Toronto Real Estate and Neighbourhoods Blog | Move Smartly

Buying a Condo – Exclusive Use vs. Ownership

Rachel Loizos in Legal

Between the glitzy sales office and the way condo documents are drafted, it can be confusing for consumers to know what they are actually buying when they agree to buy a condo.  It may seem like splitting hairs, but there is a big difference between buying a condo with a parking space and buying a condo unit and a parking space.  The difference is ownership vs. exclusive use. 

The different rights that correspond to ownership and exclusive use of space are easily examined when we look at parking spaces, lockers and terraces within a building. 

Exclusive use means that your condo unit comes with the right to the exclusive use of some amenity in the building.  This is often a parking spot, a locker or a terrace.  As the owner of the condo unit, you are the only person who can use the other space (parking, locker, terrace) while you own your condo.  If you sell the condo, the right to the exclusive use of the space is transferred with the sale.

Ownership is different.  If you actually own the space that the parking spot, locker or terrace occupies, you could then (theoretically) sell it to some other person whenever you wanted to.  If you decided to get rid of your car, you could then likely sell your now-superfluous parking space.  Be sure to review your condo documents carefully, as there may be prohibitions on selling a parking space without the unit.

Obviously, there is more value in actual ownership than merely having the right to use something.  You should ask these questions before you decide which condo development is right for you – and how much you are willing to pay for a unit.  Read the condo by-laws carefully to see what rights you will actually have when it come to the property you now ‘own’.

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law.
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Related Post:

How Important is Parking to Toronto Condo Buyers?

Good fences make good neighbours, but bad lawsuits

Bob Aaron in Legal

Back in 1915, poet Robert Frost penned the line "Good fences make good neighbours." Last year, in a bitter dispute involving the owners of adjoining cottage properties, Justice Joseph W. Quinn echoed Robert Frost in the first line of his judgment.

"A good fence may make a good neighbour," he wrote, "but does it make a good lawsuit?"

The answer, of course, requires a reading of three separate court decisions, and depends on whether the reader sides with the plaintiff or defendant.

Anthony and Catherine Suprun own a cottage property at Turkey Point, not far from Long Point on Lake Erie. Several members of the Sloat family own a similar cottage next door.

Back in 1981, Norfolk County passed a zoning bylaw defining a "boundary fence" as "any fence, hedge, free standing wall ... intended to delineate a property boundary." The bylaw limits the height of boundary fences in residential areas to a maximum of two metres (6.6 feet).

A separate bylaw, the fence bylaw, prohibits virtually all fences in Norfolk county from exceeding two metres in height.

The fence bylaw allows the county to remove a nonconforming fence, and provides for a fine of up to $2,000 for any contravention.

In early 2001, the local building inspector advised the Sloat family orally and in writing that they could construct a retaining wall between their property and the Suprun property.

Title Insurance Won’t Always Protect You

Rachel Loizos in Legal

I will relay a sad story about how a home buyer got swindled by an unethical vendor in a resale transaction in the City of Toronto recently.  In August of 2007, a purchaser closed a real estate transaction and bought a very cute little bungalow in the east end of the city.  Unfortunately, the vendor did not pay the water bill.  The arrears did not show up on a search and the fact that the account was overdue was only discovered after the transaction closed.

At the request of the bank, the purchaser was required to get title insurance and did.  The policy of title insurance stated that it would cover water arrears, but ONLY if they were the kind of arrears that would be revealed by a search.  Unfortunately for our purchaser, these were the kind of arrears that are not revealed by a search, and thus not eligible for compensation under the policy.

Water arrears, like tax arrears, will be registered as a lien against the property – meaning that the unsuspecting purchaser foots the bill when the unscrupulous vendor flees. 

Certainly small claims court is an option, but it will be difficult to collect the funds even if the purchaser is successful in their suit because the vendor has moved to another country.

This story made me particularly annoyed for a variety of reasons, not the least of which is the fact that when you use someone's utilities without paying for them it is called stealing, plain and simple, and I have no tolerance for it.

The moral of the story?  If you are purchasing property being sold under a power of attorney, protect yourself and ask your agent to insert a clause allowing for a reasonable holdback for utilities.  The same can be said if you know the vendor intends to move to another province or country following the closing.  Unfortunately, there is no way to ensure you will find out and it is almost impossible to collect these funds after closing.  Truly, buyer beware.

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law.
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Related Post:

Why Home Buyers Need Title Insurance

Road Access Critical When Buying Cottage in Ontario

Bob Aaron in Legal, Home Buying

The most important question for anyone buying a cottage property is always, "How do I get there from here?" After all, there's no point spending hundreds of thousands of dollars on a recreational home if the only way to get to it is by helicopter.

Access to cottages was the issue in a case heard by the Ontario Court of Appeal last year. A group of cottagers live year-round on the shores of Lake St. John in Ramara township. The cottage sites are on reserve lands of the Mnjikaning First Nation, and the cottagers pay the Crown an annual rent of $1,400 to $1,500 each.

The only existing motor vehicle access to the cottages is over a road located on an adjacent lot, purchased in 2003 by a numbered company owned by the Mnjikaning First Nation.

The previous owner of the adjacent lot charged the cottagers a $500 annual fee for the use and maintenance of the access road. When the numbered company bought the lot, it advised the cottagers that they would each be required to pay $2,000 annually, but only for seasonal access between May and November.

It wasn't long before the corporation owned by the First Nation band sued two of the cottagers for trespass by snowmobile, and a group of cottagers sued the First Nation corporation for an injunction restraining them from interfering with road access to and from their cottages.

The case involves the interpretation of Ontario's Road Access Act, originally passed in 1978 to resolve disputes that occur when the property of one neighbour is landlocked, and the only vehicle access to it is over a road on property owned by another neighbour.

Supreme Court Rules on Joint Name Transfer for Real Estate Assets

Bob Aaron in Legal

It's not uncommon for an elderly parent to transfer real estate or other assets into joint names with his or her adult children. When this happens, does the law presume that the transfer is a gift, or does the child merely hold the asset in trust for the parent?

Those were the questions which arose in the case of Pecore v. Pecore, which was decided by the Supreme Court of Canada last year.

In 1993, Edwin Hughes was advised that his $1 million estate could save significant probate fees on his death if he transferred ownership into the joint names of himself and his daughter Paula Pecore.

After most of the estate was transferred, Hughes was told that this type of transfer could trigger a significant capital gain on the profit on Paula's "half" of the assets.

Since that was not his intention, he wrote letters to the financial institutions holding the assets stating that the ownership change was for probate purposes only (to avoid the 1.5 per cent probate fees), and was not to be interpreted as a gift to Paula during his lifetime.

Shortly before he died, Hughes signed a will dividing his estate equally between Paula and her husband Michael Pecore. When Hughes died, Paula redeemed all of the investments, which she was entitled to do because they were registered jointly with her father.

Two years later, in the midst of divorce proceedings, Michael discovered he was entitled to half of his father-in-law's estate and sued Paula for his share.

Home Buying in a Gentrified Toronto

Rachel Loizos in Legal, Real Estate Trends

Assuming that Toronto has a housing bubble, and that it will not burst (or if it does, it won’t be soon enough), how are average people supposed to enter the market? I agree that consumers should not buy above their means, but what if that results in being priced out of everywhere you want to live?

I came across a very interesting New York Times article recently that (although cheekily mocked for its navel-gazing in a satirical blog) does raise a very interesting point.  The article, peppered with Richard Florida references,  highlights Brooklyn and the San Francisco Bay area where people, priced out of the market, join together to purchase property that they could not otherwise afford.

In a previous post, I described Tenancy in Common, a method of owning property with others.  In the face of gentrification and rising markets in general, this could provide those people who were going to share a rental space the opportunity to share an owned space.  Obviously, this type of ownership is not for everyone, and it is not a new concept - but obviously more relevant as we face increased housing costs and fewer options.

I believe that this kind of ownership is certainly a sensible way to start.  Having said that, make sure you go in to the transaction with your expectations known, and even if you decide to buy property with your brother, make sure that you have documented the agreement between you in detail.  Nothing drives people apart like disputes over money so to protect the relationship, make sure you have clear expectations from the outset.   

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law.
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Related Posts:

How to Take Title - Sole Ownership, Joint Tenancy and Tenancy in Common

Richard Florida and Toronto's Openness Paradox

Bejeweled Phantoms: Will Foreign Investors Accelerate Gentrification in Toronto?

 

Ontario Home Buyer Pays Price for Jilting Agent

Bob Aaron in Home Buying Tips, Legal

Earlier this month, the Ontario Superior Court of Justice released a decision which highlights the obligations of parties signing a buyer-agency agreement.

In the fall of 2005, Helen Clubine was looking at properties in the Orangeville area with her real estate agent Zoi Boussoulas.

By early January, 2006, Clubine had inspected a property known as Willow Hall several times, and was finally ready to put in an offer to purchase it.

At the time the offer was being prepared and signed, Boussoulas presented Clubine with a standard form buyer-agency agreement (now known as a buyer representation agreement), which gave the broker exclusive authority to act as the buyer's agent until June 30, 2006.

This form, which is commonly used in the real estate industry, provides that the broker is entitled to be paid commission if the buyer enters into an agreement to purchase any property, during the running of the agreement. If the seller does not pay the commission, or all of it, the buyer is required to pay it.

Beware if You're Purchasing a New Home or Condo to Flip

Bob Aaron in Legal, Home Selling Tips, Toronto Real Estate News

Ed. Note.  We are pleased to welcome Bob Aaron, a Toronto real estate law expert, to Move Smartly.  A leading practitioner in the legal profession, Bob is an elected director of the Law Society of Upper Canada.  Each week, Bob shares his popular Toronto Star column articles with the readers of Move Smartly.

A recently discovered policy of the Tarion Warranty Corp. could have an enormous impact on the thousands of buyers of new homes and condominiums who resell the properties without moving in.

The policy was brought to my attention by Vidas Augaitis, a colleague who practises real estate law in Collingwood.

In April 2005, two of his clients, whom I will call Deb and Chris, bought a new house in Wasaga Beach from Pinevalley Developments Corp. On closing, the buyers received a Certificate of Completion and Inspection and a warranty certificate from Tarion confirming that the house was enrolled under the warranty program.

When they closed the transaction with the builder, Deb and Chris intended to sell their existing home and move into the new one. For various reasons, they changed their minds and eventually decided to sell the new house. The resale closed on July 24, 2007.

In January of this year, Deb and Chris received a visit from a senior investigator with Tarion's enforcement department. He told them that they should have registered the house with Tarion when they resold the property, since he believed it had not been occupied during the period of their ownership. The Tarion representative pointed out that anyone who sells a new home in Ontario without registering it with Tarion is liable to a fine of up to $25,000 or a term of imprisonment of up to one year, or both.

Real Estate Fraud Action Plan: Enhancing the Security of the Ontario Electronic Land Registry System

Rachel in Legal, Real Estate Trends

Some new developments are coming to pass in the legal world as it relates to real estate. You may or may not know that the province of Ontario was the first jurisdiction in the world to provide electronic registration of land-related documents. In order to enhance the security of the system, the Ontario government's Real Estate Fraud Action Plan has outlined its new Access Requirements.  The people who are currently registered to use the system are required to re-register in order to continue to use it. The Ontario Bar Association has been sending fairly regular reminders about this, so it will be interesting to see if any deals are actually delayed because of the transition.

Do It Yourself Renovations

Rachel in  Lifestyle, HomeBuying, Legal

With spring in the air and my tulips breaking the surface in my garden, my thoughts naturally turn to home renovations.  I enjoy taking on small ‘upgrade’ projects around the house and thus far have managed not to cause more harm than good.  If you are also experiencing the need to visit a big box store for the perfect solution to your design/ structural/aesthetic issues at home, good luck but remember that you could be exposing yourself to risk.