By Brian Madigan LL.B.

(ORES)

Erin Mills is located on the west side of the Credit River in Mississauga and contains several valleys and watercourses that are tributaries to the Credit.

The Credit River system drains water from Orangeville and north Halton into Lake Ontario. It was a major transportation corridor for the aboriginal peoples who occupied Peel and Halton hundreds of years ago.

The principal creeks and valleys are Mullet Creek and Sawmill Valley. They meander through Erin Mills and eventually find their way to the Credit River.

Those same watercourses presented a challenge and concern to developers.

The conservation authorities now focus upon the one hundred year flood. This is the big flood that will occur every 100 years following a massive and sudden rainfall. That happened in Erin Mills in 1954. In fact, it was Halloween, but most people stayed in that night. Bridges were torn out, houses fell into the valleys and were swept downstream.

So, this was a planning problem. The developers of Erin Mills found a “natural solution”. Keep nature in place!

Previously, the approach to development had been to pave everything over. This created hard surfaces and placed a high demand on the sewer system at the times of heavy and excessive rainfalls. By leaving the natural watercourses in place, followed by the construction of large water conservation reservoirs, the problem would be solved. First, the natural watercourses would fill up, then, the overflow would be handled by the reservoirs.

The subdivisions in Erin Mills were laid out with this in mind.

The next question was what do you do with these watercourses in non-peak times? You use them for pedestrian walkways! Throughout Erin Mills, you will find walking paths taking the course of nature through the same routes alongside the watercourses that the original peoples once travelled. It’s very picturesque and an extremely valuable asset to the community.

By and large, most areas left in a state of nature within Erin Mills fall within the jurisdiction of the Credit Valley Conservation Authority. Longer term, now that Cadillac Fairview and Erin Mills Developments have left the planning behind, it is the CVCA which takes charge.

If you ask the residents what they like about Erin Mills, many will say the “walkways”.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

(ORES)

This clause deals with the production of evidence of title, and also discharges of mortgages. In that regard, the second part of this clause really should have been covered under the topic of closing arrangements.

Let’s have a look at the standard form agreement of purchase and sale and see what it says in the “Documents and Discharge” clause:

“12. DOCUMENTS AND DISCHARGE: Buyer shall not call for the production of any title deed, abstract, survey or other evidence of title to the property except such as are in the possession or control of Seller. If requested by Buyer, Seller will deliver any sketch or survey of the property within Seller’s control to Buyer as soon as possible and prior to the Requisition Date. If a discharge of any Charge/Mortgage held by a corporation incorporated pursuant to the Trust And Loan Companies Act (Canada), Chartered Bank, Trust Company, Credit Union, Caisse Populaire or Insurance Company and which is not to be assumed by Buyer on completion, is not available in registrable form on completion, Buyer agrees to accept Seller’s lawyer’s personal undertaking to obtain, out of the closing funds, a discharge in registrable form and to register same, or cause same to be registered, on title within a reasonable period of time after completion, provided that on or before completion Seller shall provide to Buyer a mortgage statement prepared by the mortgagee setting out the balance required to obtain the discharge, and, where a real-time electronic cleared funds transfer system is not being used, a direction executed by Seller directing payment to the mortgagee of the amount required to obtain the discharge out of the balance due on completion.”

We will have to review it line by line, and due to the fact that it contains a good deal of information. I will identify each line, thought, or partial sentence by a letter of the alphabet for review.

12. DOCUMENTS AND DISCHARGE:

A) Buyer shall not call for the production of any title deed, abstract, survey or other evidence of title to the property

What are we looking for? We need some evidence that the seller is the legal, registered owner of the property. Most of the information will be in the registry office. However, now that we have an electronic registration system, the originals of many documents are being held in solicitors’ offices. You may assume that the land titles registration currently reflects the true state of the title, unless you have evidence to the contrary. And, maybe the seller does! So, the buyer better find out, and make inquiry.

What might the seller have? One might imagine:

• Title deeds
• Abstracts
• Surveys
• Other evidence of title

Well, if you were thinking “abstracts”, then you are a way ahead of me, and should be writing, not reading an article like this. Title deeds are basically conveyances. At one time, sellers were in possession of many older deeds. It was also common to deliver the Deed of conveyance as two separate and distinct documents, known as the original which was registered and retained by the registry office and the duplicate original which was given to the buyer.

That was at a time, prior to photocopiers and after the invention of carbon paper. So, it was easy to tell the original from the duplicate original. Later, after photocopiers and computers, the two documents cannot be told apart. The second document looks as good as the first.

If the seller is in possession of any title documents, these must be produced. The conveyance could arise from some other document, and whatever that documents is, if the seller has it, it must be produced.

Abstracts are summaries. These are really solicitor’s notes, or conveyancer’s notes on the search of title. Rarely, will there be a registrar’s abstract of title. Usually, that is reserved for litigation, but from time to time, the land registrar will be requested to produce (for a fee) a certified abstract of title. But, it’s here in the agreement, so I suppose if the seller has it, then the seller must produce it.

The next matter on the list is the survey. It’s not a defined term. What’s a survey? Is a photocopy of a survey, a survey? Technically, only a signed, original survey is a true survey of the property.

However, I don’t think that this paragraph really lends itself to a narrow interpretation. If there are surveys, or copies, including adjoining, adjacent and contiguous properties, they should be delivered. The point here is to produce sufficient information so that the buyer has full disclosure. A seller who looks through the document file and picks and chooses what he thinks the buyer might want is really not upholding his end of the bargain.

Then again, this paragraph is somewhat vague.

Other evidence of title can be releases of liens, discharges of mortgages, court orders, Wills, and other documents that might pertain to the property. If the seller has them, then they must be produced.

B) except such as are in the possession or control of Seller.

There are two distinct elements here. If the documents are “in the possession” of the seller, then, of course, the seller must produce them.

Now, the real question open for discussion is the matter of “control”. When the seller acquired the property, he likely retained a solicitor, who in turn hired a conveyancer, and possibly a surveyor. In any event, any of these parties might be in possession of relevant documentation. Is the seller in control of these documents? Probably not! The solicitor has them in order to protect himself from being sued. Those documents remain under the solicitor’s control. There could be other documents which are truly the property of the seller.

These documents might include the duplicate original conveyance, a copy of a survey and old title documents. On closing these documents were delivered to the solicitor and received by the solicitor as the client’s property.

If that is the case, then these documents are under the control of the seller, although not technically in the possession of the seller. If the buyer so requests, these documents must be delivered.

As a matter of convenience some solicitors’ offices will store clients’ documents in their vaults for safekeeping.

C) If requested by Buyer, Seller will deliver any sketch or survey of the property within Seller’s control to Buyer as soon as possible and prior to the Requisition Date.

First, we must have a request. The old wording for this provision was “sketch of survey”. The word “of” has been deleted, and the word “or” inserted. This makes a significant difference. Previously, if there was no true survey of the property in the possession of the seller, this obligation could be ignored. Now, the simple requirement is that the document merely qualify as a sketch. It need not be a survey. So, photocopies count. Photocopies of adjacent properties also qualify if they show some part of the property.

The matter of control is the same as the previous provision. The seller will have to make inquiries of his own solicitor.

Given that we have three requisition dates in an agreement, which one applies? The correct answer should be the first date, since the purpose of this information is to assist with title issues.

You will also appreciate that the document is to be delivered prior to the requisition date. What are the consequences, if it is not? One remedy available to the Court is to extend the time limited for submission of requisitions on title. In many cases, if the document were to be delivered after the expiry of the initial requisition date, the court will afford the buyer a reasonable time limit to submit a requisition arising out of new information contained in the document.

D) If a discharge of any Charge/Mortgage held by a corporation incorporated pursuant to the Trust And Loan Companies Act (Canada), Chartered Bank, Trust Company, Credit Union, Caisse Populaire or Insurance Company and

This is the reference to “institutional mortgages”. These are to be distinguished from private mortgages. An institutional mortgage is held by a mortgagee whose conduct is regulated by a government or an agency of a government under some Act or Regulation. It could be federal, provincial or territorial legislation. It does not apply to out of country banks etc. nor does it apply to pension funds. These institutional mortgagees are to be treated as private lenders.

E) which is not to be assumed by Buyer on completion,

This provision assumes that the mortgage is to be discharged.

F) is not available in registrable form on completion,

And, further the assumption is that the correct discharge document is not available for the closing.

G) Buyer agrees to accept Seller’s lawyer’s personal undertaking to obtain,

This part starts out with the consequence. If the seller’s lawyer provides an Undertaking, it must be accepted.

Remember, that there are two kinds of undertakings given by solicitors:

• Undertakings on behalf of clients, and
• Personal undertakings

This undertaking must be “personal” in order for it to qualify under this provision.

H) out of the closing funds,

This requirement is really a two way street. The solicitor is to use the closing funds to pay off the mortgage. So, now we have a potential problem. What if there is a shortfall on closing. What if the amount to be paid is insufficient to pay of the outstanding mortgage?

First, the seller’s lawyer does not have to provide a personal undertaking, and
Second, the buyer doesn’t have to accept the undertaking, even if it were provided.

This part of the agreement only deals with situations where the closing funds will exceed the mortgage commitment. Basically, it is designed to permit the seller to use the buyer’s money to pay off the mortgage, rather than raise the funds independently, and have the discharge ready for registration on closing.

I) a discharge in registrable form and to register same, or cause same to be registered, on title within a reasonable period of time after completion,

This is the substance of the undertaking. The seller’s lawyer will register the correct document within a reasonable period of time. That time period varies from one lender to the next. It can be a week to ten days or as long as three months.

J) provided that on or before completion Seller shall provide

This is the commencement of the specific requirements.

K) to Buyer a mortgage statement prepared by the mortgagee setting out the balance required to obtain the discharge, and,

Institutional mortgagees should be able to provide a mortgage statement fairly quickly.

L) where a real-time electronic cleared funds transfer system is not being used, a direction executed by Seller directing payment to the mortgagee

This part of the statement deals with automatic payments. Usually, that will have been suspended for closing. It could later be reinstated if that transaction does not close. The seller is to provide a direction. The funds payable by the buyer will include a cheque drawn in favour of the institutional mortgagee.

M) of the amount required to obtain the discharge out of the balance due on completion.

The amount of the cheque will be the exact amount specified by the mortgagee to obtain the discharge.

Comment

This provision has been included to ensure easily transacted closings. A buyer who wanted to terminate a deal would insist that arrangements be made to have the discharge of the institutional mortgage available for registration on closing. That was difficult to do. The seller had to have an independent source of funds or a co-operative buyer. Most of the time, a buyer was co-operative, so the deal would go through.

This provision corrects that apparent imbalance in power.

Nevertheless, the old rules continue to apply to private mortgages, personal mortgages and institutional mortgages held by out of the country mortgagees.

Brian Madigan LL.B., Real Estate Broker is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

(ORES)

The latin term “veto” means “I forbid”. It has followed its way from ancient Rome into modern democracies. This was the power to “prevent” an act from taking place. It was not a power to act.

Its origins were simple enough. In Rome, frequently two people held the same position. If that was the case, they each possessed a veto over one another.

Interestingly, a dictator is actually someone who is not subject to veto.

In constitutional monarchies, the King or Queen holds a veto power, although, of course, it is seldom and rarely used.

In the United States, the President holds a veto power over Congress. Technically, this veto power is exercised by refusing to sign a Bill passed by Congress into legislation. Congress can in effect overrule this veto power by passing the same Bill with a two-thirds majority, which in effect enacts the legislation bypassing the President’s signature.

The role of the “veto” has also found its way in modern corporations, foundations, associations, trusteed indentures and other business arrangements. A party of important significance may possess a veto power over another.

The veto concept is interesting and possesses unique qualities, however, it is not nearly as popular today as it was in Rome.

Brian Madigan LL.B., Real Estate Broker, is an author and commentator on real estate, finances and the law related to real estate
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

There is always a great deal of confusion and discussion concerning conditions and escape clauses contained in agreements relating to real estate. But, it is really rather straightforward and the documentation depends upon how the escape clause was written in the first place.

There are really just two categories:
1) pending deals (which require confirmation), and
2) confirmed deals (which include an escape).

Pending deals are generally described by a condition precedent clause, and confirmed deals with a provision for escape are evidenced by the condition subsequent clause. The condition precedent clause begins with the words “this agreement is conditional upon….” and the condition subsequent clause begins with the words “the purchaser shall have the right to terminate…”.

Conditions Precedent

There is no deal, until the condition is fulfilled, satisfied or waived. Usually, the condition will relate to a specific matter like mortgage financing or the physical state of the premises. Once it is satisfied, then in order to confirm the transaction and make sure that there is a binding agreement between the parties, this matter needs to be documented within the relevant time period.

This documentation can be accomplished in several ways which include either both parties signing or just one party signing. If a waiver provision has been included since the condition might be to the benefit of one party only,then a Waiver can be executed by that party alone. In many cases, realtors will often have both parties execute an Amendment deleting this clause. This is unnecessary.

True Conditions Precedent

This is a sub-category of conditions precedent, but it is rather unique in nature. The condition benefits both parties. Examples might include the compliance with the provisions of the Planning Act or registration of a condominium. If a vendor and purchaser enter into an agreement to convey a piece of property that is to be severed from a larger property and it doesn’t get severed, then there is no deal. Same thing is true with respect to a condo.

If a purchaser were to offer to buy an apartment on the 27th floor of a building and it never gets registered then there is no deal. No one can waive this requirement. It benefits both parties. And, both parties cannot waive this requirement because there still is no severed property or apartment on the 27th floor. The actual decision is out of their hands and rests solely with a third party.

Another example might be a condition related to the assumption of a first mortgage upon the consent of the first mortgagee. If the mortgagee doesn’t consent, then there is no deal.

Here, the only step that can be taken by the parties is to extend the time to permit fulfillment of the condition. They cannot waive the condition itself or delete the condition in the case of the Planning Act example or condominium example. In respect to the first mortgage assumption, both parties could delete that provision and agree to a new first. So, when drafting such a condition concerning mortgage financing, it would be wise to be aware of the rules related to true conditions precedent.

It is also noteworthy that almost every new condominium agreement of purchase and sale contains a true condition precedent clause.

Conditions Subsequent

In this case, the deal has been struck. The contract is binding but it does contain an “escape clause”. The buyer has for example the right to terminate the agreement upon certain conditions. These are all the same reasons that you might have included in a condition precedent, ie. mortgage financing,condition of the premises etc.

The advantage is that if you do nothing, the deal is a “go”. So, when the relevant date arises, there is actually nothing to do. You simply allow the time period to expire, no running around getting document signed, nothing like that. However, this doesn’t seem to influence many realtors who insist on having either waivers, fulfillment statements or amendments deleting this clause signed. The purpose of this clause in the first place was to eliminate all this extra paperwork.

The leading case dealing with all three types of conditions was Turney vs. Zhilka in the Supreme Court of Canada in 1959. The Court preferred the use of conditions subsequent. Within about 10 years the Law Society adopted conditions subsequent as the preferred way of doing business (except when a true condition precedent was required). The real estate industry never adopted the change. As a result, the Law Society went back (about 20 years later) to using both types and that arrangement continues to the present time.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

The Irish have for centuries been grouped together in large families known as clans. When one group gets too large there may be a splinter group. The son of someone named Neill would start a new family called MacNeill. The word “Mac” means “son of”, and a grandson would start the O’Neill clan since the “O” is short for “grandson of”.

Some Famous Irish Characters from History

You might find it a somewhat interesting history. Much of that which is written about Ireland is simply folklore and largely untrue, yet it makes an interesting story.

St. Patrick

St. Patrick is among the first of the Irish legends. Actually, he was an Englishman who was captured as a young boy and held as a slave in Ireland until he escaped. Years later he returned as a monk and because he knew the language was able to convert large numbers to Christianity. It is often said that he rid Ireland of snakes, but there were no snakes in Ireland. The only real possibility is that this was a metaphor for the “evil spirits” of the Druids who were previously the religious leaders in Ireland.

There is a great deal of folklore associated with St. Patrick who due to the continued writings of the monastery in Armagh which held his relics became the patron Saint of Ireland in the 8th century some 300 years after he built up the religion.

St. Brendan

St. Brendan the Navigator was a contemporary of St. Patrick and he was more of a sailor than a Christian monk converting the masses to Christianity. In the latter part of the 5th century he built a small boat out of animal skins called a curragh and set sail with 17 men. They returned seven years later with strange tales of sea monsters, crystal palaces, saber-toothed water cats and little furry men. Later, it became clear that they probably witnessed whales, icebergs, walruses and Eskimos.

To add some credence to the story, the Vikings used Irish navigators enroute to Vinland, and spoke of Irish monks in Iceland in their 10th century writings.

So, did St. Brendan arrive in Newfoundland 500 years before the Vikings?

Tim Severin certainly thought so. In 1976, he built the same type of boat and crossed the Atlantic from Ireland in several months (actually, the second part of the journey was only 51 days from Iceland). While he doesn’t prove that St. Brendan was there, it definitely proves that it could be done.

And, was St. Brendan the first? Interestingly, he didn’t claim to be at the time. In fact, legend describes St. Mernoc to be among the first. The legend of St. Brendan was not recorded until the 9th and 10th centuries when it became one of the most popular medieval legends.

The Last Emporer of Ireland

In search of an Emporer or a King to acclaim, the Irish developed the story of Brian Boru. He is said to be the first King and led the Irish to oust the Vikings from the lands and reestablish Irish rule. Just a couple of problems: the Vikings never really occupied Ireland to a major extent and Brian Boru’s leadership was challenged shortly after he pronounced himself King. He was the self-declared Emperor of Ireland in 1011, but by 1012 his subjects had risen against him in rebellion. The great stories of his many accomplishments were recorded and popularized two hundred years later, and by then who could prove whether they were right or wrong.

Recorded History

Now, the interesting thing about history is that it is always written by the victors. The vanquished really have no storytellers. So, let’s think about this! What you really need is a good “publicist”. If there’s no one to tell your story you’re not going to be famous. In fact, I could say that Brion O’Madigan was the first Irish sailor to arrive in Canada, many years before St. Brendan and St. Mernoc. And, the only reason why you haven’t heard of him is that he was not a saint, didn’t convert anybody to christianity and didn’t have a “publicist”.

However, one thing that we do know to be true is that some nameless Irish sailor was the first, since both St. Brendan and St. Mernoc were following in his footsteps. So, I’m simply giving the poor nameless chap a name for all his efforts: Brion O’Madigan.

St. Patrick and the Discovery of America

Since this is a column about real estate how does this tie in with St. Patrick?

Well, it may be a little of a stretch but here it goes. St. Patrick introduced the Roman alphabet to Ireland. This allowed many writers of the time to learn Latin and transcribe their thoughts in a manner in which they could be understood by others. Latin was the universal language of the scholars. It could be transcribed and read at all the universities in the middle ages. Largely, this would be the monasteries and other institutions related to the church. St. Brendan’s voyage was written down and transcribed many times over. You cannot say published because this was centuries before the invention of the printing press.

The Latin Version called “Navigatio Sancti Brendani Abbatis” was read by hundreds of scholars throughout Europe. It chronicled the voyage of St. Brendan to the Americas and was well known to Christopher Columbus and Queen Isabella when they were planning the 1492 voyage. About 125 copies, all of course, original manuscripts copied from the first transcription or later versions survive today.

So, although there is no actual evidence that St. Patrick influenced St. Brendan to sail to the Americas, there are at least 125 copies of the Navagatio text that influenced the travels of Christopher Columbus. So, had St. Patrick not introduced Latin to Ireland, this story would not likely have been told and made its way to Spain.

So, that’s how St. Patrick discovered America.Perhaps a few pints of green beer today will help you understand. It’s either blarney or it’s true, and your challenge today will be to see how many green beers you have to consume before you absolutely know that it’s true.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

(ORES)

Here is the “ORES REAL ESTATE INDEX” which tracks the average resale prices of single family homes and condominiums in the Greater Toronto Area (GTA). It also tracks certain benchmark comparisons such as the price of oil and gold, as well as the Consumer Price Index.

In addition, the stock market indices for Toronto, and the three largest US markets are also compared.

For ease of comparison, everything we look at is worth 100 points on the Index as of 1 January 2005. That time period compares favourably with the five year average used as a standard benchmark comparison in the mutual fund industry.

As of 31 January 2010, here is the Index representing average prices [the last three months] and (the highs):

Real Estate

133.54……[126.59/127.48/129.50] (133.54) GTA single family homes
136.35……[130.77/126.87/125.03] (136.35) All condos in GTA
147.44……[142.83/131.14/123.40] (147.44) Downtown Central Condos
136.99……[122.82/135.95/122.12] (136.99) East condos
122.67……[118.94/116.47/121.57] (130.60) North condos
132.79……[131.68/123.00/134.64] (134.64) West condos

Other market comparisons

259.08……[252.13/254.24/274.87] (274.87) gold (price per ounce)
181.35…….[165.72/180.60/175.59] (320.88) oil (price per barrel)
133.54…….[126.59/[127.44/129.50] (133.54) ORES Index single family homes
126.35…….[120.54/127.62/124.37] (158.90) TSX index
109.31…….[109.02/109.40/108.83] (109.40) CPI index
108.53…….[104.12/110.02/103.99] (130.99) NASDAQ index
98.43………[95.97/99.41/98.62] (132.47) Dow Jones index
93.50………[90.91/94.40/92.75] (131.16) S&P Index

Using the Index

Just a quick note on reading the information. Have a look at the ORES Index for Real Estate (single family homes). As of the end of January, the index stood at 133.54. That’s a 33.54% increase in 62 months. That means the increase is 0.541% monthly, or it could also be expressed as 6.49% annually. The performance here is shown without annual compounding for the sake of simplicity.

The same index was 126.59 at the end of January, 127.48 at the end of December and 129.50 at the end of November. The next number, in square brackets is the all-time high since 1 January 2005. That number is 133.54, which is the February figure and is in fact the all time high.

We are now staring into the early part of the Spring market. Prices should rise, and demand should rise as well, placing even more pressure upon prices.

The other statistics are reported in a similar fashion for the ease of comparison.

Observations (on the Index)

As we use index, there are several notable comments:

• Commodity prices are just commodity prices

• There is no other “extra return” for commodities

• The same is true for the CPI

• The CPI is a benchmark to see whether you are keeping pace with inflation, that number is 109.31 (It has been modest and appears under control)

• For a realistic performance goal, you should aim for CPI plus 3.5% annually

• Stocks provide dividends in cash or extra stock. This return is additional to that shown in the stock market indices

• The stock market Indexes only measure the survivors. So, this year both GM and Chrysler would have been dropped due to the bankruptcies

• If you held GM and Chrysler, you lost everything, but two new companies moved in to replace them in the Indexes

• Real estate offers a return in terms of occupancy. You can rent out the property and receive income, or occupy the property and enjoy it yourself

• Actually, I should have mentioned that if you held gold bullion, you could sit in a room, count it, and enjoy that experience too. I’m not quite sure how to measure that. You’ll have to ask King Midas or Goldfinger!

Comparative Observations Using the New Index

• Gold was the best performer over the five year period, however it is now off its recent highs and that could mean that investors believe the recession is over

• Oil was the most volatile, (yes it dropped in half over our measurement period)

• Real estate was the most stable, with solid predictable returns at about 6.49% annually

• Downtown condos did extremely well this month. They are substantially off their earlier highs achieved just before the commencement of this Index

• Our own stock market posted reasonable gains, and now slightly trails single family homes over the last five years, however, don’t forget that the TSX is still well off its highs

• Two of the three US stock market indicators show negative numbers, with the NASDAQ now in positive territory

Conclusion

For steady, predictable, measured gains pick real estate. It’s a solid performer with lower risk (less volatility) and generally moving in a positive direction.

And remember, when it comes to real estate, it’s never “wiped out” completely, like GM or Chrysler stock. So, unless you’re sitting on the edge of a tsunami, you’ll still own something when the storm is over.

For a benchmark of success, there’s 1,000 years of history to point to a rate of return in real estate being about the equivalent of 5% per annum, simple interest (non-compounded). That means that real estate doubles in value every 20 years. There are a lot of companies (now bankrupt, including CanWest Global, and many US Banks) that would have been happy with that return.

Brian Madigan LL.B., Real Estate Broker, is an author and commentator on markets, finances and the law related to real estate
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

(ORES)

Everyone wants to know when the deal will close. So, it’s set out in the “completion date clause” which is the second numbered paragraph in the agreement.

Let’s have a look at the standard form agreement of purchase and sale and see what it says in the “completion date” clause:

“2. COMPLETION DATE: This Agreement shall be completed by no later than 6:00 p.m. on the _________day of _____________ . Upon completion, vacant possession of the property shall be given to the Buyer unless otherwise provided for in this Agreement.”

This clause deals with two matters, namely the time limits and vacant possession, as a consequence following closing.

Time Limit. The time limit is specific. The transaction is to be completed no later than 6:00 pm on a specified date. It may of course be completed earlier with the consent of the parties.

Now, there is a little problem with the 6:00 pm deadline. It’s an hour too late. The Registry offices are available for registration until 5:00 pm. The intention is to have the agreement completed while the necessary searches and registration take place in escrow.

Twenty years ago, there was no hourly time limit, just a date. Registration could take place until 4:30 pm which was the time that the offices closed. Some Judges permitted an additional day for closing and registration where it could be demonstrated that the closing funds were available later than 4:30 pm on the closing day. Hence, the need to come up with a time, since this just caused havoc.

Registry offices stayed open to 6:00 pm or sometimes 6:30 pm on the major closing dates of the year, like May 31st and June 30th, particularly if they were Fridays.

In any event, the 6:00 pm deadline is something of a misnomer and an unintended consequence. The closing should be “within the time permitted for registrations on the day of closing”. In some cases, the time limit is changed to “5:00 pm”.

However, rarely does this issue ever present a problem, but it does provide an interesting opportunity for someone who does not wish the transaction to close.

Consequences. It does seem rather odd that the clause dealing with the date, also deals with the consequences of a successful closing of the transaction.

In this case, “upon completion” meaning the time immediately thereafter, “vacant possession” shall be given to the buyer. That means that the buyer shall have all the legal rights associated with ownership and occupation of the premises. There will be no over-holding tenant and the seller will have removed all of his possessions.

Vacant does not mean “clean”. If the buyer wants the seller to clean the premises prior to the change of ownership, then that should be mentioned in the agreement.

In that regard, there are two basic standards:

• Broomswept and tidy condition
• Professionally cleaned and sanitized

If the buyer fails to specify either of these two standards, then the buyer takes his chances. In a multiple offer situation, never mention this and just understand that you will need a cleanup crew.

The sentence goes on to provide “…… unless otherwise provided for…..”. So, if there is a tenant, amend the standard form. If the owner is permitted to occupy the premises for a few additional days, then this should be noted.

Make sure that the owner does not acquire “tenant status”, the former owner’s occupancy should arise out of the agreement of purchase and sale.

There is provision for the owner to give notice to vacate to tenants on behalf of the new owner under the Residential Tenancies Act.

COMMENT

The completion date is the deadline that all parties should have in mind in setting up the due diligence agenda and schedules. There is no extension unless both parties agree.

Brian Madigan LL.B., Real Estate Broker, is an author and commentator on real estate markets, finances and law
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

I am pleased to announce that I have been designated by the Real Estate Council of Ontario as an Education Provider pursuant to the provisions of the Real Estate and Business Brokers Act, 2002 (Act).

I am also pleased to announce that the Registrar has approved my course entitled:

Disclosure Laws and the Use of the SPIS

To qualify for 3 hours of continuing education credits under the Act.

Any registrant wishing to attend the course which is currently only available in classroom format should contact me for the times, dates and locations of the course.

Brian Madigan LL.B.
Broker
905-796-8888 (tel)
905-796-8899 (fax)
BrianMadigan@rogers.com
www.OntarioRealEstateSource.com

By Brian Madigan LL.B.

(ORES)

The latin term “parens patriae” can be translated into English as the “father of the children” or the “parent of the nation”.

The intention is to convey the basic meaning that the government or the state has a certain right and in fact obligation to look after those who can’t look after themselves. It was always a role that befell someone.

A disabled child who matured into adulthood often could not look after themselves. When the elderly parents died, then someone had to step in, look after the child (who lacked sufficient maturity) and care for them throughout the balance of their lifetimes.

In some cases, parents had made adequate provision, and in other cases, they had not.

Today, this jurisdiction is specifically delegated to various government and social agencies as well as specific offices of the Ministry of the Attorney General (in the case of Ontario), including the Office of the Public Trustee and Guardian. Legislation will be directed to children as well as adults who never achieve mental maturity and independence. This is a statutory delegation of this jurisdiction.

Frequently, in particular cases, a court will refer to its “inherent jurisdiction” exercising its “parens patriae” role.

So, where there is no parent, or no one to assume responsibility for the child or adult lacking mental capacity, then, the court will step in and assume its “inherent parens patriae jurisdiction” in order to make the correct, informed decisions on the part of the person who requires assistance.

Brian Madigan LL.B., Real Estate Broker, is an author and commentator on real estate markets, finances and law
www.OntarioRealEstateSource.com