Realty Realities

by Dave Smith, Partner 

New home buyers beware – the price on the front page of your Offer is often not the full purchase price – and the builder/seller has no legal obligation to make full disclosure of extra charges to you. 

I was recently reminded of this issue when reviewing a client’s pre-construction purchase contract for a fee simple town home abutting a common element condominium plan for the roads and amenities in the neighbourhood.  The 81 page purchase agreement was typical for a pre-construction project.  There was a floor plan without measurements of any guaranteed size, with options for the builder to revise the plans, alter elevations or reverse the footprint.  Furthermore there was an obligation to pay a number of undisclosed but unlimited charges.  As is usually the case, the contract was custom prepared by the builder.  Also included were the condominium organization documents.  I have found these documents are usually intimidating and incomprehensible to clients, and they do not bother to read them. 

Buried in the purchase contract and in the condominium organization documents were a number of additional costs to the buyer.  These included Tarion Warranty registration fees; utility meters and connection charges, Transfer preparation fees, just to name a few.  Additionally there were ongoing charges to be incurred in the future by the homeowners under the condominium documents. 

The lessons:  ask about undisclosed charges in the sales office before signing anything, and read the organizational or disclosure statement for the condominium. 

Finally, always have an experienced real estate lawyer review the purchase agreement and condominium documents within the prescribed cancellation or conditional period (usually 10 days). 

Be careful out there!

by John Cockburn, Partner

Question

We sold our home and agreed to a $10,000.00 deposit held by our Realtor.  The conditions were waived a month ago, firming up the sale so we went ahead and purchased another home on a firm and binding agreement. 

Our lawyer just received a letter from our purchaser’s lawyer telling us that the purchasers have changed their mind and bought another house and were asking for the return of their deposit! 

We naturally assumed that we would get the deposit in the event of a default and have other rights against the purchasers…….but our lawyer has been unable…….so far to get a cent for us and her bills are mounting…..what is up? 

Answer 

Unfortunately a real estate deposit in a trust account of a realtor is of little practical value to a vendor.  It is not the realtors fault but the Act governing relators prevents them from releasing the deposit unless either the defaulting purchaser consents in writing or a court order has been obtained ordering the release. 

A defaulting purchaser will seldom “consent” and obtaining a court order will take many months and will cost you thousands of dollars!!! 

Solution

Be certain as a vendor that the deposit is made payable to your solicitor in trust as solicitors are not bound by the realtors legislation!

by Nathalie Tinti, Associate 

With spring coming, and now almost going, people are flocking to their cottage full of excitement to clean out the mouse poop and throw their Muskoka chairs on their dock.  It won’t be long before black fly season is over and you can enjoy an ice cold one looking out over your lake.  One problem, your dock isn’t quite as stable as it used to be and you have come to the conclusion that it is finally time to replace it.

Knowing that your neighbour down the way was charged for not applying for his permit last year when he built his dock, you realize that you need a permit to rebuild.  And since you are rebuilding anyway, you might as well make your dock into that gorgeous “U” shape 7,000 feet of dock space that you have always wanted!  Off you go to your local Municipal office, full of energy, drawings in hand and a smile that would make your grumpy aunt Fanny May break into song.  Within minutes of being in the Municipal office, you hear  4 words that you have never heard before that are about to throw you for loop… “Original Shore Road Allowance” or OSRAs as we in the real estate business like to call them.

Along with those 4 words comes an explanation as to what it is and why you don’t own it.  And then usually comes a call to your lawyer, because it simply cannot be true that you do not own to the water’s edge of your very expensive cottage property.  Guess what, unless you or a predecessor owner have purchased it, you do not own to the water’s edge of your waterfront property.

In and around Georgian Bay, Parry Sound and Muskoka, 66 foot (or 1 chain as they like to say in the golden olden days) shore road allowances are the rule rather than the exception.  The reason for these original shore road allowances is not thoroughly documented, however, it appears that the reason for them probably dates back to times of logging operations.  These OSRAs provided the lumberman with the right to trespass on private lands to haul logs.

The good news is, most of the time, these OSRAs can be purchased from the Municipality.  Thanks to snowmobilers and ATV operators finding out about the OSRAs and using them as trails, much to abutting property owners chagrin, pressure from tax payers forced municipalities and the Government to sell these ORSAs to abutting property owners in order to secure their privacy.  The real purpose of the OSRAs has long since passed, and municipalities now have the option of retaining them or selling them. 

The process by which this happens will be the topic of my next blog.