REAL ESTATE: The necessary off title searches when buying a property!
There are other searches besides a title search, that are necessary to assure title and enhance the marketability of a property. The purpose of these searches are to determine if there are any statutory liens or orders that may affect a property, and if a property complies with municipal by-laws or other statutory requirements. Depending on the type of property that is being purchased, the nature of the searches will change. Accordingly, there are standard searches for the purchase of urban properties, farm properties, cottage properties, vacant land, and properties located in an unorganized territory. As these searches are done by way of a letter, they are referred to as letter searches. In order to make searches that are relevant, it is prudent to go through the Agreement of Purchase and Sale. Relevant here means for example, deficiencies pointed out in an earlier fire marshal’s search or a municipal work order search, which if found in a fresh inspection would make the client responsible under the Agreement of Purchase and Sale. Some of the searches could be costly and the risk of not having such a search completed should be taken into account. Moreover, some of these searches may not be required if title insurance is contemplated. Therefore, before conducting a letter search, the requirements of the title insurer against the checklist of searches are to be compared. Even if title insurance does not require certain searches, there is yet a benefit in doing so to facilitate closing. For instance, a tax certificate is not required for title insurance, but to ascertain that the statement of adjustments is properly prepared, and that the vendor has actually paid the taxes, one needs to confirm this with the tax department by getting a tax certificate. If this is not done, the client could be calling the lawyer after closing and complaining about arrears that were the vendor’s responsibility, which would then result in extra letters to the other side and eventually a title insurance claim if the other side refuses to comply. It is important to remember that each case is different and that decisions are to be based on the circumstances.
Tax searches: The Municipal Act says that “taxes due on land are a special lien on the property in priority to every claim, privilege, lien or encumbrance of every person except the Crown, and its priority is not lost or impaired by any neglect, omission or error of the municipality or its agents or through taking no action to register a tax arrears certificate”. Consequently, arrears of realty taxes (i.e. property taxes) take priority over any instrument registered on title. Having regard to the likely dire consequences over any lapse here, it is absolutely necessary to set things in order at the outset.
Water charges: The water/sewer charges are also based on the Municipal Act, which states that a municipality or a local board may add to the tax-roll any fees and charges imposed by a municipality or a local board on a person for the supply of a public utility. Such fees and charges may be collected in the same manner as taxes on the property and may be recovered with interest and costs. Hence as above, the matter is to be set at rest.
Local Improvements: The Local Improvement Act was discontinued with the enactment of the Municipal Act. Persons desirous of having certain services undertaken by a municipality or a local board on their property, like the installation of municipal services or sidewalks, a municipality or a local board under the Municipal Act, may enact a by-law for the installation of such services. The special levy for such services is collectible in the same manner as taxes and should be paid promptly.
Hydro arrears: It’s a relief that unpaid hydro arrears do not form a lien on land, thus making a letter search for hydro arrears is no longer necessary. Anyway, utility companies continue to request change of ownership letters on the sale and purchase of residential homes or whenever there is a change of tenants. Hence, the purchaser’s and vendor’s lawyer should send a change of ownership letter and read the meters the day before closing (or at least ask the hydro company to).
Gas arrears: Again relief because arrears of gas do not constitute a lien on the land, unless the gas company is owned or operated by a municipal corporation. Otherwise, same as above.
Zoning: Almost all municipalities have a zoning by-law, which deals with such matters as the uses permitted for a property, requirements for lot size and frontages, location of buildings on the lot (setback requirements), size and height of the dwelling. So, if the municipality has a zoning by-law, it is necessary to find out whether or not the property conforms with it. This information is not available, except for a fee, and non-compliance means big trouble.
Building Code: Requirements of the Building Code Act, stipulates that regulations 350/06, made under the Building Code Act are to be enforced by the municipalities. Also, under the Planning Act, municipalities can enact by-laws to set their own standards for the maintenance and occupation of properties within the municipality and for prohibiting the use and occupancy of properties that do not conform to the standards. For non-compliance, a violation order could be issued specifying the violation and requiring the property owner to rectify the deficiency within a certain period. Such a violation notice will become an outstanding work order until it is completed. Should the property owner fail to satisfy the work order, the municipality would complete the work to put the property into compliance and charge the cost of the work to the property owner, which is then collected in the same manner as municipal taxes.
Electrical Safety: The Electrical Safety Authority is empowered under the Electricity Act to regulate the design, construction, installation, protection, use, maintenance, repair, extension, alteration and connection used or to be used in the generation, transmission, distribution, retail or use of electricity in Ontario. Hence, all major electrical work to a property requires a permit from the Electrical Safety Authority. After a permit is taken, an inspection follows to ensure that the work is done properly. Should the work be deficient or improperly done, the Electrical Safety Authority is empowered to issue orders relating to such work.
Fire Protection: The Fire Protection and Prevention Act, states that a Fire Marshal, an assistant to a Fire Marshal or a fire chief (collectively referred to in the Act as an “inspector”) , with or without a warrant, enter and inspect lands and premises for assessing fire safety at all reasonable times. The Act empowers an inspector to order an owner or an occupant to take any necessary measure to ensure fire safety on the property. Needless to add that this should be done forthwith.
When buying any type of property, whether or not you have suspicions, it is best to make sure your lawyer investigate all the necessary off title searches, so that you are not in regret long after the deal closes. Contact the lawyers at Levy Zavet PC the next time you are in the market to buy real estate property.