Tarion and the HCRA – The First Six Months

Author: Hannah Johnston, Summer Student

Tarion Warranty Corporation (“Tarion”) was established in 1976 under the Ontario New Home Warranties Plan Act to administer the province’s home warranty program. Six months ago, Tarion’s structure and process were updated.

The Home Construction Regulatory Authority (“HCRA”) launched on February 1, 2021. The HCRA is a separate regulator for new home builders and vendors, and Tarion will now focus solely on administering warranties and protections for the purchasers of new homes.

Tarion transferred its authority over the registration and licencing of builders to the HCRA, under the New Home Construction Licencing Act. Builders and vendors in good standing with Tarion automatically had their Tarion registration numbers transferred to their HCRA licences.

Recent Updates

The changes that came into force on February 1, 2021 include a revised fee schedule, where a $145 plus HST “Regulatory Oversight Fee” will be charged by the HCRA along with the existing new home enrollment fees already charged by Tarion. Builders must also display their HCRA licence is more places than before and be licenced with the HCRA (instead of registered with Tarion) before enrolling any homes.

Tarion continues to manage warranty claims, handle underwriting of vendors and builders, and conduct pre-possession risk-based inspections.

The HCRA has taken over home buyer concerns about builder/vendor conduct and also manages the Ontario Builder Directory (“OBD”).

Tarion remains involved at the beginning of the new-home process, and will still require that builders and vendors obtain a completed Qualification for Enrollment application before selling or beginning construction and will need to be issued the notice to proceed.

One other notable difference is a change to the forms to be included with every Agreement of Purchase and Sale (“APS”) for a pre-construction or new home signed on or after February 1, 2021. Each APS must have the following:

  1. Residential condominium units (for standard and phased) must have the HCRA’s Information For Buyers of Pre-Construction Condominium Homes form attached at the front of each APS;
  2. all homes (freehold and condominium) must have the appropriate version of the new Addendum included; and
  3. all homes (freehold and condominium) must have the appropriate version of Tarion’s new Warranty Information Sheet attached to the Addendum.

Legal Issues at the Licence Appeal Tribunal

In the past six months, the HCRA has been to the Ontario Licence Appeal Tribunal (“LAT”) three times. These LAT cases dealt with whether a builder or vendor should be able to extend how long they could file a Notice of Appeal from the HCRA’s proposed revocation of their licences. The licence revocation process requires the HCRA’s Registrar to serve notice of its intention to revoke a licence, then the builder has 15 days to request a hearing with the LAT. If no hearing is requested, then the HCRA can proceed to revoke the licence, unless the licensee can show justice demands an extension.

In 7853742 Canada Inc. o/a Mapleview Homes v. Registrar, Home Construction Regulatory Authority, the builder’s request for an extension to the Notice of Appeal period was denied because the Notice referred to outstanding construction liens, the builder had insufficient equity and failed to provide a satisfactory explanation of its financial circumstances. The appellant also applied three and a half months after being notified, which is far beyond the statutory 15-day appeal period.

No extension was granted in Superior Construction – Luxury Homes Inc. v. Registrar, Home Construction Regulatory Authority either. The builder was informed he needed to sign and send back the new conditions for registration imposed by Tarion by October 2020, but he waited until Tarion transferred authority to the HCRA. The LAT here said this was a “calculated and conscious decision” not to apply to extend the Notice of Appeal on time.

A Notice of Appeal was not filed within the statutory 15-day period in Diamond Luxury Builders Inc. v. Registrar, Home Construction Regulatory Authority but an extension was granted due to special circumstances, including the builder contracting COVID-19, which lead the LAT to say it would be an injustice to not grant an extension and allow a hearing.

The HCRA is still a rather new entity, the industry is still adjusting to the new division of responsibilities between Tarion and the HCRA. More information on the responsibilities of each entity can be found on the Tarion website.

Changes to the Condominium Act: A Guide to the New Condominium Guide

Post by Annie Bailey

Effective January 1, 2021, the Condominium Act, 1998 (the “Act”) will be amended to require condominium developers to provide potential purchasers of pre-construction and newly-built condominium units with a “Condominium Guide.”

If you are a developer or a potential purchaser of a pre-construction or newly-built residential condominium unit, this new Condo Guide is very important for you. For others, including those who currently own a condominium unit, are purchasing a unit in an existing condominium, or work in the condominium industry, the Condo Guide is a valuable educational resource.

The purpose of the Condo Guide is to provide potential purchasers of condominium units with reader-friendly, understandable information on the process and risks of buying a pre-construction or newly-built condominium unit, as stated by Ontario’s Ministry of Government and Consumer Services. The Condo Guide will assist these potential purchasers with making informed decisions about their purchase. Some of the topics covered include:

  1. Condominium corporations;
  2. Buying a pre-construction unit (including delayed occupancy and interim occupancy);
  3. Warranty coverage with Tarion;
  4. Governing documents and why you should read them;
  5. Condominium living (including owner rights and obligations);
  6. Common elements and common expenses; and
  7. Condominium governance, finances, and management.

The Condo Guide was prepared by the Condominium Authority of Ontario (the “CAO”) and approved by the Minister of Government and Consumer Services. This process ensures that all potential purchasers will receive a copy of the same government-reviewed information. You can access the Condo Guide here: https://www.condoauthorityontario.ca/resources/condo-buyers-guide/

The Act gives the Minister (and by extension, the CAO) discretion to create different versions of the Condo Guide that apply in different circumstances and to different types of condominiums. The version of the Condo Guide that has been released so far applies only to residential condominiums. So if you are purchasing a commercial condominium unit, this Condo Guide does not directly apply to you. However, the general information in the Condo Guide may still be useful for commercial condominium unit owners. We may also see different versions of the Condo Guide released in the future.

The Condo Guide is an additional document that developers (or those acting on behalf of a developer) must deliver to potential purchasers along with the already-required Disclosure Statement when potential purchasers sign an Agreement of Purchase and Sale for pre-construction or newly-built condominium units. Regulations under the Act have not yet been released specifying how the Condo Guide must be delivered, so for now, it is likely best for developers to deliver it in the same manner in which they already deliver the Disclosure Statement.

After receiving the Condo Guide, Disclosure Statement, and fully signed Agreement of Purchase and Sale, potential purchasers have 10 days to review the documents (ideally with their lawyer) and to decide if they wish to proceed with their purchase. This is known as the “10-day cooling off period,” and potential purchasers may rescind their Agreement of Purchase and Sale by written notice within this timeframe if they so desire. While the “10-day cooling off period” is not new, the requirement to include the Condo Guide is new.

Developers, please speak to your lawyers about these upcoming amendments to ensure you are providing proper disclosure to your purchasers after January 1, 2021. You must provide the Condo Guide to all new residential purchasers entering Agreements of Purchase and Sale in the new year, even for projects that went to market before January 1, 2021.

Purchasers, you can expect to receive this Condo Guide if you purchase a pre-construction or newly-built residential condominium unit in the new year.

A Declarant needs to provide Clear and Current Disclosure Information to Purchasers

In Toronto Standard Condominium Corporation No. 2051 v Georgian Clairlea Inc. (“Georgian”) the Ontario Court of Appeal affirmed the findings of the motion judge with respect to a declarant’s disclosure obligations as set out in the Condominium Act, 1998 (“Act”).

Subsection 72(1) of the Act provides that “the declarant shall deliver to every person who purchases a unit or a proposed unit from the declarant a copy of the current disclosure statement made by the declarant for the corporation of which the unit or proposed unit forms part” (emphasis added). The obligation to provide the current disclosure statement demonstrates that the Act intends for the declarant’s disclosure obligations to continue as the project changes between inception and final closing.
This intention of continuous disclosure is further codified in Subsection 74(1) of the Act where it is prescribed that a declarant is required to provide a purchaser of a unit or proposed unit with a revised disclosure statement or notice with respect to a “material change in the information contained in or required to be contained in a disclosure statement.

The disclosure issue in Georgian arose because of 2 vendor take back (“VTB”) mortgages given by the newly formed condominium corporation to the declarant while the declarant maintained control of the board of directors of the condominium corporation.

A VTB mortgage was provided in the amount of :

• $2,228,100.00 for HVAC equipment the declarant had previously disclosed would be leased by a third party to purchasers; and

• $1,026,000.00 for 32 parking units, 16 storage units, and 2 combination parking and storage units the declarant was unable to sell to purchasers.

Neither VTB mortgage appeared in the budget statement for the first year after registration of the condominium plan as no payment was due under either VTB mortgage for a period of 1 year.

During a motion for summary judgement, it was found by the motion judge that the 2 VTB mortgages were “material changes” as defined in Subsection 74(2) of the Act and that the re-disclosure/notice of these VTB mortgages was insufficient to satisfy the declarant’s disclosure obligations set out in the Act. The motion judge went on to conclude that the conduct of the declarant was oppressive to the interests of the purchasers. The Ontario Court of Appeal affirmed the motion judge’s decision.

Of interest in Georgian is the consideration of Subsection 74(3) of the Act by the motion judge. It is widely known that the Act and the disclosure obligations set out in the Act are meant to protect purchasers from the high-handed conduct of a declarant. As such, Subsection 74(3) of the Act requires “a revised disclosure statement or notice…clearly identify all changes that in the reasonable belief of the declarant may be material changes and summarize the particulars of them” (emphasis added).

It was argued by the mortgagee of the VTB mortgages (the declarant is now in bankruptcy) that the purchasers could have discovered the details of the mortgages in the disclosure documentation provided. However, the motion judge found that disclosure will not satisfy the obligations of the declarant set out in the Act where such disclosure is not “clear, coherent or consistent, or where such disclosure does not provide full and accurate disclosure”.

To that end, the motion judge considered the disclosure of each VTB mortgage separately and concluded the disclosure documents were confusing and failed to clearly identify the material changes. The Court of Appeal agreed with the conclusions of the motion judge.

For declarants, Georgian serves as an important reminder to fully and accurately disclose information in any document relating to a new condominium project. If a declarant intends to lease or sell a unit to the condominium corporation (pending the enactment of proposed Section 26.1 of the Act) it is our opinion it is not appropriate to exclude the costs associated with such lease or sale from the first year after registration budget without clearly disclosing that costs will be incurred in the second year of operations. It is of utmost importance that the collective disclosure documents clearly reflect the current intentions of the declarant.

Strict Compliance with the Terms of an Agreement is required to Strictly Enforce Contractual Rights

 

 

The Takeaway

The terms of a contract govern the relationship between the contracting parties.  If a party intends to strictly enforce a contractual right that party must have strictly complied with the prerequisite requirements to do so.

The Case

The type of agreement that gives rise to the dispute in Giuseppe Di Millo v 2099232 Ontario Inc, 20151407 Ontario Inc., and Inderjeet Dhugga is one that many land developers are familiar with.

Giuseppe Di Millo (the “Developer”) entered into an agreement of purchase and sale with 2099232 Ontario Inc. (the “Builder”) for the construction of a home on a specific lot (the “Lot”) within the Developer’s proposed subdivision (the “Agreement”).  The Agreement provided the Builder was to construct the home on the Lot within 30 months of closing.  The Agreement also provided that time was to be of the essence.

The Agreement included an option agreement that permitted the Developer to repurchase the Lot (the “Option”).  The 30 month period would have expired on March 5, 2015 but the parties agreed to extend the date until March 5, 2016.  In the summer of 2016 the Developer discovered the Builder had built a temporary structure on the Lot that did not comply with the municipal by-laws or the terms of the Agreement.

The Developer elected to exercise the Option upon the discovery of the temporary structure.  The Developer’s lawyer wrote the Buyer’s lawyer and set the closing date to purchase the Lot pursuant to the Option (the “Option Purchase”) as July 6, 2016 (the “First Notice”).  The First Notice did not comply with the terms of the Agreement.  Two months after the closing date set in the First Notice, in September 2016, the Developer discovered the Developer’s lawyer had done nothing to complete the Option Purchase.

The Developer changed lawyers and, on September 24, 2016,properly served notice on the Builder indicating the Developer’s intention to exercise the Option (the “Second Notice”).  The Second Notice provided closing of the Option Purchase was to occur October 24, 2016.

In the 18 months since the Second Notice was sent, the Developer had done nothing to complete the Option Purchase. The Developer stated that the Developer was ready, willing, and able to close the Option Purchase as scheduled but was unable to do so as the Builder had placed unauthorized 2nd and 3rd mortgages on the Lot that were required to be discharged.

In this case, the Court concluded the 2nd and 3rd mortgages did not prevent the Developer from exercising the Option.

The Court stated that:

by adding the ‘time is of the essence’ clause, the parties made it clear that they would be bound, strictly, by the terms of the Agreement.

The Court found that providing proper notice to the Builder 6 months after the Option first arose did not comply with the time is of the essence clause.  This finding was sufficient to dismiss the Developer’s application, however, the Court went on to consider whether the Developer was ready, willing, and able to close the Option Purchase.

The Court stated that the case law with respect to the exercising of an option is clear, the optioning party must tender.  The Developer supplied no evidence that the Developer had the funds to complete the Option Purchase.  Additionally, the Court heard that the Developer held a power of attorney for the Builder and had the ability to execute any and all documents to give effect to the provisions of the Agreement but failed to prepare or sign any documents with respect to the Option Purchase.

The Developer’s application was dismissed.

The full decision can be found here:

https://www.canlii.org/en/on/onsc/doc/2018/2018onsc816/2018onsc816.html

Renewal of a Commercial Lease and the Doctrine of Waiver

The Take Away

Once a party waives an enforceable legal right its ability to then enforce such right is not immediate.

The Case

A recent decision of the Court of Appeal reaffirmed the manner in which a party may revoke its waiver.

In North Elgin Center Inc. v McDonald’s Restaurants of Canada Limited, the parties had entered into a commercial land lease agreement for a period of 20 years (the “Lease”).  The Lease was subject to renewal.  The parties agreed the Lessee, McDonald’s Restaurants of Canada Limited, had provided its written notice to renew the Lease within the required period, however, the parties continued to negotiate the rental rate after the deadline to set such rental rate pursuant to the renewal provisions of the Lease.

The application judge held that through such negotiation the Lessor, North Elgin Center Inc., had waived its right to enforce the strict terms of the renewal provisions in the Lease.  The application judge later found that the Lessor’s waiver was revoked by an email sent by the Lessor to the Lessee.

The Court of Appeal disagreed.

The decision emphasises that to be effective, revocation of waiver requires:

  1. reasonable notice to be provided to the receiving party;
  2. the notice to include a clear indication that the party who granted the waiver will insist upon the strict enforcement of its legal rights; and
  3. the receiving party to be provided an opportunity to cure any defect resulting from its reliance on the waiver.

The full decision can be found here:

http://www.ontariocourts.ca/decisions/2018/2018ONCA0071.htm

Man Lawyer

Post by: Craig Robson

When I was a junior lawyer, (back before computers) I worked in a firm with a senior counsel who was of an age to have fought in the first World War.  At the time, one of my co-juniors was a very capable young woman.

One day, the senior counsel approached/tottered towards the two of us and interrupted our conversation to ask my associate to do some typing for him.  She reddened and pointed out she did not know how to type.  The counsel was shocked.  He may never have had that response before from a woman employee in his office.  He wandered away muttering comments that made it clear he did not understand how she could be employed in a law office as a woman and not know how to type. He became even more confused when I, a young man, took his notes and typed them out for him.

We are over these types of scenarios, right!?  It’s a new age when men and women are treated equally in the legal profession?  Maybe not.

In the last couple of years some of our firm’s senior law clerks and one of the firm’s lawyers (all women) have noticed something that tells me gender equality is still a good ways off.  When these clerks and lawyer cannot get a response from a client or someone else that we are dealing with, they will eventually ask me if its “time for the man lawyer?”.    When that time comes, I will send a short email or make a short call and 99 out of 100 times I get a response, sometimes while I wait.  The recipients don’t usually know who I am, but it seems the fact that a man has contacted them makes all the difference in the world. This seems to be the case even when our clerks and lawyer are trying to get a response from other women.

I think we  will be a lot closer to gender equality when women’s emails and calls are considered as important as a man’s.  My hopes in that regard were dashed a little more today when the lawyer was asked if she was a “real lawyer”.   I don’t know of many male lawyers who get asked this question.

Sigh.

Craig Robson
(man lawyer)

Condominiums, Drinking Water Systems and the Safe Drinking Water Act

Posted by: Roy Gentles

Recently we have run into a number of issues surrounding the interpretation of the Safe Drinking Water Act, 2002 (the “Act”).  Namely, several municipalities have declared that the system of works that supplies water to the unit owners of the condominium plan is a “non-municipal year round drinking water system”, a “non-municipal drinking water system” or in laymen’s terms a private drinking water system under the Act.

The interesting part from our perspective is that municipalities only appear to be raising this concern when the project is being developed as a vacant land condominium plan.  As you may be aware, a standard condominium plan and a vacant land condominium plan can appear exactly the same once built out (although this is not always the case).  Yet, it appears that if two developments are built side by side, one a standard condominium plan and the other a vacant condominium plan, both of which have the exact same number of units, the exact same layout, and the exact same system of works distributing water, the municipalities would only consider the vacant land condominium plan a non-municipal drinking water system under the Act.

Therefore, it appears that in most, if not all, of these cases it is not a safety concern that results in the vacant land condominium corporation having to comply with the added security, reporting, inspection, and testing imposed by the Act on non-municipal drinking water systems, but rather the location of the unit boundaries.  We draw this conclusion based on the fact that if there was a legitimate safety concern with the system of works distributing water itself, then the municipalities would not allow standard condominium plans to be exempt from these requirements.  Further, we are experiencing these issues in developments where one hundred per cent (100%) of the water supplied to the condominium has already been treated in accordance with the Act by the municipal drinking water system.

This issue is yet to be resolved, but when considering what type of condominium to use for your development be aware that a vacant land condominium plan is likely to run into this issue.  We suspect that common element condominium plans and possibly phased condominium plans will receive similar treatment, however, to date we have not experienced this first hand.

It should be noted that we have solutions to the concerns raised by the municipalities, which should satisfy even a strict reading of the legislation.

If you’re considering developing a vacant land condominium, a standard phased condominium, or a common element condominium we strongly recommend discussing drinking water systems with your legal counsel at the outset of the project.

Enforcement of a “One Family” Clause in Condominium Declarations

Enforcement of One Family Requirement in Condominium Declarations

Post by: Carly Haynes

We have noticed in recent court decisions the imposition of a restrictive definition of “one family” or “single family”[1] residence in condominium declarations where the term is not otherwise explicitly defined in the condominium declaration.

It is our concern that the application of this definition may result in unintended discriminatory practices based on family status or lack of family status and may not be supported by an analysis of the relevant case law.

The definition of “one family” residence which has recently been applied by the Ontario Courts seems to arise from a case involving Nipissing Condominium Corporation No. 4 whose declaration defines a family as:

a social unit consisting of parent(s) and their children, whether natural or adopted and includes other relatives if living with the family group

The declaration of Nipissing Condominium Corporation No. 4 further provides:

(1) Each unit shall be occupied only as a one family residence. For the purpose of these restrictions “one family residence” means a unit occupied or intended to be occupied as a residence by one family alone, including guests, and containing one kitchen, provided that no roomers or boarders are allowed.

A “boarder” for the purpose of these restrictions is a person to whom room and board are regularly supplied for consideration and a “roomer” is a person to whom room is regularly supplied for consideration.

(2) Notwithstanding any definition or provisions in any By-Law of the City of North Bay, no unit shall be used in whole or in part for any commercial or professional purpose involving the attendance of the public at such unit. Without limiting the generality of the foregoing, no unit or part thereof, shall be used as an office by a doctor, dentist, optometrist, drugless practitioner or other professional person.”

In our experience the foregoing declaration provisions are unusual if not unique.  In short, few other condominium declarations in Ontario attempt to define what constitutes a family for the purpose of enforcing a single family or one family residency restriction.

The facts in Nipissing Condominium Corporation No. 4 v Kilfoyl 2010 ONCA 217 (“Kilfoyl”) are quite straightforward, despite the potentially far reaching implications of the decision.  The condominium corporation applied to the court for a compliance order to enforce the declaration’s residency requirements.

The declaration, as noted above, stipulated that each unit could be occupied as a one family residence only.  The Respondent resident, on whom the case centers, rented his units to unrelated persons.  The Respondent argued that it was unreasonable to restrict occupancy based on familial relations, and that such a restriction amounted to a violation of the Human Rights Code (“the Code”), as a unit owner leasing his unit would be forced to reject or accept lessees based on their family status.

The Ontario Court of Appeal enforced the motion judge’s decision which found that this section of the Declaration did not breach the Code, and that the Respondent w498as obliged to respect the condominium’s declaration.  The court further found the condominium was justified in enforcing its unique definition of one family residence.

It is noteworthy to mention that this case was brought before the Ontario Human Rights Tribunal, who deferred to the Ontario Court of Appeal and also found no breach of the Code, see Kilfoyl v. Nipissing Condominium Corporation No. 4, 2010 HRTO 1036.

The Kilfoyl decision was relied on in Chan v Toronto Standard Condominium Corp. No. 1834, (“Chan”) which was also affirmed by the Ontario Court of Appeal.  In Chan, the court found that the unit owner Chan breached the condominium declaration provisions which limited the use of the units to “single family” occupancy by allowing multiple unrelated tenants to reside in one unit, similar in nature to a rooming or boarding house.  The court stressed the unique nature of the condominium community, which they outlined as distinct from the classic freehold ownership wherein owners are at liberty to deal with their property as they choose.

The declaration in question in Chan, unlike the declaration in Kilfoyl, does not contain a definition of “single family”, despite the term being present in the declaration.  The trial judge accepted the condominium corporation’s argument that the above definition present in the Nipissing declaration should be applied.  The definition was imposed on the resident Chan who was found to be in breach of the residency requirement.  The court in Chan made no mention of the fact the Kilfoyl declaration contained a very detailed and unique definition of “family”.

Our concern is this: if the unique definition of “family” which is found in the Nippissing Declaration is somehow deemed to be included in every declaration that makes reference to restrictions to one or single family residential use, this could lead to the exclusion of a wide range of relationships which do not fit neatly into “a social unit consisting of parent(s) and their children, whether natural or adopted and includes other
relatives if living with the family group”.  It is not likely this result was intended by the drafters of condominium declarations who restricted the use of residential units to a one family or single family occupancy.

For example, unmarried couples or friends who chose to reside together for economic or convenience purposes- should they or any other person be obligated to disclose whatever unknown personal details constitute them a “family unit”?

Despite the non-transient, non-student nature of these groups, they would be precluded from residing in developments which impose one family residency restrictions on their unit owners due to the simple fact they are not related.

This concern is seemingly becoming a reality following Ballingall v Carleton Condominium Corporation No. 111 (“Ballingall”) in which the trial judge stated [at paragraph 2] that following the Chan and Kilfoyl decisions, the legal landscape had changed.  The judge went on to say,

Since late 2011, the law has been clear that, in the absence of a definition in the condominium’s governing documents, use as a “single family residence” does not include rentals to multiple, unrelated, tenants- even if they are living there as a family…”

Consequences for Condominium Developers and Corporations

This imposition of the definition places a heavy burden on condominium corporations who do not wish to conform to this restrictive definition to amend their declarations, or risk non-compliance with their own documentation.

We advise developers of condominiums to make it clear in their declarations who exactly they intend to include and exclude through the imposition of residency requirements.  However, this advice does not help existing condominiums whose declarations include “boilerplate” clauses which restrict residency to one or single family use.  The existence of these clauses, in conjunction with recent case law, may result in over-zealous unit owners or directors attempting to force out occupants who are not related as parents or children of one another through court applications.

We are also concerned that none of the cases subsequent to Kilfoyl have made any mention of the unique definition of a one family dwelling in the Kilfoyl declaration.  This raises the question as to whether the courts were aware in Chan and Ballingall that there is no new definition in Kilfoyl as to what makes up a family or a one family dwelling, rather the court in Kilfoyl simply supported and upheld the unique definition in the declaration of Nippissing Condominium Corporation No. 4.

In our submission the Kilfoyl case has become an authority for a premise that is not supported by a careful reading of the case and the declaration that was before the courts.  We view these decisions as opening a Pandora’s Box of problems if applied to condominium declarations that restrict occupancy to one or single family use, but do not contain a similar definition of the term as present in the Kilfoyl declaration.

[1] The terms used by respective condominium corporations are not consistent, both “single family residence” and “one family residence” are found in the condominium documents, though in the cases cited in this post the interpretations applied by the courts restrict the meaning to the definition in the Nipissing Condominium Corporation No. 4, cited above.

The Importance of Abutting Land Searches in the Land Titles System

Post by: Carly Haynes

There are two systems of land registration in Ontario, Land Titles and Land Registry. Historically, land in Ontario was registered only under the Land Registry System pursuant to the Registry Act. In this System all land registration documents are submitted to the Land Registrar and are recorded, in the order they are submitted, on the abstract for the geographic area they affect within a Land Registry Office (“LRO”).  Under this System, the documents are registered on title, but the provincial government does not guarantee the effect of such documents or title to properties.  Consequently, in under to satisfy oneself of title under the Registry System, land registration documents must be searched 40 years into the past in order to assess the validity of title.

In the Land Titles System the provincial government has the responsibility for the validity and security of all instruments registered on title. The vast majority of land in Ontario has been converted to the Land Titles Automated System. Title registered and certified under the Land Titles System is guaranteed by the provincial government, and the record is updated each time a land registration document is registered.

Following a recent trend of case law, it has become clear that despite the fshutterstock_73408681act that the provincial government guarantees title of land registered under the Land Titles System, land owners may still be held responsible for administrative errors where said errors were reasonably discoverable.  This highlights the importance of undertaking abutting land searches and title searches, regardless of the acquisition of title insurance.  This raises the questions as to whether title can ever really be absolute.

In 923424 Ontario Limited v 1695850 Ontario Inc. Justice Perell found that a landowner cannot rely on the lack of express notice of a right of way on servient land to extinguish the right of way.  In this case the existence of a right of way was registered on the abstract of the dominant property, but was absent from the abstract of the servient property. The servient landowner in these circumstances argued that as a result of the failure to register the right of way following conversion of the property from the Land Registry System to the Land Titles System, the right of way was extinguished.

All parcel abstracts for land expressly stipulate that the abstracts are subject to paragraph 2 of section 44 (1) of the Land Titles Act, which provides that unless the contrary is expressed on the register, the registered land is subject to certain liabilities including easements.  This section serves as notice that the land may be subject to a right of way. The court found that despite lack of express notice of the right of way registered on the servient property, the landowner had implied notice through the section 44 statement found on the parcel abstract.  As such, had the landowner heeded the section 44 instructions and undertaken an abutting land search, the right of way would have been discovered and costly litigation could have been avoided.

The Takeaway  

This case reinforces the importance of abutting land searches when undertaking a title search prior to property acquisition.  While many title defects may be protected by title insurance, it remains necessary to complete all title searches to protect against unlikely errors and obtain clear title.

Changes to the Condominium Act, 1998: Part 2 – Additional Provisions in the Declaration

Post by: Evan Holt

Part 1 of this series discussed the new mandatory provisions for condominium declarations. Now, in Part 2 of this series, the discussion focuses on additional (optional) provisions that may be included in the declaration.

Section 7 (4) of the Condominium Act describes additional contents that may be contained in condominium declarations. Although this is a rather open ended category, the revisions to the Condominium Act provide detail with respect to the type of provisions that a developer may wish to include.

Section 7 (4) (a) of the Condominium Act currently states that a declaration may contain a statement specifying the common expenses of the corporation.  Bill 106 proposes to amend this section adding that a declaration may contain a statement specifying the common expenses of the corporation and the circumstances that may result in the addition of any amount to the contribution to the common expenses payable for the owner’s unit to indemnify or compensate the corporation for,

(i)            an actual loss, as is prescribed, that the corporation has incurred in the performance of the corporation’s objects and duties, or

(ii)           any other purpose, if any, that is prescribed.

As with the alterations to the mandatory declaration provisions, this subtle change will provide clarity to a purchaser with respect to how and why common expense fees may fluctuate over time should the declarant choose to include a statement specifying common expenses.

In addition, Bill 106 proposes to also add section 7 (4) (f) which states that the regulations will contain additional optional items that will be permitted to be included in condominium declarations.

To view Bill 106 click here