Recent case law provides the answer to this, and disclosure obligations generally, for agents and sellers with regard to emotional vs physical situations which may have occurred at the property.

Every time I lead a discussion on disclosure it becomes a very emotional exchange with people passionate about their position one way or the other. This month the British Columbia Court of Appeal provided some much-needed clarity on items referred to as stigma and when and how to disclose.

In the case of Wang v. Shao, 2019 BCCA 130, the most sensitive of stigmas being murder was considered. In this fact scenario, the seller’s son-in-law was murdered in a gang-related killing on the sidewalk outside the seller’s house. The publicity related to this killing resulted in the seller’s daughter having to change schools. The seller purchased a house closer to the new school her daughter was attending.

The seller put the property on the market. The seller’s agent was asked why the seller was moving and he conveyed that he was informed it was because the seller’s daughter had changed school. No further questions were asked and no further explanation was given. As part of the evidence provided in the resulting the lawsuit, the seller disclosed that she was also moving for the safety of her children.

The Court of Appeal reviewed all the evidence and the decision of the lower court judge and stated that the rule of caveat emptor applies to the purchasing of property. This means the buyer alone is responsible for checking the quality and suitability of the goods before a purchase is made. But there are exceptions. You cannot misrepresent or tell half-truths.

The rule that exists and is upheld by this decision of “buyer beware” is not intended to permit sellers to deceive buyers rather it places the onus on the buyers to ask specific questions designed to unearth the facts relating to the buyers’ particular subjective likes and dislikes.

The Court decision provides a very clear and thorough review of the reasons for the finding that it is the buyers’ responsibility to ask questions to which a seller must truthfully answer.

Click Here to read the full article

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

The post Disclosure Obligations appeared first on Elliott Lawyers.

The post Ontario’s Excess Soil Management Policy Framework appeared first on Elliott Lawyers.

Caveat Emptor is a Latin maxim which is defined by Merriam-Webster’s dictionary as follows: “the principle that a person who buys something is responsible for making sure that it is in good condition, works properly, etc.” You may wonder what this has to do with real estate transactions. When dealing in real estate, it is not only the purchaser in a real estate transaction that has to be aware of this maxim but also the seller. The reasoning behind this is the realtors, as well as the sellers, have to be fair and honest when disclosing problems which may not be evident to the purchaser or home inspector.

DEFINITIONS

A patent defect, by definition, is an obvious flaw that would be discovered upon a reasonable inspection of the home. An example of a patent defect would be a hole in the wall of the living room which is visible to the plain eye.

A latent defect is one that was not known to either the seller or the purchaser at the time of sale, and, as a result, was not disclosed. An example of a latent defect would be an inadequacy in the foundation which causes subsidence of the building structure itself.

POSITIVE OBLIGATION ON REALTORS & VENDORS

There is a positive obligation on the seller to do several things if there is a defect with their property. The first is that they should not cover up defects or try to misrepresent the true state of the property being sold. If it is found that the seller did misrepresent the property, or intentionally tried to cover up a defect, it will nullify the concept of “buyer beware” and will most likely result in the seller being held liable to some degree to the purchaser for the defect.

It is not only the seller who has a positive obligation to divulge information regarding defects in a home. Real Estate Agents have an obligation under the Real Estate and Business Brokers Act, 2002 Ontario Regulation 580/05 Code of Ethics, sections 3 and 4, which pertain to being candid and honest with one’s client as well as when dealing with any property in Ontario. Section 21 is also relevant because it sets out what the definition of a ‘material fact’ is. The relevant sections read as follows:

Section 3 – Fairness, honesty, etc.
A registrant shall treat every person the registrant deals within the course of a trade in real estate fairly, honestly and with integrity.

Section 4 – Best Interests
A registrant shall promote and protect the best interests of the registrant’s clients.

Section 21 – Material Facts
(1) A broker or salesperson who has a client in respect of the acquisition or disposition of a particular interest in real estate shall take reasonable steps to determine the material facts relating to the acquisition or disposition and, at the earliest practicable opportunity, shall disclose the material facts to the client.
(2) A broker or salesperson who has a customer in respect of the acquisition or disposition of a particular interest in real estate shall, at the earliest practicable opportunity, disclose to the customer the material facts relating to the acquisition or disposition that are known by or ought to be known by the broker or salesperson.

EXAMPLE IN PRACTICE

The case of Krawchuck v. Scherbak et al. 2011 ONCA 352 is a prime example of when a REALTOR might be held responsible for not being candid and upfront with purchasers.

Facts

The sellers were aware of plumbing issues with the house but responded ‘no’ to the question about whether there were any issues with the plumbing on the Seller Property Information Statement (SPIS). The buyer was provided with a copy of this SPIS and relied upon it when purchasing the property. The sellers were also aware that the house had issues with the foundation settling. Despite this fact, they told their real estate agent that the house had not faced any settling issues for 17 years. That information was not questioned by the agent but simply conveyed by the agent to the buyer.

Held

The Court of Appeal agreed with the trial judge with respect to the sellers’ negligence, but due to the actions and inactions by the agent, the Court also extended liability to the agent. The Court used the due diligence requirements found in the Real Estate Council of Ontario’s Code of Ethics to establish the agent’s standard of care. It concluded that the agent should have been apprehensive about the information provided by the sellers. In this case, the agent knew about the home’s history of settlement problems, and could also have discovered signs of problems through the agent’s visual inspection of the property. Those factors should have prompted the agent to verify the accuracy of the seller’s statements.

A key factor, in this case, was the fact that the agent acted on both sides. Ultimately, the Court decided to apportion 50% fault to both the sellers and the agent. The finding against the agent was justified by the court because the agent assisted the sellers in filling out the SPIS and should have informed the sellers about the implications of misrepresenting information in the SPIS.

In another case, Sevidal v. Chopra (1987), 64 O.R. (2d) 169 (H.C.J.), the sellers of a house knew, at the time the agreement of purchase and sale was entered into, of the existence of radioactive material in the area and did not disclose it to the purchasers. The Judge found that the amount of radioactive material was sufficient to be considered a potential risk and hazard and although not an immediate risk or danger, amounted to potential danger. The sellers had a duty to disclose to the purchasers the potential danger to the property even though the radioactive material was in the immediate area but not known to be on the actual property in question.

CONCLUSION

It is always important to know what your role is as a seller and an agent to disclose material facts and to know what your disclosure obligations are. Here are a couple of simple tips for real estate agents to keep in mind when acting for either the purchaser or the seller:

When acting for a seller, ascertain what a reasonably prudent agent would discover and advise the sellers of your ethical obligations to them and to other members of the public. If the seller refuses to disclose a defect that you must disclose, do not accept the listing.

When acting for a purchaser, ask questions and record the answers given; ascertain what a reasonably prudent agent would discover and ensure that professional inspections are done.

If all else fails, just remember to follow the golden rule: “Do unto others as you would have them do unto you.”

The content of this Blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

The post Caveat Emptor: Buyer Beware appeared first on Elliott Lawyers.

If your purchaser wants to move in, the landlord can provide notice to the tenant if the purchaser legitimately intends to use the property as his or her own residence, or for the use of their spouse, same-sex partner, child, parent, or in-law. The applicable legislation that outlines the processes to be followed and the requirements for eviction in Ontario is the Residential Tenancies Act, 2006, S.O. 2006, c.17 (“RTA”).

What is the eviction process and how long does it take to get an order to evict a tenant?

In order to evict a tenant, the landlord must follow a process that is set out in the RTA. First, the landlord must provide the tenant with a written ‘notice to vacate’ which outlines the grounds for termination and sufficient details of the situation. This is addressed in section 44 of the RTA which outlines that 60 days written notice is required. It is important to note that the landlord cannot force a tenant to leave until the end of the tenancy agreement. If the lease agreement is for a fixed term (for example one year), then legally the tenant is not required to leave until the termination of the lease. If the lease is not for a fixed term (for example month-to-month), the tenant must still be provided with the 60 day notification period.

If the landlord wishes to accelerate the process and the tenant is agreeable, the landlord can obtain and submit an Agreement to Terminate Tenancy, referred to as Form N11. This form allows the landlord to specify a date that is earlier than the 60 day notice period that is typically required and can be enforced if both parties sign and agree to the terms outlined in the agreement.

If the notice to vacate expires and the tenant has not vacated the premises, the landlord could then submit an application to the Landlord and Tenancy Board (the “Board”) in order to schedule a hearing for an eviction order.

If a landlord is concerned that the tenant will not vacate on the notice deadline, they can pay a fee of $190.00 (or $175.00 if filed electronically) to pre-file a request for a hearing to obtain an eviction order so that they do not have to wait until after the deadline has passed. For more information on filing and fees click here.

Once an eviction order is issued by the Board the tenant is required to vacate the premises, as the Board’s order is a legally binding decision. If the tenant fails to leave by the date set out in the eviction order then the landlord can take the matter one step further and file the eviction order at the Court Enforcement Office.

What happens when the eviction order is filed at the Court Enforcement Office?

The landlord must present a certified order issued by the Landlord and Tenant Board to the Enforcement Office, and must also fill out an eviction information request sheet, which is provided by the Enforcement Office. At the Court Enforcement Office, the landlord will be required to pay a fee of $315.00 for the Sheriff to force the removal of the tenant from the property.

The Sheriff will provide the tenant with a notice that instructs the tenant to leave the rental property on or before a specified date and time. If the tenant indicates that they will not vacate the premises by the date listed on the notice provided by the Sheriff, the landlord should contact the Sheriff in order to obtain their assistance for the eviction. The landlord will be informed of the date and time the Sheriff will attend at the rental property to enforce the eviction order. The landlord will be required to pay a mileage fee to the Sheriff at 58 cents/km.

Once the Sheriff enforces the order and the tenant is evicted from the rental property then the landlord has full possession of the rental property and should take the necessary steps to change the locks. The landlord is required to wait an additional 72 hours following the eviction before they can attempt to sell, retain, or dispose of any of the evicted tenant’s personal property.

The Enforcement Office of the Superior Court of Justice is located in Barrie at 75 Mulcaster Street, 3rd floor. The phone number is (705) 739-6111. There is also an online directory for court services and various Enforcement Office locations across Ontario which can be accessed by clicking here.

Case Study:

A recent case, Renee v. Simonetti out of the Ontario Superior Court of Justice (the “Court”), involved a tenant who had been living in a property which was sold by her landlord on December 3, 2015. In preparation for closing, the landlord submitted an application to the Board for an order terminating the tenancy due to the upcoming sale and the fact that the purchaser required possession of the tenant’s apartment for personal use.

On September 28, 2015, the Board made the termination order which required the tenant to vacate the property by October 9, 2015. It was further held that if she failed to leave the property by that date, she would be required to pay a daily rate of $49.32 for staying in the unit. As you may expect, the tenant did not leave the property by the October deadline and no daily compensation was provided. As such, by the date of the most recent hearing in relation to this matter (February 9, 2017) the tenant had lived rent-free for over 15 months.

What had happened in the interim was that the tenant requested a review of the termination order, which was subsequently confirmed by the Board on December 17, 2015. Once this decision was made, the tenant was able to appeal the decision based on section 210 of the RTA. As soon as a tenant appeals under this section, the eviction order is stayed which thus allowed the tenant to live-rent free until the appeal was heard.

When hearing the initial appeal, the Court had to consider whether the tenant’s motion for extending the appeal “for perfection” should be granted. This was based on the tenant’s claim that in order to perfect the appeal, transcripts from all or part of the proceedings before the Board were required. The tenant provided the Court with a letter from an Official Examiner stating that they had been “minimally retained by [the tenant] to produce the transcript” but that the request was not able to be fulfilled until funds were received. In considering this letter, the Court determined that it was not sufficient proof that the transcripts had been ordered meaning the tenant had not produced enough evidence to extend the appeal. As such, the appeal was quashed as it had not been perfected and costs in the amount of $2,500 were awarded to the plaintiff.

On February 9, 2017, the Court heard a further motion from the tenant for an order staying the decision to quash the appeal. The Court dismissed this motion. In its decision, the Court stated that “the balance of convenience tilts significantly in favour of the landlord, who requires the premises for her own purposes, and who has been denied that right for more than fifteen months, at the instance of a tenant who is not paying rent.” As such, the Court was not prepared to grant any further extensions because the tenant had failed to indicate why an extension was needed or why one should, in fact, be granted in light of the history of the matter.

The Court dismissed the motion and awarded further costs in the amount of $1,000. Due to the dismissal, the initial order to terminate the tenancy would be reinstated and the tenant would finally be required to vacate the premises.

In one of our recent newsletters, we wrote about a similar situation in which the tenant was able to live rent-free for 18 months, arguably by exploiting loopholes in the system. Thus, it appears that tenants continue to abuse the system which may present difficulties for landlords seeking eviction. The article from this newsletter can be accessed by clicking here.

The content of this Blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

The post Evicting a Tenant from Newly Purchased Property appeared first on Elliott Lawyers.

Expropriation is the compulsory taking of your property by an Expropriating Authority. It is a right granted through federal or provincial statutes to authorities such as governments, universities, or public utilities. It involves situations where privately owned land is needed for public projects such as the building of roads, highways, or schools. The Expropriating Authority must offer the owner of the expropriated land fair market value for their property, which refers to the highest price in terms of money that a property would bring in if exposed for sale on the open market. When disputes arise in relation to the amount that is offered, the owner may go to the Ontario Municipal Board (OMB) in order to negotiate a settlement that is deemed appropriate.

Can I stop an expropriation?

You do have the legislative right to object to the expropriation by requesting a Hearing of Necessity which theoretically safeguards the landowner’s interest as it requires the Expropriating Authority to prove that the land it is seeking to expropriate is necessary for the achievement of its objectives. You can also commence a legal proceeding against the Expropriating Authority by filing a Notice of Arbitration and Statement of Claim with the Ontario Municipal Board (OMB).

Who pays the legal costs?

When the matter proceeds to litigation and the OMB makes an Order regarding the amount of compensation, the landowner’s legal, appraisal, and other related costs are recoverable from the Expropriating Authority if the Board orders the Expropriating Authority to pay at least 85 percent of the amount offered when it made its Section 25 Offer of Compensation. The Expropriating Authority can require that the costs be assessed, but the assessment is based on the standard of the costs as between the lawyer and his/her client which is the highest level available, also referred to as Full Indemnity. If a settlement is recorded without a compensation hearing, the landowners legal, appraisal, and related costs almost invariably from an element of the settlement.

What compensation am I entitled too?

Under the Expropriations Act, there are four different types of claims that may be made:
1. fair market value for the property that was taken;
2. claims for injurious affection if the construction of a public work has diminished the value of the owners’ property;
3. disturbance damages which refer to the losses, costs, or expenses that were incurred by the Statutory Owner as a result of inconvenience and dislocation; and
4. claims for business losses, including compensation for the loss of goodwill.

To view our full FAQ Guide on expropriation visit our expropriation page by clicking here.

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

The post What should you do if your property is being expropriated? appeared first on Elliott Lawyers.

When two or more people are purchasing a property one of the key questions they are asked at the outset is: how will you be taking title to the property? Oftentimes the parties involved are not fully aware of the implications that this has or the legal relationship that is created as a result. There are two common ways to take title to property when two or more people are involved in the transaction. They include Joint Tenancy and Tenancy in Common.

1. Joint tenancy involves ownership by two or more persons of the same property, all of whom hold title to the property and share equal ownership of the property.
2. Tenancy in common is a relationship in which each of the tenants involved has a separate and divisible interest in the property, which may or may not be equal.

As a real estate agent, on behalf of your clients, it is important to be aware of the various considerations that must be made when facing a situation in which there is a joint tenancy or tenancy in common relationship, specifically in situations where one of the tenants passes away.

Where there is a joint tenancy, the surviving joint tenant is automatically entitled to obtain title to the property, and therefore, entitled to sell the property to someone else without any personal representatives of the deceased intervening with the transaction. This key characteristic of joint tenancy is referred to as the ‘right of survivorship’, which means that the full interest in title to a property will transfer over to the surviving joint tenant upon death of the other joint tenant. When acting as the real estate agent for the buyer, and purchasing a property from the surviving joint tenant, it is important to ensure that the seller provides and registers a Proof of Death Certificate on title to the property.

Unlike joint tenancy, a tenancy in common relationship does not have the same ‘right of survivorship’ implications. In this type of ownership relationship, when one individual dies, the death operates to sever the relationship. This means that each party involved would only retain their share of the property in question, and the deceased persons share would be transferred to whomever the deceased had previously determined would be entitled to it, often dealt with by way of a Will. If there is no Will, then the rules set out under the Succession Law Reform Act, R. S. O. 1990, c. S.26 will be applied.

Tenants in Common and Exit Agreements

When you are purchasing property with a friend, a family member (maybe for financing purposes) or with a spouse but in a second marriage, you will likely be taking title as tenants in common rather than as joint tenants.

For instance, often a parent co-signs the mortgage strictly to assist with the financing approval and is then required by the lender to be included on the property title. While that share will likely be a minimal amount (often 1%), the future ownership of this interest should be clearly explained to other family members and be included in that parent’s Will.

In addition to a Will, an Exit Agreement should be entered into by all of the parties involved. This agreement should cover all the reasons which might necessitate a need for the property title to be transferred. As you can probably imagine there are many factors that should be included in an Exit Agreement. It is preferable to have this discussion when you are purchasing and everything is amicable rather than when the reason for the change arises.

Your solicitor can assist with this or the parties can sit down and draft up an agreement between themselves. The truth is that most purchasers and their consultants do not think about this second most important question when the first question is asked; which is “How do you wish to take title?” The second question should be along these lines: “Have you considered: who will receive your share of the property upon your death, what will happen if there is a breakdown in your relationship, what happens if one party wants to sell and the other does not, or even if both parties want to sell, how will that sale be handled? (I.e. privately, real estate agent, what agent etc.?) If all of these factors are taken into consideration at the outset it will allow for a much smoother transition if and when a situation arises where title must be transferred.

The content of this Blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

The post Joint Tenancy vs. Tenancy in Common appeared first on Elliott Lawyers.

Wishing you a Happy New Year and looking ahead to 2019

As the holidays are quickly approaching I would like to take a moment and wish you all happy holidays! My hopes are that you take this time to spend with loved ones, and recharge for what will be a successful 2019.

As part of our new plans for 2019, we will be sending out weekly newsletters on a variety of real estate matters as well as some specialty topics on expropriation and environmental law. I welcome you to connect with me through Social Media and subscribe to our Newsletter, so we can continue to follow each other and strengthen our relationship.

From all of us at Elliott & Elliott, have a safe and happy New Year!

The post Happy New Year! appeared first on Elliott Lawyers.

The Change:

The post New Record Keeping Requirements for Ontario Corporations appeared first on Elliott Lawyers.

Following the non-payment of rent, the parties in this case requested mediation conducted by the Landlord and Tenant Board’s mediation service which occurred on June 25, 2015. Following mediation, the tenant consented to an order which terminated his tenancy as of July 31, 2015. The landlord agreed to waive all rent arrears and fees owed by the tenant up to June 30, 2015.

Despite this consensual agreement, the tenant refused to move out by the agreed upon date. Instead, two days after the agreement had been made, the tenant requested a review of the order, which was subsequently refused in an order by the Landlord and Tenant Board (the “Board”). As per section 210 of the Residential Tenancies Act, 2006, S.O. 2006, c. 17, any person who is affected by an order of the Board may apply to the Divisional Court within 30 days after the order is received in relation to questions of law. This allowed the tenant to appeal the matter, however, no effort was made by the tenant to set a hearing date. As soon as a tenant appeals, the eviction order is stayed which thus allowed the tenant to live-rent free until the appeal was heard.

In February, March and June 2016, the landlord’s counsel sent letters to the tenant’s known address suggesting possible hearing dates. No response was received from the tenant. A motion was made by the landlord in September 2016 to quash the eviction appeal and was scheduled to be heard on November 22, 2016 with the Court. The tenant did not show up for this motion hearing. However, instead of dismissing the appeal altogether, the motion judge set a hearing date for the appeal to be heard on December 6, 2016.

On November 23, 2016, the notice of hearing date was served and it wasn’t until December 5, 2016, a day before the scheduled hearing, that the tenant “sprang into action”. The tenant sent a letter to the landlord’s counsel objecting to the hearing date on the basis that he had a university exam for his graduate program, and further, that he did not have adequate time to prepare for, and arrange travel to, the hearing. The president of the panel of the Court requested some form of confirmation of this conflicting commitment but no word was received from the tenant by the morning of the hearing date so the hearing proceeded as scheduled.

Decision of the Divisional Court 

The Court dismissed the appeal for lack of merit and costs to the landlord were ordered in the amount of $5,000. The Court concluded that “it is plain that the tenant was evading contact and avoiding a hearing, particularly in light of the fact that he had been in possession of the apartment rent-free since April 1, 2015.” Since the effect of dismissing the appeal would be to lift the stay of the order terminating tenancy, and the initial eviction order had expired, the Court made a new order for vacant possession to be immediately enforced by the Court Enforcement Office.

Practical Considerations 

This case highlights some of the problems that are commonly faced by landlords under the existing regime. There have been numerous criticisms pertaining to the legislative scheme with regards to the amount of time that it takes to get an eviction and how easy it is for tenants to create delays. These issues have arisen in many of cases.

One example is the case of D’Amico v Hitti, 2012 ONSC 4467 which we have previously written about. In this case, Justice Ted Matlow out of the Ontario Superior Court noted that there are many “unscrupulous residential tenants” that will take advantage of the justice system by manipulating the law and taking advantage of legal loopholes. Justice Matlow recognized this problem when reviewing this case, and a number of other similar cases, which prompted him to call for changes to be made in relation to how landlord and tenant disputes are approached and handled within Ontario. Our article on this case can be accessed by clicking here. 

In response to these widely held criticisms, the government of Ontario has launched a series of consultations surrounding potential changes to the Residential Tenancies Act, 2006, which include proposals relating to how eviction appeals and hearings are handled and a review of rental increase guidelines.

The post 18 Months Rent Free – Tenants Abusing the System appeared first on Elliott Lawyers.

It is important to begin with some basic definitions that are commonly used when discussing expropriation. The following definitions are taken from the Ontario Expropriations Act, R.S.O. 1990, c E.26.

Expropriate: means the taking of land without the consent of the owner by an expropriating authority in the exercise of its statutory powers.

Expropriating Authority: means the Crown or any person empowered by statute to expropriate land.

Statutory Authority: means the Crown or any person empowered by statute to expropriate land or cause injurious affection.

Owner: includes a mortgagee, tenant, execution creditor, a person entitled to a limited estate or interest in land, a guardian of property, and a guardian, executor, administrator or trustee in whom land is vested.

What should you do if your property is being expropriated?
Expropriation involves the compulsory taking of your property by an Expropriating Authority. The power to expropriate includes all types of interests in land, not only the simple or total ownership, but also registered and unregistered easements and licenses. Expropriation is a right granted through federal or provincial statutes to Expropriating Authorities such as governments, universities, public utilities as well as to privately owned pipeline companies, and it involves situations where privately owned land is needed for public projects such as the building of roads, highways or schools.

When expropriation is considered necessary, the Expropriating Authority must offer the owner of the expropriated land a monetary amount that is considered fair in relation to the real market value. If a dispute arises in relation to the amount that is offered, the owner has the option to take the matter to the Ontario Municipal Board (“OMB”) in order to negotiate a settlement that is deemed appropriate.

Can I stop an expropriation?
Homeowners that are being forced to expropriate have the legislative right to object to the expropriation by requesting a Hearing of Necessity, however, it is rare for an owner to become successful at this stage. The stage at which owners are more commonly successful is at a Compensation Hearing where the amount paid by the Expropriating Authority can be challenged.

Can I simply sell my property rather than be expropriated?
Yes. The Expropriating Authority is legislatively required to attempt to negotiate the purchase of the property before any other action is taken. If the Expropriating Authority is unable to reach an agreement to purchase the property directly, the Expropriating Authority will proceed with a formal expropriation. The formal process is started by the Expropriating Authority serving a Notice of Intention to seek approval for the expropriation.

This is the point in which the landowner is entitled to request a Hearing of Necessity which theoretically safeguards the landowner’s interest as it requires the Expropriating Authority to prove that the land it is seeking to expropriate is reasonably necessary for the achievement of its objectives. This provides the landowner with an opportunity to challenge the Authority, and obtain proof that the proposed taking is fair. Although this does not stop the expropriation, it can stall the process.

A Board of Inquiry will be required to decide if the expropriation is necessary. If the owner does not request a hearing, or if the Board rules that expropriation is necessary in the interest of the general public, the matter proceeds to the approval stage. Once approved, a Plan of Expropriation is registered in the appropriate Land Registry Office and a Notice of Expropriation will be served.

If I object but the Board determines the property taking is necessary will I be paid?
Yes. Within 90 days of the registration of the Plan of Expropriation and prior to the Expropriating Authority taking possession of the property, the Expropriating Authority must serve an offer, referred to as a ‘Section 25 Offer’ on the landowner. A Section 25 Offer is an offer without prejudice. This means that the landowner is able to accept what is offered initially, and if they are unsatisfied with the amount then they are still able to dispute the amount offered, and make a claim for further compensation. The Section 25 Offer must be accompanied with an appraisal which shows how the compensation was allocated.

The Expropriations Act requires that the compensation paid must be based on the full and fair market value of the property, plus any amounts provided for injurious affection to the property owner.

How long do I have until the Expropriating Authority can acquire my land?
Typically, the quickest a property can be obtained by the Expropriating Authority is within 7 months if there is no Hearing of Necessity requested. Although the Expropriations Act suggests that they can acquire the land within 4 months, this is often not the case in practice. From the time that the Notice of Intention is received, until the date that the Expropriating Authority takes possession of the property usually takes approximately 9 – 12 months in total.

What do I do if I want to dispute the compensation paid?
You can commence a legal proceeding against the Expropriating Authority by filing a Notice of Arbitration and Statement of Claim with the OMB. The Expropriating Authority can, and likely will, defend the landowner’s claim by filing a Reply. At this point the matter will proceed in the same manner as a traditional lawsuit.

Who pays the legal costs?
When the matter proceeds to arbitration and the OMB makes an Order regarding the amount of compensation, the landowner can recover the legal, appraisal, and other related costs from the Expropriating Authority if the Board orders the Expropriating Authority to pay at least 85 percent of the amount offered when it made its Section 25 Offer of Compensation.

The Expropriating Authority can require that the costs be assessed, but the assessment is based on the standard of the costs as between the lawyer and his/her client which is the highest level available, also referred to as Full Indemnity. If a settlement is recorded without a compensation hearing, the landowners legal, appraisal, and other related costs almost always forms part of the settlement.

What compensation am I entitled too?
Under the Expropriations Act, there are four different types of claims that may be made. They are as follows:

1. Fair market value for the property that was taken.
2. Claims for injurious affection. This means the landowner can claim severance damage or reduction in value to the expropriated owners remaining property as a result of the construction or other public work that resulted from the expropriation. This type of claim is also made available in cases where the construction of a public work diminishes the value of the owners property.
3. Disturbance damages. This means the losses, costs or expenses that were incurred by the owner due to the expropriation of his/her property as a result of inconvenience and dislocation.
4. Business losses. If the expropriation affects a business then compensation may be provided, this also includes compensation for the loss of goodwill.

What does market value mean?
As previously discussed, the Expropriating Authority is responsible for compensating the landowner for the fair market value of the property that is being expropriated. The term ‘fair market value’ has often been disputed over the years by the Expropriating Authority and the owners, but a common definition was provided in the case Henderson v. Minister of Tourism:

Market value is defined herein as being the highest price in terms of money which a property would bring if exposed for sale on the open market, allowing a reasonable time to find a prudent, fully informed purchaser, buying with knowledge of all the uses to which the property could be adapted or is capable of being used, and purchasing from an equally prudent and informed vendor, with neither party acting under duress.

In relation to professional real estate appraisers in Ontario, market value is often defined as:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. There is motivation from the buyer and seller.
2. Both parties are acting in what they believe is their best interest, and they are well informed and well advised.
3. There has been a reasonable amount of time allotted for exposure in the open market.
4. Cash in Canadian dollars is used for payment, or financial arrangements comparable thereto.
5. The price is unaffected by special or creative financing or sales concessions granted by individuals associated with the sale. The price represents the normal consideration for the property sold.

What is injurious affection?
In the Expropriations Act, Section 1 defines injurious affection in relation to two different scenarios. The first is where a statutory authority acquires only part of the land from an owner, and the second is where the statutory authority does not acquire any land from the owner.

Injurious affection claims relating to the first situation, where only partial land is taken, involve claims where the acquisition and construction of the works, or use of the works, resulted in a reduction in market value of the owner’s land. Also, if any personal or business damages arise as a result of the expropriation, claims may be made for losses.

Where the statutory authority does not acquire any of the owner’s land, the owner can still make claims for any reduction in market value to their land, but the loss is limited to construction only, not the use. These claims are based on tort principles (i.e. trespass, nuisance and negligence) and they deal with the interference by the public authority with the owner’s use and enjoyment of his or her land.

The courts have set out the legal requirements which must be met for claims to succeed. The expropriated owner must prove the following:

1. the damage must result from an act rendered lawful by statutory powers of the authority performing the act;
2. the damage must be such as would have been actionable under the common law, but for the statutory powers exemption;
3. the damage must be an injury to the land itself and not a personal injury to its owner or an injury to a business or trade; and
4. the damage must be occasioned by the construction of the public work, and not by its use.

What are the tax implications of an expropriation?
The Income Tax Act, R.S.O. 1990, c I.2 contains provisions that are intended to mitigate or eliminate the immediate tax burden that is created as a result of expropriation. This is because it is understood that expropriation only affects a small portion of the population, and is not ordinarily requested or desired by the landowner. Due to this, parliament passed legislation aimed at providing relief from the immediate tax event that might otherwise result, in fairness to the taxpayers who must involuntarily dispose of their property as a result of the expropriation.

Expropriations are deemed to be a disposition of property so there are likely to be some adjustments of the undepreciated capital cost of fixed assets, and any income tax implications related to the recovery of business losses incurred. Taxes are payable on recapture of capital cost allowances, and business losses recovered as part of the compensation paid are taxable as income.

In relation to corporate taxes, there may be a claim made for tax liabilities which have been accelerated as a result of the expropriation. However, taxes payable on expropriation compensation are not normally claimable.

Finally, there may be property tax implications resulting from the relocation of a property from an area with lower property tax rates to an area with significantly higher property tax rates. In these circumstances, the increased property tax in the new location can be claimed by the owner as disturbance damages associated with the expropriation.

For information on the expropriation process view the “Expropriated Owners Flow Chart” created by the Ontario Expropriation Association. This chart outlines a step-by-step process which is followed in the event of an expropriation.

The content of this Blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

The post Expropriation FAQ’s appeared first on Elliott Lawyers.