REAL ESTATE law
Contents
Introduction
[§1.01]	Introduction: when delegate, remember PR obligations. See HB 12 (4-9) re: limits on role of legal assistant	1
[§1.02]	Land Title Act: key statute; governs recording of interest in land; modified Torrens system of land titles. 	1
	s.1: definitions; ss.20-3, 28-9:  basic rules, to affect 3P must be registered, priority on basis of date and time of application for registration (unless instruments state otherwise)	2
[§1.03]	Strata Property Act: provides for creation of strata lots; additional conveyancing steps; interest is both interest in land and share in corporation. See ss of Act, provides for holdback	2
[§1.04]	Property Law Act: cotnains substantive law re: rights/obligations of parties to real estate transaction.  Key ss: 4-6; 11-2; 16, 18,  20-4; 33,  36-7, 39	3
[§1.05]	Family Relations Act: if spouse not registered as owner, still given certain rights over real estate where other spouse so registered. Key ss: 
	56 - on triggering event each spouse has 50% interest in family assets, incl real estate, 	3
	64 - provides s.29 of LTA applies to spouses, it protects innocent buyers who have notice of unregistered interests, but s.29 not always strictly applied by cts . 	3
	63 - party to marriage/sep agreement can file notice of agremeent in LOT as charge against land,  	4
[§1.06]	Fraudulent Conveyance Act and Fraudulent Preference Act: note legal consequences  if purpose of conveyance is fraudulent; HB 4(6) - lawyer can’t help Cx do fraud	4
Purchase Agreements
[§2.01]	Introduction: frequently purchase agreement (PA) done by time lawyers involved; is binding agreement for purchase and sale of real property; creates legal rights and obligations. Executory contract - exchange of promises to do something in future, but as soon as promises in writing, bind promisors. Sellor promises to deliver title free and clear; buyer promises to pay	7
[§2.02]	Is the Document a Binding Agreement?	8
	1.	Minimum Requirements: Law and Equity Act, s. 59: parties, property; price, all parties must sign; no particular form	8

	2.	Amendments: any changes must be in writing	8

	3.	Subject Removal:  subject clauses (CPs) must be fulfilled/waived before other party must complete contract; fulfillment/waiver = subject removal	8
		(a)Case law re: removal of subject clauses - is uncertain	9
		(b)Uncertain Subject Clauses - clause can’t be too vague.  E.g. ‘suitable financing’ has been held to be too vague by some cts; others have said that ‘satisfactory financing’ is OK, as long as agreement not being construed by cts to surprise of one/both parties, cts should try to give effect to agreement parties made.	9
		(c)Subjective Subject Clauses: ‘subject to X’s approval’,  effect is to create base offer to purchase by buyer, the final acceptance of which depends on removal of clause by buyer; only requirement that X act honestly. Unsettled case law	10
[§2.03]	The Main Elements of the Purchase and Sale Agreement	10
	1.	Description of Parties: get it right! Ask parties for name, address, occupation, may want to know status of joint tenants.  	10
		Best source of info for sellers is land title search,note seller in PA may be different than registered owner - must establish line of authority b/w seller in K and seller on title	11

	2.	Description of Property: street address; legal description -  confirm latter. Do LTO search to get proper legal description;  verify actual property that’s being bought/sold	11

	3.	Price: review figures; is GST payable?	11

	4.	Deposit: part of purchase price B agrees to  put aaat risk after subject clauses removed and B committed to purchase property. If B fails to complete, S normally has option of cancelling K and keeping deposit or affirming K and suing for damages which may be more or less than deposit	11
		When real estate agent involved, deposit paid to them.	11
		Often 2 stages. Small deposit that is increased when subject clause removed. WHole thing = deposit	12

	5.	Completion Date: date of payment, etc. Note TOTE, must pay on time or else!	12

	6.	Possession Date: often different than completion date. Make arrangements for keys	12

	7.	Adjustment Date:  when $ items adjusted b/w parties	13

	8.    The Fine Print - specific aspects of  standard form agreements	13
		(a) Title Free and Clear - most B assume they get title free and clear of all encumbrances; review PA to see if any exceptions. Also problem if B agrees to certain encumbrances, while lender for mortgage (mtg) doesn’t	13
		(b) Buyer Bears Costs: If Kk states that B bears costs, B has responsibility for conveyance, prepare transfer docs,  except where title clearing is involved -  if title not registered in name of S, Ssss must prep docs	13
		(c) Risk - (insurance). As soon as B and S in binding agreement, B has interest in property and bears risk of loss in event of fire, etc.  Standard form clause re: transfer of risk transfers risk to S, for loss up to BUT NOT INCL completion date 	14
		Clause does not require S to get insurance  nor to make insurance proceeds avaialble to B. Case law that B has no right to proceeds unless B assigned interest in proceeds?	14
		(d) Included Items; Viewed: latter means prop will be in same condition as it was when viewed; Incl Items: deals with fixtures and chattels. Can excl specific fixtures; incl certain chattels	14
		(e) Representations and Warranties: only reps and warranties actually in writing will survivie closing, unless fraud involved.  Breaches of reps/warranties allow sue for damages; unless go to root.	15

	9.	Information on the Back of the Form: info for parties about transaction, not legal rights	15

	10.	Real Estate Commission: commission % in listing agreement.	15

	11.	Completion: typical dilemma - B won’t have mtg $ to pay S until after application for reg but S can’t clear title until gets money! Ss has no obligation to agree to any method of completion diff than set out in interim agreement	16  
		Exs of adeuate/inadequate tender	16
		Set out something in interim agre, e.g. resovle via lawyer’s undertakings (standard form clause s.13,   14).e.g. CBA has newer standard form where B agrees that S can wait til receives purchase $ before clearing title. (Lawyer undertaking)	17
		Some concerns about wording of these types of clauses: big undertaking for lawyer to give; no requirement of post-reg search
	12.	Agency Disclosure: each party must disclose relationship w/real estate agent	18
[§2.04]	Property Condition Disclosure Statement:  more info about property; not part of K unless specific term added to that effect.  See caselaw about impact of incorrect statements	18
Client Instructions
[§3.01]	Receiving Instructions from the Buyer: after review PA should contact Cx, should discuss certain issues either on t/c or in interim letter. See MASSIVE list of 16 things to cover, incl your fees; title search, insurance; zoning by-laws; proposed method of financing	28
[§3.02]	Conflict of Interest: be clear who you are acting for.  HB 6, App 3: re acting for more than one party in any transaction.  HB 6 - shouldn’t do it; App  3- exceptions	29
	
Searches
[§4.01]	Searching a Title at the Vancouver/New Westminster Land Title Office:    can do computerized search on BC Online. Rare occasions where need to do index search - if not computerized.	32
	1.	Obtaining the Legal Description: need legal description of property. See Title Search company; Instant Legal; municipality. Will  incl Parcel Identifier number (PID)	32
	2.	Searching the Title: use PID to get comuterized printout of title	32
	3.	Obtaining Particulars of Charges (If Requested): can order these	32
	4.	Obtaining Plans: Should search survey/strata plan showing where property located on lot. obain any other plans that affect property incl right of ways/easements, etc.	33
	5.	Land Title Office Search Checklist -- (a) full search incl computer printout of title; copies of all charges against title; copy of survey plan; copies of all other plans	33
		(b) when review title, consider that all charges may not be listed in order of priority; pending applications; duplicate indefeasible title - is there a 2nd cert out there? if so must be returned before title transferred;  transfers - has portion of prop already been transferred?; corrections	33-4
		(c) check misc notes separately on computer
[§4.02]	Index Searches: if title not computerized	34
[§4.04]	Real Property Taxes: are  taxes up to date? Get info from local taxing authority, usually municipality. Payment for taxes follows property, not owners; unpaid taxes = charge on  property	35
[§4.05]	Corporate Searches: if S is company, search Registrar of Companies to ensure company not struck from Corporate Registry. If it has, property may have escheated to Crown (become property of) - this isn’t refected in LTO.  Escheats is struck from Reg for more than 2 years, to recover land, must bring ct action	35
[§4.06]	Encumbrances:  non-financial:	35
	1.	Easements: interest in land which owner of one parcel (dominant tenement) is granted certain rights over adjacent parcel (servent tenement).   Must identify precise location	35
	2.	Statutory Rights of Way: easement w/out dominant tenement. LTA s.218, only certain parties qualify to own these, e.g.  public bodies, utilities, municipalities	35
	3.	Certificate of Pending Litigation: cert issued by ct and filed in LTO. If proceeding commenced where claim made for property, effect of CPL is to freeze all/part of title to prevent subsequent applications from being registered except if instrument has exception OR if caveat; sublease; involuntary charge; builder’s lien; subsequent CPL	36
	4.	Caveat: temp instrument - 60 days - request of registrar to prevent registration of any instrument dealing w/property described in caveat til cav w/drawn or discharged	36
[§4.07]	Investigating Title	36
	1.	Land Title Act: s.23(2): person named in certificate is indefeasibly entitled to estate in fee simple, unless evidences shows otherwise; check liens and taxes; rights of way and easements; escheats and expropriation.....	36
	2.	Aboriginal Title: not registered in land registry, not registrably under LTA b/c inalienable except to Crown. Since aboriginal title and claims to aboriginal title can’t be registered, can’t rely on land title records to indicate if parcel of land subject to aboriginal claims	37
	3.	Aeronautics Act: s.5.4(2): can’t use land adjacent to airports in ways that interfere w/ safe operation of airports and aircrafts or with communcations or signals. LTA s.22 provides for filing of zoning regs under AA	37
	4.	Agricultural Land Reserve Act:	38
	5.	Bankruptcy and Insolvency Act: conveyance/charge made 3 months before bankruptcy can be deemed a fraudulent preference	38
	6.	Builders Lien Act: mtgs filed before liens claims take priority to extent that mtg advances were made before lien filing. Can file against provincial Crown but not Federal	38
	7.	Consumer Protection Act: allows ct to reopen mtg transaction, very term and even set aside the security; only	38
	8.	Corporation Capital Tax Act: can file a lien against property under this Act	38
	9.	Employment Standards Act: certificate can be filed against emp’r’s interest in land for unpaid wages. Constitutes a lien	39
	10.	Family Relations Act: spouse who’s party to marriage/separation agreement can file notice in LTO under s.63. SPouse interest subject to LTA s.29, except for fraud	39
	11.	Fish Protection Act: affects land use next to protected rivers	39
	12.	Forest Act	39
	13.	Heritage Conservation Act: affects what changes can be made to home if designated as a herigate object or site; registered designation at LTO	40
	14.	Highway Act: applies if land has public highway on it.	40
	15.	Home Conversion and Leasehold Loan Act:	41
	16.	Homeowner Protection Act: scheme for mandatory new home  warranty insurance and regulatory system for licensing residential builders.  Leg to safeguard strata property owners intro’d in 2001.	41
	17.	Home Purchase Assistance Act: transfer of title restricted where loan made under this Act and loan secured by mtg against title	41
	18.	Homeowner Interest Assistance Act: registration of cert setting out max assistance to which homeowner is entitled, the effect of which is to create mtg/	41
	19.	Islands Trust Act: if prop falls under this Act, may be restrictions on what can be done w/land	41
	20.	Land Act:	42
	21.	Land (Spouse Protection) Act:if entry made, disposition of land may be void.	42
	22.	Land Tax Deferment Act	42
	23.	Land Transfer Form Act: unless otherwise stated, every transfer of estate in fee simple deemed to be done in pursuance of this Act/	42
	24.	Manufactured Home Act: no transfer of manuf’d home is effective unles reg’d at Manuf’d Home Registry Office	42
	25.	Local Government Act:	42
	26.	Patients Property Act: after committee appt’d, any transfer of land by patient is void unless for full consideration	43
	27.	Personal Property Security Act: s.49, can file at LTO, security interest in fixtures, may incl manuf’d homes, crops.	43
	28.	Power of Attorney Act: 3 year limitation period on power of attorney (s.56 LTA)	43
	29.	Property Law Act: mtgs, entry of adjoining to do repairs; encroachments	43
	30.	Securities Act: Sec commission can give written notice to LTO re: proceedings which may affect land belonging to people in notic	44
	31.	Trespass Act: stat obligation on adjoining owners in rural areas to make/repair fences and natural boundaries	44
	32.	Waste Management Act: if potentiall toxic waste suspected, B should insist on subject clause and conduct special searches. J/s liability to past and present owners, exception is innocent B who acquired already contaminated land which no reason to suspect contammination, who did not contribute to contamination and who carried out due diligent searches	44
		For specifc prop, S must disclose site profile, see examples	44
	33.	Water Act: water licenses can be obtained; can remove water from stream w/out license, but no right to do so	45
	34.	Workers Compensation Act:	45
[§4.08]	Contaminated Sites Registry: access  to  reported info on contaminated sites. Info on sites that have been investiaged and/or cleaned up. Electronic and paper records	45
	Info under 7 categories: General; Notations; Participants; Docs; Land Use; Assessments;  Remediation Plans	45
	Search for info in 3 ways: numeric search (PID); Civic address search; area-based search	46
[§4.09]	Land Transactions on First Nations’ Lands: transactions usually outside land title system and subj to diff legislative regimes and conveyancing requirements.  E.g. reserve lands under Indian Act; First Nations Land Management Act	46
	Indian Act establishes own Registry	46
	Some reserve lands not under Ind Act land management scheme; if entered into land management agreement w/Minister, governed by F. N. Land Managment Act	46
	Lands held by Sechelt and Nisga’a nations subject to special legislative regimes	47
	
Steps and Documents in a Conveyance
[§5.01]	Introduction: B’s lawyer does most work; S’s lawyer’s role is ltd
	3 basic stages when acting for B: gather info; prepare and execute doc on basis of info gathered;  receiving funds,  tender docx for reg’n; pay out funds	55
[§5.02]	Steps in a Residential Conveyance	55
	1.	Initial Contact: get copy of PA and review, consider conflict of interest,   etc	55

	2.	Client Interview: confirm instructions; get more info; discuss particulars of PA	55
		See LONG list in materials (a-t): names of parties; method of payment; CP, etc	55-6

	3.	Search Title: (a) confirm removal of CPs; (b) order full title search in LTO; (c) order title searches in other registries as appropriate - corporations, taxes, PPR; (d) order surveyor’s cert if instructed; (e) strata lot cert; (f) zoning inquiries; (g) real estate agent	56

	4.	Follow-Up from Interview and Title Search: List in materials (a-l), incl review title docs ensure mtg assumable; who’s responsible for clearing title;  occupancy certificate 	56
		Write interim reporting letter to Cx to bring up to date: 7 things to cover off, address who has responsibility to do what - make sure you set out your instructions clearly so Cx can’t later say you were supposed to do something that you didn’t	57

	5.	Prepare Documents: See list in materials (a - o)	57

	6.	Matters Before Closing: List (a-h): all searches satisfactory; mtg’ee’s consent, mtg docs; discuss interim letter w/Cx; get B’s funds for completion; B’s $ to trust acct; return mtg docs to mtg’ee; ensure all docs are in order	58

	7.	Registration: arrange for reg’n of land title docs in LTO. List (a-e): assemble pkg; conduct pre-reg search; tender conveyancing docs; present original and copy 	58

	8.	Closing Procedures: conduct post-reg’n index search to ensure no intervening charges;  get $ from  mtg’ee; holdback $ as needed; pay out balance of $;obtain/register discharges of mtg;  order state of title cert; report to Cx on registration	58

	9.	Post – Closing Procedures:  transfer $ from trust acct to pay fees and disbursements; put out holdback amts; ensure mtg discharge; rpesnt final report to Cx	59
[§5.03]	Form A Freehold Transfer: Use Form A to transfer of fee simple interest in land - names of parties; legal description of land; market value of property; consideration; signatures	59
	Look out for implied convenants in transfer - s.186 of LTA	59
	If prop transferred subject to easements, etc, state this on transfer`	59
[§5.04]	Property Transfer Tax Return: 3 forms - 2 where exemption claimed, one where no exemption claimed. Complete one and file at LTO.	60
	Prop Transfer Tax Act: tax on land transfers, 1% on firsst   $200, 000 and 2%  on balance. Tax relief to those using high ration financing on principal residence	60
	GST payable on entire amount, incl this tax
	First time buyers of principal residence can be exempt - if mtg 70% or more, max purchase price of $275, 000, Cdn cits	60
[§5.05]	Other Documents	60
[§5.06]	Survey Certificate: order where instructed - look for encroachments; best to rec’d Cx to get this in pretty much all cases. If Cx says no - get it in writing. While no legal duty to rec it, but standard practice	60
	Not all surveys show by-law violations unless you specifically request it	60
	To protect self, consider doing.....see list (a-d) - write letter, make file notes, etc.	61
[§5.07]	Land Title Fees	61
[§5.08]	Goods and Services Tax: Excise Tax Act	61
	1.	What is Taxable: B must pay GSt on new residential housing; substantially renovated housing. Pay GST on FULL purchase price, incl legal fees	61
		Also payable when,........see list (a-e)	61
		Not payable when.....see list (a -c)	62
	2.	Representations and Warranties: before sign PA, B should determine if GST payable and whether negotiated P incl GST. If not addressed in PA, must determine later	62
	3.	Who Collects the Tax: reg’d S is required to collect GST as agent of Fed gov’t	62
		Exceptions to rule that S collects GST: (a-c): S is non-resident, non-residential props; S is not an individual. In these cases, B remits tax directly to Receiver General. B liable even if remits to S.	62
	4.	GST Certificates: if S says sale exempt from GST, and B has no info to contrary; B should get written statement from S in form of certificate.  	63
	5.	Rebates: various GST rebates available to  individs who renovate/build own homes or who buy co-ops.  Up to the less of 36% or $8750.  Less if P over $350, 000	63
		Must meet certain conditions (5) : P less than  $450, 000; ownership transferred after construction; prop unoccupied, etc.	63
		Supposed to be: B pays full GST and gets rebate after,  but S can credit B for amount of rebate and B pay only net GST payable after rebate deducted.  	63
		Ex of rebate cacluation	63
[§5.09]	In/Out Analysis:  Financial dry run of conveyance; left hand column: sources of funds; right hand column: application of funds so that there is precise match b/w left and right	64
[§5.10]	Holdbacks for Non-Resident Sellers: Prep stat declaration wrt S residence status. If   non-res, need clearance cert under s.116 of ITA or else deduct holdback from S’s sale proceeds.  B must make reasonable enquiry of S status	64
	W/holding tax is 25% for non-depreciable property; 50% for depreciable property	64
	cert will only be issued when S  calcluates actual tax payable and remitted that amount
	Look to impact of tax treaties	65
[§5.11]	Effect of Proceeds of Crime Legislation	65
	1.	Legislation Provisions: CC makes crime to deal w/property which is proceeds of crime w/intent to conceal it. J can make order freezing property. Restraint order must be  reg’d against property according to provincial laws	65
		Reporting requirements under suspicious transaction reporting Reg’ns of Proceeds of Crimne(Money Laundering) Act.  Temp injunction for lawyers right now	65
	2.	Impact on the Land Title System: diff b/w stat lien and restraint order	65
		(a)can’t do search for restraint order; can search for liens	65
		(b) liens attach to person’s interest in land; restraint order brings into Q ownership of land and is an injunction
	3.	Inability to Honour Undertakings: restraint order can also be made against lawyer trust account	66
	4.	Impact of Proceeds of Crime Legislation: dilemma for innocent lawyer bound to  perform unconditional undertaking. E.g. if property is seized, rendering performance of undertaking impossible, which unlikely to be PR breach - HB 11(8): most unusal/unforeseen circ.  	66
		But consider situation where performance would expose lawyer to prosecution under proceeds of crime leg.	66
		Best way to address is to make undertaking conditional or self-determining or draft that in event of events discussed above, failure to perform undertaking will not be PR breach	66
Statements of Adjustments
[§5.14]	Introduction: payments to be made by either party wrt use and enjoyment of prop are adjusted - adjusted amt is actual amt to be paid by each party on adjustment date	69
[§5.15]	Purpose of Statements of Adjustments: 3 main purposes: to define and calculate financial matters to be adjusted; to confirm method of payment of purchase price; to provide for disbursement of sale proceeds	69
	Debit is something B must pay for/buy from S at closing.  Credit is money the B has already paid to the S	69
	Notes following calucations have been used by lawyers to obtain parties’ agreements on matters not set out in sufficient detail in PA and to provide framework for further adjustments as needed. Be careful not to put in too much detail that is not in PA or will make PA invalid, statement of adjustments becomes counteroffer. See exs of court rulings	69
	Notes should relate exclusively to adjustments made and only involve matters related to [(a-e)]: methods used in calculating specific adjustments; explanations re: variations of adjustments; methods used in arranging subsequent readjustments; holdbacks;  payments to 3P	70
[§5.16]	The Number of Statements: B’s lawyer usually prepares, one for S, one for B	70
[§5.17]	Methodology	70
	1.	General: pt is to ensure each party bears expense of maintenance and operation of the property during that time in wwhich that party is enjoying use/occupation of property.  Most financial obs/benefits are addressed monthly or yearly.  Determine who paid/must still pay for item being adjusted and then to ensure that party is credited for that part of the period during which he’she won’t have benefit of the tiem.	70
	2.	Calculation: up to but excluding day of adjustment - day of adjustment is incl with B’s share of payments	70
	3.	Payout Statements: obtain written statements from various sources providing info for statement of adjustments	70
	4.	Specific Adjustments	71
		(a) Property  Taxes: complicated b/c until tax notice comes out, unknown how much tax will be charged.  Common to determine base figure for taxes for previous year and increase by 5% for inflation; provide for further adjustment once tax notice received	71
		Penalites and interest  not adjusted; they’re S responsibility	71
		Before due date for payment, should be adusted net of Home Owner Grant if both S and B are eligible for it	71
		If adjustment date is after due date, taxes adjusted on what’s actually paid	71
		(b) Assumption of Mortgage: assumption statement should confirm balance of mtg as of last payment date and per diem charge; should also confirm that mtg is assumable, that mtg doc on file is, in fact, the whole mtg; and mtg’or is in good standing	71-2
		In absence of instructions otherwise, where B asssumes mtg, mtg payments should be adjusted as of completion date rather than adjustment date and B start making payments on completino date	72
		(c) Utilities and Licenses: get statements of applicable charges e.g. municipality	72
		(d) Electricity and Gas: easy to get meter read.	72
		(e) Oil: rare these days; have oil supplier dip the tank. Also look to state of tank, supplier to check if significant water in tank - which means tank is deterioriating and will have to be replaced -- repair cost and potential env issues	72
		(f) Rents: ensure prepaid rents and security deposts plus accrued interest are accounted for. Easiest to prepare ‘rent-roll’ for use unit to show (see list) - rent, due date,  prepaid rent/deposit; any interest accrued thereof; last date rent was increased	72
		B not debit for unpaid arrears b/c don’t know if will actually be paid! Further adjustmets needed 	72
		(g) Insurance Premiums: if B taking over S insurance, make adjustments, but rare to have takeover. Better to have B arrange own insurance and no adjustment needed	73
		(h) Deposit and Real Estate Commission: deposit as credit to B, but not necessarily incl in S statement unless paid directly to S	73
		Commission  usually shown as S debit, commissions are subj to GST	73
		Normally agents hold deposit and put towards commission, 	73
		(i) Legal Fees and Disbursements: normally entered on B statement of adjustment	73
		(j)Social Service Tax (PST) on Sale of Chattels:  not adjusted b/w B and S, but since B liable to pay and S responsible for collection of PST, the S should require amt to be shown as B debit to be paid on closing by  B.  Unless separate payment made for chattels, PST rarely paid in residential real estate transfer	73
		(k) Property Transfer Tax: if payable, amt inc in B statement of adjustments and obtained before closing.	74
		(l) GST on Property: should be shown as separate item if payable	74
		(m) Holdbacks: used to secure obligations of S to B or to 3P. Notes to st. of adj. should clarify arrangements.  B may try to get holdback if (4): S share of utility payments needs securing; S obligated to complete work before close but unable to do so, S non-resident;  if assumption that last monthly mtg statement cleared	74
		(n) Reconciling Cash Balance: prepare cash in/out statement to reconcile funds to ensure have enough $ to complete transaction	74
		(o) Conflicts: lawyer often asked to act for B and S at close - don’t do it!  Read HB App 3 closely.  Lots of potential risk; if you do it, make sure you get confirmation in writing from parties; becomes even more essential to get payout statements	74
		(p) Disbursements and Delivery of Funds: closing to take place at LTO	75
[§5.18]	Notes to Statements of Adjustments:  Purposes of notes - see list (a-e)	75
	To cover off purposes a/b: clarify parties’ responsibilities; methods of calcluation, notes include - see next list (a-e)	75
	If reps/warranties not in original PA, S can argue no obligation. Agreements b/w B and S made after PA signed should be incl as amendment to PA.	75
	If B and S both amenable to more covenants, may have an enforceability problem for lack of consideration - can get stat of adj under seal just in case	76
Interim Report Letters
[§5.19]	Initial/Interim Report to Client: enables lawyer to confirm receipt of instructions; clarify them; provide title opinion; address potential conflicts; advise as to fees/disbursements	76
	1.	Receiving Instructions: will often receive instructions be way of PA,  confirm receipt of PA.	77
	2.	Title Opinion: deals w/present status of title and the status of title once all contemplated registrations have been done. Address encumbrances to be discharged and those to remain on title.  Also address qualifications on your opinion	77
	3.	Parameters of Instructions: outline instructions from Cx to you. Clarify to Cx what it is you are doing and what is still THEIR responsibility	77
	4.	Conflicts: if also asked by mtg company to prepare security for loan to B, must advise Cx.  See HB 6, App 3.  Also advise Cx of requirements of mtg’ee	78
	5.	Fees - discuss your estimated fees/disbursements	78
	6.	Conclusion: send asap after receiving instructions so Cx can deal w/mattters in report	78
[§5.20]	Interim Report Letter Checklist - pretty self - explanatory - see long list!	78
[§5.28]	Insurance and the Lender: if act ONLY for B, leave matter of insurance to B himself	81
	If act for B and for lender taking mtg security, who will want insurance before advance $. Obtain ‘insurance binder’ which is acknowledgment of insurance coverage ussed by insurance company pending preparation of formal policy document	81
	If acting for lender, review binder to ensure prop insured to proper value.  Lender will want coverage set at full insurable value; that policy has ‘standard  mtg clause;’ and that lender is designated first or second payee under policy	82 
	Latteer clause makes lender assigneeeee of proceeds, but right to receive proceeds may be impaired since loss payee can’t have any greater rights than insured - e.g. what if insured does fraud or misrep?	‘Standard mtg clause’ provides that mtg remains in force notw/standing insured’s fraud or misrep	82
	Co-insurance - ensure is expressed in stated amt and not % of cash value or replacement cost
[§5.30]	Undertakings	83
	1.	Introduction	83
	2.	What is an Undertaking? Not a K’al obligation; don’t need consideration	83

		(a) Nature of an Undertaking: promise from lawyer to 3P where lawyer assumes personal obligation to act/refrain from acting. Generally express; can be implied.
		(i)must be made in professional capacity
		(ii)must be clear on its face
		(iii) must be made by lawyer, not as agent for Cx, but as principle, w/understanding that will be personally bound by it.  If intend otherwise, MUST be totally clear
		(iv) if condition, conditions must have been fulfiled	83
		
		(b) Common Types of Undertakings: 2  broad categories	83
		(i) to pay money, held in trust, on happening of certain event	83
		(ii) to do, or refrain from doing, an act upon happening of certain event	84

		(c) Undertakings - Solicitor’s Liability: If breach undertaking - ct may enforce it on summary application; injured party can bring civil action for damages; lawyer subject to PR discipline proceedings	84

		(d) Undertakings - PR: HB 11(7, 7.1); also 11(9-11); also commentary 7 of Chpt XVI of Code of Professional Condcut 	84

	3.	Deemed Undertakings: HB 11(8, 8.1) provide for 2 kinds:
		(i)when give trust cheque, deemed undertaking arises that cheque will be honoured	85
		(ii) if lawyer acting for B of real prop accepts money in trust and receives conveyance from S in favour of Cx, lawyer deemed to have undertaken to pay purchase money to S on completion of registration	85

	4.	Basic Practical Rules for Undertakings: List (a-j). E.g. never give undertaking if lesser form of promise will suffice; never give u.t. w/which you can’t comply; draft u.t. precisely; don’t give u.t. based on performance of 3P	85

	5.	Undertakings in Real Estate Transactions: that you have particular amount of $ in trust; promising to do something specific w/$ once certain events occur.	86
		Must know when application for registration can be w/drawn and by whom.  See s.167 of LTA.  See detailed explanation in materials	86
Remedies
[§6.01]	Introduction: remedies when real estate transaction collapses.  Statute of Frauds repealed, replaced w/s.59 of Law and Equity Act	111
[§6.02]	The Solicitor as Witness: precautions to take as lawyer: make good notes, confirm all communications by letter, keep careful records of dates,, don’t talk to much, if trying to negotiate settlement, remember to communiate ‘w/out prejudice’	111
	If end up as witness, consider if still appopriate for you/your firm to be counsel. HB 8(9), Code Ch IX (Comm 5)
[§6.03]	Relevant Legal Principles	112
	1.	The Enforceability of the Purchase Agreement: enforceable PA is essential; can be unenforceable for lack of certainty, failure to comply w/relevant statute; other.....	112
		(a) Certainty of Terms: cts dislike technical args and make every effort to determine parties’ intent so as to enforce bargain	112
		(b) Law and Equity Act s.59(3): must be written OR other evidence of agreement such as parties’ conduct	112
		(c) Real Estate Act: s.61 requires developer selling 1 co-op or 5+ subdivided lots or  strata lots or time-share interests to meet many requirements; s.77 if don’t comply wAct, may not enforce a PAa	112

	2.	The Essentiality of Time: if TOTE, failure of party to perform on time will constitute breach, giving other party right to pursue remedies asap.  If wavie TOTE right by words or conduct, can’t enforce it.  	112
		Extension of time that merely substitutes new date for old one is not waiver of TOTE. but cts can give equitable relief if they feel its necessary.  Other caselaw, if amend PA, have to reiterate TOTE?	112
		If TOTE and both parties fail to perform, TOTE ceases until one side gives notice to other to perfom at rescheduled timeq	113
		“Putting Together the Puzzlue of TOTE” (a)Functions as condition, if not performed, other party can elect to treat K at end and sue for damages or keep K alive and sue for specfic perf.; ( b)where no TOTE,  can only sue for damages b/c time stipulation only operates as warranty; (c)where no express TOTE, matter of K interpretation; (d)TOTE can be restored by one party giving notice and specifying new date, also (e), (f)	113

	3.	Conditions Precedent (Subject Clauses): Law and Equity Act s.54: one party can unilaterally waive performance of CP if: (a) incl solely for his benefit; (b) K can be completed w/out CP; (c) waiver made before time stipulated for fulfilling CP	113

	4.	Anticipatory Breach: if one party to PA cleraly indicates intent not to complete K other party can treat him as being in default.  Must be clear. S who fails to notify B that has accepted B’s anticipated breach must perform obligations under K	114
[§6.04]	Remedies of Seller and Buyer	114
	1.	The First Election: Affirm or Disaffirm: if one party in breach of condition, other must afffirm or disaffirm the K. Generally choice is irrevocable, certain remedies n/a after election made. Should communicate election to other party	114

	2.	Seller's Remedies: 
		(a)Claiming the Deposit:  if B repudiates K, S can treat agreement at end, return dep. More often, S keeps dep. Most PA incl term providing for forfeiture of dep on B repudiation.	115
		S may try to keep dep and pursue other remedies, such as specific perf or damages. Risk that if keep dep, might be precluded from this option.  
		General rule is that in absence of agreement to contrary, parties will be taken to have intended that the deposit operate as limit on damages recoverable; t/f lawyers usually incl clause in PA that expressly preserves S’s right to keep deposit and claim additional damages.  	115
		Current standard form PA seems to have simliar clause.  But only if K is terminated at S’s option. If S keeps K open and wants sp perf, dep not forfeited on account of damages. Lawyer should seek order that deposit be paid into ct	115
	
		(b)Specific Performance and/or Damages: to enforce agreement, S may sue for sp perf or damages for K breach. Both represent enforcement of K. S must elect b/w 2 remedies  at or before trial. Dams sought if prop already resold or don’t want to sell anymore, otherwise normally go sp perf route	116
		Seek sp perf and damages; damages in lieu of sp perf; c.l. damages
		
	3.	Buyer's Remedies	116
		(a) Claiming Return of Deposit: if S repudiates, B may demand deposit return and can sue for its return. Clearly constitutes disaffirmation of K so B’s remedy may be confined to return of deposit. 	116
		(b) Specific Performance and/or  Damages: can claim sp perf and damages; damages in lieu of sp perf; c.l. damages	116
		Should also file cert of pending litigation to prevent S from selling to 3P	116
		Sp Perf not granted w/out some evidence that prop is unique to extent that substitute not readily available - alter c.l. tradition that sp perf always available for real prop	116

	4.	Damages	117
		(a) Damages in Addition to Sp perf: equitable dams; discretionar; ltd recovery. Generally relate to out-of-pocket expenses incurred by Pl & for which has received no benefit	117
		(b) Damages in Lieu of Sp Perf: may no longer be diff b/w this and damages for K breach. Awarded to Pl who would otherwise be entitled to sp perf but can’t perform b/c of circs beyond control; if ct in discretion thinks award of dams to be more appropriate than award of sp perf that Pl seeks.	117
		(c) Common law Damages: cts rejected idea that these are more rigidly caluclated than equitable damages; cts discretionary here too	117
		(d) Statutory Damages: s.37 Property law Act: B can recover damages for loss of bargain from S who can’t perform b/c of defect in title	117
		(e) Liability of Agents and Others:	117
		(f) Liability of Municipalities and Others: re: Building Code?	118
[§6.05]	Tender as an Evidentiary Tool: to sue successfully for sp perf, Pl must  show that he was “ready, willing and able” to complete transaction at apprioraite time. Tnder is evidence that party was able to complete	118
Mortgages and Agreements for Sale
[§7.01]	Introduction: at c.l. mtg is K for debt and conveyance of land as security for debt.  C.l. mtg rights expressly retained in LTA s.231(1), (2)	125
	1.	Contractual Aspect of a Mortgage: Mtg is K, look to privity b/w parties. At c.l. original mtg’ors remain bound under mtg K even if no longer owners of land; 
		Subsequent B are not privy to mtg K, unless entered into assumption agreement.	125
		S can be released from liability by c.l. doctrine of novation OR ss.20-4 of Property Act

	2.	Conveyance and Security Aspect of a Mortgage: mtg contains grant of land from borrower to lender, subject to right of redemption.  	125
		Rel’n b/w first and second mtgs	125-6

	3.	Mortgages Under the Land Title Act: ss. 224-237; 2 parts. 
		(1) 2 page prescribed form, App. 48 w/key elements of mtg, incl execution; 
		(2) all other terms of mtg. Mtg may either 
		(a) incorporate statutory terms est’d by reg, App.49; 
		(b) incorporate standard terms which may be filed in LTO, B must receive copy; 
		(c) attach an express set of terms in same manner as a schedule to 2-page form.	126
[§7.02]	Conflicts: most frequently occur when lawyer asked to act for both B and lender. Consider HB App 3, Rules 3-5, esp	126
[§7.08]	Instructions/Commitment Letter: review instructions from lender who often forwards the form of final report it requires - review to see exactly what’s being asked of you.	130
[§7.09]	Searches	130
	1.	Land Title Office: will reveal 2 types of encumbrances, those that wil stay on title after closing such as easements, rights of way and those that will be removed before closing.
		Write to holders of latter and request payout statements	130
	2.	Company Searches: if  borrower is company, confirm that is in good standing	131
	3.	Zoning and Bylaw Compliance: dependent on lender instructions	131
	4.	Environmental Enquiries: lender may ask you to confirm that prop not affected by any hazardous waste. Search Contaminated Site Registry, check whether need to make inquiries under Waste Managment Act or CEPA.	131
[§7.10]	Report to Client: give lender report on search results asap. Send lender copy of prop plan on file at LTO and get confirmation that this is prop it intends to take as security for loan	131
	Lender will have to decide if particular charge can stay on property or not; get comfort letter of blaket easement holder that won’t enforce more than necessary	131
[§7.11]	Survey: lender should require survey cert showing boundaries and dimensions of prop; location of easements, etc; location of all buildings on land.  Will show encroachment probs	131
[§7.12]	Insurance: lender will require adequate insurance to be in place before advance $	131
	1.	Standard Mortgage Clause: lender will normally insist it be named loss payee so that if loss occurs, lender is assignee of payable proceeds. But rights are no bigger than those held by insured, so lender frequently wants standard mtg clause that insurance will remain in force notw/standing act, neglect, fraud, misrep, etc. attributable to mtg’or (insured)	131
	2.	Co-Insurance:  since most insurance claims are only for partial loss, borrower might only get partial insurance. Co-insurance encourages insured to get insurance up to certain % of prop value. If he doesn’t, insured becomes co-insurer and responsible for making up short-fall b/w insurance procured and set % limit.	132
		See calculation ex. 	132
		Lenders should request that insurance policies be written w/out co-insurance or w/co-insurance for stated amt	132
	3.	Replacement Cost Endorsement: Indemnity - used to be could only recover cash value of prop destroyed, not replacment value. Insurance comp now provides replacement value coverage, but only if replacement/repair actually took place. Choice: insured takes cash of present value or must spend $ up front on repairs/replacement and get paid back 	132
		
		Most important features (a-e): not in all policies; insured must elect it; insured must actually repair/replace; must be done promptly; may still have to bear portion of cost, depending on level of coverage	132
[§7.13]	Registration and Advances: reg’n essential to lender’s security. Should do pre-reg’n and post-regn index searches.  Common practice to pay out mtg $ after file app for reg’n but before completed reg’n on basis of post-reg’n search. Prob that intervening charge might be made. Advise Cx of this hazard.	133
	Priorities as b/w reg’d mtg holders don’t arise simply on bsis of time of reg’n. Priorty may be based on time $ is secured or advanced. If advance in stages, must search LTO each time to ensure no intervening mtgs that will take priority.	133
	Property Law Act s.28(2) provides that in certain circs, advances made by lender in accordance w/mtg provisions rank in priority to advances made under subsequent mtgs	133
	
[§7.14]	Clearing Title: Q of who should clear title. If transaction is one in which B getting new first mtg, should be no prob b/c S should have agreed to clear title. In reality, it’s B’s lawyer  - also acting for lender - who does that, using lender’s money	133
	If lender has separate representation: (a) lender’s lawyer can forward mtg proceeds to B’s lawyer on his undertaking to clear title; (b)lender’s lawyer pays out amt owing on prior encumbrances and sends only the balance to B’s lawyer; (c) if B’s lawyer won’t have enough time to deposit cheque from lender’s lawyer and issue one to pay out encubrances, lender’s lawyer may deliver cheque to B’s lawyer that is payable to encumbrance holder
[§7.15]	Final Steps: having paid off prior encubrances, should file discharges and request state of title certificate.	134
[§7.16]	Problems, Pitfalls, New Developments, and Disclosure Requirements	134
	1.	Interest Act, s. 6: mtg must state the amout of principal and rate of interest being charged or else no interest is payable	134

	2.	Interest Act, s. 8: prohibits lender from charging higher rate of interest on arrears than rate of interest payable on principal that is not in arrears.  Even if stipulate set rate and then say lower rate will be applied if pay on time - violate this section	134

	3.	Interest Act, s. 10: if mtg provides that cant’ be redeemed for more than 5 years, at any time after 5 yrs is up, borrower can pay off full amount owning + 3 mos interest	135
		(a) Only applicable to  mts on real estate; (b) n/a to companies	(c) Right to repay arises if any individual term of mtg is more than 5 years

		SCC: Royal Trust v. Potash: (i)purpose of 10(1) is to ensure mtg’ors have right to repay mtg at end of 5 yr period;
		 (ii) where original mtg term exceeds 5 yrs, mtg’ors have right to repay when 5 yrs expires; (
		iii) where original term is for 5 yrs or less and term extended by agreement beyond 5 yrs; mtg’or has right to repay after 5 yrs is up; 
		(iv) where mtg’or elects not to repay, but enters into renewal agreement which deems date of original mtg to be date of maturity of existing loan, right of repayment doesn’t come up for 5 yrs; 
		(v) can’t K out of this section.	135

	4.	Assumption and Novation:  c.l. - new B of prop doesn’t assume K’al obligation for mtg debt unless enter into assumption agreement. Original B not relieved of debt unless lender releases him or novation occurs	135
		Prop Law Act, s22(3) new B generally bound to mtg covenants, but this not tested in ct yet so lenders should keep getting assumption agreements
		Prop Law Act - how orignal B will be relieved of liability  - (a), (b). For non-residential mtgs and those to which Act doesn’t apply, B continues to be liable unless novation	136
		Novation: new debtor must assume complete liability; creditor must accept new debtor as principal debtor and not just agent; creditor must accept new K in full satisfaction of old K; new K must be given w/consent of old debor.	136
		
	5.	Criminal Code: CC s. 347: offence to agree to or actually receive interest in excess of 60% per annum on credit advanced. Need AG consent before criminally prosecute, normally ends up as civil action that lending transactions are illegal b/c violate s.347 and so are void. Cts typcially allow lender to recover principal but not interest, don’t want to give borrower a windfall	136

	6.	Mortgage Brokers Act: regulates mtg brokers; must give written disclosure of their fees, if not and or if misleading, borrower can redeem mtg w/in one month	137

	7.	Bank Act: deals w/interest and charges on loanss. ss.449-56 cover rules re: interest; disclosure of interest rates. 450: prohibit loan unless rate disclosed; 451: expressed as rate per annum; 452: disclosure of right to prepay before maturity as applicable	137

	8.	Property Law Act: if borrower asks lender, in writing, to supply statement re: amt payable, balance payable as of particular date; statement of terms on which discharge will be granted	137

	9.	Consumer Protection Act: ss.41, 42: disclosure requirements, similar to Bank Act.  S.50 prohibits recovery of cost of borrowing if 41/42 not complied with.  CPA only applies to unconscionable transactions, no other mtg transactions	137

	10.	Priority of Statutory Liens: s.87 Employment Standards Act; s.52 Workers Comp; s.70 Bankruptcy and Insolvency Act; Corporation Capital Tax Act; Strata Property Act	138
		Certain liens that take priority over reg’d mtg; see notes on specific Acts.

[§7.23]	Equitable Mortgages: can be created in 4 ways: 
		(i) pledge of duplicate certificate title; 
		(ii) mtg by holder of equitable interest such as a subsequent mtg - only type that can be registered.; 
		(iii)by instrument intended to create legal mtg but is defective; 
		(iv)agreement to provide a mtg	141
[§7.26]	Mortgage Remedies	143
	1.	Action on the Personal Covenant	143
		(a) Bringing Action on the Covenant: as soon as default, lender can start action alone or join it w/foreclosure action. If obtains order nisi in foreclosure proceeding, must ask for judgment on covenant at that time	143
		(b) Acceleration Clause: if default, lender may usually enforce acceleration clause which makes outstanding principal, interests, costs due; exercisable at lender’s option.  Law and Equity Act s.25 provides for relieff rom acceleration - normally only where  borrower’s equity is substantial; security intact; default not wifull	143
		(c) Enforcement of Personal Covenant After Order Absolute: Property Law Act s.32: after obtaining order abselute for foreclosure, lenderm ay not enforece personal covenant.	143

	2.	Action for Foreclosure:  lender’s summary remedy; effect is that B’s equity of redemption is extinguished	143

	3.	Judicial Sale: ct will only order sale of property in context of foreclosure or other proceeding	143

	4.	Contractual Power of Sale: most mtgs give lender power to sell prop if default, not really used in B.C. anymore, K’al power of sale is unenforceable before redemption period expires	143

	5.	Possession: provided borrower not in default, will have quiet possession of property secured; but in case of default, lender may enforce assignment of rents, etc.	143
		(a) Mtg’ee in Possession: mtg’ee in possession has rights of owner, subj to mtg’or right of redemption and right to accounting. Must manage as prudent owner would	144
		(b) Appointment of Receiver: all mtgs should provide for this. Rarely used b/c mtg’ees prefer protection of ct appointment under Law and Equity Act s.39	144

	6.	Distress: seizure of goods and chattels of borrower in default. To distrain borrower’s goods, lender must have right in terms of mtg.	144

[§7.27]	Title Insurance: being used for mtg financing	144
Tax aspects of real estate transactions
[§8.01]	Introduction	174
[§8.02]	Principal Residence	174
	1.	Principal Residence Exemption: generall when tax payer (t.p.) sells principal residence, not taxed on any appreciation in value during ownership. (ITA s.40(2)(b))  Must have been principal residence for whole time - meet definition in s.54(g) of ITA - family members must ordinarily inhabit housing unit in the year; seasonal use OK	174
		Certain types of trusts qualify (??)	174
		Can incl up to 1/2 hectare; can be more if can’t subdivide real estate	174
		Wide definition, ‘housing unit, leasehold interest in housing unit; share in coop.’ Housing unit incl house, appt, houseboat, condo, trailer, etc	174
		Can only have one - s.54 ITA, must desigate	174
	2.	Partial Exemptions: if prop was principal residence for some years you owned it and not others, only pay tax on years it wasn’t principal residence	174
		May be principal residence for some years and not others b/c t.p. may own more than one property oridinarily inhabited by family; pre-82, could have one principal residence for each family member, not one for whole family; prop might have been used to earn y	175
	3.	Change in Use of Property: usually triggers ‘deemed disposition’ at FMV, elections available to defer/avoid this. W/election, prop can be continued to be designated as principal residence for 4 years after it isn’t!  Also indefinite designation if had to move b/c transferred, relocated, but only if t.p.returns to residence.	175
	4.	Transfers Between Spouses or Common-law Partners: if done on a rollover basis, transferee deemed to have owned principal  residence for whole time that transferor owned it.  Must also consider possible application of attribution rules.	175
[§8.03]	Non-Resident Seller: tax  must be collected off of non-resident S when disposes of real property (ITA s.116). B must  request certificate from S; if S doesn’t get one, B must holdback, or else will be liable himself	176
	25% for non-depreciable prop; 50% for depreciable prop.	176
	B not liable, if after reasoanble inquiry,  had no reason to believe S was non-resident, but should still seek statutory declaration from S to that effect	176