landlord Archives - Levy Zavet Law

The Ontario Real Estate market meets its April 2017 Budget; are we in crisis?

April 2017 will possibly go down as the turning point in Ontario/Canada’s economy. Although the brunt of the straws that broke the camel’s back were dropped in Ontario, it’s obvious that this province is Canada’s strongest at the moment. Remember presently, Real Estate, Construction and Mortgage/Finance are pretty much the only above positive performing industries in Canada. To recap collectively what transpired in April here are the following in layman terms (excuse my spelling and grammar, can’t be bothered):1) 15% foreign real estate buyer tax, essentially taxing well to do non-citizens and non-permanent residents investing in real estate in the better part of Ontario. These dollars will no doubt be diverted elsewhere away from real estate entrepreneurs, retirees looking to down size and leave an inheritance to their kids and grandchildren looking to get into real estate themselves, real estate developers employing tens of thousands of contractors and sub-trades, contractors and sub-trades busy building homes for which their contracts will dwindle, tens of thousands of realtors making a living helping others buy and sell real estate, tens of thousands of mortgage brokers helping buyers borrow money, and much more

Resulting and Constructive Trusts: All About Constructive Trusts

The Constructive TrustA constructive trust is formed by operation of law. It is considered an equitable remedy so as to prevent unjust enrichment, which is when the law imposes an obligation upon one party to hold specific property for another. The person so obligated becomes a constructive trustee towards the person to whom he owes performance of the obligation. Although the application of the constructive trust has been treated as an equitable remedy to prevent unjust enrichment in Canada, recently, constructive trust has been applied as a remedy to wrongful acts in the absence of enrichment and corresponding deprivation on the basis of the good conscience doctrine. There are two situations described by the Supreme Court of Canada when a judge would decide whether good conscience requires the imposition of a constructive trust. These two conditions are:Ill-gotten property obtained by a wrongful act of the defendant, notably breach of fiduciary obligation or breach of duty of loyalty; andSituations where the defendant has not acted wrongfully in obtaining the property, but would be unjustly enriched to the plaintiff’s cost by keeping the property.

The Law of Lease Assignments

Earlier we have seen how Goodyear benefited from its lawsuit against Burnhamthorpe. This verdict is compared with the generally accepted good law set out in Corbett v. Plowden over one hundred years ago in Ontario. By asserting its paramount right to possession, Canada Life got the right to terminate the subsequent lease in favour of Goodyear and gave Goodyear the right to walk from its subsequent lease obligations. Such a result apparently is only possible when the mortgage has priority over the lease. So, the mortgagee would take title subject to the lease, if the Goodyear lease had priority.TenancyThe Goodyear lease was not terminated in December 1994 by Canada Life or Goodyear. Continuing as usual, Canada Life demanded rent, which Goodyear paid from January of 1995. Following the decision in Corbett v. Plowden, in the absence of an express agreement as to the term of the lease between the mortgagee and the tenant, the court could impose an annual tenancy on Canada Life and Goodyear, which could be terminated by six months notice. Thus, there was no dispute that the law in Corbett v. Plowden was good law in Ontario.

Assignments of Leases: Goodyear, A Case in Review

Goodyear v. BurnhamthorpeGoodyear was the tenant under a long-term ground lease of part of an office building in Etobicoke, known as 10 & 21 Four Seasons Place, where the original landlords were Four Twenty-Seven Investments Limited (“427”) and Saracini Investments Ltd. (“Saracini”). When Goodyear entered into its lease in 1980, Aetna Canada held a first and second mortgage on the property, which went on in 1979. Hence, the Goodyear lease was subsequent in priority to the Aetna mortgage. When Aetna put its mortgage on the property, it wanted the owners 427 and Saracini to assign to it as collateral security for the benefit of any future leases entered into by 427 and Saracini. Goodyear was not a party to the assignment of leases at that time. Despite the assignment, Goodyear paid its rent under the original Goodyear lease to 427 and Saracini. The assignment of leases to Aetna was made in the belief that any future lease including the original Goodyear lease would be assigned to the lender as collateral security for the loan, since the original Goodyear lease was a long-term lease. Goodyear naturally wanted to protect its security of tenure and entered into a non-disturbance agreement with Aetna. According to this non-disturbance agreement, Aetna would not re-enter and take possession of the demised premises so long as Goodyear was paying rent to Aetna. The non- disturbance agreement also contained attornment language stating Goodyear would attorn to Aetna and create privity between Goodyear and Aetna.

Assignment of leases, rents, non-disturbance, and attornment

Assignment and Assumption of Contracts General RulesThe lease is a mixture of benefits and obligations, which can be unilateral or bilateral. The “assignor”, or a party to a lease, can assign the benefits to a third party, the “assignee” but cannot assign the obligations without the consent of the other contracting party or the non-assigning party. The assignee can assume the obligations without the consent of the non-assigning party, but this does not relieve the assignor of its primary liability for the obligations. Nor does it enable the non-assigning party to sue the assignee for a default. In the event of default, the non-assigning party can sue the assignor who could in turn sue the assignee who had assumed the obligations and either expressly or by implication agreed to indemnify the assignor for the assumed obligations. The point here is that benefits can be assigned without consent of the non-assigning party, but obligations cannot. Nonetheless, if the benefit is expressly not assignable or because of its nature is not assignable, or if the lease provides a mechanism for its assignment, then these express provisions would modify the right of the assignor to assign a benefit. This is known as the Doctrine of Privity of Contract, and it has value in some instances, like other contractual rules, but causes unnecessary complexity and rigidity in relation to assignments.

ASSIGNMENTS OF LEASES, RENTS, NON DISTURBANCE AND ATTORNMENT: An Introduction

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;

Understanding Municipal Tax Sales: Legal Challenges

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.

CONSTRUCTION LIENS: Electronically Liening Registered Leases

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

Construction Liens: Obtaining Liens and Restrictions Placed on Them

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:

Liens and Commerical Tenants

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

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