Leases and tenancies of a secured property are of great interest to a commercial lender for the following reasons:1. The borrower could pay the debt from the rent obtained from the tenant;2. For valuation of the property based upon a cap rate, the rent could be used as the basis;3. The rent would determine whether or not the borrower could liquidate the property to repay the debt or get replacement financing to repay the debt, namely the voluntary exit strategy;4. It would also indicate whether or not the lender could liquidate the property using mortgage remedies to repay the debt or could sell security to another lender, namely the involuntary exit strategy;

Other Legal Challenges Earlier we have discussed three Municipal Tax Sales clauses, which if applicable, leads to cancellation of sale. Besides cancellation by the treasurer, the tax sale could be challenged by others as voidable for neglect, omission, or error as provided in s. 382 (1).21RedemptionThe statute states that the cancellation price has to be paid within one year from the date of registration of the tax arrears certificate because the tax arrears certificate is required to announce that the land will be sold by public sale if the cancellation price is not paid within one year following the date of its registration. In addition, the tax deed has to include a statement that the cancellation price was not paid within one year following the date of the registration of the tax arrears certificate.It has been seen, however, that a treasurer has the discretion under s. 12(6) of the Rules to cancel a tax sale any time up to registration of the tax deed. The failure to exercise such discretion is a lapse against which a court can grant relief.  This, however, is of no consequence as the Courts have found that a municipality has no obligation in law to complete the tax sale.

GST On July 1, 2010, the Harmonize Sales Tax (HST) will replace GST in Ontario. However, the province’s municipal tax sales legislation precedes the federal GST legislation, which only dates back to 1991. There is no reference to GST in the legislation or the Rules, nor how it should be applied. According to the Act, the treasurer can declare the highest tenderer as the purchaser if the balance of the amount tendered, the applicable land transfer tax, and the accumulated taxes are paid in time, but there is no provision for withholding registration of a tax deed for failing to pay the GST.A municipal tax sale is a taxable supply of property under the Excise Tax Act, requiring the municipality to collect GST from the purchaser. The municipality is treated as a creditor having seized or repossessed the property being sold, for federal purposes. As the treasurer may not know why the supply is tax exempt, GST is expected to be paid before the treasurer registers a tax deed for non-registrant purchasers. Hence, the solicitor has to get the purchaser’s confirmation of the non-registrant status, so as to pay the GST, even though there is no notice or agreement in the matter. To find out if the GST/HST applies to a transaction, it is prudent to obtain a ruling or interpretation in writing from the Canada Revenue Agency.

As municipal tax sales are not that frequent, it is not uncommon for purchasers to proceed without professional advice. As a consequence, real estate practitioners often are clueless in these transactions due to lack of experience.Legislated ProcessStatutory codes manage the highly regulated municipal tax sales in Ontario. Its predecessor was the Municipal Tax Sales Act, since repealed, when the Act’s statutory regime was introduced as Part XI of the Municipal Act 2001, effective January 1, 2003.The treasurer decides the method by which land is to be sold for municipal taxes, such as public sale, public auction, or public tender. Those sales are made under a Regulation made up of some 27 sections with related schedules and forms which together make up the Municipal Tax Sales Rules. Sales by public tender happen to be the most common means of selling land to recover taxes.

It would appear that when registered leases are liened electronically, adherence to the rules is not as strict, sort of relaxation of rules is practiced, as would be seen from the case history below:Petroff: Liening Registered Leases ElectronicallyRegistration of title documents electronically has made it easier for lawyers to representing lien claimants wishing to lien leasehold premises where the lease is registered on title.  Petroff Partnership Architects v. Mobius Corp is a lawsuit based on the applicability of the curative

We have discussed earlier one of the two methods by which a contractor working for a tenant is able to get a lien on the freehold of the property.  The second method will now be discussed.The Freehold Owner Deemed  “Owner” Under the CLAWithin the meaning of the CLA, there are circumstances, when the owner of the freehold may be considered an “owner”, even if the work was performed on leased premises. The definition of “owner” given in Section 1(1) of the CLA is as follows:

OverviewRegardless of the fact that the individual is a landlord, a tenant, or a lien claimant, it is important for each of them to be aware of the unique issues raised when construction liens are registered against leasehold premises. Firstly, there is the need to determine for whom the construction work has been carried out, either the landlord or the tenant, and whether or not the landlord, the tenant, or both are the owner” within the meaning of the Construction Lien Act (“CLA”), R.S.O. 1990. Secondly, it is necessary to review the possibility of binding the

Rooftop Solar PanelsA number of landlords, owners, and tenants have recently received inquiries from rooftop solar panel installers desirous of installing solar panels on their roofs. In principle, the idea of encouraging green initiatives sounds like a good one. However, in circumstances in which the owner is not the end user of the building (it has a tenant) or is thinking of selling the building, further consideration may be required before entering into licences for solar panels.

Renewals and Extensions are quite important in C. L., as can be seen from the case histories below.Saskatchewan Ltd. v. NelsonIn this case, a lease was taken by the former landlord and the tenant for a term commencing in March 2001, and ending February 2006.The lease had an option to renew for one further period of five years on the same terms and conditions as existing with the exception of annual rent, which was to be agreed between the parties. In 2005,

Zoning Disputes concerning the Smartcentres have been in the spotlight for much of this past year, illustrating the significant hurdles developers face when seeking approval for a large scale, primarily retail development. The cases have shown that proposals for large scale retail developments from now on must take into account policy directives developed under a municipality’