Forced Sales of Property Under the Partition Act
A lot of people own land. It might be a place to live, a location to invest, or both. Land can also be held by many people. Land can be co-owned in one of two ways: as joint tenants or tenants in common. Each joint tenant owns 100 percent of the land in undivided portions. For example, a husband and wife frequently own their family home as joint tenants, which means they jointly own the entire property. Tenants in common, on the other hand, hold 100 percent of the land in split parts. For example, three persons may own a business property in equal thirds. Each owner’s one-third stake is stated on title. Sometimes co-owners of land argue over how a property should be managed or whether the land should be kept or sold. It is not unusual for one co-owner of a property to want to sell it while the other does not. As a result, you may be obliged to sell your property if you are a joint tenant or tenant in common of a property with a friend, family member, or business partner… How To Resolve These Disputes: The Partition Act permits anybody with an interest in land in Ontario to file an action or make an application to the court to have that land partitioned or sold at the court’s discretion. According to Section 2 of the Act: “All joint tenants, tenants in common, and coparceners, all doweresses, and parties entitled to dower, tenants by the curtesy, mortgagees or other creditors having liens on, and all parties interested in, to or out of, any land in Ontario, may be compelled to make or suffer partition or sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only.”[i] Prudent landowners may opt to sign into a contract with another person prior to acquiring land, which gives a method for dealing with problems. However, in many cases, land is simply acquired with little thought given to how to deal with any future problems. The Partition Act of Ontario gives some help to co-owners of land who are in conflict. A landowner may petition to the court under the Partition Act to force the sale of his or her land. This right, however, is not absolute. The individual wishing to sell the land must have what is called as a “possessory right” to it. For example, if a co-owned commercial property is leased to a tenant, one co-owner cannot force the sale of the land since the property is occupied by a tenant with a lease. Furthermore, even though a co-owner has a prima facie right to sell a property, a court may deny a transaction if the moving party’s motive is malevolent, oppressive, or vexatious against the other co-owner. Recent Cases: As noted above, the court may reject to award partition or sale in cases of malice, oppression, or vexatious purpose (Brienza v. Brienza).[ii] Please keep in mind that pursuing division or sale does not become oppressive or vexatious just because the other co-owner will be dissatisfied with the loss of […]
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How Escalation Clauses Function in Agreements of Purchase and Sale
Prospective buyers and their realtors are frequently disappointed in today’s competitive real estate market when their offer is not accepted by sellers. Too frequently, buyers and their agents are left wondering how close their offer was to the winning bid and whether a few thousand dollars more would have made a difference. As a result, many people have turned to the escalation clause. An escalation clause permits a buyer’s offer to automatically rise in predetermined increments until it reaches a maximum cap or is otherwise accepted. For instance, Ali makes a bid to buy a house from Suzan for $775,000, with an escalation clause requiring a $5000 incremental increase to beat rival offers, up to a limit of $825,000. If Marcus submits a bid of $820,000 without an escalation provision, Ali’s offer will be escalated to $825,000 instead of his original $775,000 bid. The escalation clause permits Ali’s offer to become the most financially appealing offer presented to Suzan, even though Marcus filed an initial bid that was greater than Ali’s original offer. Here at Cactus Law, we advise you to use caution while utilizing the escalation clause. As stated below, using an escalation clause, or accepting an offer with an escalation clause should not be handled lightly. To guarantee compliance with the Code of Ethics and the Real Estate and Business Brokers Act, realtors, purchasers, and sellers must carefully analyze the provision and how it is to be handled with. The Duty to Act in Good Faith Because the seller is not required to reveal the next best offer to the buyer, an unethical seller might exploit Ali’s escalation clause to make his offer $825,000 while Marcus’ offer was always $780,000. An unethical seller may even induce a favourable offer from a third party (say, Ken, who offers $820,000) before the irreversible period finishes, where the third party’s offer is intended to trigger the maximum rise in Ali’s offer. O. Reg. 580/50 mandates Real Estate and Business Brokers Act registrants to act fairly, honestly, and with integrity. While this precaution exists, proving that the seller illegally used the provision would be difficult, and the court would most likely hold the purchaser to their escalation clause as stated. Privacy Concerns Realtors must follow the rules regarding competing bids outlined in O. Reg. 580/05, which states that “if a brokerage that has a seller as a client receives a competing written offer, the brokerage shall disclose the number of competing written offers to every person who is making one of the competing offers but shall not disclose the substance of the competing offers.” For example, if Ali’s bid is successful at $825,000 after his original bid of $775,000, he will be aware that the next best competitive price was $820,000. RECO has recommended that while this scenario does not constitute a breach of Section 26, a rigorous process should be followed to guarantee conformity with the Code of Ethics. Cactus Law’s Recommendations Realtors who represent the seller must: ensure that their clients are willing to consider offers including such conditions. verify the substance of the provision with the purchaser (Does it have a cap? Does […]
Read moreThe New Residential Rental Property Rebate
The New Residential Rental Property Rebate You are entitled for the new residential rental property rebate (NRRPR) if you bought a newly constructed home or condo as an investment property and have a tenant who has signed a lease for at least one year. Notably, when you purchase a new residential property to rent out, the condo or home developer is not allowed to apply for the new home HST rebate on your behalf, as they would if it were your primary residence. As a result, buyers are forced to pay the HST for the rental property up front and then must wait for the Canada Revenue Agency (CRA) to issue a refund. This often places a temporary financial burden on the individual purchasing the investment property because they will be out a considerable amount of money for up to a year and will have to endure any interest costs in the interim. It is strongly advised that you file your HST rental refund application as soon as you close on the property and find a tenant to reduce the amount of money you spend servicing this additional debt. HST Rebate for Primary Residences vs. Rental Properties If you are purchasing a home to live in or for a close relative to live in, the seller will usually reduce the final selling price, including HST, by the sum of the new housing rebate in return for full access to your rebate when it is released by the CRA. Not only does this make it easier for the buyer to afford the property because the selling price is lower, but it also saves them the time and effort of applying for the new home refund themselves since the seller takes care of it. This also enables condo and home builders in Ontario to advertise a lower “sticker price” for their new developments. When looking for new real estate, you will notice that many of the advertised prices already include the HST rebate for new homes. Notably, however, sellers are only allowed to do this for buyers who are purchasing a primary home. This means that all other buyers, including those buying a rental property, must pay the HST in full up front, resulting in a selling price that is higher than what is usually advertised. Fortunately, in Ontario, there is a special HST rebate intended to ensure that investors do not pay more for a new home than they would if it were to be occupied by the owner. The NRRPR is a HST rebate for rental properties provided by the CRA, and it is available to any landlord who purchases a new home or condo of which the first occupant is a tenant. The main difference between the rental property rebate and the regular HST new house rebate is that the buyer must pay all of the HST upfront and can only apply for it themselves, rather than the seller “fronting” the reimbursement to reduce the purchase price and then handling the application for you. Since most property owners who are interested in applying for the NRRPR are not tax […]
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Construction Lien
What is a Construction Lien? A construction lien is a security interest on a property that can be registered on title to the property by anyone who has supplied work or material to improve the property. The lien on the improved property is for the outstanding price owed for the services or materials provided. Registrants are typically builders, contractor, construction sub-contractor and suppliers. Under Ontario’s Construction Act, a lien first arises and takes effect when a party first supplies services or material to the improvement. The party paying for the services is entitled to holdback or retain 10% of the price of the services or materials until all liens that may be claimed against the holdback have expired, satisfied, or been discharged. Since 2018, there have been changes with respect to the time line for preserving and perfecting a lien. Preserving a Lien A lien can be preserved during the supplying of service or material or at any time before it expires, by registering the lien in the proper land registry office on the title of the premises. Any number of persons having liens upon the same premises can bring forward a joint claim for a lien. A party who wishes to preserve a lien will have 60 days to do so starting from the date that a certificate of declaration of the substantial performance of the contract is published, or the date on which the contract is completed, abandoned or terminated. Perfecting a Lien After an individual preserves a lien, they can then perfect it. However it is important to note that the claiming party will only have 90 days to perfect a lien, after it has been preserved. Among other considerations generally, in order to perfect a lien, the claimant must commence an action to enforce the lien and then register a certificate of action in the prescribed form on the title of the premises. A perfected lien will expire immediately after the second anniversary of the commencement of the action that perfected that lien, with the exception of an order for a trial in which the lien may be enforced. Time Limitation Suspension during COVID-19 The province of Ontario issued the Emergency Management and Civil Protection Act on April 9, 2020, which put a hold on limitation and procedural time periods that are retroactive to March 16, 2020. The Attorney General however, lifted the suspension of limitation periods for construction liens, effective as of April 16, 2020. This means that amount of time a lien claimant had to preserve a lien prior to March 16, 2020, will resume on April 16, 2020. Therefore, if a lien was established on March 16, 2020, the claimant would have 60 days from April 16, 2020 to preserve it. Have you provided services or materials for improvement of a property for which you have not been paid? If so, contact our Toronto Real Estate and Civil Litigation Lawyer for a free consultation, to discuss how you can protect your interest by registering a line. Disclaimer: The information in this article is provided as general introductory information and shall not be […]
Read moreBuying A Real Estate Property
There are many steps involved with a buying a home. Whether arranging for financing or obtaining clear title, it is important to work with a diligent lawyer who understands how to protect your rights and interests. Our Toronto Real Estate Lawyer is here to make sure your moving day is stress free. Contact us to learn more about our residential real estate services.
Read moreSelling a Real Estate Property
We are here to protect your investment and simplify the complex steps involved with selling a property. From arranging for payout statements and removing liens, we provide the care and support you need to ensure the successful completion of your sale. Contact us for more information on how we can support you with the sale of your home.
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