Author: alyssa

In Ontario, when buying or selling a home, hiring a real estate lawyer is not just a recommendation; it is a requirement. The law is clear that only licensed lawyers can complete real estate transactions.

Under the Law Society Act, it is prohibited to provide legal services without a license. Section 1(6) of the Act outlines actions considered as “legal services”. These include, but are not limited to:

• providing advice with respect to legal interests or rights;
• drafting, completing, or revising documents in rights to real or personal property; and
• negotiating legal interests.

Therefore, real estate transactions such as purchases, sales, title transfers, or mortgage registrations all fall directly within the scope of “legal services.” As a result, none of these procedures can be completed in the absence of a real estate lawyer.

Similarly, Section 3(1) of the Land Registration Reform Act demands that documents registered under the Ontario’s Land Titles Act and Registry Act comply with specific forms and execution rules. While the Land Registration Reform Act does not explicitly say only lawyers can register title, it is an implied term given that Ontario’s electronic land registering system (Teraview), requires a Professional Services License. These licenses are only issued to individuals who register documents, thus, limited to legal and real estate professionals.

These statutes make it clear that real estate lawyers are essential in every transaction in Ontario. To understand why their involvement is required, it is important to look at what their role entails.

What Role Do Real Estate Lawyers Have?

Depending on whether you’re buying, selling, or refinancing, your lawyer’s role will look a little different. In every case, nonetheless, they are working to protect you and your interests.

If You’re Buying

Your lawyer will:

• Conduct a thorough title search. The title search will:
  • confirm that the seller is the rightful owner and has the legal ability to convey the property to you;
  • verify that the legal description of the land matches exactly what you believe you are purchasing; and
  • ensure the property is free from liens, claims, or other encumbrances that could affect your ownership.
• Carefully review the agreement of purchase and sale, ensuring the terms protect your rights and that you receive exactly what you have negotiated.
• Prepare and register your mortgage.
• Confirm that property taxes, utilities, or condo fees are accurately adjusted for at closing.
• Arrange for title insurance.

If You’re Selling

Your lawyer will:

• Ensure you are not left with ongoing obligations after closing (for example, payments on a rental hot water tank);
• Arrange for any mortgages, liens, or other encumbrances to be properly discharged at closing, thereby allowing title to transfer seamlessly to the buyer;
• Prepare the transfer and statement of adjustments, setting out exactly what you and the buyer owe to one another at closing; and
• Ensure that you get your sale proceeds securely and on time.

If You’re Refinancing

Your lawyer will:

• Request a mortgage discharge statement for your existing mortgage.
• Assist in preparing your new mortgage.
• Conduct a title search to confirm that no liens or claims have been registered against the property
• Discharge the existing mortgage and register a new one.

Why It Matters

Given the wide range of responsibilities handled by real estate lawyers, obtaining a qualified one is essential. Real estate mistakes can be costly. For instance, an overlooked lien, an improperly registered mortgage, or a defect in title can lead to years of litigation and thousands of dollars in legal fees to rectify the mistakes. Thus, it is important to have a real estate lawyer who holds themselves to the highest standard, prioritizes your interests, protects your investments, and reduces all relevant risks.

This blog was co-authored by articling student Adriana Piccolo.

What is a Status Certificate

A status certificate is a document issued by the Condominium corporation’s management or board upon request by a prospective purchaser. It is an essential document in a condominium transaction because it provides a snapshot of the corporation’s financial and legal status at purchase.

Pursuant to section 76 of the Condominium Act, 1998 S.O. 1998, c.19, a status certificate must include, among other things the current common expenses; any arrears or unpaid fees by the unit owner; details regarding ongoing or pending legal actions involving the condominium or its corporation; rules and restrictions regarding the unit; and the corporation’s current financial statements.

Prospective purchasers, through legal advice can use these documents to assess the financial viability and governance of the condominium corporation to help purchasers make an informed decision of whether they wish to purchase the unit.  

Purchaser’s Right to Review

The opportunity to review a status certificate is the purchaser’s right. Purchasers must ensure that in a resale condominium transaction the Agreement of Purchase and Sale (“APS”) includes a clause which permits makes the APS conditional upon the purchaser’s solicitor reviewing and approving the status certificate. A conditional Status Review clause protects purchasers by allowing them to walk away from the property with no penalties if the status certificate raises significant concerns.

Timing and Delivery Requirements

Section 76 of the Condominium Act requires condominium corporations to provide the status certificate within 10 days of a written request. The conditional right to review clause should allow for sufficient time to receive and review the status certificate. However, delays can arise; if the purchaser does not receive the status certificate within the time required by the conditional clause in the APS, the purchaser will have to either delay waiving the condition and request to amend the APS or, may choose to walk away from the transaction altogether.

It is generally best to obtain a recent and complete certificate, meaning a certificate that provides a snapshot of the condominium corporation within the last thirty (30) days. As a seller, it may not be a legal requirement to provide the purchaser with a status certificate; however, obtaining one pro-actively will ensure the transaction is not unnecessarily delayed and avoids the risk that the purchaser walks away from the transaction due to any delay in obtaining the status certificate. Typically, a seller should order the status certificate immediately upon listing to ensure a quick sale of the unit.

Contents of a Status Certificate

The purpose of a status certificate is to provide transparency in a transaction where the purchaser often has significantly less bargaining power than the condominium corporation. Reviewing the status certificate before you enter into a binding agreement of purchase and sale will prevent unexpected financial liabilities or operational issues that may arise upon purchase. Typically, lenders will require purchasers to obtain a status certificate before entering into any mortgage financing.

The status certificate’s importance comes from its role in due diligence. It serves as a powerful disclosure tool which allows the purchaser to assess the risks associated with their prospective purchase.

There are seven (7) key areas which must be assessed.

Condo Fees and Common Expenses

Details of monthly condominium fees payable by the unit owner and what these fees cover are essential to understanding the total cost of the condo unit. Purchasers must identify what their monthly expenses cover and how much per month they are liable for.

Reserve Fund and Special Assessments

A reserve fund sets aside money from the condo fees and common expenses to cover the costs of major repairs and replacements of the common elements of the condo. Special assessments are outstanding or planned fees which will be paid by the unit owners for unexpected repairs or upgrades. Purchasers ought to consider the strength of the reserve fund to cover expenses without requiring special assessments so that unit owners are not saddled with additional costs on top of their mortgage and condo fees.

Financial Health

Purchasing a condo is quite different from purchasing a home; a condominium is owned and operated by a condominium corporation. Since you are effectively entering into a long-term contract with a corporation, it is important to assess the long-term financial sustainability of the corporation. Purchasers should review the current budget and recent audited financial statements to gauge the financial health of the corporation.

Legal Issues

Lawsuits and potential litigation present significant risks to purchasers who may be required to pay special assessments in order to resolve these litigious matters. Purchasers must consider the potential claims against the condominium corporation and the likelihood that it will affect their expenses.

Rules and Restrictions

Condominiums are governed by their by-laws, declarations and rules that govern the unit use of all unit owners. Condominiums, through these mechanisms, can restrict your enjoyment of the unit by imposing pet restrictions, noise regulations, rules regarding rental properties, parking and locker rights, and other operational policies. Purchasers should assess these rules and determine whether the restrictions imposed by the Condominium will significantly limit their enjoyment of the unit.  

Insurance

A status certificate will also include information regarding insurance for the condominium corporation and the specific unit. If there are significant gaps in their coverage, Purchasers should consider obtaining additional insurance.

Owner Arrears

The status certificate also provides information about the party from whom you are purchasing the unit. The previous unit owner may have failed to make regular condo fee payments. Purchasers may not wish to proceed with the transaction if they are aware they may be liable for the previous owners’ arrears. 

Impact on Financing and Closing

Status certificates play an important role in mortgage financing. Mortgage lenders rely heavily on these documents to assess the risks of lending for a specific unit. If there are issues identified in the status certificate, the mortgage approval process may be significantly delayed.

Lenders review status certificates for the same things purchasers do. If a status certificate poses potential risks, the lenders may choose to withhold approval, impose stricter lending conditions, reassess the value of the property or decline to finance the transaction altogether. These actions by the mortgage lender can delay a transaction and interfere with closing dates, placing the purchaser at risk of breaching the Agreement of Purchase and Sale, resulting in a potential loss of the deposit and liability for damages.

Risk Mitigation Strategies

To address the risks associated with status certificates, parties to a condo resale transaction should ensure the following when entering into an Agreement of Purchase and Sale:

1. Ensure that the Seller has proactively ordered a status certificate when listing the property;
2. Purchasers should retain a real estate lawyer to review the certificate within the conditional period;
3. Lenders should be given access to the certificate as early as possible in the financing process;
4. Purchasers should secure conditional mortgage approval pending review of the status certificate.

In condo purchases time is always of the essence, meaning that any deadlines imposed in the APS must be met. The failure to meet a deadline will result in a breach of the contract. It is important that upon entering into a condo purchase, timelines are closely monitored and steps are taken immediately to ensure all conditions and deadlines are complied with.

Contact Us

If you are purchasing a condo or have recently entered into an Agreement to Purchase a condo, please contact Jonathan Dippolito by email at jonathan@durhamlawyer.ca or by phone at 905-668-4486 ext. 3229.  

This blog was co-authored by articling student Jason Corry.

This article is provided for general informational purposes only and does not constitute legal advice. Laws and interpretations can change, and specific circumstances may vary. Readers should consult with qualified legal counsel for advice tailored to their situation.

A commercial lease assignment involves a transfer of a commercial tenant’s (the “Assignor”) rights and obligations to a new tenant (the “Assignee”), where the Assignee agrees to assume the Assignor’s rights and obligations under the original lease with the landlord. The parties to an assignment of lease must ensure compliance with the terms in both the assignment of lease agreement and the original lease.

There are many reasons for entering into a lease assignment. Assignors may be selling their business, restructuring or looking to exit their current lease prior to its expiry. Assignees may prefer the particular location and existing lease terms, while landlords may allow an assignment of the lease (provided certain conditions are met) to ensure a steady stream of rent if the current tenant is having financial troubles.

Most commercial lease assignments involve the negotiation and signing of an assignment and assumption agreement as between the Assignor and Assignee, and a consent to assignment of lease agreement as between the Assignor, Assignee and the landlord.

Each of the Assignor, Assignee and landlord must carefully review the terms of such agreements as they relate to its particular interests. Retaining legal counsel for such matters is highly recommended, as such agreements can be complex and result in unintended liability.

Assignors (Current Tenants)

Consent Requirements

Commercial leases typically include an assignment clause, which requires the landlord’s written consent to the assignment and sets out specific terms that must be complied with before any assignment can become effective. While specific terms may vary, s.23(1) of the Commercial Tenancies Act provides that consent to an assignment of lease is not to be unreasonably withheld, unless an express provision is made to the contrary.

What constitutes unreasonably withholding of consent depends on the facts of each case. To determine reasonableness, the court will look at the information available to, and the reasons given by, the landlord at the time the landlord neglected or refused consent (Rabin v. 2490918 Ontario Inc., 2023 ONCA 49 (“Rabin”)).  The lease may note factors that the landlord may consider in making its determination to grant or not grant its consent to assignment (e.g., that the Assignee has the financial ability to fulfill the terms and obligations under the lease, that the Assignor has regularly complied with its obligations under the lease, that the intended use of the leased premises by the Assignee will not increase the risk of environmental contamination or damage to the premises, etc.).

The Assignor must ensure it obtains the landlord’s written consent before entering into any assignment and assumption agreement with the Assignee, or risk being deemed in default of the lease by the landlord.

Notwithstanding the general requirement for landlord consent, there are times when a landlord can be persuaded to allow for certain assignments of the lease without requiring their consent, but with prior written notice (e.g., if the lease is being assigned to a subsidiary, parent or affiliate of the tenant).

Continuing Liability

It is important to review the assignment provisions in a commercial lease for any requirement that the Assignor remains jointly and severally liable with the Assignee under the original lease upon any assignment if the Assignee defaults under such lease. This requirement carries significant risk for Assignors as it imposes liability on the Assignor for the default of the Assignee, even though the Assignor no longer carries on business at the leased premises nor has any control over the conduct of the Assignee following the lease assignment. This liability may extend beyond the original term if the Assignee exercises a renewal option, unless the Assignor negotiates a specific release from the landlord.

Accordingly, when obtaining consent to assign a lease from a landlord, Assignors should attempt to negotiate a release from such continuing liability with the landlord (including a release of any personal guarantee, if applicable). If such a release cannot be negotiated, the Assignor should ensure that the Assignee agrees to indemnify and hold the Assignor harmless for and against any claims, actions, suits, demands, etc. that the Assignor may suffer as a result of the Assignee’s breach under the lease. For this reason, it is also generally prudent for the Assignor to conduct some due diligence against the Assignee to ensure the Assignee has the financial means to meet all its obligations as the new tenant under the lease.  

Security Deposit

A security deposit paid by the Assignor to the landlord is unlikely to be returned by the landlord upon an assignment; rather, the landlord will continue to hold such security deposit on account of the new tenant (Assignee). It is therefore important that Assignors ensure that they are able to recover these deposit amounts from the Assignee by including a term in the assignment and assumption of lease whereby the Assignee agrees to reimburse the Assignor for such amount as a condition to the assignment.

Costs

There will typically be requirements in the assignment provisions regarding the Assignor being responsible for the landlord’s legal and administrative costs associated with reviewing and granting its consent to assignment. These costs can include the landlord’s legal fees for drafting or reviewing the consent documentation, as well as internal administrative charges. Such costs will be borne solely by the Assignor as part of the landlord’s conditions for the assignment, unless the Assignor negotiates with the Assignee to share such costs.

Assignees (New Tenants)

Due Diligence

Assignees must be cautious when assuming a lease where they are not the original tenants. They should inspect the leased premises to ensure it is or can (with permitted alterations) be suitable for their intended use. They must consider not only their rights and obligations under the assignment documentation, but also their rights and obligations under the original lease and any amendments thereto. As an Assignee, it is essential to review the entirety of the existing lease, including any amendments and extensions related thereto. Besides reviewing the obvious provisions such as Rent obligations, Assignees should also become familiar with any renewal options, use provisions, maintenance and repair obligations, leasehold improvement provisions, end of lease obligations, and various other terms and conditions that any prudent tenant of such space should consider before entering into a commercial lease. Additionally, Assignees should review any exclusivity clauses granted to other tenants in the building or plaza, as these could limit their intended use.

If the Assignee has strong negotiating leverage, there may be an opportunity to negotiate with the landlord for amendments to the original lease that are favourable to the Assignee as tenant. Some common amendments include revisions to the “Use” provision (if necessary) to allow for the Assignee’s intended use of the leased premises, and providing for an option to renew (if the existing term will be expiring shortly).

 Existing Defaults

It is critical for the Assignee to determine whether the existing lease is in good standing and that no defaults (by either the Assignor or Landlord) have occurred or are continuing. It would be highly unfortunate for an Assignee who is unaware of an existing default by the Assignor to have then assumed such default upon the effective assignment of lease. In most instances, the landlord will require any current defaults by the Assignor to be remedied as a condition of granting its consent to assignment. However, in the event of a previous default by the Assignor that has since been remedied, what is the implication of such default? For example, many tenant rights, such as renewal rights, are dependent on the tenant never having been in default under the lease; as such, if there has been a previous default by the Assignor, the Assignee may no longer have the benefit of its tenant renewal right under the lease. It is therefore prudent that Assignees include a representation and warranty from both the landlord and Assignor in the assignment documentation that confirms that the lease is in good standing and there are not, and have not been, any defaults.

Landlords

Control Over Tenancy

If the lease provides for an assignment, Landlords must contemplate when consent can and cannot be unreasonably withheld. The court in Rabin noted that when faced with an assignment request from a tenant, landlords must consider both the economic realities of the marketplace and the financial impact of the assignment to the landlord. Landlords should ensure the original lease provides grounds to inspect the Assignee’s financial documents to properly assess the financial impact of the assignment. It is also common for landlords to restrict the Assignor’s ability to advertise the leased premises unless the text and format of such advertisement is first approved by the landlord (and does not include reference to the rental rate).

Maintaining Flexibility

When negotiating assignment clauses in a lease, it is important to maintain flexibility. Landlords may wish to include the right to terminate the lease if they do not consent to the assignment. This gives landlords an exit option if they do not wish to accept the Assignee.

Protecting from Risk of Tenant Default

The greatest risk to landlords when consenting to a lease assignment is the Assignee’s default. This can include monetary default (e.g. failure to pay rent) or non-monetary default (e.g. failing to maintain the property as agreed).

Some strategies for landlords to protect themselves in the event of such Assignee defaults include: (a) having the Assignor continue to be jointly and severally bound with the Assignee on the lease, at least for the remainder of the existing term (but ideally for any renewal terms as well); (b) ensuring there is a personal guarantor(s) who guarantees the obligations of the Assignee (if the Assignee is a corporation) under the lease; and (c) obtaining an additional security deposit be paid and held by the landlord as security for the Assignee’s performance of its obligations under the lease.

Each of the above strategies should be contemplated and could then be carefully drafted into the assignment documentation as conditions precedent to the landlord’s consent to the assignment.

Change in Control of the Tenant

What is a Change in Control

A change in control in the lease context refers to changes to the structure of ownership or control of a tenant who is a corporation or a partnership. This can include internal transfers of ownership due to amalgamations, reorganizations, or transfers of voting shares, rights or interests (e.g., changes to voting rights among existing shareholders or partners of the tenant), as well as external transfers of voting shares, rights or interests (e.g., the sale of all the issued shares of the corporate tenant to a third party, as part of the sale of the tenant’s business). These transfers, while not resulting in an assignment to a new tenant/Assignee, can have the same effect as an assignment because there are now new persons in control of the existing corporate tenant. Accordingly, most landlords will deem such change in control scenarios as effectively being assignments/transfers of the lease, which would therefore be subject to the same terms and conditions related to an assignment of lease, subject to the terms of the lease. It is crucial that landlords include such change in control provisions in the lease to avoid any ambiguity as to whether such a change in control should effectively be treated as an assignment of lease.

Practical Implications

A change of control clause will typically trigger the same requirements as an assignment. Generally, the landlord’s consent to such change in control is required. The same considerations regarding consent for an assignment ought to be considered in the context of change in control. Specifically:

• Consent not to be unreasonably withheld;
• Imposing joint and several liability on new and previous owners;
• Requiring guarantees from new owners;
• Continuing liability for the previous owner;
• Landlord’s right to inspect financial documents.

It is important that tenants and landlords consider the language in a change of control clause to ensure that the definition of what constitutes a change in control of the tenant is clear (e.g. a transfer of more than 50% of voting shares, or changes to the directors, depending on the lease’s specific language).

Tenant Considerations

As a tenant, consideration must be given to the type of transaction that would constitute a de facto assignment. Often, lawyers can assist in negotiating carve-outs in the lease so that transfers within a corporate entity for estate or tax planning purposes are not considered changes of control.

Conclusion and Practical Tips

Well-drafted commercial lease assignment documentation provides all parties with a common understanding regarding their rights, obligations and liabilities. The following are key considerations for each party when entering into an assignment of lease arrangement:

This blog was co-authored by articling student Jason Corry.

This article is provided for general informational purposes only and does not constitute legal advice. Laws and interpretations can change, and specific circumstances may vary. Readers should consult with qualified legal counsel for advice tailored to their situation.

Are you thinking about buying a single family home with a basement apartment?

For many Ontario homebuyers, basement apartments offer attractive benefits, from generating rental income to providing long-term flexibility for family living or future resale.

What is a Single Family Residence?

A single-family home or residence is a detached dwelling that is not connected to any other structure (except its own garage or shed). It has open space on all sides and no dwellings either above or below it.[1]

What is a Basement Apartment?

A basement apartment or unit is considered a second unit if it is a separate, self-contained living space within a house. That means it has its own kitchen, bathroom, and sleeping area.[2]

What Happens When The Property is Zoned as a Single Family Residence?

In the past, rules often limited or even prohibited basement units in homes zoned as single-family residences. However, with Ontario’s More Homes Built Faster Act (“Bill 23”), the rules are shifting to give homeowners more freedom to add or keep basement units.

 How the Act Is Transforming Housing Rules

The More Home Built Faster Act, also known as Bill 23, came into effect in 2022, as part of a long-term strategy to help build homes and make life more affordable for Ontario families.[3]

Before Bill 23, municipalities had wide discretion to regulate and often restrict secondary units through local zoning bylaws. For example, they could:

• Prohibit secondary units in certain residential zones,
• Impose minimum lot sizes,
• Require additional parking spaces,
• Limit where and how units could be constructed.

With the introduction of Bill 23, the rules are changing. The legislation limits a municipality’s ability to restrict or prohibit basement units. Without these limits, the potential for buyers to legalize and use secondary units is made simpler.

Bill 23 introduced key amendments to the Planning Act that make it easier for homeowners to add extra residential units. Specifically, the law now permits:

• Two units inside a house (such as a main unit and a basement apartment),
• One unit in a separate building (such as a garden suite or laneway house), as long as the main house has no more than two units,
• Or three units total inside the main house, if there is no extra building being used.[4]

Development Charges Act

In addition to planning changes, Bill 23 also introduced key amendments to Section 2 of the Development Charges Act, aimed at reducing costs for adding residential units:

• There is now a clear exemption from development charges for multiple units (up to three) added to a detached, semi‑detached, or rowhouse.
• This means homeowners can build secondary units more affordably, although other codes and permit requirements still apply.[5]

What This Means for Buyers

If you’re purchasing a property that is described as a single-family home but has a basement apartment, the More Homes Built Faster Act may work in your favour. The addition of residential units offers financial benefits to property owners and supports efforts to increase housing availability.

What you should keep in mind:

Check Legal Status:

• Not all basement units are legal, even with Bill 23 in place. You will still need to verify that the unit meets building code, fire safety, and municipal property standards.

Municipal Bylaws Still Apply:

• While municipalities can no longer outright ban secondary units, they can still regulate certain aspects, such as parking, unit size, and servicing capacity.

Conclusion

If you are buying a single-family home with an existing basement unit, the More Homes Built Faster Act may make it easier to legalize or use that unit. While zoning is no longer the obstacle it once was, compliance with safety and building standards is still essential.

Bill 23 is part of a larger shift in Ontario housing policy, one that increasingly supports multi-unit living on traditional single-family lots. As a buyer, understanding these new rules can help you make a more informed decision and unlock the full potential of your new home.

If you have additional questions or concerns about buying a single-family residence with a basement unit, or any other type of property in Ontario, please feel free to contact Jason Lane at Woitzik Polsinelli LLP at 289-220-3241 or jason@durhamlawyer.ca.

This blog was co-authored by summer law student Emma Wilson.

This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with legal advice tailored to your specific situation and needs.

[1] Statistics Canada. Classification of Residential Structures. https://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVD&TVD=144257&CVD=144258&CLV=0&MLV=2&D=1

[2] Government of Ontario. Add a Second Unit in Your House. https://www.ontario.ca/page/add-second-unit-your-house

[3] Government of Ontario. More Homes Built Faster Act, 2022. https://news.ontario.ca/en/backgrounder/1002525/more-homes-built-faster-act-2022

[4] Planning Act, R.S.O. 1990, c. P.13, s 16(3)

[5] Development Charges Act, 1997, S.O. 1997, c. 27, s 2(3.2)

With interest rates and property values constantly shifting, Ontario’s real estate market is experiencing an unprecedented increase in mortgage defaults. When a borrower defaults on their mortgage, lenders have several statutory remedies available to recover the money owed. One of the most common is a power of sale, as it is typically more cost-effective and efficient than a foreclosure.

In Ontario, the power of sale process is regulated under the Mortgages Act,R.S.O. 1990, c. M.40, which sets out important rights and obligations for lenders and borrowers.

A power of sale allows a lender (also referred to as the “mortgagee”) to sell a property when the borrower (the “mortgagor”) defaults on their mortgage. Mortgage default occurs when borrowers fail to comply with the terms of the loan, most often by missing payments. Unlike a foreclosure, which transfers ownership to the lender through the court, a power of sale allows the lender to sell the property directly.

The Step-by-Step Process

1. Default
   The power of sale process begins when a borrower misses payments. Under s. 32 of the Act, the default must last at least 15 days before a Notice of Sale (the “Notice”) can be sent.
   
   Under s. 24, if mortgage payments are overdue for 3 months, the lender may initiate a power of sale. Where the mortgage contains its own power of sale terms, s. 30 allows the terms written into the contract precedence over the statutory process.

2. Notice of Sale
   Under s. 31, the Notice must be sent to the borrower(s), any guarantors, subsequent mortgagees, and any other parties with an interest in the property. The Notice must state the amount owed and provide a warning that the property will be sold if the debt is not paid.
   
   Under s. 39(1), if a mortgage expressly allows the lender to sell the property after a specific type of default, and that default has lasted at least 15 days or if there’s been at least 3 months of default under a mortgage where the law grants that power, the lender may seek permission from the court to sell the property without giving notice to the borrower. In 1173928 Ontario Inc. v 1463096 Ontario Inc., 2018 ONCA 669, the Court of Appeal clarified that the statutory and contractual rights to a power of sale should be read together, specifically in commercial proceedings.

3. Redemption Period or the Borrower’s Equity of Redemption
   Borrowers have a redemption period of at least 35 days from the date of the Notice to pay the outstanding debt and costs.
   
   Under s. 22, borrowers can request a statement of the outstanding debt. If the lender fails to provide it within 15 days, their enforcement rights are suspended until it is furnished.

4. Preparation for Sale
   Lenders are expected to exercise good faith when listing the property for sale. The lender has an obligation to appraise the property, market it to achieve fair market value, and maintain detailed records of all expenses (including legal costs).

5. Sale of Property
   The property must be listed on the multiple listing service (“MLS”). The proceeds of the sale must cover the lender’s costs; the mortgage loan (including interest and penalties); and any other encumbrances on title. Any excess must be returned to the borrower.

Borrowers Protections

Ontario law ensures that even in default, borrowers retain key rights:

• Right to redeem: The ability to pay off the debt before the sale closes.
• Right to surplus funds: Any excess from the sale after debts and costs must be returned to the borrower.
• Fair sale requirement: Lenders must take reasonable steps to obtain fair market value.

The Financial Consumer Agency of Canada requires financial institutions to:

• Set clear criteria for mortgage relief measures
• Proactively contact borrowers at risk of default
• Encourage borrowers to reach out to them if they anticipate difficulty making payments
• Offer mortgage relief options suited to the borrower’s circumstances
• Provide clear, timely information so borrowers can make informed decisions

The power of sale process creates a careful balance between lender efficiency and borrower protection. Whether you are a borrower facing default or a lender enforcing a mortgage, understanding the timelines, notice requirements, and legal obligations is key to navigating the process and avoiding costly disputes.

Challenging times can be stressful. Whether you are a borrower or a lender, speak with a lawyer on our team to explore your options when facing a default.

This blog was co-authored by summer law student Aranya Sivakumar.

 “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situations and needs.”  

Have you recently purchased a new home in Ontario? If so, you may be eligible for a New Home HST Rebate.

Understanding The Rebate

When purchasing a newly built home or condo in Canada, many buyers are often surprised by the additional cost of Harmonized Sales Tax (HST). What’s less commonly known is that a significant portion of this tax can be recovered through federal and provincial rebate programs. The type of rebate you may qualify for depends on how you intend to use the property. Understanding the distinction is key to ensuring you claim the correct rebate.

The Difference Between Owner-Occupied & Rental Use New Home Rebates

There are two types of HST rebates for new homes:

1. New Housing Rebate for Owner-Occupied Homes [1]
2. New Residential Rental Property Rebate [2]

While both rebates aim to offset the tax burden on new residential properties, the main difference lies in who will occupy the home.

New Housing Rebate: For Owner-Occupied Homes

This rebate applies if you or an immediate family member intend to live in the home as your primary residence.

WHO QUALIFIES?

You may qualify if:

• You purchased a newly constructed home or condo.
• You built a house on land you own or lease.
• You substantially renovated your home (or hired someone else to do so).
• You bought shares in a newly constructed cooperative housing project.
• You converted a non-residential property into a home.

ELIGIBILITY

• The purchase price of the home must be $450,000 or less to qualify for the federal rebate.
• Investment properties and homes purchased solely for house flipping are not eligible.

New Residential Rental Property Rebate: For Rental Use

The New Residential Rental Property Rebate applies when you purchased a new home with the intention of renting it out long-term.  

WHO QUALIFIES?

You may qualify if:

• You purchased a newly built or substantially renovated home from a builder and paid GST/HST.
• You built a new home or multi-unit addition yourself, or hired a contractor to do so, and reported it on your GST/HST return.
• You substantially renovated a home (or had someone do it for you) and reported it on your GST/HST return.
• You converted a commercial or non-residential building into a home and reported the change on your GST/HST return.
• You leased or subleased land in a way that required you to report a self-supply of that land on your GST/HST return.

ELIGIBILITY

• You must be the buyer, not the occupant.
• The property must be new or substantially renovated.
• The home must be rented to a tenant under a minimum one-year signed lease.
• The fair market value of the qualifying residential unit must be less than $450,000 when the tax was payable on the purchase or self-supply of the property.

How Much are the Rebates Worth?

Federal GST Portion (5% of HST):

• You can claim 36% of the 5% GST portion of HST, up to $6,300.
• The rebate begins to phase out for homes priced over $350,000 and is eliminated at $450,000.

Ontario Provincial Portion (8% of HST)

• You can claim 75% of the 8% Ontario portion of HST, up to a maximum of $24,000.
• Unlike the federal rebate, the Ontario rebate is available for all home prices, even if your home costs over $450,000.

DEADLINES

Both the New Home Rebate and New Residential Rental Property Rebate must be claimed within two years of the:

• Closing date (for purchases), or
• Completion of construction (for renovations or self-built homes).

All required forms are available on the CRA website.

TAKEAWAY

Whether you’re purchasing a new home to live in or as a rental investment, understanding the difference between the New Housing Rebate and the New Residential Rental Property Rebate is essential. Each rebate has its own eligibility rules, application process, and risks if claimed incorrectly. Taking the time to clarify your intended use of the property before closing—and gathering the right documents—can save you thousands of dollars and prevent future disputes with the CRA.

If you have questions about which rebate applies or need help with the application process, please contact one of our real estate lawyers at info@durhamlawyer.ca or 905-668-4486.

This blog was co-authored by summer law student Emma Wilson.

This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with legal advice tailored to your specific situation and needs.

[1] CRA. GST/HST New Housing Rebate. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4028/gst-hst-new-housing-rebate.html

[2] CRA. GST/HST New Residential Rental Property Rebate. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4231/gst-hst-new-residential-rental-property-rebate.html

Introduction

Thinking of buying your first home? The federal Government of Canada (“Government”) has proposed a new GST rebate (the “proposed rebate”) aimed at helping first-time home buyers and boosting housing supply. If passed, this measure could significantly reduce the cost of purchasing newly built homes, potentially saving eligible buyers up to $50,000 in sales taxes. [1]

We have prepared a breakdown of what is being proposed, how it would work, and who could benefit.

Overview of the Proposed GST Relief Measures

As part of the 2025 federal budget, the Government is proposing to eliminate the GST on new homes valued up to $1 million and offer a partial rebate on new homes valued between $1 million and $1.5 million. [2]

Homes priced at $1 million or less would qualify for a full GST rebate. [3] Whereas, homes between $1 million and $1.5 million would qualify for a phased-out rebate. [4] For example, a $1.25 million home could see a 50% rebate, roughly $25,000 in savings. Homes priced above $1.5 million would not be eligible for the rebate. [5]

If passed, the rebate is to take effect for Agreements of Purchase and Sale (“APS”) entered into on or after May 27, 2025. [6]

Who Would Be Eligible?

To qualify for the proposed rebate, a buyer must be [7]:

• A first-time home buyer
• Purchasing a newly built home, building a home, or buying a share in a cooperative housing corporation

A first-time home buyer would need to be [8]:

• At least 18 years old
• A Canadian citizen or a permanent resident of Canada
• Not have lived in a home that you (or your spouse/common-law partner) owned during the calendar year or in the four prior calendar years

Types of Eligible Purchases

1. New Homes Purchased from a Builder
   
   You may be eligible if [9]:

• At least one purchaser is a first-time home buyer
• The home is purchased for use as a primary residence
• The buyer is the first occupant of the home
• The APS is entered into on or after May 27, 2025, and before 2031
• Construction begins before 2031 and is substantially completed before 2036

If all criteria are met, the buyer could recover up to $50,000 of the GST or federal portion of the HST. [10]

2. Owner-Built Homes

For a home you build (or hire someone to build), the proposed rebate would allow you to recover up to $50,000 of the GST or federal portion of the HST paid on construction costs. [11]

To qualify [12]:

• At least one owner-builder must be a first-time home buyer;
• The home must be used as a primary residence; and
• Construction begins on or after May 27, 2025 and before 2031, with substantial completion by 2036.

3. Shares of a Cooperative Housing Corporation

You may also qualify if you buy a share in a cooperative housing corporation where GST/HST was paid on new housing. The rebate would not apply if the cooperative housing corporation already qualified for a 100% GST rebate for purpose-built rental housing. [13]

Eligibility conditions are similar to the above-mentioned [14]:

• The co-op unit must be your primary residence;
• You are a first-time home buyer.

Limitations

To ensure the rebate is used as intended for first-time home buyers, the Government has proposed several limitations [15]:

• The proposed rebate can only be claimed once
• If your spouse or common-law partner has already claimed the rebate, you are not eligible
• The proposed rebate would not apply on APS signed before May 27, 2025, even if you are a first-time home buyer
• If an APS is cancelled and re-signed after May 27, 2025 to meet the cutoff, the rebate would be disallowed
• Investors and non-occupants would not qualify
• The proposed rebate does not apply to rental properties

Need Help Navigating Your First New Home Purchase?

The proposed GST rebate could offer meaningful financial relief to first-time home buyers. While the measure is not yet law, understanding its potential impact and preparing accordingly can be beneficial. If you are considering buying your first home from a builder or building your own home, it is important to speak with an experienced real estate lawyer early in the process to help you assess your eligibility, review your Agreement of Purchase and Sale, and ensure you are positioned to take full advantage of any new incentives.

If you would like more information regarding the purchase of real estate, please contact Real Estate lawyer Paria Rad, Woitzik Polsinelli LLP at 905-668-4486 ext. 230 or paria@durhamlawyer.ca.

This blog was co-authored by summer law student Aranya Sivakumar.

This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs

[1] The Government of Canada, “GST Relief for First-Time Home Buyers On New Homes Valued Up to $1.5 Million” (27 May 2025), online: < https://www.canada.ca/en/department-finance/news/2025/05/gst-relief-for-first-time-home-buyers-on-new-homes-valued-up-to-15-million.html >.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] The Government of Canada, supra note 1.

[10] Ibid.

[11] Ibid.

[12] Ibid.

[13] Ibid.

[14] Ibid.

[15] The Government of Canada, supra note 1.

Prohibition on the Purchase of Residential Property by Non-Canadians Act 

The Prohibition on the Purchase of Residential Property by Non-Canadians Act prohibits non-Canadians from purchasing, directly or indirectly, any residential property in Canada. As discussed in our previous blog, Non-Canadians Will be Prohibited from Buying Canadian Residential Property in 2023, non-Canadian is defined as: 

• An individual who is not a Canadian citizen, permanent resident of Canada or registered as an Indian under the Indian Act;[1]  

• A corporation that is not incorporated under the laws of Canada or a Canadian province; or 

• A private corporation that is incorporated in Canada but that is controlled by a person referred to in paragraph (a) or (b) above. 

The Act became effective on January 1, 2023, and was initially scheduled to run until January 1, 2025. In February of 2024, the federal government extended the ban until January 1, 2027.[2]  

Important Amendments to the Act 

After the original legislation was enacted, the Act was amended to better accommodate newcomers and businesses contributing to housing development in Canada.  

These amendments included: 

1. Expanding Eligibility for Temporary Workers to Buy Property 

Those who hold a work permit or are authorized to work in Canada under the Immigration and Refugee Protection Regulations are eligible to purchase property in Canada if the following two conditions;  

• Work permit holders must have 183 days or more of validity remaining on their work permit or work authorization at the time of purchase; and  

• They have not purchased more than one residential property. 

2. Prohibition No Longer Applicable to Vacant Land 

• Vacant land zoned for residential and mixed use can now be purchased by non-Canadians and used for any purpose by the purchaser. 

3. Exception for Development Purposes 

• Non-Canadians can now purchase residential property for the purpose of “development”. 

4. Easing Corporation Regulations 

• The original legislation stated that if a corporation included 3% of equity value or voting rights held by non-Canadians, it will deem the corporation as non-Canadian. 

• The amendments increased this threshold from 3% to 10%.[3]  

You Are Eligible to Buy Property… Now What? 

If you meet the eligibility to buy, because you qualify for an exemption or the federal ban doesn’t apply to you, you still may be subject to Ontario’s 25% Non-Resident Speculation Tax (NRST) on top of your purchase. 

The NRST applies on the following transactions: 

1. The transaction involves “designated land,” which is land containing six or less “single family residences”; 

2. There is a change in beneficial or legal ownership of that designated land; and 

3. The land is conveyed to a “foreign entity” or a “taxable trustee.” 

• A person is a “foreign entity” if it is a foreign national or a foreign corporation.  

• A person can be a “foreign national” if they satisfy the definition under the Immigration and Refugee Protection Act, which is anyone who is not a Canadian citizen or permanent resident.[4] 

Exemptions From the Non-Resident Speculation Tax  

An exemption from the NRST may be available for: 

• Registered transfers if the transferee is a nominee;  

• A protected person or a spouse of a Canadian citizen;  

• A permanent resident of Canada;  

• A nominee or a protected person.[5] 

If you have applied to become a permanent resident of Canada, but you have not acquired that status at the time your home transaction closes, you must pay NRST unless you are eligible for another exemption. If you become a permanent resident of Canada after the home transaction closes, you may qualify for a rebate of the NRST.[6] 

New Additional 10% Tax on Toronto Homes for Non-Residents  

Effective January 1, 2025, the new Municipal Non-Resident Speculation Tax (MNRST) of 10% applies for foreign buyers on the purchase price of certain residential properties in Toronto.[7] The exemptions mentioned above that apply to the provincial NRST, also apply to the City’s MNRST.[8] 

Selling Property in Canada as a Non-Resident 

When selling your property, it is important that you follow the tax reporting rules set by the Canada Revenue Agency (CRA). Section 116 of the Income Tax Act in Canada requires non-residents selling taxable Canadian property to apply for a clearance certificate from the CRA.[9]  

When To Notify CRA of the Disposition 

Non-residents are required to notify the CRA within 10 days of the date the property was disposed of, or proposed to be disposed of.[10]  

Penalties For Failure to Notify 

Non-residents who sell and fail to notify CRA of the disposition within the 10-day period will be liable to a penalty under subsection 162(7) of the Act.  

• This penalty is $25 a day for each day the notification is late, with a minimum of $100 and a maximum of $2,500.[11] 
   

If you do not let the CRA know about your disposition, the purchaser may become liable to pay a specified amount of tax that arises from the disposition on behalf of the vendor. In this case, the purchaser is entitled to withhold 25% (50% on certain types of property) of the proceeds minus the amount of the certificate limit, if any, from the proceeds.[12] 

For further elaboration on selling and section 116 please visit our blog; How Section 116 of the Income Tax Act Can Affect Your Real Estate Transaction.  

Takeaway 

If you are looking to buy as a non-resident, it is important to consider the financial implications in place at all levels of government. Before signing an agreement of purchase and sale, non-resident buyers should conduct prudent due diligence to determine if they are eligible for any exemptions or rebates and how certain taxes may impact their purchase. If you are looking to sell as a non-resident in Canada, it is important that you follow the tax reporting rules under the Income Act and speak with an accountant. 

 If you have any questions about purchasing or selling as a non-resident please contact one of our real estate lawyers at info@durhamlawyer.ca or 905-668-4486.  

This blog was co-authored by summer law student Emma Wilson. 

This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with legal advice tailored to your specific situation and needs. 

[1] RSC 1985 c.I-5. 

[2] Government of Canada, “Government announces two-year extension to ban on foreign ownership of Canadian housing”(Feb 4, 2024), online: https://www.canada.ca/en/department-finance/news/2024/02/government-announces-two-year-extension-to-ban-on-foreign-ownership-of-canadian-housing.html  

[3] Regulations Amending the Prohibition on the Purchase of Residential Property by Non-Canadians Regulations, (2023), C Gaz II, Volume 157, Number 8. https://gazette.gc.ca/rp-pr/p2/2023/2023-04-12/html/sor-dors66-eng.html 

[4] SC 2001, c. 27. 

[5] Government of Ontario, “Non-Resident Speculation Tax,” online:  https://www.ontario.ca/document/non-resident-speculation-tax 

[6] Ibid. 

[7]City of Toronto, “Municipal Land Transfer Tax & Municipal Non-Resident Speculation Tax,” online: https://www.toronto.ca/services-payments/property-taxes-utilities/municipal-land-transfer-tax-mltt/municipal-land-transfer-tax-mltt-information/  

[8] Ibid.  

[9] R.S.C., 1985, c. 1 (5th Supp.) 

[10] Government of Canada, “Disposing of or acquiring certain Canadian property”(27 June 2023), online: https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/disposing-acquiring-certain-canadian-property.html 

[11] Ibid.  

[12] Ibid.