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Mar 31
Mar 15
This is the third of a series of blogs about residential lease agreements in Ontario. In the first blog, I talked about what residential lease agreements are, the impact of the Residential Tenancies Act, 2006 (the “Act”), and some of the Landlord’s obligations. In the second blog, I discussed the Tenant’s statutory obligations. In this blog, I’ll be discussing SOME of the terms you can find in a simple residential lease agreement. Note that, if the terms and conditions are already dealt with in the Act, you need not replicate them in the agreement and you can’t override them (so I just exclude them and simply point out in the agreement that, if a party wants to know, for example, how to terminate the residential lease agreement, they should turn to the Act). So on with the show… Void Terms
Term Termination The other big way to terminate a Residential Lease Agreement involves the Landlord giving NOTICE OF TERMINATION: if the Tenant vacates the rental unit in accordance with the notice of termination, then the tenancy is terminated on the termination date set out in the notice: section 37(2). So what entitled the Landlord to give proper Notice of Termination? Well, they can only give such Notice if the Act permits it. For example, the Landlord can give Notice if they, in good faith, require possession of the rental unit if they, their spouse, their children, or parents (among others) require it for residential occupation: section 48. The Landlord can also give notice of termination if they require possession of the residential unit to demolish it, convert it into something other than a residential premise, or do extensive repairs or renovations: section 50. There are specific requirements that must be met concerning the information that must appear in the Notice, the applicable time limits, and earlier termination by the Tenant. Make sure to review the Act carefully and consult a lawyer if you have any comments, questions, or concerns. Security Deposit Rent A Landlord cannot increase the rent charged to a Tenant for a rental unit until 12 months have elapsed since the last increase in rent or since the day the rental unit was first rented: section 119. The Landlord must also provide 90 days written notice to the Tenant of their intention to increase the rent: section 116. There is a guideline under the Act for determining how much the Landlord can increase the rent by. The Landlord and Tenant can agree to increase the rent charged to the Tenant above that guideline if the Landlord carried out or undertakes to carry out a specified capital expenditure in exchange for the rent increase or the Landlord has provided or undertakes to provide a new or additional service in exchange for the rent increase: section 121. The Landlord can also apply to the Board for an order permitting the rent to be increased by MORE than the guideline in limited circumstances relating to the rental unit. These circumstances include extraordinary increases in the cost for municipal taxes and charges or utilities, eligible capital expenditures, and operating costs related to security services: section 126. If you’re a Landlord or a Tenant and need advice concerning rent, seek professional help. General Terms
Residential Lease Agreement (Ontario)A Landlord can use this Agreement to rent out a residential unit. This Agreement comes with a Rental Application. All of Dynamic Lawyers‘ legal forms are lawyer-prepared, simple to read, easy to customize, and only a fraction of the price a lawyer would charge. Also, each legal form comes with a FREE VIDEO GUIDE (watch a useful example of how this legal form can be customized), a FREE DL GUIDE (read helpful information about this legal form), and another FREE DL GUIDE that sheds valuable insight into how legal forms can be challenged. What are you waiting for? This information and this sample video guide is NOT legal advice and is provided for informational purposes only. If you need an Ontario lawyer, go to Dynamic Lawyers and make a post. Mar 15
This is the second of a series of blogs about residential lease agreements in Ontario. In the first blog, I talked about what residential lease agreements are, the impact of the Residential Tenancies Act, 2006 (the “Act”), and some of the Landlord’s obligations. In this blog, I’ll be discussing some of the Tenant’s obligations under the Act. Tenant Obligations under the Act Cleanliness: Section 33
Repair of Damage: Section 34
Changing Locks: Section 35
Not to Harass: Section 36
Residential Lease Agreement (Ontario)A Landlord can use this Agreement to rent out a residential unit. This Agreement comes with a Rental Application. All of Dynamic Lawyers‘ legal forms are lawyer-prepared, simple to read, easy to customize, and only a fraction of the price a lawyer would charge. Also, each legal form comes with a FREE VIDEO GUIDE (watch a useful example of how this legal form can be customized), a FREE DL GUIDE (read helpful information about this legal form), and another FREE DL GUIDE that sheds valuable insight into how legal forms can be challenged. What are you waiting for? This information and this sample video guide is NOT legal advice and is provided for informational purposes only. If you need an Ontario lawyer, go to Dynamic Lawyers and make a post. Mar 15
So this is the first of a series of blogs I’ll be writing about residential lease agreements in Ontario. What is a Residential Lease Agreement | Tenancy Agreement? How are disputes resolved? What are the Landlord’s Obligations under the Act? Repair: Section 20 Non-Interference: Section 22
Not to Harass: Section 23 Privacy and Entry: Sections 25, 26, and 27 Changing Locks: Section 24 Tenant Applications to the Board If the Board finds that the Landlord had breached its statutory obligations, then the Board may (among other things) terminate the tenancy, order an abatement of rent, authorize repair / replacement, order that the Landlord pay money to the Tenant or Former Tenant, prohibit the Landlord from taking steps to raise the rent, or make any other order that it considers appropriate. In determining which remedy or remedies to impose, the Board must consider whether the Tenant or former Tenant advised the Landlord of the alleged breaches before applying to the Board: section 30(2).
Residential Lease Agreement (Ontario)A Landlord can use this Agreement to rent out a residential unit. This Agreement comes with a Rental Application. All of Dynamic Lawyers‘ legal forms are lawyer-prepared, simple to read, easy to customize, and only a fraction of the price a lawyer would charge. Also, each legal form comes with a FREE VIDEO GUIDE (watch a useful example of how this legal form can be customized), a FREE DL GUIDE (read helpful information about this legal form), and another FREE DL GUIDE that sheds valuable insight into how legal forms can be challenged. What are you waiting for? This information and this sample video guide is NOT legal advice and is provided for informational purposes only. If you need an Ontario lawyer, go to Dynamic Lawyers and make a post. Jan 16
This 42 page eBook will cover topics such as: - How is the Ontario real estate industry organized? -Who are the players and what are their roles and responsibilities? - How can a Realtor help a buyer or seller? - What are the terms in an Agreement of Purchase and Sale? - What is a Buyer Representation Agreement? - What happens to the Deposit? - What is Title Insurance? - What happens if I default on my mortgage? - What happens if I am a victim of real estate fraud? Grab your copy today! Remember: the information provided in the eBook is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to your offer or agreement of purchase and sale (or wanting to back out of one) you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you with your offer or agreement of purchase and sale. Jan 08
What is a Vendor Take-Back mortgage (also called a VTB mortgage)? Well, in simple terms, a vendor take-back mortgage is a situation where the property owner who is selling their property is willing to provide some (or all) of the mortgage financing on the sale of that property. This typically happens in commercial deals where it may be difficult for a purchaser to be able to get financing (e.g. in the millions of dollars). So a mortgage is taken out with the vendor and payments are made directly by the purchaser to the vendor pursuant to a Vendor Take Back Mortgage Agreement. The title of the real estate property is transferred to the buyer. Most of these arrangement are neither renewable or transferable to the next home owner. So a VTB mortgage is a way for the purchaser to be able to purchase the property by having the vendor finance part or all of the deal. Vendor take-back mortgages are typically used where the vendor knows and trust the purchaser and where the purchaser cannot otherwise secure the full amount of financing. The great thing for the vendor is that they can sell their property. Sometimes, they can charge higher than normal interest rates on the mortgage than a traditional bank or financial institution would (this reflects the higher risk level that the vendor is willing to accept). The great thing for the purchaser is that it will be able to get the financing it needs and the vendor will likely not be as stringent in asking for documentation in order to provide the mortgage: while the vendor is assessing the purchaser’s credit, it may be more flexible and lenient than a traditional bank. Notwithstanding its advantages, a VTB mortgage should not be entered into lightly. It is a complicated matter and you should always consult with a real estate lawyer (e.g. by making a post on Dynamic Lawyers). A real estate lawyer will review all the documentation to ensure that all necessary due diligence for the agreement of purchase and sale and mortgage is in place. For example, a real estate lawyer could determine whether a VTB mortgage, as a second mortgage on the property, is prohibited by the first mortgage being used by the purchaser to finance the deal. Finally worth mentioning is that real estate brokerages are exempt from having to have a mortgage brokerage licence when arranging a vendor take-back mortgage, or attempting to do so, in the course of a trade in real estate. This is important because, under the Mortgage Brokerages, Lenders and Administrators Act 2006, a party wishing to deal or negotiate in mortgages must have a mortgage broker’s license. This would have required a real estate brokerage, which typically deals or negotiates VTB mortgages for its clients, to have successfully completed a Mortgage Broker Education Program from an approved provider, pay a bi-annual fee of nearly $500 and maintain errors and omissions insurance. This was just too onerous. So after some hard lobbying from the Ontario Real Estate Association, the Ontario government put an exemption for real estate brokerages in the Exemptions from the Requirements to be Licensed Regulations made under that Act. Basically, if the real estate brokerage does not otherwise hold itself out as dealing in mortgages (and does not engage in other activity that requires a license under the Act), then it can deal in VTB mortgages in the course of a trade in real estate. Oct 19
Toronto Real Estate Lawyer (Part 23) – What happens if you want to back out of an offer or purchase agreement?Real Estate Comments Off
In this blog, I’ll be discussing what happens if you change your mind after singing an offer or purchase agreement? Once an offer or counteroffer has been made, it cannot be withdrawn unless there is a time limit on the offer or counteroffer which passes without being accepted. An Agreement of Purchase and Sale may also be terminated if it becomes impossible to perform through no fault of either party (lawyers say such a contract is “frustrated”). An example is property destroyed in a flood or a fire before the buyer has taken possession. If there is no relevant termination clause in the Agreement of Purchase and Sale, a party cannot claim frustration if the supervening event resulted from a voluntary act of the buyer or seller. Furthermore, frustration is not available if the parties contemplated the possibility of the supervening event arising during the term of the agreement and provided for in the agreement. In Dinicola v. Huang & Danczkay Properties, 2 R.P.R. (3d) 267, a condominium developer failed to develop 3 buildings and returned all deposits and down payments. The condominium unit purchasers, however, sued for breach of contract. In its defence, the developer argued that the municipal council’s refusal to approve the site plan for the development of the buildings frustrated its agreements with the purchasers. The Ontario Court of Justice (General Division) rejected that defence and found the developer liable to pay damages assessed at $4.9-million. The court reasoned that frustration was not available as a defence because the developer and the purchasers had contemplated the possibility of the municipal council’s refusal at the time the purchase and sale agreements were entered into. That possibility was also provided for in the agreements. Frustration was also not available because the developer relied on its own refusal to negotiate terms of the approval with the municipality to excuse itself from liability under the agreements. Purchasers of new condominium units in Ontario have a cooling-off period of 10 days to back out of their purchase agreements. Once the offer or counteroffer has been formally accepted, the buyer and seller are bound legally by its terms. If you walk away from a deal you may not only lose your deposit, but may also be liable for any damages suffered by the other party, such as the lost opportunity to sell to someone else, expenses arising from a delayed move, or the seller’s loss of deposit on another home intended for purchase. The legal remedy, called “specific performance” (making you complete the purchase), is an unlikely event, but a court could still hold you responsible for the entire purchase price, plus expenses and court costs. Oct 19
Toronto Real Estate Lawyer (Part 22) – What happens to deposits on termination of an agreement of purchase and sale?Real Estate Comments Off
Generally, the deposit a buyer puts down in respect of an agreement of purchase and sale is only released by the listing brokerage in very limited circumstances, including:
If the Agreement of Purchase and Sale is silent on specifically what happens to the deposit on termination, courts will generally take the view that, if the buyer defaults, then the deposit is forfeited to the seller. If the seller defaults under the agreement, however, the deposit is returned to the purchaser (unless the agreement says otherwise). Finally, if the agreement is frustrated because of some event or condition that arises beyond the control of the buyer or seller, then the purchaser is entitled to the return of his or her deposit (unless the agreement says otherwise). Where the purchaser defaults, there is no requirement for the seller to prove damages. This means that, even in the case where the seller resells at a purchase price that is high enough to compensate for any loss from the first sale, the seller may nevertheless retain the deposit. Whether a Court will return a deposit to a defaulting purchaser depends on a three-part test – all of which must be satisfied in favour of the purchaser for the deposit to be returned:
In Gajasinghe v. Dewar, 2007 CarswellOnt 5738, the Ontario Superior Court of Justice applied this three part test and refused to return a $20,000 deposit to the defaulting purchaser. Although the Court found that the purpose of that deposit was to secure the purchase price and that there was a substantial disparity between the amount of the deposit and the amount of damages suffered by the seller, the purchaser’s conduct was not reasonable. Specifically, the Court found that the purchaser’s actions were “indicative not of a purchaser who was ready and willing to close but rather of one who was searching for an excuse not to close”. Generally, the deposit is only released by the listing brokerage in very limited circumstances, including:
If the Agreement of Purchase and Sale is silent on specifically what happens to the deposit on termination, courts will generally take the view that, if the buyer defaults, then the deposit is forfeited to the seller. If the seller defaults under the agreement, however, the deposit is returned to the purchaser (unless the agreement says otherwise). Finally, if the agreement is frustrated because of some event or condition that arises beyond the control of the buyer or seller, then the purchaser is entitled to the return of his or her deposit (unless the agreement says otherwise). Where the purchaser defaults, there is no requirement for the seller to prove damages. This means that, even in the case where the seller resells at a purchase price that is high enough to compensate for any loss from the first sale, the seller may nevertheless retain the deposit. Whether a Court will return a deposit to a defaulting purchaser depends on a three-part test – all of which must be satisfied in favour of the purchaser for the deposit to be returned:
In Gajasinghe v. Dewar, 2007 CarswellOnt 5738, the Ontario Superior Court of Justice applied this three part test and refused to return a $20,000 deposit to the defaulting purchaser. Although the Court found that the purpose of that deposit was to secure the purchase price and that there was a substantial disparity between the amount of the deposit and the amount of damages suffered by the seller, the purchaser’s conduct was not reasonable. Specifically, the Court found that the purchaser’s actions were “indicative not of a purchaser who was ready and willing to close but rather of one who was searching for an excuse not to close”. Oct 19
Toronto Real Estate Lawyer (Part 22) – Standard Terms in an Agreement of Purchase and SaleReal Estate Comments Off
Brace yourself…this is a long blog! Here are some of the common terms in OREA’s a standard form Agreement of Purchase and Sale (remember: there are many more terms which can be included and you should speak with a lawyer about your particular situation!):
For an Agreement of Purchase and Sale to be enforceable, it must comply with the Statute of Frauds, which requires that the parties be identified. The Ontario Real Estate Association‘s standard form Agreement of Purchase and Sale begin with some basic information about the buyer and seller. Worth noting is that, even after the Agreement of Purchase and Sale has been signed, additional buyers can be added (e.g. so as to be on title) through a direction provided to the sellers. No amendment is necessary. The buyer can be a trustee who purchases in trust on behalf of a beneficiary. The seller is referred to as the “vendor”. It is extremely important that the proper legal names of all of the registered property owners be stated in the Agreement of Purchase and Sale. For example, absent a marriage contract to the contrary, a married spouse not registered on title has a proprietary interest in a matrimonial home. If that spouse does not sign the Agreement of Purchase and Sale, the buyer may only be acquiring the interest of the other spouse. In some situations, the legal capacity of the seller will need to be included in the Agreement of Purchase and Sale where they are not the registered owner of the property. This may be the case, for example, where the bank is selling the property pursuant to a power of sale or where a sheriff is selling the property to satisfy an outstanding judgment. A party can represent a corporation in the purchase and sale of property. In these situations, directors and officers of the corporation generally have the power to bind it. A buyer or seller dealing with a corporate party on the opposite side should:
A party can also act as agent for a corporation that does not exist (i.e. that has yet to be incorporated). Here, the Agreement of Purchase and Sale should clearly state that the buyer has the right to transfer the agreement to the corporation. Within a reasonable time after coming into existence, the corporation must adopt that agreement. Failure by the corporation to do so will make the buyer liable for the obligations set forth in the agreement (unless the agreement says otherwise) as per section 21(1) of the Ontario Business Corporations Act, R.S.O. 1990, c. B. 16 or section 14 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44. If a party is a partnership, it is prudent to have all the partners sign the agreement if the purchase or sale is outside the normal course of the partnership’s business.
For the Agreement of Purchase and Sale to be enforceable, it must comply with the Statute of Frauds, which requires that the property be adequately identified. The description of the property that is being bought and sold using OREA’s standard form Agreement of Purchase and Sale includes:
Using a survey can help ensure the proper location and dimensions of the property.
For the Agreement of Purchase and Sale to be enforceable, it must comply with the Statute of Frauds, which requires that the purchase price be included or ascertainable. Whatever price is ultimately written in this section, be sure that the words and numbers coincide. Confusion may arise where multiple amendments to the purchase price are made using the same Agreement of Purchase and Sale. Remember that the amount of money indicated in this section is not the actual amount that the buyer must pay. The purchase price is the starting point for which there will be adjustments (as per the statement of adjustments). It is the adjusted amount which the buyer must ultimately pay.
There will also be an area to record the deposit paid by the buyer to the seller’s brokerage, which will hold it “in trust” until the terms of the agreement are met. Once the agreement is completed, the deposit will be applied to and credited against the purchase price (as determined by the statement of adjustments). Sometimes, the buyer will include a provision requiring that the deposit be placed in an interest-bearing account and that interest be credited or paid to the buyer on or after closing.
The next section is a blank area for the purchaser to identify any attached Schedules to the Agreement of Purchase and Sale which detail any special arrangements. For example, the buyer may agree to assume the seller’s existing mortgage rather than getting separate financing through a bank. The buyer may also make the sale conditional until a specified date on the happening of various events such as the sale of the purchaser’s current house, the purchaser arranging adequate financing, a home inspection being conducted to the satisfaction of the buyer, or municipal approval being obtained.
The next section typically deals with “fixtures” and “chattels”. Fixtures are improvements made to a property that are attached or cannot be removed easily without causing damage to the property. Hot water heaters, built-in cabinets, interior doors, a dining room chandelier, and lights are examples of fixtures. Fixtures are assumed to be included in the sale of the home, unless they are specifically excluded in the agreement. While the rules for determining whether a certain item is a fixture are very confusing, some of the factors that will be used in making this determination include:
Chattels are moveable items of personal property contained on the property and must specifically be listed in the agreement if they are to be part of the sale of the home. For example, if the seller agrees to include a refrigerator, stove, or gardening equipment in the sale, these items must be specifically identified in the Agreement. If there is any doubt whether an item is included or excluded, it should be clearly specified in the agreement.
The buyer will be asked to agree to assume rental contracts (if assignable) in respect of the property being purchased. Classic examples of rental items include: hot water tanks, furnaces, and security monitoring systems. The price for the rental items is not included in the purchase price, but will be accounted for in the statement of adjustments.
Next, are a series of clauses dealing with relevant dates. The first of these is usually a clause establishing that the buyer’s offer will be void unless the seller accepts it before a certain date. It is not unusual for sellers to have only a few hours to consider the offer. A deadline is also set in the Agreement for all searches to be done on the property. This is commonly referred to as the “requisition date”, which is the earliest of 3 dates:
Before this date, it is the buyer’s responsibility to do a number of searches to ensure there are no problems with the property. These include searching the registered ownership of the property through the land registry office, checking that the property complies with zoning regulations, and searching for outstanding municipal work orders, encumbrances, or builders’ liens. It is typical to see that the title search is conducted a number of days prior to closing so that, if an issue arises concerning title, there will be time to address that issue and/or extend the closing date (through mutual agreement). The buyer and the seller also must identify a date for the closing of the transaction. This is the very important date when the sale is finalized and the buyer takes physical possession of the property.
Typical Agreements of Purchase and Sale establish so-called “conditions” that must be met before the sale can be completed. The party who is responsible for fulfilling the condition must use his or her best efforts to do so. First, the buyer’s entire offer to purchase the home is usually conditional on the seller being the legal and registered owner of the property. Second, if the buyer’s lawyer discovers any problems while doing the various document searches, the buyer (or the lawyer) must send a letter explaining the problem to the seller’s lawyer before the requisition deadline. If the seller is unable to fix the problem, then the entire Agreement may come to an end unless the buyer specifically chooses to take the property with the particular defect. Finally, the Agreement will state that, unless the buyer makes an objection in writing before the requisition date, the buyer cannot complain later about any defects in the seller’s ownership of the property. For this reason, it is very important for the buyer’s lawyer to perform all the necessary searches to ensure there are no hidden problems that may arise at a later date. Other clauses in the Agreement may deal with technical issues relating to future use of the property, production of documents, insurance, tax arrangements, adjustments, and spousal consent. Your lawyer or Realtor can provide a more detailed explanation of these terms. Completing an Agreement of Purchase and Sale can be complicated and technical. Before the Agreement is final, it may change several times as the buyer and the seller negotiate its terms, and counteroffers are presented. To be certain you understand all the terms, it is best to have your agreement reviewed by a lawyer before your purchase or sale of land is finalized.
This paragraph states that there is no agreement – oral or written – concerning the purchase and sale of the property by the parties except as set out in the Agreement of Purchase and Sale. No representation, warranty, collateral agreement or condition affecting that agreement exists unless it is expressly included therein. Furthermore, if there is a conflict between the printed form and any clauses inserted in the agreement (including those inserted in a Schedule), the inserted clauses will govern to the extent of the inconsistency.
In the standard form Agreement of Purchase and Sale, the legal representatives (e.g. heirs, executors, administrators, etc.) of the purchaser and seller are bound by the Agreement of Purchase and Sale. This means that bankruptcy, death, mental incapacitation in some cases, etc. cannot allow a party to avoid their obligations under the Agreement of Purchase and Sale. If a buyer or a seller, for example, died before closing, their estate trustee would be bound to close the transaction even if the beneficiaries did not want that to happen. While not a legal requirement in Ontario, it is a good idea to have witnesses sign and date the Agreement of Purchase and Sale in order to establish who the parties are (this helps prevent against fraud). Having witnesses also helps in case an issue arises concerning the mental capacity of one or more of the parties to enter into the contract. Finally, witness testimony may become relevant if a party wants to avoid fulfilling their end of the bargain (and closing) based on misrepresentations, undue influence, duress, etc. To deal with situations where a vendor has a spouse (e.g. common law or married) that has an interest in the property but is not on title, there is a section in the standard Agreement of Purchase and Sale requiring their consent. When the final version of the Agreement of Purchase and Sale is accepted, whichever party accepted it must sign off. The buyer, for example, could be the last party to accept the seller’s counter-offer and would be required to sign off here. This provision was included to avoid difficulties in determining specifically when the Agreement of Purchase and Sale was finally executed. Finally, there is an acknowledgment section that states that the parties acknowledge receiving a signed copy of the accepted Agreement of Purchase and Sale and authorize their Realtor to forward a copy to their lawyer. This is a requirement on the brokerage under section 12 of the Code of Ethics. This acknowledgment section also identifies the buyer and seller’s address for service of notice as well as their lawyer’s addresses, telephone and fax numbers. Oct 19
There is no legal requirement that governs what percentages are appropriate. So long as the Realtor fulfills his or her professional, ethical, and fiduciary duty towards his or her client, the negotiated overall commission is what usually governs the deal. If a real estate salesperson is involved in the purchase and sale (which is the normal course), then the commission payable is further broken down between the respective brokerages and their real estate salespersons. This may be a 75:25 allocation in favour of the real estate salesperson or a simple transaction fee (e.g. $300) that the salesperson must pay to the brokerage to facilitate the transaction. While in most cases there is no direct cost to a buyer for their Realtor’s services, a buyer may be liable to pay for some or all of their Realtor’s commissions if they agree to it in a Buyer Representation Agreement (as discussed above). SearchLatest Public Posts:Need a Lawyer?
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