Occupancy Period When Buying a New Build Condo

August 25, 2017

Overview of Process  When a consumer purchases a new condominium unit in Ontario and they move into the unit, they are unaware that condominium ownership is a two-part phase. In Ontario there are two closings when consumers are purchasing a new unit in a condominium: The Interim Closing – during this phase, the consumer will occupy (“Occupancy”) the unit that may be suited for habitation but does not hold title of the unit; The Final Closing – during this phase, the title or ownership will be transferred from the builder to the consumer/purchaser.  The Occupancy period (the time between Occupancy and the Final Closing) is governed by the “Interim Occupancy Agreement” that is typically attached to the Agreement of Purchase of Sale (“APS”). During the initial stage (from when the APS is signed until the Interim Closing), the purchaser will often pay the builder the down payment portion of the total purchase price through various deposit payments. Prior to the Interim Closing, the APS usually calls for a Pre-delivery Inspection also known as a “PDI.” The purpose of the PDI is for the builder and purchaser to walk-through the unit to make sure the work in the unit was done in a workmanlike manner and to point out any deficiencies which are to be repaired. During the Interim Closing, documentation is exchanged resulting in possession being passed onto the purchaser. Based on historical data, the purchaser may be in this phase for a few months to a year until the Final Closing. Upon occupancy, the builder is able to charge the purchaser the monthly occupancy fee – which is outlined by a number of factors by the government to prevent the builder from making profit during this phase. The purchaser is also able to pay the remainder balance of the purchase price (after taking into account the previously provided deposits) upon Occupancy. Some purchasers may be enticed to do so because doing so may help reduce the interim occupancy fee. The occupancy fee is made up of interest on the unpaid balance of the purchase price, an estimate on the property/land taxes for the unit, and a common expense contribution in order for the building to keep running (common expenses would include costs such as elevators, the lobby, security, parking, etc). The first phase is referred to as interim occupancy because it allows for a builder to complete construction while also arranging an orderly move-in process for all purchasers by providing possession of units to the purchasers. There are three laws that protect purchasers when buying and living in a condominium. The Condominium Act outlines certain duties that the builder must adhere to during the interim occupancy period. It regulates the way in which condo corporations are created, owned and governed. The Condominium Management Services Act outlines the rules that condo managers and management companies must follow. Lastly, the Ontario New Home Warranties Plan Act establishes deposit protection, a warranty program that protects purchasers, and direction on resolving disputes with builders. The warranty program usually comes into play after the Final Closing if there are deficiencies or issues with the […]

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Title Insurance

May 24, 2017

  Importance of Title Insurance The term ‘title’ refers to an individual’s legal ownership of a property. Title Insurance is simply an insurance policy that is meant to protect residential and/or commercial property owners against any losses related to the property’s title or ownership, including their lenders. While Title Insurance has not been deemed as a requirement in Ontario, individuals will seek to order Title Insurance when purchasing a home. A Title Insurance policy may provide home buyers protection from losses such as: Title defects that are unknown and may prevent home buyers from having clear ownership of the property Any existing liens against the property’s title – whether the previous home owner had unpaid debts from utilities, mortgage, property taxes, etc. Any encroachment issues – a structure on the property that needs to be removed as it is approaching the neighbour’s property Title fraud – typically will involve a fraudster using personal information that has been stolen to transfer the title of the home to themselves without the home owner’s knowledge (note: not all policies cover this, please check with your lawyer when purchasing your home or lending funds) Title Insurance policy is set out to protect home owners, for as long as they own the property. In addition, the policy will cover any losses occurred up to the maximum coverage stated in the policy. The following are some of the possible exclusions from a Title Insurance policy: A home owner’s knowledge/awareness of title defects – were made clear prior to the purchase of the property Any environmental hazards – soil contamination around the property Any native land claims Any zoning bylaw violations from any changes, renovations or additions to the property or land that the home owner is responsible for creating It is important to note that Title Insurance does not provide home owners compensation for non-title related matters. Title Insurance is neither a home warranty or a home insurance policy. Title Insurance will not provide compensation to home owners in the following instances: Any damages that have occurred from flooding, fire or sewer backup General wear and tear of the home Theft related issues Any other losses or damages that are non-title related matters Why obtain Title Insurance? There are a variety of situations in which a lien may arise on your property due to the seller. The seller may have had renovations done prior to selling the home and did not pay the contractor or the supplier of materials. The seller may have not paid their final hydro or utility bills. Water and hydro companies have priority power when it comes to unpaid bills. They have rights to put on a lien on the property – it is not relevant who owes the money, as long as water or utilities were supplied to the property, the right to place a lien on the property exists. Purchasing real estate is usually a large investment and having to commence legal action against a seller is usually the last thing on a purchaser’s mind. Whether the focus is on moving in, or renting the property out, title insurance helps […]

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Commercial Leases

December 2, 2015

Many businesses enter into lease agreements without professional advice.  The moment you sign a commercial lease agreement, you have most likely made a long term commitment with a variety of obligations and demands – both monetary and otherwise. Many clients I meet do not realize the gravity of the agreement they are entering into. For some, they think of it as a monthly fee, others think they can just get out of it, or leave the premises without legal consequences or implications. However, when I explain the agreement they have just entered into from a high level, their view on the agreement suddenly changes. For example, a client may say, it is a $1500.00 per month commitment, what’s the big deal? It’s the cost of doing business, right? Yes – I suppose that is somewhat true, but in fact, what if it is a $1500 per month commitment over 5 years? That is a $90,000 commitment. Many clients have had experiences in the past when renting an apartment or home – however, leases in the commercial context are much different. Most of the protections afforded to tenants under rental housing legislation do not exist in the commercial context.  In the commercial context, parties are allowed to negotiate the terms of their agreement as they choose. Why Consult a Lawyer? When running a business outside of your home, you probably need to sign a commercial lease in order to rent a space to operate your business, whether to make your product, or to meet your clients and customers. Invariably, commercial leases heavily favour the creator of the lease – the landlord, and are unfortunately worded in complex legalese which, without proper advice, makes it difficult to truly understand and appreciate the obligations you are agreeing to, and the possible legal implications.  Seeking professional advice from a lawyer should be the first step you take when entering into commercial lease negotiations. Many clients I meet have the misconception that a lease is “written in stone” or cannot be changed to suit their needs or particular business. However, many landlords understand the commitment they are receiving from a tenant and thus are willing to make changes and concessions to “close the deal.” Offer to Lease Tenants and landlords typical begin by signing an “offer to lease” which outlays essential leasing terms such as rent, additional rent (maintenance, insurance, realty taxes), the term of the lease, etc. This legally binding agreement comes with the expectation that the offer to lease document will be replaced thereafter by a longer formal lease which will be much more in-depth and will involve a host of obligations and requirements which were not included in the offer to lease. The landlord then provides the tenant with their standard formal lease after the tenant signs the offer to lease. It is safe to assume that your landlord’s formal lease will be heavily structured in the landlord’s favour. Make sure you don’t sign away your right to change the standard form lease when you’re still in the “offer to lease” phase. Getting a lawyer involved right at the beginning stages is essential, as […]

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