What happens to your deposit if you cannot close? Do sellers get to keep the entire amount?

by: Robert Pacan

Typically, an offer to purchase a property comes with a contractual promise to pay a deposit on acceptance of the offer by the seller. My anecdotal evidence for average deposit amount in Ottawa for used residential homes is one to two percent of the purchase price. It’s usually recommended that sellers try and get as large of a deposit as possible. This is to protect sellers against deals that go bust through no fault of their own.

Do the sellers get to keep the entire deposit amount?

If a purchaser cannot close on the closing day, the deposit is generally forfeited to the sellers. In addition, the sellers can sue for damages for any losses, such as carrying costs of the home. However, purchasers can ask the court for relief from forfeiture. This remedy is requested when they feel that losing all or some of the deposit amount to the sellers would be unfair. The Ontario Court of Appeal stated in order to obtain relief from forfeiture, purchasers are required to establish that the forfeited sum (the deposit) would be out of proportion to the damages suffered and that it would be unconscionable for the seller to retain the money.[1]

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Do not conceal water damage before selling your home

by: Robert Pacan

You’ve decided to sell your home and while preparing your home for showings, you discover water damage in the basement. Mold is present on the studs in addition to some damp insulation. What should you do? I see two options: 1) find the cause of said damage and repair it properly before you sell or 2) leave it as is without concealing the damage to potential buyers. Unfortunately for one Brantford, ON couple, a third option was exercised and that was to hide the water damage with sprayfoam insulation and drywall. While this option may have been a quick and easy fix, it resulted in the sellers paying for it in court after closing.[1]

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Common law tort of nuisance prevails over Forestry Act

by: Robert Pacan

Two Toronto neighbours had an issue with a tree straddling their property line.[1] At issue was whether one neighbour had the right to cut down the tree without the consent of the other neighbour. This tree was damaged by the 2013 Toronto ice storm, losing one-third of its canopy in the process. It also caused damage to a neighbouring property due to a falling large tree branch. Worried about the possibility of further damage, Ms. Beryl Freedman hired an arborist to determine the state of the tree. The certified arborist recommended the removal of the boundary tree due to the damage it suffered. His report stated that “The number of potential targets under and adjacent to this tree makes removing this tree a safety priority.” Mr. Lorne Cooper, the neighbour, was approached by Ms. Freedman regarding the report. Mr. Cooper did not want the tree removed. Without receiving his consent for removal, Ms. Freedman initiated an application to the City of Toronto to remove the tree. The City approved the application allowing Ms. Freedman to cut down the tree. The arborist hired to cut down the tree required consent from Mr. Cooper to access his property. Mr. Cooper, in writing, denied any access to his property and stated any breach would be handled as a matter of law.

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Can a Buyer and Seller use the Same Real Estate Lawyer for a Home Purchase?

by: Robert Pacan

No, but they can use the same law firm. In most cases, one lawyer is not allowed to represent both the buyer and seller in a transfer of property. The Law Society’s rules of professional conduct state that a lawyer cannot act for both parties in order to avoid conflicts of interest. However, the parties are permitted to be represented by one law firm if both the seller and buyer are represented by different lawyers within the same firm and if the parties consent to the representation. For example, I alone could not represent a buyer and seller on a real estate transaction, but one of my fellow colleagues could represent one party and I the other, both lawyers belonging to Adam, Miller, Kelly.

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Real Estate Agents – Disclose Dual Agency Or Risk Losing Commissions

by: Robert Pacan

It’s not uncommon for a real estate agent to act a dual agent for the buyer and seller on a real estate transaction.  In doing so, the listing agent would disclose his or her relationship with the potential buyer before an offer is presented, as per the standard listing agreement terms.  A listing agreement sets out commission rates, listing periods, as well as the terms and conditions with respect to ‘multiple representation’, also known as ‘dual agency’.

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Condo board vs Existing Non-resident Parking and Storage Unit Owner – What happened when board tried to prevent outside owners from owning units?

by: Robert Pacan

Situation: Condo purchasers buy a parking and storage locker from another condo nearby because their building had none available. The condo board from the nearby building subsequently amends its declaration to prevent outside users from owning parking or locker units after the purchaser obtained ownership of the units. What happened next?

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What is a holdover period? Am I required to pay the real estate agent commission after the listing agreement expires?

by: Robert Pacan

It’s not uncommon that a listing agreement between a real estate agent and a seller include a “holdover period”. This clause states that the seller is liable to pay the commission to the real estate agent should the property sell within ‘x’ number of days after the listing agreement concludes, provided that the buyer was introduced to or saw the property during the listing period. An agent who puts in a lot of time and effort wants to be protected should a buyer decide to make an offer shortly after the listing agreement expires. A recent Ontario Court of Justice decision upheld the holdover period clause after the seller attempted not to pay the real estate agent’s commission.

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Fixtures and Chattels: When in Doubt, Spell It Out


by: Robert Pacan

Far too often, purchasers assume that certain items seen in prospective homes accompany the property on closing, but they soon find out that these items are now missing after taking possession of the home. Disputes between the vendor and purchaser may follow, causing headaches for all parties involved. This all relates back to the agreement of purchase and sale and the fixture and chattel paragraphs contained therein.

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Joint Tenants versus Tenants in Common: Quick Overview on the Types of Title Ownership

by: Robert Pacan

So you’ve just bought a new house with your spouse, friend, or relative and your real estate lawyer asks you how you want to take title to your new home. There are two ways that your property can be owned: 1) Joint Tenants or 2) Tenants in Common.

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