The Law Society’s 2023 Real Estate Summit recently took place, and Sid Troister of Torkin Manes identified fifteen important tips and observations taken from speakers and program materials. These are useful for all real estate lawyers to read, and were included in Mr. Troister’s email newsletter.

1. The solicitor client relationship obligations are still with us: the duty to communicate with our clients, the duty to discuss client’s intentions and expectations, the obligations to explain what you will and cannot do for them, the obligation to read documents that affect their interests and explain them. Almost every speaker said so in one way or another: read the agreement of purchase and sale, read the condo documents, review the leases and discuss clients’ expectations with them. Remember Harela v. Powell—a powerful case about the duty of lawyer’s to clients.

2. The law of contract is still with us. Read the small print, watch out for limitations of liability in contracts and environmental expert reports. Exercise great care when discussing clients’ rights to close, to get out of a deal, their entitlement to damages or other remedies or that they have to close and have no way out. Clients always have the option of breaching a deal and not closing and that may be a better option than closing.

3. Deposits are trust monies and you never release them unless everyone with a possible interest in them directs you to. The forfeiture of a deposit will almost invariably require a court action and often, the entitlement will be settled before it gets to trial. Deal with it early if you can and save everyone time and money.

4. Condos: Clearly not the “piece of cake” easy deal. Certificates of status and financial statements contain all kinds of information that a buyer needs to know including the status of reserve funds and reserve fund studies, contemplated increases in common expense and more. If you get the status certificate and don’t review it with your client, it can come back to bite you. And typically, agreements of purchase and sale are conditional on approval of the status certificate. It is the client’s right to approve it, not yours.

5. Condo renovations. I never knew this stuff. Tell a client if they plan on buying and gutting or doing major renovations, landscaping their terrace, enclosing a balcony, expanding their exclusive use areas, that they have to deal with a process that can be complicated, especially if they plan to add drains and plumbing, going into ceilings, or other common areas as defined in the declaration. Before they buy, they need to know that buying a condo is not like buying a house. A building permit for the work is not enough to start banging out walls. And hardwood floor requires special attention.

6. Intergenerational family loans and gifts are a mine field. And we are full of conflicts: between spouses with different amounts of contributions, and certainly protecting monies given by parents to children to buy houses. It cannot be a gift for banking purposes and a loan as between parents and children. And remember, if you are acting for the lender on the transaction, they are your clients too and you cannot lie to the bank that it is a gift if you know that it is a loan. There is no such thing as a “loan-gift”. And you may need family law expertise to make sure that the advice you give is correct and protects your clients. And know who your client is: the kids, the parents, who? Get a retainer agreement to clarify your role. And like item number 1 above, explain everything, and document everything for their protection and for yours.

7. New vacant home taxes. You are presumed “guilty” unless you file a form that says that you aren’t. The City of Toronto appears to be issuing tax assessments. The exemption form needs to be filed by February. Remind your snowbird clients. If they failed to file, they might want to file a notice of appeal even before an assessment is issued. And the non citizen taxes should be of concern to off shore investors. Great material in the paper.

8. Fraud is still with us. ID is going to become more important and the same with anti money laundering tests. Indeed, inquiring as to source of funds will be a challenge but understand this: Canada is well known as an easy place to park funds acquired criminally. We are in the world’s bad books and the Feds will impose restrictions if the lawyers in Canada do not install their own requirements. The government tried, the Canadian Federation of Law Societies pushed back to the Supreme Court of Canada. We have a reprieve if we get our own act together and adapt to the ID and source of funds guidelines that are going to be applicable nationally.

9. Condos and searches. A PIN for a condo unit does not include the PIN for the parking and locker units. Make sure you know what your client expects to get and pull the PINs for all the units. Sometimes a discharge of mortgage might not include all the PINs either. And clients need to have it confirmed where their parking space is as a matter of title. You may need to pull the floor plans (the survey descriptions) for title that show the location of the units and confirm it with the client.

10. If your client is buying a property together with an easement or right of way, it is a good idea to pull the PIN on the servient lands (the lands that are supposed to be subject to the easement or right of way) to make sure the two titles are consistent.

11. Distributing closing or mortgage funds. Your client may give you instructions and a direction to pay funds to a third party. Make sure you follow the lender’s instructions (the lender is your client too) and the title insurer and ignore what your seller or borrower tells you. You have to read (remember reading?) the instructions of the party giving you all that money because it is THEIR money and they are trusting YOU to follow their instructions.

12. Carefully check the terms and conditions of environmental consultants reports and make sure your client understands them and their limitations. Get reliance letters for your client. A report that you cannot rely on (regardless of the limitation of liability) is useless. And if the environmental report has technical detail in it, retain someone who knows this stuff to tell you about the risks. We are lawyers; we are not scientists.

13. Beware any representation and warranty, especially an environmental one, qualified by knowledge and belief. Unless you can prove they knew, it is not of much if any value.

14. Lawyers with a few employees need to know their obligations as employers. It goes beyond just hiring and firing. Lots of issues. The presentation was great.

15. Cottages, camps and rural properties: There is so much to explain to clients that are both legal and practical. Where do you get your water and what is its quality, the status of the septic system (and that means the tank and the bed), access that may or may not be deeded and in some places what is deeded is not where the road is, shore road allowances, what will a survey show where the improvements are, etc. And then there are the practical—snow plowing, year round permitted use, internet, satellite and cell phone service and availability and more.

Categories: Real Estate