision which upset many real estate professionals was the finding that the agent was liable for 25 per cent of the damages.
Justice Margaret Eberhard found that Lazarus took a “hands-off approach” with respect to the home inspection report. “Had he read the report he . . . might well have concluded that the parging and driveway issue raised concerns.”
The judge found that the agent induced the purchaser to rely on the home inspection, and then “washed his hands of all responsibility to his client. . . . He failed to advise the purchaser of the use to be made of the report . . . (and) fell below the standard of care by failing to review the report with his client before waiving the home inspection condition.”
Halliwell, the agent and the broker all appealed. Earlier this year, a three-judge panel of the Ontario Court of Appeal reversed Eberhard’s findings of negligence against the real estate agent and the purchaser, and determined the home inspector was responsible for all of the damages.
“Turning to the agent’s liability,” the appeal court wrote, “we agree with the agent’s submission that the trial judge erred in finding the agent liable on a failure to read the inspection report, review it with the (purchaser), and bring to the (purchaser’s) attention the potential for moisture problems arising from the findings in the report.”
This is not to say that some agent in the future would not be held responsible for failing to warn a buyer about a home inspection report. In the Halliwell case, the trial judge did not hear any evidence concerning the standard of care expected of an agent in these circumstances.
As a result, the appeal decision in the case presents both good and bad news for agents and their clients. While the agent in the case escaped liability for the moisture damages to his client’s property, a future court in a different case could decide differently on the agent’s responsibility.
Prudent agents will still review a home inspector’s report with their clients, but in the end it seems to me that the obligation, and the risk, all fall on the shoulders of the home inspector.
By: Bob Aaron, June 12, 2015, Toronto Star
Real estate agents and builders don’t always tell you about the thousands of dollars in hidden fees. Two areas involving builder agreements of purchase and sale that cry out for action by the new homes provincial watchdog are disclosure of additional costs and unit size.
Last week Stella came into my office to review a builder purchase agreement for a unit in a flashy new Toronto condo project. During the negotiation of the deal, both the buyer and the builder were represented by separate real estate agents.
Initially, Stella was enthusiastic about buying her own place — even if it wasn’t going to be ready for as long as six years. By the time she left my office 90 minutes later, after we went through the offer together in detail, she had changed her mind and decided that she was going to exercise her right to back out of the transaction.
Stella’s unhappy experience reveals a huge gap in consumer protection that needs to be remedied by Ontario’s Tarion Warranty Corporation. (Full disclosure: I am a past member of its board and Consumer Advisory Council.)
As I walked Stella through a schedule to the builder agreement, which lists the extra charges she would have to pay in addition to the $392,990 purchase price, her enthusiasm for the purchase dropped away. Although the extras are detailed in the agreement, they were never mentioned in the sales office and are effectively buried in the 41-page document.
Despite their obligations as registered real estate agents, neither the builder’s agent nor her own agent ever mentioned the charges to her.
In total, the extras came to about $12,000 which cannot be mortgaged and would have to be paid on closing.
But that’s not all. Buried in a thick volume of disclosure materials, there is an obligation for each purchaser to contribute proportionately to the purchase of a $744,000 superintendent unit and a $265,000 guest suite. Stella’s share would be $1,952, plus interest, at the Bank of Canada 10-year bond rate plus four per cent, repayable over the next 15 years.
The overall total of undisclosed extras at closing and afterward would be about $16,000.
Although all these charges are by law required to be set out in the purchase agreements or the disclosure materials, there is no obligation to mention them in any meaningful way in the sales office or disclose them prominently on the first page of the offer form.
As a result, buyers who do not have their offers reviewed by their lawyers in the first 10 days after an agreement is signed, often experience huge sticker shock on closing.
This needs to be remedied both by Tarion and by the Real Estate Council of Ontario. Builders and their sales agents should be required to speak up and be transparent about extra charges.
The other area which cries out for Tarion regulation is the failure of most — but not all — condominium builders to include in their purchase agreements floor plans that show linear measurements and the total unit area. Size is, perhaps, the most important factor in buying a condo and measured floor plans are crucial to buyers.
Some of these charges typical in builder agreements — that came to about $12,000 — cannot be mortgaged and must be paid upon closing:
• $7,797 (all figures include HST) for charges and levies imposed by government authorities or school boards;
• $1,695 “administration fees” for connecting and energizing hydro and water meters to each unit;
• $282.50 to keep track of the buyer’s deposits;
• $904 to amend the agreement to add or remove a purchaser’s name;
• $339 to subsidize the builder’s lawyer’s legal fees for registering discharges of the construction financing on the property title;
• two months’ extra common expenses for the reserve fund; and
• the Tarion enrolment fee of $1,050.
By: Bob Aaron, March 6, 2015, Toronto Star
Early pipe failure has sparked cross-border class-action lawsuit
My home has Kitec plumbing in it. Should I be worried?
The short answer is: Yes. Kitec plumbing was widely used in Canada and the U.S. in homes and condominiums built, or extensively renovated, between 1995 and 2007. It was sold for pipes for drinkable water pipes, as well as in-floor and hot-water baseboard systems.
Kitec was marketed as a corrosion-resistant alternative to copper pipes and fittings, but was recalled around 2005 due to a tendency to corrode at an accelerated rate. It is no longer manufactured.
Kitec may deteriorate or fail due to excessive water pressure or water running at temperatures hotter than the manufacturer’s rating of 77C (180F).
Industry professionals believe that homes and condominiums with Kitec plumbing and fittings will experience premature pipe failure, and failure rates will increase over time. The pipes may not just leak but burst, with potential for flooding. The only complete solution is to replace Kitec plumbing with copper pipes. This will typically require access behind walls and through floors.
Most Kitec plumbing can be identified by its bright orange (hot water) and bright blue (cold water) pipes, which were the most common colours, but it was also sold in red, blue, gray and black. The pipe is typically marked with one of about 10 different brand names including Kitec and PlumbBetter. Visible fittings are stamped with Kitec or KTC.
The best place to look for a Kitec system is near the hot water tank or in the mechanical room where the pipe connects to, or exits from, the walls. Pipes are also visible beneath kitchen sinks or bathroom vanities. Electrical panel doors may contain a sticker stating that Kitec was used in the home and that the electrical system cannot be grounded to it.
One large midtown Toronto condominium was built with Kitec plumbing. The anticipated costs to retrofit each suite with copper pipes ranges from $5,000 to $6,500 for one-bedroom units to $8,000 to $10,500 for two-bedroom and larger suites. The prices include replacing plumbing and drywall but not kitchen or bathroom tiles which would have to be removed to access the pipes.
Each owner must pay for his or her own repairs, and those expenses cannot be charged to the condominium reserve fund.
The time needed for the work to be completed in each suite ranges from a full day for smaller units to as much as three days for larger units.
Kitec plumbing has been the subject of many lawsuits across North America, including a large cross-border class action which was concluded in 2011. A settlement fund of $125 million (all figures U.S.) was established, with $25 million going to the lawyers in Canada and the U.S., and $100 million being set aside for claimants who have until January, 2020 to file.
With an estimated 87,600 claims, the payout to each claimant will be nominal and the final amounts will not be settled until the expiry of the claims period in 2020.
The Nova Scotia Real Estate Commission, which regulates the provincial real estate industry, takes the Kitec issue very seriously. It has issued an advisory to its member real estate agents instructing them how to identify Kitec plumbing, what they need to know about it, what clauses to add to agreements of purchase and sale, and how seller clients can make a claim against the class action settlement fund.
In Ontario, every residential purchase agreement contains a warranty about urea formaldehyde foam insulation. Clauses about marijuana grow ops are often included. But I have yet to see a clause about Kitec plumbing.
The web site of the Real Estate Council of Ontario (RECO), with a mandate to administer the legislation governing real estate agents and to protect the public interest through “a fair, safe and informed marketplace,” should consider adopting Nova Scotia’s approach. 
By: Bob Aaron, September 27, 2013, Toronto Star
Get the details of property you’re buying in all-important survey
I think it’s time that a land survey be made a compulsory part of every real estate transaction. It baffles me why a clause to that effect is not a part of the standard form agreement of purchase and sale, or at the very least added to every contract as part of a schedule.
In lay terms, a land survey shows:
• the size of a parcel of land
• its location relative to nearby lands, roads, or geographical features
• the location of public and private improvements such as buildings, pools and fences, relative to the property boundaries, and
• the physical features of the property.
The purchase agreements commonly used in the industry today are published by the Ontario Real Estate Association (OREA) and in annual revisions over many decades have avoided any reference to land surveys.
I have repeatedly stated that the land survey is the most important document in any real estate transaction and yet in most of the non-condominium transactions that cross my desk, the word survey does not appear. Without one, purchasers cannot possibly know the full extent and measurements of their title.
A real estate agent who fails to provide for a survey in creating purchase agreements risks running afoul of the industry’s code of ethics. Back in June, 2001, an Ontario real estate agent was acting for the buyers and sellers of a home. He failed to indicate on the MLS listing that the driveway providing access to the property belonged to the Ontario Ministry of Transportation and was not included in the title to the house.
The agent failed to explain this to the buyers, and did not advise them to seek outside professional advice from a lawyer or surveyor. Although a survey was provided to the buyers before they submitted the offer, it was not explained to them that the driveway was not part of the deal.
Shortly after closing, the buyers discovered that they did not own the driveway. The buyers’ title insurer paid to install a new driveway, but the lot remained considerably smaller than originally advertised.
In 2003, after the buyers complained to the Real Estate Council of Ontario, the agent was found to have breached the code of ethics by failing to make the offer conditional on approval of the survey and was fined $4,350. In this case, as in most cases, title insurance was not a substitute for a survey.
Sellers often tell their agents that they do not have a survey, when in fact they received one at the time of their purchase. Although using an old survey entails some risk since it is not current, many historical surveys are available online for a modest fee from I think it’s fair to say that a land survey exists for every home built in Ontario in the last 30 or more years, and I have often seen century-old surveys showing the same house that is standing today.
In 2002, the law firm Miller Thomson prepared a report for the Alberta Land Surveyor’s Association. It concluded, “Using title insurance as a replacement for a (survey) would be like purchasing theft insurance and then leaving the car door unlocked with the keys under the floor mat. Your car may not be stolen, but you increase the likelihood by acting in a careless manner.”
Title insurance, as valuable as it is, is no substitute for knowing that the homeowners have valid title to all the land underneath the house, that they own the driveway, and that a utility easement is not running beneath the living room.
By: Bob Aaron, February 1, 2016, Toronto Star
Interest Act is intended to protect property owners against abusive lending practices.
A decision of the Ontario Court of Appeal has ruled that late payment charges and default fees set out in a mortgage are unenforceable and contrary to the Interest Act.
The case arose in 2011 when Bijan Pardis and two of his companies signed a promissory note and a mortgage on a property he owned on Langstaff Rd. E. in Markham in favour of Sam Acquaviva and Premier Homes Realty Ltd.
The property itself was used as an addiction treatment centre by Pardis, who is a medical doctor and land developer.
Both the promissory note and the mortgage secured a single debt in the amount of $458,488.07, repayable over a six-year term. Under the terms of the mortgage, interest was set at the rate of 0.75 per cent annually. The note, but not the mortgage, also provided that in the event of any default in monthly payments, the interest rate on the debt would increase to 10 per cent per year.
The mortgage entitled the lender to an administrative fee of $300 for every payment which was missed, late or returned due to insufficient funds. As well, any late payments under the mortgage would attract a penalty at the rate of $10 daily.
In early 2012, the borrowers stopped making payments on the debt. In response, the lenders issued a notice of sale and also sued for the amounts owing. They also claimed $300 for each late payment, and interest at the rate of 10 per cent based on the escalation clause in the promissory note.
Interest arrears calculated by the lenders at the 10-per-cent rate totalled more than $57,000. A total of 24 late payment charges at $300 each came to $7,200 and default fees at $10 a day amounted to $11,110. At the first court hearing, the judge accepted the lender’s calculations and granted judgment in the amount claimed, plus $55,600 in costs.
Through his lawyer, Howard Crosner, Pardis and his companies appealed to a three-judge panel of the Court of Appeal in late 2014. In its decision handed down last year, the court applied a section of the federal Interest Act which prohibits any fine, penalty or an interest rate in a mortgage that has the effect of increasing the charge on arrears higher than the mortgage rate which would apply if the borrower was in good standing.
The appeal court referred to an earlier British Columbia court decision which states that the Interest Act is intended to “protect property owners against abusive lending practices, while recognizing that generally speaking parties are entitled to freedom of contract … The prohibition against extra charges on arrears remains in place for loans secured by a mortgage.”
In the end, the appeal court rules that the only interest rate which applied to the debt was the agreed 0.75 per cent interest rate.
The court of appeal also struck down the $11,110 late payment charges and the $7,200 default fees on the basis that they also constituted a prohibited fine or penalty within the meaning of the Interest Act.
The borrower was awarded $25,000 in court costs against the lender.
Similar penalty provisions often appear in many residential first and second mortgages with private lenders and smaller lenders other than the country’s largest banks and trust companies. This decision of Ontario’s highest court makes it clear that, unless mortgage penalties directly relate to actual costs incurred by a lender, such as an NSF bank charge, the borrower is not required to pay them. The borrower, of course, still has to pay interest at the lower rate.
By: Bob Aaron, June 13, 2014, Toronto Star
An acceptable status certificate is as important to the buyers as the purchase agreement itself. Make sure your lawyer reviews the certificate closely.
Why does a lawyer have to review the condominium status certificate on a resale purchase? What are the risks if it’s not done?
Although there is no legal obligation to obtain and examine a status certificate before buying a condominium unit, it is extremely risky not to do so.
The wording of the status certificate is mandated by the Condominium Act.
A lawyer’s review of the certificate will confirm the unit and level number of the condominium, the amount of common expenses, the existence of a budget and audited financial statements and a reserve fund study.
Other matters disclosed in the certificate are the names of the board members and management company, the building’s insurance coverage, whether there are any anticipated special assessments or common expense increases, and whether the corporation is involved in any litigation.
Unfortunately, as many as half of the certificates I examine reveal problems serious enough to require further action.
The most frequent problem I see is where the unit and level number of the suite being purchased as set out in the offer do not match the real numbers on the status certificate.
Typically, this is the result of the failure to verify the unit numbers and incorrectly guessing at the floor number. Some buildings, for example, do not have floors marked 4 or 13, but those levels cannot be ignored when counting the floors up from the ground.
As a result, a suite such as 2507 may be unit 7 on level 23 or level 24. When it is incorrectly shown on the offer as being on level 25, the agreement has to be amended.
Another frequent issue occurs when the common expenses shown on the offer are less than the amount disclosed on the status certificate. This can happen when the listing period overlaps the building’s year end, and the expenses are increased but the listing details are not updated.
Last week, I was asked by a client to examine a status certificate for a condominium purchase outside of Toronto. It turned out to be one of the worst ones I have ever seen.
The unit and level number of the suite were missing entirely. No property manager was shown on the certificate.
The reserve fund balance was shown as of last October, while the Condominium Act requires the certificate to show a balance not earlier than a month-end within 90 days of the date of the certificate.
Despite the existence of a recent update to the reserve fund study, the required plan for funding the reserve had apparently not been approved, and the notice of future funding, which the law requires the corporation to deliver to owners, had not been prepared.
I pointed out to the purchasers that this issue alone would likely cause the bank to decline to fund their mortgage, as it was clear the building was not being properly managed.
The purpose of a reserve fund study is to ensure that enough money will be available for required major repairs and replacements in future years. In buildings where major work is required and the reserve fund is not adequate, the owners can face huge special assessments, or the condominium will have to carry the cost of borrowing large amounts of money over a lengthy period.
Sadly, too, in the certificate I examined, the budget and audited financial statements were also missing from the documents attached to the certificate — apparently because they do not exist.
Audited financial statements are a requirement of the legislation, and their absence would be another reason for a purchaser to back out or a bank to decline to fund the mortgage.
In the case of the status certificate I examined, the purchasers decided on their own that they would not be able to obtain financing, and it would be too risky to proceed. They terminated the transaction.
An acceptable status certificate is as important to the buyers as the purchase agreement itself. Never buy a resale condominium without a lawyer’s careful review of the certificate while the offer is still conditional.
Would you buy a condominium without audited financial statements or a plan for funding the reserve fund?
By: Bob Aaron, Feb 13/2016, Toronto Star
The way some builders calculate estimated taxes is not the way the city does it and the result is a significant overcharge to buyers. Thousands of purchasers of new condominiums are being overcharged for property taxes.
Here’s how it works: when a new condominium is ready for occupancy, the buyer gets the keys and can move in — but title will not be transferred for some months.
The period between occupancy and the final closing, when title is transferred, is called the “interim occupancy period.” During this time, buyers pay the builder a monthly interim occupancy fee.
The components of this fee are set out in the Condominium Act, and include an amount “reasonably estimated” by the builder for the unit’s municipal taxes.
Most builders typically calculate the tax component of the interim occupancy fee by taking the purchase price of the unit as shown on the front page of the offer and multiplying it by 1 per cent. The result is then divided by 12 to get the monthly charge.
The 1 per cent figure is supposed to represent the city of Toronto’s mill rate, which is a percentage used to arrive at annual taxes. The city sets the mill rate with its annual budget, and for every residential property in the city, the assessed value is multiplied by the mill rate to yield the annual property taxes.
The way some builders calculate estimated taxes, however, is not the way the city does it. And the result is a significant overcharge to buyers.
The correct method, which is how the city calculates taxes, is to take the assessed value of the unit, which is typically the purchase price minus the significant HST component, and multiply the result by the city’s official mill rate, which last year was 0.7056037 per cent.
Here’s how the numbers worked in a transaction in my office last month.
The purchase price including tax was just over $868,000, and the price without HST was $789,720.
On occupancy, the builder calculated the estimated taxes using the total purchase price — including HST — multiplied by 1 per cent. This resulted in estimated annual taxes of $8,377 for the unit.
The correct formula, which I had inserted into an amendment to the agreement, required the purchase price without taxes ($789,720 and not $868,000) to be multiplied by the city’s actual mill rate for 2015 (0.7056037 per cent and not the builder’s 1 per cent). This yielded a reasonably accurate estimate of $5,572 for 2015 taxes — a discrepancy of $2,805.
The purchasers had therefore been overpaying taxes of almost $234 monthly as part of their interim occupancy fees. For the almost 10 months they had been in possession, the tax overpayment was $2,314.
When I pointed this out to the builder’s lawyer the night before closing, he agreed that the calculations were correct and credited my clients with the full overpayment.
Technically, each purchaser in the building, and in hundreds of similar buildings, should be entitled to a readjustment from the builder — if they or their lawyers crunched the numbers.
In the same vein, builders often charge purchasers an overestimate of final taxes to the end of the year of closing, and undertake to readjust with purchasers afterward — but typically only on request.
With tens of thousands of new condominiums closing annually, the potential windfall to developers is huge.
There are two solutions to this problem. The first is to require builders to calculate the tax component of interim occupancy fees in a manner which corresponds to the way the city calculates taxes.
And the second is for purchasers and their lawyers to be on the alert and require builders to more accurately calculate estimated taxes.
By: Bob Aaron, July 10, 2015, Toronto Star
Be smart and ensure address changes are complete — especially on government forms
A Tax Court of Canada decision last month can help buyers of new homes and condos ensure they qualify for the HST new home rebate.
The court’s finding is also a serious reminder for buyers to complete all details associated with moving.
In 2009, Anthony Montemarano was in a serious relationship with his girlfriend and decided to buy a home for himself and his future wife.
He signed an agreement with Country Wide Homes to buy a four-bedroom house to be built on Fairwood Circle in Brampton. The purchase price was $362,000. Prior to closing, Montemarano and his girlfriend chose $7,507.50 in upgrades
The transaction closed on December 10, 2010 and Montemarano moved into the house with the help of two friends. His parents gave him a few things for the house until the wedding when it was customary for them to give gifts of furniture.
In March, 2011, Montemarano and his girlfriend broke up. He listed it for sale and in September, 2011, sold it for a gain of about $130,000.
At the time of buying the house, Montemarano declared that it would be his principal residence. As a result, the builder credited him with total HST provincial and federal rebates of $27,297.85. Subsequently, the Canada Revenue Agency (CRA) reassessed him, claiming a clawback of the rebates on the basis that he did not qualify for them.
With so many people flipping houses and condos in this market, CRA did not believe Montemarano genuinely intended the house to be his home.
The Excise Tax Act provides that a purchaser is eligible for the HST rebate if, at the time he or she signs a contract with the builder, they genuinely intend it as their primary residence.
Montemarano appealed the government’s attempt to recover the rebates and the matter came before the Tax Court of Canada last month.
Montemarano introduced evidence from two friends who testified they went to the house to play poker. He presented his hydro bills and a letter from his real estate agent.
The Canada Revenue Agency disputed his claim, relying on the fact that he did not change his address on record with the CRA, the Ontario Ministry of Transportation for his driver’s licence, and the Ontario Ministry of Health for his health card.
After hearing evidence from both sides, Justice Valerie Miller concluded that Montemarano met the conditions required to qualify for the HST new housing rebates. He did not have to repay more than $27,000 in rebates back to the government, and presumably is entitled to claim the $130,000 profit as a tax-free capital gain.
For home buyers in similar situations, the test is whether or not they can assemble enough evidence to establish a genuine intention to live in the house as a primary place of residence. Moving in a mattress and toothbrush, as many buyers apparently do, will simply not be enough to convince CRA of a genuine intention to live in the house.
By: Bob Aaron, December 4, 2015
One of the greatest shortfalls in Tarion’s consumer protection is in the area of marketing pre-construction houses and condominiums, Bob Aaron says.
A review of consumer protections for owners of new homes is set to get underway.
Retired associate chief justice J. Douglas Cunningham has been appointed to look into Tarion Warranty Corp. and its governing legislation, the Ontario New Home Warranties Plan Act.
Tarion is a private organization that administers the plan and about 50,000 new homes and condos are enrolled in the warranty program annually.
As a past board member of Tarion, I welcome the review and offer my wish list of topics to be considered:
To me, one of the greatest shortfalls in Tarion’s consumer protection is in the area of marketing pre-construction houses and condominiums.
• Ontario builders sell tens of thousands of units, worth billions of dollars, every year. Most of them are sold by unlicensed sales people who are not required to have specialized education, experience, insurance or ethical standards. Nor is there a requirement for bonding, or criminal record checks.
In my view, consumer protection demands that pre-construction homes should be sold only by real estate agents who are licensed, trained, insured and regulated.
• Another area requiring urgent regulation is disclosure of unit size. Tarion’s Bulletin 22, which suggests a permitted variation of 2 per cent in the size of the delivered unit, is only a guideline and needs to be scrapped.
• I have often noticed a huge discrepancy between marketing material and the contents of builder purchase agreements which specifically state that brochures and sales office floor plans are not part of the deal. This should be prohibited so that builders can be held to the contents of marketing materials and oral representations made in the sales offices.
• Buried at the back of builder agreements are two Tarion schedules that list both the known and undetermined extras which will be added to the purchase price. The front page of every purchase agreement should require a statement in bold type stating the total amount of known additional charges, and whether undetermined extra costs have any dollar limit at all.
Delayed occupancy compensation should be increased to $250 daily from the current $150, and the $7,500 cap should be removed. Builders should be prohibited from forcing buyers to waive their entitlement to the money, and it should be credited to buyers on closing and not paid afterward.
• Entitlement to HST rebates is always a confusing issue for buyers. The front page of purchase agreements should contain a statement of the dollar amount of HST that will be payable if the buyers fail to take possession as their primary residence.
• Builders who consent to buyers assigning their purchase agreements at huge and often unreported profits, should be required to forward details of the assignments to Canada Revenue Agency.
• And finally, builders should be prohibited from forcing condominium buyers to contribute to the cost of guest suites, energy conservation equipment, or recreational facilities over a period of as many as 11 years after closing.
Just one person’s opinion.
By: Bob Aaron, May 1, 2015, Toronto Star
Having her uncle on title to get financing disqualifed an Oakville woman for federal rebate
Back in June 2011, Angela Maria Henao and her aunt signed an agreement to buy a new house on Quetico Cres. in Oakville. With the June 2012, closing date approaching, Henao and her aunt discovered they were unable to qualify for the required $472,000 mortgage financing.
The purchase agreement was then amended by replacing her aunt as one of the buyers with her uncle, Carlos Restrepo. At the insistence of the bank, he had to be registered on title as an owner. Henao would have been the only buyer if she had qualified for the financing by herself since it was to be her house.
After closing, the Minister of National Revenue refused to allow Henao the HST new homebuyer’s rebate, which I estimate to have been about $24,000.
Henao lived in the house as her primary place of residence. Her uncle never lived there, never made any mortgage or other payments and never expected to receive to receive any proceeds of the sale when the house is sold.
The uncle was clearly on title only as a straw buyer so that his niece could secure mortgage financing. There was no formal trust agreement in which the uncle would have declared he had no interest in the property, but that was in fact their arrangement.
Henao appealed the denial of her HST rebate to the Tax Court of Canada and the court’s decision was released at the end of March. The only issue for the court to decide was whether she was entitled to the rebate.
The law in this area is complex, and in cases like this one, unfair to unsuspecting purchasers. On the sale of every newly constructed home or condominium, the purchase price is subject to HST. The sale price in a builder offer assumes that the purchaser will live in the house and is eligible for the HST rebate.
If the buyer is not eligible, the rebate is added to the builder’s purchase price.
In order to qualify for the HST rebate, the house or condominium must be acquired for use as the primary place of residence of the titled purchaser or a specific category of relative.
Without losing the rebate, title may be held by the buyer jointly with a specific blood relation, including a child and grandchild, a brother or sister, and relationships by marriage or common-law partnerships — even if the relative doesn’t live in the house.
Unfortunately, aunts, uncles, cousins, nephews or nieces and others are excluded from eligibility.
This means that if just one of the buyers does not qualify, even as the owner of a one per cent interest in the property, none of the buyers can get the rebate. All of the buyers must qualify, not just most of them. There is no percentage allocation.
The amount of the lost rebate can be substantial. The federal portion of the rebate is 36 per cent rebate of five per cent of the price, up to a maximum of $6,300 for homes or condos costing $350,000 or less. The rebate gradually drops to zero on homes priced between $350,000 and $450,000.
In addition, there is a rebate of 75 per cent of the eight per cent provincial portion of the HST on the purchase price, up to a maximum of $24,000.
In the case of Angela Henao, Justice Kathleen Lyons ruled that since Carlos Restrepo did not intend to live in the house as his primary residence, and since as the owner’s uncle he was not exempted as a blood relative, both he and his niece were not entitled to the rebate.
In her ruling, Justice Lyons acknowledged the consequences of her decision. “While it is unfortunate that the legislation disentitles (Henao) from the Rebate, it is for Parliament — not the Court — to remedy the situation.”
Homebuyers’ and moving advice
Next month is the busiest month of the entire for real estate transactions year in Canada. Give yourself some breathing room and try not to schedule your transactions for May 1, 15 or 30 — that’s when movers are typically booked solid and could charge you premium rates for a regular moving job.
By: Bob Aaron, February 27, 2016, Toronto Star
Recent court decisions have ruled in favour of condo buyers seeking a refund of their deposits following a discrepancy between the initial documents they signed and the final sale agreement.
Recent lawsuits over material changes in final sale agreements have ended with the courts ordering buyers’ deposits fully refunded.
Three cases involved purchasers in Toronto’s Trump International Hotel and Tower condominium project.
Decisions in two of the cases against Talon International, the developer, were released on the same day last month.
The litigations began when buyers started to realize the units would not yield the profits they were expecting.
Michael Carlson, counsel in two of the cases, cautioned buyers of new condominiums to carefully review any last-minute disclosure notices since they may contain changes to the budgets and common expenses.
“This case,” he said, “firmly pushes the Condominium Act back to its original purpose: consumer protection legislation.”
In the first case, Young Sook Yim and Paul Chung-Kyu Kim had bought a pre-construction unit in the Trump tower in 2007 and paid Talon deposits totalling $172,000.
In November 2011, the buyers visited the building for a pre-closing inspection of their unit. At the same time, the developers provided them with a copy of the proposed hotel unit maintenance agreement. This was the agreement where the hotel unit would be managed for the investor buyers.
After reviewing the document, Yim and Kim took the position that its terms were materially different from the maintenance agreement in the builder’s original disclosure statement and the projected expenses were significantly higher than those originally provided.
Yim and Kim then exercised their right to rescind the purchase agreement based on a material change from the disclosure documents and they demanded return of their deposits. They sued to get their money back.
In a companion case, Adrian Harvey and his company had purchased a $727,000 pre-construction unit in the Trump project in 2005 and provided deposits totalling $145,500.
As in the Yim and Kim case, Harvey objected to the form of the maintenance agreement and the increase in monthly common expenses. He sent the developer a notice of termination but did not use the magic word rescission, which is the legal right a buyer has to back out of the agreement if there is a material change in the disclosure documents.
The court in both the Yim and Kim, and the Harvey cases ruled that the revisions were material changes, and the form of the buyer’s notice was not as important as the intent and content. The deposits were ordered returned.
Nancy Tourgis, who represented the developer in the cases, has filed a notice of appeal.
In another decision released last September, Ganesh Ram and his company sued Talon for return of his deposit of $228,250. Talon counterclaimed for a declaration that the deposit monies were forfeited.
Just before the scheduled occupancy closing in February 2012, Ram was notified that the revised common expenses were 40 per cent higher than those set out in the builder’s original disclosure statement. He took the position that this was a material change in circumstances and that a revised disclosure statement was required. If it had been delivered, the buyers would have a new 10-day window to rescind the transaction.
When the closing deadline in the agreement passed, Ram proceeded as if the agreement was terminated and demanded return of his deposit. Mavis Butkus, counsel for the buyers, was successful in obtaining judgment against Talon for the entire deposit of $228,250 plus interest.
This decision has also been appealed, with the hearing scheduled for May 18.
By: Bob Aaron, April 11, 2013, Toronto Star
In Ontario, sellers and real estate agents have no legal obligation to disclose information about suicides, murders, or any other matters which might stigmatize a property.
Shortly after Sidney and his wife bought their Toronto home last fall, a number of their new neighbours told them that there had been a suicide there just prior to their purchase.
The neighbours knew in great detail that the event occurred in the basement washroom, and was soon followed by a crime scene-like display of 10 police cars, fire trucks and an ambulance.
Sidney emailed me to report that the seller told them that her brother, the original owner, died of a heart attack.
The property was inherited by the owner’s sister, who sold the house right afterward.
At the time of the sale, the house was in its original condition except that the basement washroom had been gutted and renovated. The buyers were told that the reason for new basement washroom was due to “renovations they never ended up finishing.”
The new owners are very unhappy. They wanted to know whether the seller was required by law to reveal the truth about the suicide, and how this impacts them when they resell the house.
In Ontario, sellers and real estate agents have no legal obligation to disclose information about suicides, murders, or any other matters which might stigmatize the house.
Nevertheless, real estate agents are required by their regulator, the Real Estate Council of Ontario (RECO), to “discover and verify the pertinent facts relating to the property and the transaction.” RECO interprets its rules to mean that material facts regarding stigmatized properties need to be disclosed so that agents can treat all parties to the transaction “fairly, honestly and with integrity.”
The key element here is that if the agent is not informed about the property’s stigma — whether it is murder, suicide, a marijuana grow-op, meth lab, sex scandal, or even hauntings — there is no obligation to disclose something beyond the agent’s knowledge.
No real estate agents were involved in Sidney’s purchase transaction. “The owners stressed a great deal they’d only do it privately on both ends. Now I think I know why,” he told me.
No law required the sister of the deceased owner to disclose the suicide or the reasons behind the renovation of the basement washroom.
About half of all American states have laws requiring disclosure of property stigma, some with certain time limits. Quebec does, but the rest of Canada does not. Generally, the rule is caveat emptor, or buyer beware.
Sidney plans to renovate the entire house and put it on the market. It seems he is not required to tell his real estate agent, or any prospective buyers, of the gruesome event in the basement. But if he did, would it have any impact on the price?
In 2001, Wright State University professors James Larsen and Joseph Coleman studied psychologically-impacted houses in Ohio. They found that real estate brokers in the state reported that homes with bad histories sold for about 3 per cent less than non-impacted houses, but they stayed on the market 45 per cent longer than the average home.
The study concluded that owners of these properties had to keep their homes on the market until they eventually found a buyer who didn’t care about the home’s history or who were happy with the price.
Sidney told me that for his Toronto “suicide” home, “we never would have paid anything like what we did had the seller not withheld this information.
We find this extremely unfair and were misled into paying what we would not have otherwise.”
Some interesting questions arise from Sidney’s story and hundreds of others just like it across the continent.
• Should Ontario have laws making disclosure of stigmatizing events compulsory?
• If so, should there be a time limit on disclosure?
• Should sellers as well as agents be required to disclose?
• Is it true that what a buyer doesn’t know won’t hurt him?
Shakespeare put it best in The Merchant of Venice when Launcelot says, “Truth will come to light; murder cannot be hid long.”
Is Ontario ready for a disclosure law so that murder or suicide cannot be hid long?
By: Bob Aaron, May 24, 2013, Toronto Star
Legal services coverage can protect you from mistakes beyond policy
In the world of real estate, it’s not very well known that title insurance policies vary significantly from one company to another.
When it comes to basic title protection, though, policy coverage among insurers is very similar. Title insurance typically protects home buyers against loss from risks which are listed in the policy, including another person having an ownership interest in the property, outstanding liens, construction without a permit, fraudulent title dealing, breach of zoning bylaws and other circumstances which could result in loss.
But unlike insurance policies in other fields, some title insurance policies also include coverage for risks that are not specifically itemized.
This type of protection is called legal services coverage and not every title insurer offers it.
In plain language, if a mistake in a real estate transaction occurs due to a lawyer’s negligence, legal services coverage in a title policy protects the owner — even if the mistake falls outside the specific risks listed in the policy.
I often say that there is no such thing as a simple real estate deal. There are numerous aspects of a real-estate transaction in which mistakes can occur, even though the owner has received good and valid title to the property.
A real-life example of legal services coverage occurred when a purchaser signed an agreement to buy a lakeview condominium unit, described as Suite 5321 and Unit 5 Level 2. It turned out that Unit 5 Level 2 was actually Suite 5531,which did not have a view of the lake.
In reviewing the status certificate, the buyer’s lawyer missed the inconsistency.
The buyer took title to a unit he had no intention of buying and the lakeview unit was sold to someone else.
Normally, since the purchaser received good title to the numbered unit in his purchase offer, the loss would not be covered by a title insurance policy.
In this case, however, the legal services coverage came into play and the insurer compensated the buyer for the difference in value between the two units.
Other examples of legal services claims might include putting incorrect names on the deed, land transfer tax and income tax implications, errors in calculating the adjustments between buyer and seller, and financial consequences of the purchase.
In Ontario, only two title insurance companies are authorized to issue policies which provide legal services coverage: FCT Insurance Company Ltd. (First Canadian Title), and Lawyers’ Professional Indemnity Company (LawPRO — TitlePLUS).
(Disclosure: I am a non-voting director of the Law Society, which owns LawPRO. I have no role in its operations.)
TitlePLUS routinely includes legal services coverage in all its Ontario residential purchase policies, and FCT does not include it although it is licensed to do so.
In the case of TitlePLUS, any negligence or mistake by a lawyer in providing legal services for a real estate purchase transaction is covered by the TitlePLUS policy whether or not the mistake is a specific insured risk set out in the policy.
This coverage is included in the policy without extra charge to the lawyer or buyer.
FCT Insurance offers what it calls E&O Extra coverage to lawyers who pay a one-time annual fee. The coverage reimburses the lawyer for his or her deductible and insurance premium surcharge if the client sues the lawyer due to an error in the transaction which is not covered by the title insurance.
With FCT, the homeowner would have to sue the lawyer in order to recover any losses.
Although Stewart Title is unable to provide legal services coverage, it does offer what it calls StewartPROTECT for an extra premium with each policy.
The wording of the coverage suggests that there is no protection from lawyer mistakes for post-closing errors (such as payout of funds) or mistakes (such as calculation errors) which do not affect use and enjoyment of the property. Stewart, though, may provide protection outside policy boundaries.
Home buyers who want the broadest possible protection with their title insurance policies should always discuss legal services coverage with their lawyers before closing.
By: Bob Aaron, December 9, 2011, Toronto Star
Is it wrong to advertise a link-semi, whose only physical attachment is typically a row of underground concrete block footings, as a detached home?
When you’re selling a house known as a link-semi, is it wrong to advertise it as a detached home?
The link house style was popular in Toronto in the 1970s and 1980s. The only physical attachment that joins two adjacent houses typically consists of one or two short rows of underground concrete block footings, at right angles to the foundation walls. They are entirely unnecessary for structural reasons.
Looking at the houses from the street, they are clearly detached, with a few feet separating them. It is impossible to tell that the houses are linked because the only physical attachment is the concrete blocks that are invisible above ground level. In fact, the only purpose of the attaching footings was to allow builders to construct what looked like detached houses on lots which were designated for semi-detached models.
One Toronto real estate agent found out the hard way that the Real Estate Council of Ontario (RECO), the industry regulator, takes a dim view of agents who advertise link houses as detached.
Back in May 2007, this selling agent listed a house for a client, describing it on the Multiple Listing Service (MLS) as “detached,” which from a street view, it was.
The property was listed at $320,000, sold for $329,000 through a buyer broker, and closed Aug. 31, 2007.
Prior to closing, neither the listing agent nor the buyer’s agent disclosed that the property was a link house, although it could easily have been verified by calling the city’s zoning department or reviewing the R-plan. Had the buyers seen the plan, they would have noticed the dotted lines indicating that the foundations were connected.
More than 18 months later, the buyers complained to RECO about the listing agent, saying that the house was misrepresented as being detached, and that had they known it was technically a link house, their purchase decision might have been affected. (Hindsight is always 20-20.)
The agent was charged with violating various sections of the RECO Code of Ethics, including failing to treat buyers with fairness, honesty and integrity, failing to demonstrate reasonable knowledge, skill and competence, failing to determine and disclose material facts, and making an inaccurate representation.
He was also charged with failing to use his best efforts to prevent error, misrepresentation, fraud or any unethical practice.
To me, it looks like RECO threw the book at the unfortunate agent. Ultimately he agreed to the buyers’ representation of the facts, and that he had breached the RECO code of ethics. He was assessed a rather stiff fine of $8,000, and required to take an ethics course.
Having had the experience of sitting on Law Society discipline panels over the last 16 years, it seems to me that a good argument can be made that the anonymous RECO panel reached the wrong conclusion and imposed an unduly severe penalty.
Although the property was technically known as a link, it was clearly and obviously detached to anyone standing at the curb looking at the property. Despite the fact that the agent involved admitted to a breach of the code of ethics, it seems to me that he was under no obligation to do so and should have been given the benefit of the doubt due to the ambiguous terminology.
Visually, the house was detached, even though it was technically classified as a link house. I’m not sure the agent did anything wrong, or if he did, it was a technicality only, resulting in no loss to the homebuyers. I doubt that it merited an $8,000 penalty.
The RECO panel’s decision fails to discuss the obligations of the selling agent and the buyers’ lawyer to show them the R-plan before closing. Had this been done, I doubt the case would ever have reached the RECO discipline panel.
I wonder whether the result would have been the same if one or both of the adjacent owners had dug up the connecting foundations or footings, which serve no physical purpose, and simply demolished a few inches so that the houses were no longer “connected.”
By: Mark Weisleder, Friday, Dec. 17, 2010
Virtually every real estate deal is signed by the buyer and the seller “under seal.” But what does it mean?
Virtually every real estate deal is signed by the buyer and the seller “under seal,” but many buyers and sellers don’t know what this means or even whether a seal is necessary. 
In order for any contract to be valid it must have what’s called ‘consideration’ which an exchange of value between the parties because you can’t receive something for nothing. Consideration is usually money, but it could be a case of good red wine if you agree to it. 
In a real estate deal, there is always consideration, since the buyer gives money and the seller is giving the property. Let’s say you agree to buy a cottage for $200,000. A week before closing you go up to the cottage with the seller and notice you forgot to include in the offer the fact that you want the seller’s old boat as part of the deal. The seller says: “Don’t worry, I’ll leave it.” Instead he takes the boat with him. 
Can you sue him for it? The answer is no. The seller received nothing for making this promise about the boat.
In the same example, the seller takes out a piece of paper and writes: “I agree to leave you my boat on closing.” He signs the paper and puts a seal beside his name. Under the law, the seal itself is consideration. This means that even though it still doesn’t look like the seller received anything for making this promise, he still has to leave the boat, or else you can sue him for it.
In medieval England, having a seal meant that you were able to make an enforceable promise. You never signed anything under seal unless it had great significance to you. If you were too poor to have a seal, you signed with blood beside the signature. That was your seal. This concept continues to the present day, only what it means today in simple English is, that when you sign something under seal, you can’t change your mind.
In the real estate contract, if the buyer and seller were sitting together at a table signing the agreement, there would be no need for the seal. But that is not how most real estate deals happen. The buyer usually makes an offer to the seller, and then he leaves the offer “open for acceptance” for usually twenty four hours. That means that the seller has twenty four hours to decide whether or not to accept the buyer’s offer. 
Now think about this. Did anyone pay the buyer any money to make their promise be open for twenty four hours? In fact, the buyer is making this promise to keep the offer open without any consideration. Therefore, if the offer was not signed under seal, then the buyer, at any time before acceptance, could simply call the seller and say “Sorry, I am cancelling the offer.” However, when you sign the offer under seal, once it is delivered to the seller, you cannot change your mind. That is why we sign under seal.
This will also apply to the seller, whenever they sign an offer back to the buyer. This becomes a counter-offer, and the same principal applies. It is very important for buyers and sellers to take every offer that they make very seriously and to read and understand every provision before they sign it. Remember, once you sign it, you cannot change your mind.
So, be very careful about any new year’s resolution. And whatever you do, you may want to think twice about making that resolution under seal.
The ins and outs of subletting
By Mark Weisleder, Sat. Feb. 12, 2011
What’s a landlord to do if he signs a lease with one person and finds someone else living there? What’s a tenant to do if they have to move out, but are part way through a lease? 
In Ontario, any residential tenant has the right to assign or sublet their rental unit, as long as they get the landlord’s consent. The difference between an assignment and a sublet is that in an assignment, the original tenant is moving out for good and transfers the lease to the new tenant. The new tenant then pays the rent. In a sublet, the original tenant plans to come back and the subtenant pays him the rent and he continues to pay the landlord.
The landlord cannot unreasonably withhold their consent in either case. A common reason a landlord uses to withhold consent would be if the new tenant did not pass a credit or background check. However, in an interesting case decided in Ontario, a landlord was allowed to refuse the assignment of lease when they had a waiting list of new tenants who wanted to come into the building and were permitted to choose the next name on the waiting list instead. 
If the tenant feels that the landlord is not being reasonable, he can apply to the Landlord and Tenant Board to either force the landlord to agree or to cancel the lease. 
Tenants are not allowed to charge the subtenant more rent than they pay to the landlord and cannot charge any fee, or key money, for the new tenant to take over the lease.
If a tenant has assigned or sublet without the landlord’s permission, the landlord has 60 days from discovering the new tenant to apply to the Landlord and Tenant Board to terminate the entire tenancy. If the landlord does nothing, then after 60 days, they are deemed to have accepted the new tenant. 
For tenants who want to break a lease, you should know that you will be responsible for all the rent owing to the end of your lease. That is why subletting or assigning your lease is a good idea, as it will reduce your liability for the rent owing.
Landlords and tenants need to understand their rights and obligations regarding potential new tenants that may take over any lease. They should be encouraged to try and resolve these situations by working together to find solutions that work for everyone, especially if the tenant can no longer afford to stay in the unit and needs help finding a new tenant to take over their responsibilities. By being properly prepared and working together, you will not have to take time consuming and costly applications to the Landlord and Tenant Board to enforce your rights.
A collateral mortgage can trap you
By Ellen Roseman, Tues., Feb. 17, 2015
Your residential mortgage is coming up for renewal. Your lender won’t match the competition, so you decide to get a better rate elsewhere. Moving a mortgage at the end of a three-year or five-year term is no big deal. The new provider usually covers any transfer fees.
But switching is more costly if you have a collateral mortgage. You must hire a lawyer and pay about $1,000 to discharge the mortgage before you can move to a new lender. Since 2010, TD Canada Trust has sold only collateral mortgages. Tangerine Bank (formerly ING Direct) changed to collateral mortgages in 2011. National Bank also offers them.
Having a collateral mortgage affects your ability to transfer your mortgage to a new lender and your ability to borrow additional funds. It can also affect your ability to discharge the mortgage after repaying the loan in full. Many people don’t know the difference between a conventional and a collateral mortgage, since the information is buried in the fine print of a detailed agreement.
Last August federal Finance Minister Joe Oliver announced an agreement with eight major banks, under which they would voluntarily disclose general information about collateral mortgages at their websites by Sept. 1, 2014, and in their branches by Nov. 30, 2014. Finally, the banks would provide specific information to consumers who were entering into a new mortgage agreement by Jan. 31, 2015.
Has voluntary disclosure worked? I found almost nothing when checking the banks’ websites. But the Canadian Bankers Association’s website has an article, “Mortgage Security,” to which individual members can provide links. 

With a conventional charge, only the amount of the actual mortgage loan is registered against your home. If you borrow $250,000, the lender will register a $250,000 amount as a liability on your property. With a collateral charge, an amount higher than the actual mortgage loan may be registered against your home. If you borrow $250,000, the lender can choose to register a $300,000 or $400,000 amount.
This allows you to get an extra $50,000 to $100,000 at a later date, secured by the mortgage, without having to discharge the loan and go through a costly refinancing. However, you must meet certain conditions in order to borrow more money.
“You will need to apply and be approved by the lender for the increased amount, based on the current criteria of the lender, your ability to repay the mortgage loan and verification that your home’s value supports the mortgage loan request,” says the CBA. 
Dan Faubert, an Ottawa mortgage broker, wrote a blog post last August about the pitfalls of a collateral mortgage. He used the example of John Smith (not his real name), who was denied a loan to fix up his home. The man owned a home worth $375,000. He had $25,000 left on his mortgage and a $250,000 balance on his home equity line of credit — a total debt of $275,000.

Unfortunately, he didn’t know the bank had registered a $375,000 mortgage against his home. Most collateral mortgages are registered at 100 per cent of the property’s value and some go up to 125 per cent, depending on the lender. Smith wanted $25,000 to renovate. He was planning to sell his house. But since he was retired and had a lower income than when he borrowed the money, he didn’t qualify for a bank loan. Faubert couldn’t get him any more money, nor could any other mortgage broker, since the collateral mortgage was registered for 100 per cent of the property’s value. 

Smith had borrowed $275,000 and his home was worth $375,000, but there was no equity against which to register a mortgage. It is a dilemma that could face other Canadians who carry a mortgage with them into retirement.
“Any mortgage with any bank that has multiple products in one mortgage is also registered as a collateral mortgage,” says Faubert, who recommends asking lenders for an explanation before agreeing to new financing. I predict the trend to collateral mortgages will spread. Banks benefit by making it more difficult — or impossible, in some cases — to switch lenders before a mortgage is discharged.

Oliver should check the banks’ voluntary disclosure under the agreement announced last year. Customers need to know in clear terms, explained by a real person and not just in fine print, about a key change to the standard mortgage contract.
Beware the pitfalls of collateral mortgages
By: Dan Faubert, Aug 7, 2014
When you apply for a mortgage, you usually just ask about the term, amount, interest rate and monthly payment. Not many people understand the difference between a conventional mortgage and a collateral mortgage. Yet many banks are now asking borrowers to sign collateral mortgages — and it could result in them being tied to this bank, for life.

With a normal conventional mortgage you bargain for a set amount, rate and amortization. Say the property is worth $250,000 — you bargain for a $200,000 loan, at 3.5 per cent, a five-year term/25-year amortization, payments of $998.54 per month. 
A conventional mortgage is registered against the property for $200,000. If all the payments are made on time, the mortgage is renewed on the same terms every five years and no prepayments are made, the balance is zero after 25 years. 

Should another lender decide to lend you money as a second mortgage, there is nothing stopping them from doing so, subject to their own guidelines. Under normal circumstances the principal balance on a conventional mortgage goes only one way, down. In addition, banks will accept “transfers” of conventional mortgages from other banks, at little or no cost to the consumer.
A collateral mortgage has as its primary security a promissory note or loan agreement and as “backup,” a collateral security, being a mortgage against your property. The difference is that, in most cases, the mortgage will be for 125 per cent of the value of the property. In our example, the mortgage registered will be for $312,500. But you will only receive $200,000. The loan agreement will indicate the actual amount of the loan, interest rate and monthly payments.

The collateral mortgage may indicate an interest rate of prime plus 5-10 per cent. This will permit you to go back to this same bank and borrow more money from time to time, without having to register new security. The lender will offer you a closing service, to register the mortgage against your property, at fees that will be cheaper than what a lawyer would charge you. Sounds good so far, doesn’t it?

However, this collateral loan agreement has different consequences, which are usually not explained to the borrower.
 • Most banks will not accept “transfers” of collateral mortgages from other banks, so the consumer is forced to pay discharge fees to get out of one mortgage and additional fees to register a new mortgage if they move to a new lender. Thus the bank is able to tie you to them for all your lending needs indefinitely because it will cost you too much to move.
 • Lenders may be able to use the collateral mortgage to offset any other unpaid debts you have. Offset is a right under Canadian law that says a lender may be able to seize equity you have in your home, over and above the mortgage balance, to pay, for example, a credit-card balance, a car loan, or any loan you may have co-signed that is in default with the same lender. In essence any loans you may have with that lender may be secured by the collateral mortgage. Nobody goes into a mortgage thinking about default, but “stuff” happens in people’s lives and 25 years is a long time.
 • Let’s say your house value is $200,000. A collateral first mortgage registered on the property is $250,000. The amount owing on the mortgage is $150,000. If you were to need an additional $20,000, but the lender declines to lend it for any reason, then practically speaking you won’t be able to approach any other lender. They will not go behind a $250,000 mortgage. Your only way out would be to pay any prepayment penalty to get out of the first mortgage and pay any additional costs to get a new mortgage.
 • Let’s say your mortgage is in good standing but you default under a credit line with the same bank. The bank could in most cases still start default proceedings under your mortgage, meaning you could lose the house. 
 • Some lenders are offering collateral mortgages in a “negative option billing” manner. Unless you are informed enough to say you want a conventional mortgage, you will be asked to sign documents for a collateral mortgage. 
One bank is only offering collateral mortgages. 

I spoke with David O’Gorman, the president and principal mortgage broker with MortgageLand Inc. He tells me it is his duty under the law to ensure the “suitability” of any mortgage he arranges for a consumer. He would be hard pressed to justify the recommendation of this type of collateral first mortgage to any consumer, without disclosing both verbally and in writing the points listed above, and he believes the consumer should have their own lawyer review everything before they sign.
Published Wednesday, October 5, 2016 11:37AM EDT 

A major shift in mortgage rules means that Canadians taking on loans to buy homes may not qualify to borrow as much as they previously could.

The rules announced by federal Finance Minister Bill Morneau are aimed at making sure homebuyers aren’t taking on mortgages they can’t afford if interest rates rise. The change means that all homebuyers, regardless of how much they have for a downpayment, will be subject to a mortgage rate stress test beginning Oct. 17 that has, up until now, been reserved for those with less than 20 per cent down.

The big change

Buyers with a downpayment of between five and 20 per cent – who hold what are known as high-ratio mortgages – must be backed by mortgage insurance to protect the lender in the event the homeowner defaults on the loan.

Because they are considered higher risk, those buyers must pass what’s called a mortgage rate stress test to qualify for insurance backed by the federal government through the Canada Mortgage and Housing Corp.

That stress test measures whether the buyer could still afford to make payments if mortgage rates rose to the Bank of Canada’s posted five-year fixed mortgage rate.

That rate is usually significantly higher than what a buyer can negotiate with banks or other lenders. For instance, TD has a five-year fixed rate mortgage at 2.59 per cent, while the Bank of Canada’s rate is 4.64 per cent.

The stress test also sets a ceiling of no more than 39 per cent of household income being necessary to cover home-carrying costs such as mortgage payments, heat and taxes.

Until now, buyers with more than a 20 per cent downpayment have escaped such scrutiny.

The federal government says it’s responding to concerns that sharp increases in housing prices in Toronto, Vancouver and elsewhere could increase defaults in the future, should historically low interest rates finally start to climb.

Other changes

The government is also instituting changes aimed at foreign buyers, big banks and lenders and mortgage insurance on homes valued at more than $1 million.

As it stands, those buying a home with more than 20 per cent down could obtain low-ratio insurance to protect the loan against default. That insurance is sold through two private insurers, but is backed by the federal government, subject to a 10 per cent deductible.

Beginning Nov. 30, new criteria will be in place governing the low-ratio insurance. To qualify, the mortgage’s amortization period must be 25 years or less, the purchase price must be under $1 million, the property must be owner-occupied and the buyer must have a credit score of 600 or more.

The new rules also mean that, beginning this tax year, all home sales must be reported to the Canada Revenue Agency. The gains from sales of primary residences will remain tax-free, but the government is aiming to block foreign buyers from purchasing and flipping homes while falsely claiming the primary residence exemption from capital gains tax.

Finally, the government says it will shift some of the risk of defaults against insured mortgages to banks and other lenders. Ottawa says its shouldering 100 per cent of the cost of a defaulted mortgage is “unique” in the world. How the government plans to share some of that risk with lenders remains to be seen. But experts say, while it protect the government from widespread defaults, it could lead to higher interest rates for borrowers.

Robert McLister, writing for Canadian Mortgage Trends, says Ottawa is cracking the housing market with a “sledgehammer.”

He predicts consumers will bear the brunt of the blow and that housing prices will tumble because a “sizable minority” of first-time and high-ratio buyers will no longer qualify for the mortgage amount they want.

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Reasonable Doubt: changes to Ontario tenancy law designed to help survivors of domestic abuse and violence
By Jonathan Robart

September 19, 2016    

For persons experiencing sexual or domestic violence and/or abuse, the greatest risk of harm occurs when the person attempts to flee the relationship. If you or someone you know is in this situation and needs to leave, changes to the Ontario Residential Tenancies Act (RTA) are designed to make that easier by shortening the time it takes to break a lease and by protecting the confidentiality of tenants fleeing violence.

Below is some important information you need to know if you or someone you know needs to break their lease because of an abusive or violent relationship.

I’m experiencing domestic violence and/or sexual abuse and need to flee my abuser. Can I break my lease?

The new changes to the RTA allow a tenant to break a monthly, fixed-term or yearly lease if they, or a child living with them, are experiencing any of the following types of violence or abuse:

•Bodily harm;
•actions that cause a tenant or child to fear for safety;
•forced confinement;
•sexual violence; or
•unwanted contact, communication, observing or recording of the tenant or child by the abuser.

The lease may be broken if the tenant or the tenant’s child has experienced or is experiencing any of the above types of violence or abuse by one of the following:

•a spouse or former spouse;
•a person living with the tenant in a conjugal relationship outside marriage;
•a person who the tenant is or was dating; or
•a person who lives with the tenant and is related by blood, marriage or adoption to the tenant or a child who lives with the tenant.

What papers do I have to give my landlord to break my lease?

The following two forms from the Landlord and Tenant Board’s website provide all the necessary information to the landlord. Both of these forms need to be completed, signed by the tenant or their representative and given to the landlord:

1) Tenant’s notice to terminate my tenancy because of fear of sexual or domestic violence and abuse; and

2) Tenant’s statement about sexual or domestic violence and abuse.

The above tenant’s statement can be replaced by other court documents, such as a restraining order issued under the Family Law Act or a peace bond issued under the Criminal Code. The restraining order or peace bond must have been issued no more than 90 days before a tenant gives the notice of termination to their landlord.

The tenant’s statement does not require the tenant to identify the abuser by name or specify the type of abuse or violence they are experiencing. Tenants will not have to prove, at any hearing at the Landlord and Tenant Board, that any violence and/or abuse happened or that they fear violence and/or abuse if they continue to live in their apartment. It is, however, against the law for a tenant to give their landlord a tenant’s statement if it does not apply to the tenant’s situation.

How long do I have to wait before I can break my lease?

Tenants who give notice under the new rules may move out immediately, but they have to pay any rent that is due until the date in the notice of termination. To break a lease under the new RTA changes, the tenant needs to give their landlord the above notice and supporting papers at least 28 days before the date they want to break their lease. The termination date does not have to be the last day of a month or the end of a lease.

What about confidentiality? I don’t want my abuser, or anyone else, to know that I’m moving out.

The recent changes to the RTA help protect the confidentiality of the tenant and/or tenant’s child experiencing violence or abuse.

Landlords are forbidden (with very limited exceptions) from telling anyone that the tenant is breaking their lease if the tenant gave notice under the new RTA changes. Landlords are also forbidden (again with limited exceptions) from giving anyone a copy of the notice of termination and supporting papers. A landlord can tell the superintendent and/or office manager that a tenant is breaking their lease if the superintendent and/or office manager needs to know this information to perform their job. The above confidentiality rules apply to superintendents and/or office managers.

In addition, landlords are restricted from identifying the apartment address when advertising to fill the vacancy until the tenant that is breaking the lease has moved out. Landlords are not allowed to show the apartment to prospective tenants until after the tenant experiencing violence or abuse has moved out.

I live with my abuser and we are both on the lease. Can I still break the lease?

The RTA changes ensure that the tenant can terminate their portion of the lease without having to tell their abuser or any other co-tenants. Landlords are not allowed to tell a co-tenant (including the abuser) that a notice of termination has been given until after the termination date and after the tenant experiencing violence and/or abuse has moved out.

Note that the tenant who breaks their portion of the lease forfeits their portion of the last month’s rent deposit. As well, all remaining co-tenants can keep their lease or have the option to terminate their interest.

The new changes to the RTA are an important step in the right direction. However, sexual and domestic violence and abuse lead to long-term financial, social, economic and health consequences for survivors and their children. Persons fleeing violence or abuse are at risk of homelessness and need much more than the ability to break a lease to help ensure their safety. Access to emergency and affordable housing and financial resources to pay for new housing are crucial. Please consider contacting your city councillor, member of provincial parliament, and member of parliament and advocate for more shelter space, increased funding for emergency services for survivors of domestic violence, and public educational initiatives.

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Here’s What to Ask Your Real Estate Lawyer
By: Bob Aaron, Toronto Star on October 31, 2015

Insurance claims against Ontario real estate lawyers cost their insurance company an average of $20.7 million a year, according to a fact sheet published last week by LawPRO, the Law Society’s insurance company.  LawPRO provides mandatory errors and omissions insurance coverage to Ontario lawyers. 

The fact sheet is intended to assist lawyers so they can avoid insurance claims, but it is also useful as a guideline for purchaser clients on what they can expect from their real estate lawyers to avoid problems in real estate transactions – which are typically single-family, owner-occupied homes or condominiums. 

Based on the LawPRO document, here are some questions clients should be asking their real estate lawyers:

•Will you review the land survey to show me the lot size and to discuss any risks or problems it reveals?

•Will we be reviewing the title search and the subdivision or reference plans together?

•Will we be discussing any plans I have for future use of the property, such as rebuilding the house or putting in a swimming pool?

•Will you tell me whether it is legal to have a home-based business or more than one dwelling unit in the house?

•Do you conduct a title search on adjacent properties to make sure that there has been no violation of the subdivision control rules in the Planning Act?

•Will you be explaining the title insurance policy to me so I will know what risks are covered and what are excluded?  Can you explain standard coverages, exclusions and property-specific exceptions?

•Will we be going over every line on the Statement of Adjustments together to make sure the numbers are correct and there are no clerical errors?

•Will we be reviewing the condominium plans together to ensure that the unit, parking and locker I am buying are the same ones shown in the agreement and on the deed, and that they match my understanding of the locations of each?  Does my unit overlook the lake or the parking lot?

•Will you review the condominium’s status certificate for me and bring any deficiencies to my attention?

•If my purchase is a multiple unit dwelling or a commercial property, what additional searches will you be conducting?

Should real estate clients expect a personal meeting with their lawyers?   LawPRO tells real estate lawyers that they should meet clients in person at least once. 

“Take the time,” it tells lawyers, “to meet with the client in person to review the transaction and understand client instructions, particularly with respect to the client’s intended uses of the property. Not every matter is straightforward, and you don’t want to have to be addressing a problem that was only noticed the day of closing, or never noticed at all.”

Real estate transactions involve far more than the clerical processing of paperwork, a quick signup meeting, and handing over keys or money.

But it is also useful to remember that of all lawsuits against Ontario real estate lawyers, only 16 per cent result in a claims payment. 

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Assigning an Agreement of Purchase and Sale (Prior to Closing)
By: Martin Rumack, September 3, 2016

What is an Assignment of an Agreement of Purchase and sale?

At its essence, an Assignment of an Agreement of Purchase and Sale – informally known as “flipping a home” – is a simple concept:  A buyer of a new home allows someone else to take over the purchase contract, which allows that person to buy that same home him or herself.  

More specifically, the original buyer enters into a formal Agreement of Purchase and Sale with a Builder, and then allows another person – who we will call the “new buyer” – to step into his or her shoes through what is legally known as an “Assignment” of that original Agreement or Offer to buy.  The new buyer pays the original buyer a higher price than what was set out in that original Agreement, with the difference begin the original buyer’s profit. All of this takes place after the original buyer has agreed to buy from the Builder, but before the deal closes; the original buyer never takes title to the property.  

This arises primarily with homes: For newly-built homes with typically long closing dates (e.g. often 18 months or more), an Assignment is particularly attractive in situations where the Builder has already sold all of the units in the development early on, but where there is still demand for soon-to-be-completed homes and new condominium units in the development.  The assignment of a new condominium unit is also interesting for similar reasons, although the time frame may be significantly longer depending on when the assignment occurs.  This puts the original buyer in position to make a profit by inflating the new price well above what he or she agreed to pay the Builder in the first place.  

And what is the benefit to the new buyer?  There can be several:

The new buyer may be able to buy into a desirable neighbourhood at a time when there are no more units available to be purchased directly from the Builder;

Even taking the original buyer’s profit into account, the assignment may give the new buyer a price advantage over other properties that are currently on the market; and

Depending on the timing of the assignment, the new buyer may be position to choose finishes and make minor changes to the yet-to-be-built home.

Whatever the respective motivations of the original and new buyer, the assignment of an Agreement of Purchase and Sale has many specific features – and just as many potential pitfalls.  What follows is a discussion of some of the key points.

When Can An Agreement of Purchase and Sale Be Assigned?

Unlike the standard Toronto Real Estate Board (TREB) or Ontario Real Estate Association (OREA) agreements, many Builders’ own (i.e. customized) Agreements of Purchase and Sale contain a clause that generally prohibits the assignment of the contract outright – or else allows it only certain very strict conditions and in exchange for a significant fee payable to the Builder.

In fact, the vast majority of new home or condominium-purchase agreements do not allow the original buyer to assign the contract to someone else and stipulate that any attempt by the buyer to do so, or to list the home for sale on the Multiple Listing Service (MLS) or otherwise, or else list the property for rent, will put the original buyer in breach of the Agreement.   This triggers the Builder’s right, with notice, to terminate the original Agreement, keep the original buyer’s deposit, and seek additional damages from him or her.  (And in most cases, the original buyer’s Agreement is “dead”; i.e. he or she cannot go back and try to complete the transaction as if no assignment had taken place).

All of this means that anyone who has agreed to purchase a home from a Builder should give careful consideration to, and should seek legal advice prior to signing the Agreement, or in the case of condominium units during the 10-day cooling-off period in order to determine whether it’s possible to assign the Agreement in the first place.

This in turn involves a careful review of the clauses in that Agreement.

Typical (and Not-So-Typical) Provisions

As a practical matter, there are as many variations in these types of provisions as there are Builders.   

Many Agreements of Purchase and Sale will include a largely-standard “No Assignment” clause, which disentitles the original buyer from “directly or indirectly” taking any steps to “lease, list for sale, advertise for sale, assign, convey, sell, transfer or otherwise dispose of” the property or any interest in it.    

A potential exception – and this is important – arises if the Builder gives prior written consent, although in the more draconian version of these kinds of contract, that consent may be “unreasonably and arbitrarily withheld” by the Builder, essentially on its whim.   In other words, the buyer is not allowed to deal with the property, unless the Builder pre-approves it in writing, but in many cases the Builder has no obligation to give that approval and may withhold it for any reason whatsoever, including unreasonable and arbitrary ones.

(With that said, the “No Assignment” clause in some Agreements will allow for express exceptions or situations where the Builder will not withhold consent, for example:  a) Assignments made to a member of the original buyer’s immediate family; or b) where the Builder has determined that a sufficient and satisfactory percentage of the available units have already been sold).

The bottom line is that the basic clause in an Agreement of Purchase and Sale may or may not allow for the assignment of the Agreement to a new buyer, and if it is allowed, it will be subject to specified conditions such as obtaining the Builder’s written consent.  Most Agreements will embellish this basic clause by adding further written stipulations such as:

Having both the original buyer and the new buyer sign an Assignment Agreement that has been drafted by the Builder;

Mandating the original buyer will not assign the Agreement until the Builder has managed to sell a certain percentage of the units in the overall development (e.g. 85 or 90%), and even then it must be with the Builder’s written consent as usual;

Requiring the original buyer to pay a fee to the Builder of (for example) $5,000 plus taxes as part of obtaining the Builder’s consent to the assignment;

Requiring the original buyer to pay another fee plus taxes to the Builder’s lawyer (ostensibly as a sort of “legal processing fee”);

Getting the pre-approval of any lending institution or mortgagee that is providing funding to the Builder for construction or otherwise;

Assuming the Builder agrees to the assignment in the first place, prohibiting any further assignments of the offer by the new buyer to any subsequent party;

Confirming that the breach of any of the original buyer’s promises in relation to how and when an assignment can occur will be considered a breach of the whole agreement (and one that cannot be remedied); and

Requiring the original buyer to confirm in writing that the property is not being purchased for short-term speculative purposes.

Note that even if the Agreement of Purchase and Sale does not expressly allow or provide for it in writing, some Builders will permit an original buyer to make an assignment nonetheless.  This is because it is always in the Builder’s discretion to give up (usually for a fee) its right to technically insist on the purchase going ahead with the original buyer.

Getting the Builder’s Consent

It’s important to remember that, initially, the original buyer and the Builder had a valid legal contract in place that obliged the buyer to purchase a home or condominium unit from the Builder.    That original buyer, for whatever reason – whether it’s a change of circumstances (such as a change in a marital situation, job transfer to another city, province or country; birth of children resulting in a home/condominium unit being too small for the buyer), cold feet, or simply the desire to make a profit – has subsequently decided to “sell” that right to buy to the new buyer.   

To protect the Builder, the Assignment will contain clauses that are designed to safeguard the Builder’s rights.  The most important one is that, as discussed, the Builder must give its written consent to the Assignment.  This will often involve specific Builder-imposed requirements, fees and forms which must be completed.

Once consent has been obtained, there may be additional restrictions on the manner in which the original owner can market the property.  For example, some Builders will insist that the property is not to be listed on MLS (where it may be competing with the Builder’s own listings for still-unsold home and units in the same development); if the original owner does so nonetheless, it will be tantamount to a breach of the Agreement of Purchase and Sale which could entitle the Builder to damages, or rescission of the Agreement of the Purchase and Sale while retaining the deposits paid, as well as the monies paid for extras.

However, aside from any marketing / advertising restrictions that may be imposed, the original buyer must clearly indicate in any listing that it is an assignment of an Agreement of Purchase and Sale, not merely an ostensible sale from the original buyer.

Continuing Liability After Assignment

One key provisions in the Agreement of Purchase and Sale – and one that is easy to overlook – may significantly impact whether an original buyer will want to assign his or her agreement at all.

Even though the original buyer has essentially transferred his or her right to buy the property to the new buyer, the original buyer is not fully off-the-hook.  Rather, under the terms of the Assignment document, the original buyer can remain liable to go through with the contract if the new buyer does not complete the transaction with the Builder.

This written obligation appears in the original buyer’s Agreement of Purchase and Sale, and is couched in phrases that give the buyer continuing liability for the “covenants, agreements, and obligations” contained the original agreement.  But the net effect is that the original buyer remains fully liable should the agreement between the Builder and the new buyer collapse.  The Agreement may also stipulate that the assignee, meaning the person receiving the benefit of the assignment (i.e. the new buyer) must sign an “assumption covenant” which creates a binding contract between the new buyer and the Builder.

(Incidentally, in contrast some Builder’s agreements quite conveniently allow the Builder itself to freely assign the agreement to any other Builder registered with Tarion, which assignment completely releases the Builder from its obligations.)

The original buyer’s continuing liability under the Assignment Agreement is a major drawback in these types of arrangements.   The original buyer always has to balance the risks and rewards inherent in this scenario.

Documenting the Transaction

Assuming that the assignment of an offer is even permitted by the Builder, then (as with all contracts) it must be documented to reflect and protect the legal right of the parties.

The technical aspects of an assignment require more than simply taking the original buyer’s Agreement of Purchase and Sale with the Builder, scratching out his or her name, and replacing it with the new buyer.   (Although, in some cases people do try to “squeeze in” assignment-of-offer terminology into a new Agreement of Purchase and Sale made out in the new buyer’s name – but this is definitely NOT recommended).

Rather, a properly-documented transaction makes reference to the Agreement of Purchase and Sale between the original buyer and the Builder, but adds a separate document called an “Assignment of Agreement of Purchase and Sale.”  The Ontario Real Estate Association (OREA) provides a standard form that can be used, although in many cases those Builders who permit Assignments will insist that the original buyer and the new buyer use the Builder’s customized assignment forms, rather than the OREA standardized version.

The Specifics of the Deal –Who Pays What?

Recouping the Original Buyer’s Costs

At the point where the Assignment is being negotiated, the original buyer has typically paid a deposit to the Builder, may have pre-paid for certain upgrades and extras, and has a large balance owing.  This means that in the course of striking a deal to achieve the assignment, the original buyer should give some serious thought to the various costs, fees, pre-paid deposits, and tax repercussions of the deal, and how these should be reflected in the price that he or she will want the new buyer to pay under the Assignment Agreement.   The timing of the payment(s) will also be a consideration.

For both original buyer and new buyer who are considering an assignment arrangement, here are some of the questions to ask:

Does the price to be paid by the new buyer include any fee that the Builder is charging in exchange for the original buyer’s right to assign the Agreement of Purchase and Sale?

Does it include any deposits paid by the original buyer to the Builder, after the Agreement was signed?  Does it include any interest that has been earned on those deposits?

Does it clearly state that the new buyer will take over the entire contract, including the adjustments that are to be paid to the Builder on closing?  Or are those adjustments to be split between new and original buyer?

Does the price include money paid by the original buyer for extras and upgrades?

Are there any additional deposits that are still owing to the Builder, under the original agreement?

Who is responsible to pay the additional fee (i.e. the Builder-imposed fee) in exchange for the Builder giving consent?  Usually, this will be the original buyer, but the parties may negotiate otherwise.

Does the new buyer agree to take on responsibility under the original Agreement for making additional deposit payments until the final closing date (which may still be months or even years away)?

Does the new buyer have a full understanding of the amount of all the adjustments that must be paid to the Builder pursuant to the original Agreement?

If the original buyer has negotiated any special financial incentives into the Agreement of Purchase and Sale that has been reached with the Builder, have these been addressed in terms of whether the new buyer will receive the benefit of them?

In any case, the final purchase price payable from the new buyer to the original buyer will typically be made up of:

The outstanding balance owed to the Builder by the original buyer, that will now be payable by the new buyer;

The total deposits already paid by the original buyer to the Builder;

The total payments already paid by the original buyer to the Builder for any upgrades, extras, etc.; and

The profit that the original buyer stands to make in the deal.

Deposits, and Interest on Deposits

The treatment of deposits, and the interest they may have earned, merits a brief separate discussion.

Under virtually all Agreements of Purchase and Sale with Builders, the original buyer will be required to pay a series of deposits to the Builder, starting with the initial deposit paid when the Agreement is signed, and on a set payment schedule thereafter.   The total of those deposits can be significant.

Once the Agreement has been assigned to the new buyer, how those deposits are treated will form part of the negotiations.  Typically, the original buyer will get those deposits back from the new buyer as part of the overall purchase price of the assignment transaction; he or she will usually receive them at the time the assignment agreement is entered into and the Builder has consented to the assignment.

The potential problem with an Assignment Agreement is financing. The original buyer will want his deposit funds returned before closing, but if the new buyer does not have funds on-hand, he or she may find that financing is very difficult to obtain because banks do not advance mortgage funds at the time an Assignment Agreement is entered into; rather, the financial institution will provide funds only on final closing.  This can serve as a roadblock to the new buyer’s ability to repay the deposits and potentially to embark on the transaction at all.

The question of who is entitled to the Interest on any deposits pre-paid to the Builder is also a topic for the original and new buyers to discuss.    In many cases, the interest will be only a small amount (if any) and may be credited to the new buyer, rather than the original one.  However, in cases where the original buyer has paid significant deposits over time, and where larger interest amounts have accrued, the parties may want to negotiate a different outcome.

Land Transfer Tax

Land Transfer Tax is also an important consideration in Assignment Agreement arrangements.

When negotiating the deal, the original buyer and the new buyer must discuss the structure of the deal between them, to ascertain the exact selling price on which the Land Transfer Tax (and any Municipal Land Transfer Tax) should be payable i.e. whether it is the original buyer’s price with the Builder (net of HST and the HST New Housing Rebate, which is discussed below), or whether it’s the newly-inflated price being paid by the new buyer under the Assignment.

Generally speaking, it will be the latter, although in some assignment arrangements the parties have attempted to structure it so that they pay the Land Transfer Tax based on the lower initial price asked by the Builder, while taking the position that difference between that and the increased price is merely the “fee” paid to acquire the original Agreement of Purchase and Sale entered into with the Builder (thus avoiding having the tax calculated on the higher sale price).

In any case, once the Assignment Agreement is reached, it will be the new buyer who is obliged to pay Land Transfer Tax and any Municipal Land Transfer Tax on closing, not the original buyer.

HST and the HST New Housing Rebate

The issue of how HST is to be treated in an assignment scenario is a crucial one, but is fraught with pitfalls.

The first issue is how HST on the transaction should be calculated.   Because the new buyer’s price will inevitably be higher than the one the original buyer agreed to pay to the Builder, there is an important issue as to whether the difference – meaning the original buyer’s profit – should be subject to HST (and if so, who will pay it in the transaction).

This determination hinges on whether the assignment is a “taxable supply” under the tax legislation, and on whether the original buyer can be considered or deemed a so-called “builder” of the home for HST purposes.    This, in turn, involves a number of complex legal concepts and factual findings – including the intentions of the original buyer as to whether the home is going to be a primary residence.

Next, there is the issue of the HST New Housing Rebate.   In a typical scenario, the original buyer may have been entitled to the HST New Housing Rebate, based on meeting numerous qualifying requirements and stipulations. However, once he or she assigns the Agreement, that eligibility is obviously lost because he or she is no longer taking title to the home on closing.   Only one HST New Housing Rebate application per dwelling can be filed.

But once there has been an assignment, it is the new buyer’s circumstances that will determine whether the opportunity for an HST Rebate exists.   He or she will have to meet the stipulated legislated requirements, and may either apply directly to the Canada Revenue Agency (CRA), or arrange with the Builder to have the rebate amount credited right at closing.

(Note that the new buyer may want to take steps to protect his or her position in this regard.  For example, when negotiating the Assignment Agreement, the new buyer should make the agreement conditional on receiving written confirmation from the Builder that any HST New Housing Rebate will be credited to him or her on closing (assuming that the qualifying requirements are otherwise met).    Otherwise, if this commitment is not in writing then the Builder, being entitled to exercise its discretion on whether to credit the buyer with the rebate amount on Final Closing, can withhold it and force the new buyer to apply to CRA directly after closing.  Obtaining this commitment in writing is especially important given the likely lack of prior dealing between the Builder and the new buyer.

Other Things To Consider

Who is Responsible for the Documentation?

In addition to ascertaining whether the original buyer or the new buyer will pay for certain items, it is also important to determine – in advance – which of them will take care of arranging the documentation.  The questions to ask:

Who will prepare the documents needed to achieve the Assignment?  And who will bear the cost?

Will the Builder’s lawyer prepare the Builder’s needed consent to the Assignment?

Since the new buyer cannot renegotiate any of the provisions of the Agreement that the original buyer entered into with the Builder, are any of those terms objectionable, and if so, how will they be resolved and who will bear the cost?

As discussed, the Assignment Agreement will be conditional on the Builder giving its consent.  From the new buyer’s standpoint, it should also be made conditional on him or her giving close review to the original Agreement of Purchase and Sale (as signed by the original buyer), the Assignment Agreement, as well as any amendments, waivers, notices (and for condominium purchases, the Disclosure Statement) etc.  If for no other reason, it will give the new buyer a chance to consider the specific list of adjustments for which he or she will be responsible to pay on closing.  Needless to say, this review should be undertaken with the guidance of an experienced lawyer.

Once the terms of the assignment are settled and the Builder’s written consent has been obtained, the Assignment Agreement must be drafted and is attached to the original Agreement of Purchase and Sale that the original buyer entered into with the Builder.  

Incidentally, the Builder may have certain requirements that must be incorporated into the process and accommodated as well.    For example, the Builder will require the new buyer to provide I.D., and will need confirmation that he or she has the financing required to close in place.

Tarion Registration

When negotiating the assignment arrangement, the original and new buyers must be aware of the impact of the New Home Warranty Program as administered by Tarion, particularly if the home being “flipped” is a condominium unit.


There may be financial issues for the new buyer to work out before the deal can go ahead.

As usual, the transaction may be conditional on financing, which will be arranged on the higher price that the new buyer has agreed to pay.   However, since some mortgage brokers may be unfamiliar with financing an assignment transaction, getting approval for the new buyer’s purchase may be challenging.   This is something that needs to be investigated long before the original buyer and the new buyer start their negotiations in earnest.


A final issue to be negotiated is who is paying the commission with respect to the Assignment Agreement transaction.  This includes consideration of the specific commission rate, together with the details on how and when the commission gets paid.

While an Assignment Agreement can be beneficial to both the original and the new buyer – and even to the Builder (in extra fees) there are many issues to be addressed and negotiate.

As an agent, make sure your client obtains legal advice prior to finalizing any agreement to assign the original Agreement of Purchase and Sale.

Be careful… be aware… and think!”

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Parking pad? Not in your front yard:
By: Edward Keenan, Toronto Star, Dec. 8, 2015

What seems at first glance a heavy-handed proposal — to ban all new front-yard parking pads — makes sense when you look at it more closely.

Front-yard parking pads have sometimes been a contentious issue.

Front-yard parking pads have sometimes been a contentious issue.

Around city hall debates, we often encounter NIMBYism — some group of homeowners encounters a proposal for a new rail bridge or a homeless shelter or a townhouse development and shouts “not in my backyard.”

But the agenda for this month’s city council meeting brings us something a little different: a motion by Councillor Shelley Carroll, seconded by Deputy Mayor Denzil Minnan-Wong, that you could say is a “Not in your front yard” resolution, even if NIYFY makes sort of an awkward acronym.

The proposal council is to consider would put a citywide moratorium on front-yard parking pads, extending a ban that’s already in place in the central former-city-of-Toronto district. Carroll points out that as a matter of land-use policy, front yard parking pads — where people pave the area that would usually be their front lawn and use it as a storage space for a car — are already forbidden everywhere, but as it stands the city accepts applications to make exceptions. For the past few years, the downtown area has refused all of those applications as a matter of course, and now Carroll says it’s time to make that policy a citywide one.

I like this issue because it’s one of those things — like so many involved in municipal politics — that seems straightforward at first, but is surprisingly complex when you look closely.

At a glance, you might think the key consideration here is what private property owners have the right to do with their own property. Some will want to maintain a lawn manicured like a golf green, some will want to plant a prairie garden full of tall prickly pear cacti and coneflowers, some will want to pour out the blacktop to make room for their car collection. We may not love our neighbours’ choices — some people think tall grasses look raggedy or that cars on the lawn look redneck — but who are we to say they shouldn’t be able to make them? Live and let live, right?

You could almost start to think this is a case of the city government unjustly meddling in homeowner’s personal choices.

Except those personal choices carry much broader consequences, and not just in how they make a neighbourhood look. There are a bunch of reasons the personal convenience of front-yard parking pads for those who have them impose an unfair burden on everyone else.

First of all, when a parking pad is allowed legally, it involves more than paving the space on private property. It also involves cutting the curb to install a driveway ramp over the sidewalk to allow access to the parking space. Which has the effect of privatizing a public resource: in places in the city where street parking is allowed, everyone in the community has access to any of the spaces along the curb. When the curb is cut, a public parking space disappears, and only one household has access to the resulting spot. What was publicly available — a parking spot — is now reserved for one private party.

Obviously, this is a more pressing issue in the older parts of the city, where parking is more scarce (and often regulated by permit). Which may explain why a ban on new parking pads has been more easily accepted downtown.

But the community interest goes well beyond that. There are environmental concerns about paving areas previously unpaved. They make the city hotter because pavement absorbs heat more than vegetation does, which means both a harsher environment for surrounding trees and plants and, generally, more money and energy spent on air conditioning.

Dramatically more immediate is the effect it has on our water quality and on our sewer system. A lawn (or a prairie, or even an untended patch of weedy dirt) will absorb rainwater and melted snow into the ground. Pavement, as a rule, will not, which means that water runs onto the road and into public storm sewers and, through them, into the lake. Along the way, the water absorbs all kinds of pollutants: fertilizer and pesticides leaked out from lawns, grease and petroleum products on the road, bacteria, and so on. This all goes, untreated, into the lake, which is the source of our drinking water.

But on the way to the lake, stormwater can also overwhelm the sewer system. In older parts of the city, when the storm sewer system gets overloaded it actually causes our sanitary sewer system to overflow, which means untreated sewage — the stuff we flush down the toilet — flows into the lake.

Overloaded storm sewers also cause basement flooding across the city, which has been a real problem in Toronto during recent big storms, so much so that city council has implemented and gradually expanded a subsidy program to help homeowners try to flood-proof their cellars — a program the city is slated to ramp up (in a different proposal also on this month’s agenda). The threat of basement flooding is the stated rationale for Carroll and Minnan-Wong’s motion. But it isn’t the only one.

So even though at first the ban seems heavy-handed, when you look at all the reasons to prevent front-yard parking, this proposal seems not just reasonable, but long overdue.

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Idea of citywide front-yard parking moratorium a political can of worms
By: Chris Selley, National Post, April 6, 2016

Bloor West Village resident Jennifer Hargreaves understands why digging up your front yard for a parking pad is a controversial issue in Toronto. Any new paved surface hinders the city’s ability to absorb storm water. However nicely a parking spot is landscaped, it is no match aesthetically for a lawn.

“If everyone has parking pads there’s no front yards,” says Hargreaves, a mother of two who works at home. “So I understand from an environmental perspective, and from a curb appeal/community feel perspective as well.”

But the daytime parking situation in her neighbourhood is murder, she says. “I’ve got to carry two infants, and groceries (a long way) to get to my house.”

So more than a year ago, Hargreaves and her husband spent $393 applying for a front-yard parking pad. The city turned them down, citing a vulnerable tree. They then spent $822 more to appeal the decision to Etobicoke York Community Council, and an additional $500 for the opinion of an independent arborist. And on Tuesday, subject to myriad tree-friendly conditions, that council granted its application.

Shelley Carroll: “I’m prepared to be heartless about this.”.

Many are not as lucky. Fewer than half of applications are approved by the city itself. And Toronto East York Community Council (TEYCC) in particular is a very tough nut to crack on appeal. Tuesday marked the first time in downtown Coun. Gord Perks’ career that he voted in favour of one — and it was a unique situation that might never recur.

If an unusual political alliance that includes left-wingers like Perks, centrists like Coun. Shelley Carroll, and conservatives like Deputy Mayor Denzil Minnan-Wong has its druthers, Hargreaves’ may be one of the last front-yard parking pads ever installed in Toronto. In December, City Council directed staff to examine extending an existing moratorium on new pads in the old City of Toronto across the 416, and Carroll says momentum is on their side.

One’s home is one’s castle, and perhaps one’s front yard, too. But the policy as it stands is difficult to defend. Under Section 918 of the Toronto Municipal Code, which is 26 pages long, residents of most wards cannot apply to the city for a front-yard parking pad at all. In some cases, they can nevertheless appeal directly to their municipal council, as can residents whose applications the city denies.

That brings politics into the game, and politics isn’t good at balancing sympathetic individual concerns against goals like storm water management. (Perks calls front-yard parking pads “a ward heeler’s dream.”) On TEYCC, victory or defeat can hinge on which councillors happen to comprise quorum at the moment. “It’s a crap shoot,” concedes Coun. Janet Davis.

You might be out of luck simply because someone went for a pee.

“I take absolutely no pleasure in watching someone who’s paid a fee, hired a landscape architect, canvassed their neighbours, been turned down by the city, paid another fee (to appeal), taken a day off work, come down and watch the guy in front of them get (a parking pad), watch (a councillor) leave the room and then they don’t get it,” says Perks. “It’s a horrible way to do it.”

A citywide front-yard parking moratorium — with some very narrow exceptions, perhaps — might be more plausible than it would seem at first. Perks says there was blowback at first over the ban downtown, but it didn’t last. In many outlying wards, traditionally at odds with downtown on automotive issues, it’s simply not an issue. People who have driveways and garages neither need nor want to park in their front yards.

This can of worms is certainly full to bursting. If a moratorium involved pursuing Toronto’s innumerable illegal front-yard parking pads, it might get very ugly very quickly. But Carroll and Minnan-Wong are both willing to talk tough, and they make good sense.

“I’m prepared to be heartless about this,” says Carroll. “You have to make life choices. If you absolutely need a front-yard parking spot, she suggests, “you’re living in the wrong neighbourhood.”

“You buy into the neighbourhood knowing what the rules are,” echoes Minnan-Wong — or you should, anyway. He argues parts of North Toronto have become significantly less attractive thanks to front-yard parking.

“There’s an environmental reason” for a moratorium, he says, “but there’s also a ‘looks-like-s–t’ reason.”

“When we bought the house, the people who lived there told us there was no problem with parking. But that’s a joke,” laughs Hargreaves. In future, Toronto homebuyers may have to do more homework on such matters. Considering the unfair, random and undemocratic current process, that might well be for the best.

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My parking dispute with an uptight neighbour 
By: Andrew Clark , The Globe and Mail, Nov 7, 2012

It was late at night and Hurricane Sandy was in full fury. Rain came down and parts of the city were without power. I’d been circling my block for 20 minutes in search of a parking space. Finally, I spied one. It was tight, not too spacious, but I managed to position my minivan so that it did not block the two driveways that book-ended it. I was not one inch over.

The next morning, the world looked a little better, but when I went to my car I found a note had been left. It was hand-written on a yellow cue card and had been sealed in a Ziploc bag. The author evidently wanted to be sure that the message remained dry and legible. It read:

Hello Neighbour.

On the weekend I asked you nicely not to block my driveway.

Next time I will call to have your van ticketed.

Please do not park so that your vehicle crosses the sloped part of the curb this much.

I was puzzled for a moment and then I recalled that, on the previous weekend, a lady on our street had cautioned my wife for parking too close to her driveway. Could this be the same one? Apparently yes. What a strange Dickensian twist of fate. I examined my park. Both driveways were clear. If you couldn’t get your car out of this, you should turn your licence in. Yet a stern note had been issued. Here I was on the brink of a good old-fashioned parking feud.

Neighbours have many reasons to hate each other, but probably the most common one is that they are neighbours. The Bible says, “You shall love your neighbour as yourself.” And we do – the problem is that most of us hate ourselves.

Few next-door slights burn more than a perceived parking infraction. It digs to the core. My “neighbour” was obviously agitated but she wasn’t trying to open a discussion. She hadn’t signed her epistle or left a contact number. All I could do was reread the anonymous note looking for insight.

“Hello Neighbour.”

This is a strange way to start. What does my dwelling’s proximity to her dwelling have to do with anything? Wouldn’t “Dear Inconsiderate Moron with the Minivan” better capture her spirit?

“On the weekend I asked you nicely not to block my driveway.”

Note the use of “nicely.” To this person being civil is a Christmas present.

“Next time I will call to have your van ticketed.”

Okay – now we’re talking! This is really about unexpressed rage. She wants to see someone punished. She wants to stand at her window and watch them put the ticket on my car. Revenge is a dish best served by a parking drone.

“Please do not park so that your vehicle crosses the sloped part of the curb this much.”

The note’s author seems to be “detail-oriented” person. Interlopers are to stay away from the “sloped part of the curb this much.”

Having examined the note I considered my options. Should I get mad and park my car in front of her house every night? This could lead to years of bad feeling. Or should I repent my parking ways? I needed information. I knew that it was a $40 infraction to block a driveway, but the whole “sloped part of the curb” had me intrigued. I called the city’s parking enforcement department and spoke with two polite information officers.

The first said, “I can’t find a thing here. I can’t find a thing about that.”

The second said, “When it starts sloping down, your bumper can’t be out over it. Even if you’re not really blocking the driveway they can have your car tagged. … If they really wanted to be anal about it, they could call tagging enforcement and have you tagged.”

I even checked the Toronto Municipal Code, Traffic and Parking. Sure enough on page 88, Article V Parking, Stopping and Standing, Section E General Parking Prohibitions 1 (a) “In front of or within sixty (60) centimetres of a driveway or laneway so as to obstruct vehicles in the use of a driveway or laneway.”

To my naked eye, the driveway was clear but my car was within 60 centimetres of the “slope.” Of course, so was virtually every parked car on the street.

Still, there you had it. I was in the wrong. If you went strictly by the law (the only standard by which these disputes can be measured), I was in foul and the note writer was right. If she wanted to be anal about it (and judging from the cue card and Ziploc bag, she did) then she could call the city to get me ticketed.

You know, I could understand her frustration. Over the summer of 2011, a dilapidated urine-coloured van parked in front of my house for months, a clear violation of the bylaw that states vehicles unmoved for seven days may be ticketed and towed. I was tempted to call tagging enforcement but there was something about threatening to call the authorities on my neighbours that seemed a little – how shall I put this – “1938.” Besides, the note-writer had no idea I’d parked there by mere chance. As far as she was concerned, the person she’d “nicely” asked was provoking her.

So I will no longer park my vehicle in front of her house nor infringe on that “sloped part of the curb” again. There will be no feud. Part of me, however, thinks maybe I should. Maybe I owe it to my note-writer. She may have been looking forward to making that call, to that release. Perhaps she’s fantasized about executing her coup de grace on my minivan. Perhaps she lies awake at night yearning to hear the slap of ticket against windshield.

Maybe I should park there again, a centimetre or two over the “curbed slope” just to let her have satisfaction? If, for some strange reason, I ever do, I will be sure to leave a note. The cue card and Ziploc bag are at the ready in my glove compartment.

“Hello Neighbour,” it will read. “Go ahead. Make your day.”

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Condominium Declaration, By-laws and Rules: What’s the Difference?
Blog Condo Adviser, Rodrigue Escayola, November 22 2016

I was speaking this weekend at a Condominium Director’s Course given by CCI-Eastern Ontario. One of the participants asked me to explain the differences between a condominium declaration, by-laws and rules. While the more seasoned condominium directors have become familiar with these documents, many first-time directors may be puzzled by the differences between them. In fact, even some managers seem to refer to these documents interchangeably.

So, which one does what and what is required to change them?

Hierarchy of governing documents

The setting up and governance of condominium corporations in Ontario can be found in 4 different sources:

The Condominium Act;
The condominium declaration;
Its by-laws; and
Its rules.

I’ve listed these sources in that order as they form part of a hierarchy. The provisions of any of these documents cannot be inconsistent or contradict the provisions of a document above it. For instance, the declaration cannot contradict the Condominium Act but it has precedence over the by-laws and the rules. Similarly, when a board adopts a new by-law or a new set of rules, these cannot be inconsistent with the Condominium Act or with the Declaration.

The Condominium Act

Ultimately, the Condominium Act governs most aspect of condominiums in Ontario. It regulates the creation, the ownership and the governance of condominiums.

Obviously, we don’t have much control over what’s in the Condominium Act. Legislation is adopted by Parliament.

Most of us know that the Ontario Condominium Act is being amended as we speak. The ‘new’ version of the Act was adopted in December 2015, but will only come into force “on a day to be named by proclamation of the Lieutenant Governor“. Your guess is as good as mine as to when that will be. The province is presently working on regulations to supplement the Act. Indeed, in addition to the Act, one must also consider any regulations adopted pursuant to it. Presently, there are only two regulations adopted pursuant to the Condominium Act. The ‘new’ condominium Act leaves a lot to be fleshed out in the regulations to come. The publication of the proposed regulations will provide very useful information on the exact effect of the new legislation.

We already have numerous posts on Bill 106, which is the Act amending the Condominium Act.


Condominium corporations are created by the registration on title of a declaration and description. Once the declaration is registered on title, the Condominium Act applies to and regulates the condominium. The registration of the declaration is done by the developer, or more accurately, by the declarant.

The declaration will, amongst other things, define the units and common elements of the corporation and specify the boundaries of each of them. It will define the percentage of ownership of each unit and set the proportion pursuant to which each unit must contribute to the common expenses. The declaration also usually contains conditions or restrictions with respect to the use and occupation of the units and common elements. For instance, the declaration will determine whether some units can be used for commercial purposes. It will also allocate as between the owners and the corporation the obligations and responsibilities of maintaining, repairing and/or insuring the units and the common elements. Declarations could contain pet restrictions. They could also prohibit or limit smoking in units or on balconies. Smoking is already prohibited on common elements.

The declarant is the entity which sets the precise provisions of each declaration. Declarations therefore vary from one corporation to another but can be modified at a later date. Generally speaking, the declaration can be amended by the owners if 80% to 90% of the owners agree to such amendment (it depends on the type of amendment being sought). This is a high threshold, which is usually difficult to attain.

In addition to the owners’ ability to amend the declaration through a vote, courts can correct a declaration if it contains an error or an inconsistency. A court will only make the correction if it concludes that it is necessary or desirable to make such a correction.


By-laws deal with the governance of condominium corporations (ie. how they are run). For instance, by-laws may deal with the qualification of condominium directors, their remuneration (if any) and their term of office. It may deal with the quorum required to hold meetings (of the board or of the owners). It may grant a corporation with the power to borrow money. It may also define what constitute a standard unit for the purpose of determining the responsibility of repairing or maintaining improvements made to the unit. It may also restrict the use and enjoyment that a person other than the occupant of a unit may make of common elements (ie. whether the owner who leases his or her unit to a tenant use the pool or the gym). By-laws can also govern the management of a property.

By-laws may be passed, repealed or amended by the board of directors. They must, however, be reasonable and they cannot be inconsistent with the Act or the declaration. Before becoming effective, by-laws must be approved by a majority of the units of the corporation. Therefore, 50% +1 of all units must approve a proposed by-law. Once this happens, it must be registered on title. Only then does the by-law become enforceable.


The board can also make, amend or repeal rules. However, rules cannot be about anything and everything. Rules must be either:

be for the purpose of promoting the safety, security or welfare of the owners and of the property or assets of the corporation; or

they must be aimed at preventing unreasonable interference with the use and enjoyment of the common elements, the units or the assets of the corporation.

Typical rules may therefore be aimed at preventing nuisance or interference between owners. They may deal with noise, for instance. They may impose parking restrictions. Pet restrictions and smoking restrictions can be found in rules (not in by-laws). These restrictions could also be found in the declaration, but they are far easier to adopt in the context of a rule.

Rules must also be reasonable and must be consistent with the Act, the declaration and the by-laws.

To pass, repeal or amend a rule, a board of directors needs to circulate the rule to the owners for a period of at least 30 days. The notice to owners must advise them that they have the right to requisition a meeting of the owners to submit the proposed rule to a vote of the owners. If no meeting is requisitioned within 30 days, the rule becomes enforceable. If a meeting is requisitioned, the rule only becomes valid and enforceable if 50%+1 of the owners present at the meeting approve it.

Each of the declaration, by-laws and rules have a different purpose and are amended pursuant to a different mechanism, requiring a different level of support by the owners. Each of them, however, are equally enforceable. Owners and occupants have an obligation to abide by the Act, the declaration, the by-laws and the rules. Similarly, owners are entitled to require that others comply by them. The Corporation must take all reasonable steps to ensure such compliance.

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A Scary Scenario for Condominium Buyers – A Bad Decision – And a Major Headache
Martin Rumack, May 20, 2015

A recent decision released by the Ontario Court of Appeal is not only scary, but in my mind is a bad decision which abrogates the rights of Condominium Buyers.  The central issue was whether a Board of Directors of a Condominium Corporation, appointed by the Developer prior to the time when the Unit Owners elect their own Board of Directors, can vote to prohibit the Buyers from suing the Developer for deficiencies not covered by the TARION Warranty.

This case involved a new condominium project located at 628 Fleet Street in the City of Toronto (TSCC 2095).  The developer in this case was a subsidiary of Plazacorp a major developer of condominium projects in the GTA.

The Agreements of Purchase and Sale and the Disclosure documents provided that the Builder’s liability for deficiency claims (and therefore the Buyers’ collective right to sue) were limited to those claims that came within the TARION Warranty program, i.e. Buyers could not sue the Builder for claims outside the Warranty program’s envelope.  Following registration of the Condominium project, the Developer-appointed Board of Directors entered into an agreement with the Builder which likewise restricted a Buyer’s right to sue the Developer.   The Developer-appointed Board of Directors went so far as to enact a by-law confirming the Agreement, which by-law was registered on title thereby serving as actual notice to all subsequent Buyers.

Once the Buyers had collectively elected their own Board of Directors, that new Board brought a Court Application to have the Agreement and by-law overturned, arguing that the Developer’s Board did not have the legal right to restrict the Buyers’ right to sue for deficiencies outside of TARION Warranty program.

The Ontario Court of Appeal, in affirming the trial decision, recently ruled that the Agreement and relative by-law were within the powers of the Builder’s Condominium Corporation’s Board of Directors and were not in contravention of the Condominium Corporation’s Declaration nor any of the provisions of the Condominium Act.  In the Court’s view, the Developer was entitled to limit its risk, stating:

“… the warranty agreement and the by-law are lawful and valid.  There is nothing inherently unreasonable in a Declarant limiting its liability for construction deficiencies in the manner done here.  None of the provisions cited by TSCC 2095, either individually or read in the context of the Condominium Act as a whole, prevents a Declarant from entering into such an arrangement.”

Furthermore the Judge stated:

“Whether developers should be prevented from limiting their liability to the statutory warranties provided in the… Act is a matter of policy for the legislature and not one for judicial determination.”

As a result of the decision of the Court of Appeal, the Buyers were ordered to pay the Developer’s legal fees totaling $27,000.00… of course the Buyers had their own lawyers’ legal fees to pay as well.

What is to be learned from this case?  Specifically, Buyers of new condominium units should be aware and careful before signing an Agreement of Purchase and Sale that both the Builder’s Agreement of Purchase and Sale and the Disclosure Documentation are complex, full of hard-to-understand legal jargon which is burdensome on Buyers, totally drawn in favour of the Builder, and a moving target.

Therefore, Buyers must ensure they have the Agreement reviewed by an experienced condominium lawyer and explained to the Buyer during the statutory 10 day cooling-off period – do not wait until the 9th day to speak to a lawyer – it will not give the lawyer sufficient time to review the Agreement, meet with the Buyer to explain the significant portions of the Agreement, point out the uncertainties and the moving targets, or as I refer to it as “buying a pig in a poke” all in addition to corresponding with the Builder in an attempt to obtain changes to some of the one-sided provisions and ludicrous additional charges (referred to as Adjustments) contained in the Agreement of Purchase and Sale.


Check to see what liability, contractual obligations, and limitations are contained in the Agreement of Purchase and Sale, as well as many other matters such as what are standard features and what are upgrades; which additional adjustments will you as a Buyer have to pay on closing; what are the various time limits; can you advertise your Unit for lease and/or lease your Unit before the Interim Closing or the Final Closing; can you try to sell your Unit before the Interim Closing or the Final Closing; additionally there are generally many more issues – beware of what the Agreement provides!

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Making Sense of Toronto Loft Terminology: Hard Lofts vs Soft Lofts Blog, Nov 14, 2015

A hard loft – considered an authentic loft – is a residential conversion of an historic building (typically a factory, a warehouse or a church) whereas a soft loft is a new build created in the style of a hard loft, meant to mimic the aesthetic.

Hard lofts are more coveted because they have authentic, heritage features like exposed, original brick or concrete, cathedral ceilings or regular ceilings that are 10 feet or higher, large factory windows (or in the case of church conversions, you’ll often see arched, stained glass decorative windows) and/or wooden beams and ceilings.

Many of these features you just can’t find in new builds today. Even if developers had the budgets to use similar materials, it’s really hard to source some of the things that were used in century old buildings in order to duplicate the heritage and quality. For example, reclaimed, solid wooden beams carved from a single tree.

These character features are considered “hard” or more industrial and rugged than the look of modern construction materials. Hard lofts also tend to be open concept, at least in the main living area, and there are many dual-zoned, live/work hard lofts in Toronto. But Toronto’s hard loft stock is becoming a much smaller percentage of the overall Toronto condo mix than it was even five years ago as new builds increase in number and heritage conversions dwindle.

There are many great examples of authentic, hard lofts for sale in Toronto but they’re not making many more because:

a) it’s harder to find a conversion-worthy building in a decent neighbourhood than it is a plot of land (or a tear-down that can be razed), and

b) it typically costs more to convert than build from scratch and the premium that builders can charge for authentic lofts isn’t always worth the extra hard costs and red tape they have to face at City Hall.

Thankfully, Toronto has a high number of beautiful hard loft buildings already. Some of our favourites include the Brewery Lofts, the Garment Factory Lofts and the Broadview Lofts, pictured above, all in the east end, the Candy Factory Lofts in Queen West, pictured in our lead image, the Toy Factory Lofts in Liberty Village and the Tip Top Lofts, pictured below, just to name a few.

Not to complicate matters but we should note: you’ll often see the term "loft" used to describe two-storey condos or lofts with the bedroom on a mezzanine level. This is not inaccurate – “loft” can also mean a gallery level as seen here in the Network Lofts located in Islington Village, pictured below. But this should be set aside in exploring the differences between hard and soft lofts as it’s a different matter altogether.

You can have split-level, mezzanine designs in hard lofts, soft lofts or condos but that feature in and of itself doesn’t define the property type.

Moving now to soft lofts, these are simply new builds meant to look like historic lofts and they’re much more common than hard lofts. Builders are continuing to erect more because a lot of buyers prefer them to a typical condo aesthetic.

So, a hard loft is a multi-residential conversion of an historic building, typically one that had an industrial function, and a soft loft is a new build in the style of a hard loft. Simple, right? Except that the term soft loft is becoming muddy and a lot of developers are slapping the moniker onto what’s essentially a condo building with a bit of exposed concrete and not a loft at all. It’s no wonder why buyers – and some Realtors for that matter – get confused.

The Term Soft Loft Is Often Misused

Traditionally, soft lofts have included higher ceilings than condos, exposed ductwork and a reliance on “hard” materials like exposed concrete. However, soft lofts are getting further away from authentic lofts in the name of profit (pack more units in and keep construction materials and finishes cheap) and so the very definition of “loft” is changing. And there's a lot of confusion over what’s a loft and what’s a condo.

In my opinion, for a builder to label a building a “soft loft” it should at a minimum include the following:

•High ceilings at a minimum of 10 ft

•Open concept main living spaces

•A conservative use of drywall, instead exposing concrete walls, ceilings and ductwork

And to really feel like a loft, I’d also add:

•Large windows that let in a lot of light to add to the feeling of spaciousness or “loftiness” that hard lofts are known for

You can see many lofty qualities in 66 Portland for example, pictured above and below, with its concrete ceilings and mushroom pillars, large, floor-to-ceiling windows, exposed ductwork and 10.5' ceilings.

Soft lofts are sometimes referred to as “fake” lofts but we’ve never liked that insinuation because it implies you're getting bamboozled in some way as a buyer and that's not the case with a well-designed and well-built soft loft. There are so many quality soft lofts on the market that conform to a traditional definition of a loft in every way save for the fact that they happen to be purpose-built, newer residences.

And there are many soft lofts that are appreciating faster / to a higher degree than comparable condos. And so they're a great option for people who can't find a hard loft on their budget or prefer a slightly less raw aesthetic with modern features like contemporary, European-style kitchens, without completely elimating the industrial feel.

But now we have a new terminology problem because there are “fake” soft lofts. And this is where we have to start drawing the line as Realtors and consumers and be clear about what a loft really is. If a unit has 8 ft ceilings, standard-sized windows, drywall on all the walls and the only industrial feature is a concrete ceiling then sorry folks, it’s not a loft. It’s a fake soft loft. In other words, this is a bog-standard condo with a bit less drywall.

Don't Overpay For Trickery

As a buyer, make sure that you’re not paying a premium for so-called loft features that are anything but, particularly in pre-construction projects where fancy sales brochures and idealistic artist’s renderings can make a place appear to have the edge and vibe of an authentic loft when the reality may be very different.

If you’re looking at pre-construction soft lofts, besides hiring a Toronto Realtor who specializes in lofts (remember, you don’t pay more to bring your own representation to the table), the best way to ensure that you’re getting the character features you’re paying for is to tour some of the developer’s completed builds. Nothing speaks more to the anticipated finished product than a similar building that's already opened its doors.

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