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Purchasing a pre-construction or “new-build” home is an exciting yet stressful process. To help ease some of the risk and anxiety, Tarion Warranty coverage (“Warranty”) plays a crucial role. Established under the Ontario New Homes Warranties Plan Act, the Tarion Warranty Corporation (“Tarion”) ensures that new home buyers are protected against defects, financial losses, and construction delays.  

What is Tarion Warranty Coverage?

The Warranty is available for new homes built by registered builders in Ontario. From the day of possession (or the occupancy date for condos), every eligible new home is covered for 7 years. The primary purpose of this coverage is to protect homeowners from construction-related problems, breaches of contract, or financial losses due to delays and other unforeseen issues. 

Tarion is a non-profit organization that both regulates registered home builders and provides warranty protection. It not only enforces minimum construction standards but also offers homeowners a safety net should problems arise. Understanding what this Warranty provides is essential for all new homebuyers. We’ve created a quick guide to offer some insight. 

One of Tarion’s most significant assurances is its warranty on construction quality:  

First Year Warranty 

• Ensures that the home is built properly and is free from defects 

• covers violations of the Ontario Building Code, unauthorized material substitutions, and fitness for habitation 

Two-Year Warranty 

• Protection against water penetration in the basement or foundation walls 

• Coverage for the electrical, plumbing, and heating systems 

• Additional protection against exterior cladding issues and major building code violations 

Seven-Year Warranty 

• Focuses on major structural defects that could compromise the home’s integrity or affect the use of significant portions of the home 

For a new-build home, the maximum financial limit for certain defects in work and materials is $400,000.00. For new condominium units, the maximum financial limit is $300,000.00. 
 

Deposit Protection

Deposits made to secure a new home are safeguarded by Tarion in the event of specific issues. This protection can apply if:  

• The builder goes bankrupt 

• The builder fundamentally breaches the Agreement of Purchase and Sale (“APS”) 

• The buyer exercises their right to terminate the APS 

Deposit Coverage Limits 

• “Freehold” (not a condominium) homes priced at $600,000.00 or less are covered up to $60,000.00 

• Freehold homes priced over $600,000.00 will be covered up to 10% of the purchase price, with a maximum of $100,000.00 

There are two different forms of deposit protection for new condominium units. As per the Condominium Act, builders are required to place all deposits in trust, which ensures the deposit is protected. However, if for some reason the deposit was not placed in trust, you are covered for up to $20,000.00 through Tarion. 

This protection extends to money paid for upgrades and extras, ensuring that your total investment is secured. 

Delayed Closing Coverage  

New home construction schedules are subject to change, and delays can often be stressful. Your APS must specify a “final” closing date. If your home is not ready by that date and the builder has not provided notice of an  “unavoidable delay” (i.e., strikes, acts of God, pandemics), you may be able to claim compensation. The maximum amount of compensation for a delayed closing is $7,500.00. The same applies to new condominium units. 

Common Elements Warranty

For most new condominiums, the Warranty also includes the common elements, also known as common areas. The coverage is distinct, as it is managed by your condominium corporation and applies to the boundaries of your unit.  

Some things to remember and consider throughout the process: 

Pre-Delivery Inspection (“PDI”)  

Before taking possession of a new home, builders must conduct a PDI with the buyer. Buyers will inspect the home prior to closing to identify any damage, missing components, or incomplete work. It also helps homeowners familiarize themselves with the operation and maintenance of vital systems like ventilation, plumbing, and heating. The PDI is an opportunity to document and address issues early, preventing problems after possession. 

Enrolling an Existing Home

If you purchase a home that is less than 7 years old and already enrolled with Tarion, you inherit the remaining warranty coverage. To initiate this transfer, Tarion requires proof of ownership, so you should contact Tarion immediately. 

Notice Requirements for New Freehold Homes

Effective January 1, 2026, purchasers of new freehold homes will be encouraged to notify Tarion of their purchase and provide transaction particulars within 45 days of signing their APS. An additional deposit coverage regime will be available for those who comply with the notice requirement.  

What is Not Covered?  

It is equally important for buyers to understand the limitations of the Warranty. Exclusions include:  

• Defects in materials or work supplied by the homeowner 

• Secondary damage (e.g., personal injury or property damage) caused by defects 

• Normal wear and tear or shrinkage 

• Damage from dampness due to inadequate maintenance 

• Alterations or damage caused by the homeowner or visitors 

The Tarion Warranty Coverage is a comprehensive program designed to protect new homebuyers in Ontario from financial loss and construction defects, providing significant peace of mind. For any homeowner investing in a new home, understanding these protections is essential. 

A careful review of your pre-construction Agreement of Purchase and Sale (“APS”) with a lawyer can help safeguard your investment and ensure that you fully benefit from the protections available under Tarion.  

If you have additional questions or concerns regarding an APS review, please feel free to contact Jason Lane at 289-220-3241 or jason@durhamlawyers.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 situations and needs.”

As Canada’s housing crisis continues to challenge affordability and supply, the nation is turning to innovative solutions. Among these, modular and prefabricated homes are emerging as a promising option for Canadians.   

Programs like the federal Build Canada Homes (BCH) initiative aim to improve housing accessibility by reviving government-led homebuilding and embracing modern solutions like modular housing.¹ It is praised for its ability to address the housing shortage efficiently and cost-affordably.² 

This blog explains: 

• What modular homes are 

• How they fit into Canada’s housing strategy 

• What homebuyers need to understand about financing, regulations, and legal protections 

What Are Modular Homes?  

Modular homes are built using one or more prefabricated (prefab) three-dimensional sections called modules.³ Unlike traditional homes, modular homes are manufactured in a factory, then transported and assembled on-site.⁴  

In Canada, prefab homes are categorized into three styles: mass timber (large wooden components assembled on-site), panelized (flat wall panels manufactured off-site), and modular (fully enclosed 3D units built in a factory and stacked or connected together on-site).⁵ Thanks to advances in materials and technology, modular homes look and function like traditional houses.⁶  

The key difference lies in the construction and delivery process.⁷ Traditional homebuilding involves transporting raw building materials to the site and constructing the home from the ground up.⁸ Whereas, modular construction involves fabricating three-dimensional modules in a controlled facility, transporting them to the site, and placing them on a foundation.⁹ 

Benefits of Modular Homes 

Modular homes offer several advantages¹⁰: 

• Faster construction – Some can be completed in as little as eight days, reducing overall build time 

• Greater energy efficiency – These homes generate less waste and produce fewer carbon emissions compared to traditional on-site construction 

• Consistent quality and predictable timelines – Built indoors in controlled environments, they avoid weather delays, ensuring reliable craftsmanship 

• Flexible and scalable design – Available as single or multi-storey homes, with customizable styles and layouts 

Why Modular Housing Matters to Policy Makers  

With Canada’s housing crisis accelerating demand for faster and more affordable solutions, modular construction offers key benefits for the economy, environment, and community. For instance, the federal government aims to catalyze the housing industry by providing over $25 billion in financing to prefab homebuilders.¹¹ Similarly, in Ontario, Premier Doug Ford has committed $50 million to support modular housing technology.¹²  

Several small cities in Ontario have successfully implemented modular developments. The City of  Peterborough has built a 50-unit complex and the City of London has built a 61-unit building.¹³ 

Can You Finance a Modular Home like a Traditional Home?  

Yes! Modular homes can qualify for traditional mortgages from banks and financial institutions, as well as personal loans and manufacturer financing, similar to a Vendor Take Back (VTB) mortgage.¹⁴ 

The Canada Mortgage and Housing Corporation (CMHC) offers mortgage loan insurance for modular home buyers, helping reduce risks and potentially lowering interest rates.¹⁵ As with any home purchase, it’s important to compare loan options carefully and ask for any conditions that may apply. 

Legal Protections and Warranty Coverage 

Modular homes are subject to many of the same legal standards and consumer protections as conventionally built homes.¹⁶ Zoning by-laws must be reviewed and building permits must be secured for both the foundation and for home placement.¹⁷ 

Most new modular homes qualify for coverage under Tarion, but eligibility depends on key factors¹⁸: 

• The home must be new 

• It must be built on a permanent foundation 

• The builder or vendor must be licensed by the Home Construction Regulatory Authority (HCRA) 

• The owner cannot act as their own general contractor or divide construction tasks  

Is This a Long-Term Solution or Just a Fad?  

Experts agree that modular homes are not a one-size-fits-all solution, but they can play a critical role in expanding Canada’s housing supply.¹⁹ 

The success of modular housing depends on²⁰: 

• Clear zoning and construction regulations 

• Expanded financing and insurance options 

• Strong warranties and buyer protections 

• Close collaboration between government and industry 

Thinking About Buying a Modular Home? 

Modular homes offer promising benefits, but due diligence is essential. Here are a few steps to get started: 

• Vet your builder – Ensure they are licensed and experienced in modular/prefab construction 

• Check land ownership and zoning by-laws – Confirm that the subject land is zoned for residential use and that modular construction is permitted 

• Understand your rights and duties as a homebuyer 

• Compare financing options – Shop around for the best rates and terms 

• Consult professionals – A real estate lawyer can help navigate legal financial complexities 

With proper planning and professional guidance, they offer a practical and affordable path to homeownership. 

Please contact our experienced Real Estate Lawyer and Partner, Paria Rad, at Woitzik Polsinelli LLP at 905-668-4486, ext. 230 or paria@durhamlawyer.ca to help you navigate this unique pathway and understand your rights as a homebuyer.

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.”

¹ The Liberal Party of Canada, “Mark Carney’s Liberals Unveil Canada’s Most Ambitious Housing Plan Since the Second World War” (31 March 2025), online: <https://liberal.ca/mark-carneys-liberals-unveil-canadas-most-ambitious-housing-plan-since-the-second-world-war/>.  

² Ibid. 

³ The Ministry of Municipal Affairs and Housing, “Building a Modular Home” (2021), online: <https://files.ontario.ca/mmah-building-a-modular-house-en-202-12-06.pdf>. 

⁴ CREA Café, “Can Modular and Prefab Homes Help Address Canada’s Housing Crisis?” (13 September 2024), online: <https://www.crea.ca/cafe/can-modular-and-prefab-homes-help-address-canadas-housing-crisis/>. 

⁵ Ibid. 

⁶ The Ministry of Municipal Affairs and Housing, supra note 3.  

⁷ Ibid. 

⁸ Ibid. 

⁹ Ibid. 

¹⁰ Ibid; Philip Drost, “Canada Needs More Homes. Prefabricated Houses Could Fill the Void.” (18 May 2025), online: CBC Radio <https://www.cbc.ca/radio/costofliving/prefab-housing-shortage-1.7535092>. 

¹¹ The Liberal Party of Canada, supra note 1.  

¹² Sharif Hassan, “In Canada’s Housing Crisis, Are Modular Homes a Cheaper and Faster Solution?” (15 May 2025), online: CBC News < https://www.cbc.ca/news/canada/toronto/modular-homes-housing-crisis-1.7535799 >. 

¹³ Ibid. 

¹⁴ Manufactured Housing Association of British Columbia, “A Few Points on Modular Housing Financing” (2025), online: <https://mhabc.com/a-few-facts-on-modular-housing-financing/>. 

¹⁵ Ibid.  

¹⁶ The Ministry of Municipal Affairs and Housing, supra note 3. 

¹⁷ Ibid. 

¹⁸ Ibid.  

¹⁹ Robin MacLennan, “OREA Pushes Prefab Housing to Ease Crisis” (23 April 2025), online: Ontario Construction News < https://www.ontarioconstructionnews.com/orea-pushes-prefab-housing-to-ease-crisis >; Hassan, supra note 12. 

²⁰ Ibid.  

What is an Amalgamation?

An “amalgamation” is a process by which two or more corporations (the “amalgamating corporations”) merge into and carry on business as one corporation (the “amalgamated corporation”).

Amalgamations are completed pursuant to the provincial Ontario Business Corporations Act, R.S.O. 1990, c. B.16(the “OBCA”) or the federal Canada Business Corporations Act, R.S.C. 1985, c. C-44(the “CBCA”), depending on the incorporation jurisdiction of the amalgamating corporations. The amalgamation process is largely the same under each statute.

Amalgamating corporations must be incorporated pursuant to the same statute. If one is provincial and the other federal, then one corporation must first apply for a continuance under the other statute.

There are two types of amalgamations:

1. Long-Form Amalgamations[1]
   • Long-form amalgamations occur between two (or more) unrelated, arm’s-length corporations. A long-form amalgamation requires each amalgamating corporation to sign an Amalgamation Agreement and submit it for approval at a meeting of shareholders. The agreement will be adopted if the shareholders of each amalgamating corporation approve the agreement by special resolution (i.e. a two-thirds majority of the votes) for all relevant classes or series of shares.
2. Short-Form Amalgamations[2]
   • In contrast, short-form amalgamations occur between related corporations. Short-form amalgamations do not require shareholder approval and can be approved by a resolution of the directors of each amalgamating corporation. An amalgamation agreement is also not necessary. This means that a short-form amalgamation is often much more expedient and simpler than a long-form amalgamation.

There are two kinds of short-form amalgamations:

1. Vertical Short-Form Amalgamation:[3]: A holding corporation amalgamates with one or more of its wholly owned subsidiaries. The articles of amalgamation must be the same as the articles of the amalgamating holding corporation, apart from the name.
2. Horizontal Short-Form Amalgamation[4]: Two or more wholly-owned subsidiaries of the same holding company amalgamate. The shares of all but one of the subsidiaries must be cancelled and the articles of amalgamation must be the same as the articles of the subsidiary corporation whose shares were not cancelled, apart from the name. 

How Do You Complete an Amalgamation?

There are several key steps that the amalgamating corporations must take when completing an amalgamation:  

1. Prepare the Amalgamation Agreement

If proceeding by way of a long-form amalgamation, the directors of the amalgamating corporations must first negotiate and prepare an Amalgamation Agreement (the “Agreement”), setting out the terms and means of carrying out the amalgamation. Such agreements can be complex and must include the following:

• The provisions required in the Articles of Amalgamation;
• An explanation of how the shareholders of each amalgamating corporation are to receive shares of the amalgamated corporation, money, or securities of any corporate body other than the amalgamated corporation, in the amalgamation;
• The manner of payment of money instead of the issue of fractional shares of the amalgamated corporation or of any other body corporate the securities of which are to be received in the amalgamation;
• Whether the by-laws of the amalgamated corporation are to be those of the amalgamating corporations and the address of where a copy of the proposed by-laws may be examined; and
• Any other details necessary to complete the amalgamation and provide for the management and operation of the amalgamated corporation.[5]

In addition, if the amalgamation occurs under the CBCA, the Agreement must include the name and address of each proposed director of the amalgamated corporation.[6]

2. Obtain Approval of the Amalgamation Agreement

The Agreement must be approved via a special resolution of the shareholders of each amalgamating corporation. However, if proceeding by way of a short-form amalgamation, an amalgamation agreement is not required; the amalgamation must simply be approved by a resolution of the directors of each amalgamating corporation.

3. File the Appropriate Documents

After the Agreement is approved (if applicable), the amalgamating corporations must file the Articles of Amalgamation (the “Articles”). The Articles must have attached a statutory declaration of a director or officer of each amalgamating corporation which states that:

• There are reasonable grounds to believe that each amalgamating corporation is able, and the amalgamated corporation will be able, to pay its liabilities when they become due and that the realizable value of the amalgamated corporation’s assets will not be less than the aggregate of its liabilities and stated capital of all classes; and
• There are reasonable grounds to believe that:

(a) no creditor will be prejudiced by the amalgamation; or

(b) adequate notice has been given to all known creditors and no creditor objects on reasonable grounds that are not frivolous or vexatious.[7]

Upon receipt of all required documents, the Director will issue a certificate of amalgamation.  The amalgamation will become effective on the later of the date specified in the Articles or upon the date of filing the required documents.  

Why Do Corporations Amalgamate?  

There are several benefits to amalgamating, including:

• Costs Saving: Amalgamations can make operations more efficient by reducing overhead expenses and managerial costs when two (or more) corporations merge into one.
• Greater Market Competitiveness: If the amalgamating corporations are involved in the same business, the amalgamation can reduce competition in that marketplace. The amalgamated corporation may also be able to reach a broader customer base if it retains the customer and business of all of the amalgamating corporations.
• Tax Advantages: The amalgamated corporation may have less tax liability through carrying forward tax losses or accessing additional tax credits, depending on how it is structured. Amalgamations can also be used to transfer assets between corporations without triggering a deemed disposition of the assets and incurring the subsequent tax liabilities.
• Greater Access to Capital: The amalgamated corporation will have access to the cash and capital of the amalgamating corporations. With more capital, the amalgamated corporation may have more opportunities for growth and greater access to financing.

What Should You Consider Before Amalgamating?

Shareholder Approval and Dissenting Rights

Long-form amalgamations require the approval of shareholders via special resolution with a two-thirds majority of the votes. Any shareholder who disagrees with the amalgamation or the terms of the Agreement has dissenting rights,[8] including the right to be paid for the fair value of their shares in the amalgamating corporation. If many shareholders exercise their dissenting rights, this may add a significant cost to the amalgamation.

Existing Contractual Rights

Amalgamating corporations are likely to have existing contracts, permits, licenses, and other rights. Following the amalgamation, these contractual rights may need to be renegotiated or assigned to the amalgamated corporation, which may involve obtaining consent or approval from the other contracting parties depending on the terms of the contract.

Employment Implications

When corporations amalgamate, the rights of their employees must be considered. An amalgamation does not automatically terminate all employee’s employment contracts. In an amalgamation, the amalgamated corporation assumes the role of employer for all of the existing employees of the amalgamating corporations. This means that the employees’ length of employment, which impacts their entitlement to notice of termination, severance pay, vacation, and statutory leaves under the Employment Standards Act, 2000, S.O. 2000, c. 41, will include their employment under the amalgamating corporations and the amalgamated corporation. This also means that the amalgamated corporation will assume all termination and severance obligations with respect to the employees transferred from the amalgamating corporations.  

Due Diligence

For long-form amalgamation in particular, the amalgamating corporations should conduct their due diligence prior to finalizing the Agreement. Proper due diligence includes obtaining full disclosure from the other amalgamating corporations with respect to their financial, legal, operational, tax structures and liabilities. This disclosure should be closely examined to identify any possible issues that could impact the value or structure of the amalgamation and to minimize the risk of assuming unexpected or undisclosed liabilities.

Tax Implications

Amalgamations have significant tax implications for all corporations involved. Section 87 of the Income Tax Act, R.S.C., 1985, c. 1 (5th Supp.) sets out extensive rules regarding the taxation of amalgamating and amalgamated corporations.

The tax treatment of the amalgamation depends highly on the context, such as whether the transaction is structured as an asset or share amalgamation and the tax characteristics of the amalgamating corporations. As such, it is crucial to consult a professional with experience in corporate tax when drafting the Agreement and carrying out the amalgamation to fully understand the tax implications that may arise.

Risks of Amalgamating

Before you begin the process of an amalgamation, you should also consider the potential consequences that may arise, namely:

• Amalgamations may reduce a corporation’s workforce by making some positions redundant. As a result, the amalgamated corporation may be liable for providing employees with termination and severance pay.
• The amalgamated corporation takes on the debts and liabilities of the amalgamating corporations, which may result in significant debts and liabilities. Proper due diligence prior to the amalgamation will provide a better understanding of the debts and liabilities that the amalgamated corporation will assume and minimize the risk of undisclosed debts and liabilities. 
• The amalgamated corporation may face challenges in integrating the workforces of the amalgamating corporations. The amalgamated corporation should expect and prepare for issues such as workplace culture clashes, operational inefficiencies, and disagreements among the management team.
• Amalgamated corporations may face increased scrutiny from regulatory bodies such as the Ontario Securities Commission and the Canadian Competition Bureau, especially when the amalgamation raises conflict of interest concerns or reduces market competition.

Conclusions

Amalgamations are complex corporate transactions with many legal, financial, and corporate implications. Accordingly, it is vital to consult with an experienced corporate lawyer prior to beginning an amalgamation and throughout the amalgamation process.

This blog was co-authored by Articling Student, Leslie Haddock.

This article is intended to inform. Its content does not constitute legal advice and should not be relied on 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.

---

[1] See Business Corporations Act, R.S.O. 1990, c. B.16, ss. 175-176 (“OBCA”) and Canada Business Corporations Act, R.S.C. 1985, c. C-44, ss. 182-183 (“CBCA”).

[2] OBCA. supra, ss. 177(1)-(2) and CBCA, supra, ss. 184(1)-(2).

[3] OBCA, supra, s. 171(1) and CBCA, supra, s. 184(1).

[4] OBCA, surpa, s. 171(2) and CBCA, supra, s. 184(2).

[5] OBCA, supra, s. 175(1) and CBCA, supra, s. 182(1).

[6] CBCA, supra, s. 182(1)(b).

[7] OBCA, supra, s. 178(2) and CBCA, supra, s. 185(2).

[8] OBCA, supra, s. 185 and CBCA, supra, s. 190.

What is an Assignment?

The assignment of an agreement of purchase and sale is a legal transaction whereby a party to a contract transfers their rights and obligations in that agreement and associated property, to another party. It is commonly used in Ontario real estate transactions as a means of selling a property before the original purchase agreement is completed. Assignments are often pursued by buyers or investors who wish to purchase a property for a lower price than the original purchase price or who seek to benefit from a changing market or financial circumstances. In an assignment, the original purchaser (the assignor) sells their rights and benefits under the agreement to a third party (the assignee) for a negotiated price.

Benefits, Disadvantages, and Uses of an Assignment Transaction

There are several benefits to pursuing an assignment. For the assignor, it may provide an opportunity to sell the property at a profit without having to close on the purchase themselves. It may also allow them to avoid closing costs and other fees associated with the purchase. For the assignee, an assignment can offer an opportunity to purchase a property at a lower price than the original purchase price, particularly if the market has changed or the original purchaser is in financial distress. However, there are also potential drawbacks to assignments, such as uncertainty regarding the closing date, tax implications, higher than anticipated closing costs and the potential for disputes between parties.

Assignment Process

The assignment process typically involves several steps. First, the assignor must find a willing assignee who is willing to purchase their interest in the property. They may need to advertise the property and assignment (provided this is permitted by the original vendor in a pre-construction transaction) and negotiate a price with the assignee. Once an assignee is found, the parties must draft an assignment agreement that outlines the terms of the assignment, including the purchase price, closing date, obligations of each party and other relevant details. The assignment agreement must be signed by both the assignor and assignee and may need to be registered with the relevant authorities, such as the Land Registry Office. Finally, the assignee assumes the rights and benefits of the original agreement and is responsible for completing the purchase on the closing date. Throughout the assignment process, it’s important to seek legal advice and follow the requirements outlined in the original purchase agreement.

Fees and Default

Assignment agreements generally include an ‘Assignment Fee’ payable by the assignee to the assignor in exchange for the right to acquire the property. It is important to determine when this fee is payable. If any funds are to be released to the assignor prior to the completion of the original transaction, it must be specified. Otherwise, the default is that they are to be held in trust by the assignor’s solicitor, until the completion of the original agreement of purchase and sale.

If a seller defaults on the original agreement (i.e. fails to close the transactions), the assignment becomes null and void. The funds are returned to the assignee, and the assignor is not liable for any expenses or losses incurred therefrom by the assignee. The assignor can commence legal proceedings against the seller for failing to close the transaction, however, the assignee has little to no such legal remedy available, even in the face of changing market conditions.

Other Considerations

On a final note, the tax implications of assignments can be complex, and it’s important for buyers and sellers to seek legal advice before pursuing an assignment. Depending on the circumstances, both the assignor and assignee may be subject to various taxes, such as capital gains tax, HST, or land transfer tax. For example, while the resale of a residential property is naturally not subject to HST and, accordingly, there is no HST payable on the assignment fee, extra steps must be taken to ensure the same result for new-build properties; the assignment agreement must include a provision stating that part of the consideration is attributable to the reimbursement of a deposit paid by the assignee to the builder. As with the Land Transfer Tax, it is payable by the assignment after the completion date of the original transaction, on the aggregate purchase price (including the assignment fee).

Conclusion

Assignment of agreements of purchase and sale are a common tool used in Ontario real estate transactions to transfer property ownership rights and benefits. They can offer benefits such as flexibility and financial gain but also carry risks and challenges. Understanding the legal, financial, and practical implications of assignments is crucial for anyone considering pursuing this approach.

If you have any questions about assignments of agreement of purchase and sale or real estate law generally, please contact Jonathan at 289-220-3229 or jonathan@durhamlawyer.ca

Proposed in the Federal Budget of 2022, and passed in June of 2022, the Government of Canada has enacted the Prohibition on the Purchase of Residential Property by Non-Canadians Act[1] (the “Act”). As is made clear by the title, the Act prohibits the purchase of Canadian residential property by non-Canadians, directly or indirectly. ‘Indirectly’ refers to scenarios where a purchase is attempted through a trust, partnership, or an unincorporated association. Interestingly, the Act overrides section 34 of the Citizenship Act[2], which otherwise explicitly grants this right to non-Canadians. The Act will be enforced for a two-year period beginning January 1, 2023 and does not apply if a non-Canadian becomes liable or assumes liability under an agreement of purchase of sale of residential property before this date.[3]

To understand the extent of the application of the Act to potential purchasers, it is important to pay close attention to the Act’s definition of a “non-Canadian”. The definition is as follows:

• an individual who is not a Canadian citizen, permanent resident of Canada or registered as an Indian under the Indian Act,[4]
• a corporation that is not incorporated under the laws of Canada or a Canadian province,
• a private corporation that is incorporated in Canada but that is controlled by a person referred to in paragraph (a) or (b) above.

In addition, “purchase” means to acquire or agree conditionally or unconditionally to acquire a legal or equitable interest, or an immovable real right in a residential property. There have been proposals to preclude certain situations under this term, specifically those pertaining to an acquisition resulting from divorce or separation, the rental of a residential dwelling unit, or an acquisition resulting from succession. These proposals are expected to be included in a set of Supporting Regulations (the “Supporting Regulations”) that will be released to provide additional detail regarding the application of the Act.

Exemptions

As is common to many laws and regulations, the Act provides for certain exemptions. These exemptions include:

• temporary residents within the meaning of the Immigration and Refugee Protection Act[5] who satisfy prescribed conditions set out in the Supporting Regulations;
• a refugee;
• an individual who is a non-Canadian and who purchases residential property in Canada with their spouse or common-law partner if the spouse or common law partner is a Canadian citizen, person registered as an Indian under the Indian Act[6] permanent resident or person referred to in paragraph (a) or (b) above; or,
• a person of a prescribed class of persons under supporting regulations.[7]

Penalties, Enforcement and Liability

Under section 6(1) of the Act, anyone who contravenes or counsels, induces, aides or abets a contravention of the Act, or attempts any of the above, is guilty of a summary conviction of a fine of not more than $10,000.

Additionally, if the offence is committed by a corporation, then any officer, director, or agent or other authorized individual that “directed, authorized, assented to, acquiesced in or participated in” the commission of the offence is a party and is held equally liable, regardless of whether the corporation was prosecuted.[8]

Note that a contravention of the Act will not void a contract to purchase residential property from an innocent vendor. However, if a non-Canadian is convicted of having contravened the Act, a court may order that the property be sold in a prescribed manner and under prescribed conditions. Subsection 8(2) of the Act indicates that when a court orders the sale of residential property bought by a non-Canadian in contravention of the Act, the non-Canadian cannot receive more than the purchase price paid for the property from the proceeds of sale.

Given the implications of the Act, individuals who are involved in the real estate industry, such as real estate agents, mortgage brokers and lawyers, should take extra care to ensure that they confirm the residential status of purchasing clients. Real estate professionals should independently verify their clients’ identity, document their clients’ Canadian status, and have the clients confirm their status in writing.

Real estate professionals acting for the vendor in a transaction should also be wary about contravening the Act unintentionally. Even though it may not be the direct responsibility of the selling party to verify the Canadian status of the purchaser, do not be quick to conclude liability may not extend that far. It would be good practice to include certain provisions within an Agreement of Purchase and Sale to shield the selling party from potential liability at the outset of the transaction.

If you have additional questions or concerns regarding the Prohibition on the purchase of residential property by Non-Canadians Act, please feel free to contact Jason Lane at 289-220-3241 or jason@durhamlawyers.ca.

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] SC 2022, c. 10 s. 235

[2] RSC, 1985 c. C-29.

[3] Supra note 1, s. 4(5). [emphasis added]

[4] RSC 1985 c.I-5.

[5] SC 2001 c.27.

[6] Supra note 5.

[7] Supra note 1, s. 4(2).

[8] Ibid, s. 6(2).

With over 250,000 lakes and vast expanses of countryside, Ontario is home to thousands of cottages and other rural properties. Buying a rural property is often an exciting time for purchasers. However, whether you are looking forward to sipping your morning coffee by the lakeside or are interested in buying an investment property on a large piece of land, purchasing a rural property often involves greater due diligence.

Does the property use a well and/or a septic system?

While the majority of urban residential properties operate using their respective municipal sewer and water systems, many rural properties do not have this luxury. Often more isolated and less dense, rural municipalities are unable to construct an efficient system to meet all of their residents’ needs.

For example, to dispose of waste, these properties frequently operate with a septic system or holding tank. When purchasing a rural property with a septic system, it is crucial to ensure that the system is in good working order prior to closing. Requiring the vendor to provide a warranty in the Agreement of Purchase of Sale that survives upon closing relating to the septic system is recommended. It is also advisable to require that the vendor pump the septic system prior to the transaction closing.

Similarly, many rural properties often rely on private wells for their supply of water. To ensure that the water is safe to drink and free from contamination, purchasers should obtain multiple water potability tests from their local Public Health Station. It is also a good idea to make your Agreement of Purchase and Sale conditional upon a satisfactory inspection of the well and related pump prior to closing.

Is this a Waterfront Property?

When you expect a property to give you access to a body of water, it is important to determine whether the property actually includes the shoreline. If your property does include the shoreline, it comes with a set of rights known as “riparian rights”. This means that you will have the right to access the water, the right to the undisturbed natural flow of the water, and the right to withdraw water for your own use.

However, not all rural properties include the shoreline. Many bodies of water in Ontario are surrounded by shoreline reserves, also referred to as “shoreline road allowances.” These are reserves that remain either with the provincial crown in the unincorporated territory or with the municipality in the incorporated territory. If you do not own the shoreline, you do not possess any “riparian rights” and therefore may not have legal access to the water. This further means that any structures that have been built or that you plan to build on this shoreline may not be legal.

If the shoreline allowance bordering the property is not owned, it is possible to make an offer to purchase it from the Crown or municipality, pursuant to the Public Lands Act, RSO 1990 C P.43. This can be a lengthy process so it is important to determine whether a property is affected by a shoreline road allowance prior to making a firm offer to purchase the property.

Does the Property Have a Legal Road Access?

For many urban properties, the road directly leading the property is often a public roadway that is owned by the local municipality. However, for rural properties road access is not always so simple. Many properties are located adjacent to private roadways. If these private roadways are not conveyed with the property, it is vital that your solicitor confirms that you have a legal right of way to access the property through that private roadway by way of ownership or easement.

Building and Zoning Implications

When purchasing a rural property, prospective buyers often have predetermined plans for the use and enjoyment of the land. These can include installing docks, constructing decks, building structures and removing vegetation. Before committing to the purchase of a property, purchasers are encouraged to view the zoning regulations for the property, which will state the permitted uses for that piece of land. Furthermore, before constructing structures, homeowners should review the municipality’s building rules to see if any permits are required.

To ensure the property is in conformance with all building and zoning bylaws prior to closing, your solicitor can obtain and review compliance letters, which can be provided by your local municipality upon request.

Property Boundaries

It may be difficult to visually inspect the boundaries of a rural property, as there is often vegetation between property lines, with no clear boundaries erected. Rural properties are often not registered on plans of subdivision, and therefore may require some extra investigation to determine the exact location of their boundaries.

Maintenance of the Property

Finally, rural properties often demand higher levels of maintenance. Whether it be a larger lawn to mow or a longer driveway to shovel, purchasers should be aware of the significant upkeep levels and costs required to maintain the property. Furthermore, since roads leading into the property are often privately owned, purchasers should be diligent in reviewing any private road maintenance agreements that come with the property.

A good real estate lawyer, knowledgeable in rural property issues, is essential. If you are looking to purchase a rural property or have any questions, please contact Jason Lane, a lawyer at Woitzik Polsinelli LLP at 905-668-4486 ext. 241 or at jason@durhamlawyer.ca.

“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.”

This blog was co-authored by Jaimin Panesar*

Recent statistics suggest that there is a record demand for rural properties in Ontario. This may, in large part, be due to the COVID-19 situation, which has resulted in more people having the option to work remotely and has led to a greater desire to move away from large urban centers. If you have found the perfect cottage or waterfront property and are eager to submit an offer before anyone else does, don’t forget to complete your due diligence. Rural properties are often not registered on plans of subdivision, and therefore may require some extra investigation to determine the exact location of their boundaries. One area of potential concern when buying property bordering most lakes and rivers in Ontario is whether or not the property actually includes the shoreline.

Why Does It Matter?

If your property does include the shoreline, it will come with a set of rights known as “riparian rights.” This means that you will have the right to access the water, the right to the undisturbed natural flow of the water, and the right to withdraw water for your own use. You can legally enforce these rights against any other persons or government entities.

Doesn’t Every Waterfront Property Include The Shoreline?

The short answer is no. In order to determine whether or not a particular property includes the shoreline, the property’s history would need to be examined. This may involve reviewing the description of the property in the original crown patent.  Many lakes and rivers in Ontario are bordered by shoreline reserves, also referred to as “shoreline road allowances.” These are 66-foot wide reserves that remain either with the provincial crown in unincorporated territory or with the municipality in incorporated territory.

Can a Shoreline Road Allowance Be a Problem?

If there is a shoreline road allowance between your property and the water, you do not own the shoreline. Therefore you do not receive the riparian rights that come with owning a truly “waterfront” property.  A potentially larger problem is that structures on the property, including decks, boathouses or even a cottage itself may be built on land that you do not own. You could be asked to remove any such structures.

What is the Solution?

It is possible to offer to purchase the shoreline road allowance bordering your property. Under the Public Lands Act, RSO 1990 c P.43, an offer to purchase a shoreline road allowance in unincorporated territory is made directly to the Ontario Ministry of Natural Resources. In incorporated territory, the offer is made to a municipality and the exact process differs somewhat depending on the particular municipality. Often the owners of neighbouring properties will be notified and given opportunities to object prior to a shoreline road allowance being closed. Thus, the process can be lengthy and it is important to determine whether a property is affected by a shoreline road allowance prior to making a firm offer to purchase the property. You may also want to consider including a condition or warranty regarding a shoreline road allowance in your Agreement of Purchase and Sale.

A good real estate lawyer, knowledgeable in rural property issues, is essential. If you are purchasing a waterfront property and are not sure whether or not it includes the shoreline, or if you have any further questions about shoreline road allowances or other rural property issues, please contact Jason Lane, lawyer at Woitzik Polsinelli LLP at 905-668-4486 ext. 241 or at jason@durhamlawyer.ca.

“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.”

The recent Ontario Court of Appeal (ONCA) decision Bilotta v Booth is an excellent example of a case where greed got the better of a purchaser who tried to renegotiate the purchase price after a flood had caused damage to the property shortly before closing the transaction.

The purchasers refused to close at the contract purchase price, arguing that the sellers had acted in bad faith. This argument was based upon the fact that the flood occurred 14 days before closing, but the sellers did not provide notice of the flood to the purchasers until less than 24 hours before closing.

Nevertheless, the ONCA found that the purchasers’ refusal to close was not reasonable and not permitted under the Agreement of Purchase and Sale (APS). A clause in the APS (Paragraph 14 of the OREA APS) permitted the right to terminate only in the event the damage to the property was ‘substantial’, which was not the case here, as detailed by a report issued by the property insurer. A key consideration of the court was that the sellers had made a reasonable offer to the purchasers in light of the damage, namely to hold back $50,000 in trust to ease any concerns that the insurance proceeds payable to the purchasers would be inadequate to cover the costs of the repairs. The sellers also offered to extend the closing, at no cost to any party for one week to allow the purchasers time to conduct an inspection of their own. They further agreed to pay the cost of storing the purchasers’ belongings that would have been stored in the flooded basement.

Despite the sellers’ offer, the purchasers insisted on a reduction of the purchase price in the amount of $50,000, or to purchase the property after the repairs were completed and inspected to the satisfaction of the purchasers. The purchasers also demanded that they be compensated for any extension costs. The sellers did not accept these demands and the ONCA agreed that they were not obliged to do so.

The ONCA held that the purchasers repudiated the contract when they failed to accept the reasonable offer of the sellers and refused to close the deal on the proposed terms. As a consequence, the purchasers were required to compensate the sellers for court costs and the $100,000 loss the sellers suffered as a result of having to relist and resell the property one year later. The purchasers’ deposit was credited against the damages they had to pay.

The primary lesson to be learned from this decision is that the courts are in favour of fair and reasonable conduct of the parties.

If you require assistance with your real estate transaction and your rights and obligations,, contact Paria Katie Rad at 905-640-4242 or 905-668-4486 ext 230 or paria@durhamlawyer.ca or paria@yorkregionlawyer.ca

“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.”

The first important message is that you do not make a will for your immediate benefit, but for that of your loved ones. When you are deceased you will only figuratively turn in your grave when a family quarrel arises over what could have been spelled out by your will. Your family, on the other hand, may face very real struggles when left without any guidance as to your intentions.

There are of course laws in place that determines what happens to your belongings if you die intestate, that is, without a will. However, that does not mean that disagreements are pre-empted, or that your wishes are given effect. The following are just three examples of issues that can arise when an individual dies without a will.

Executor appointment

If you die intestate, you forego the opportunity to appoint an executor. The executor is in charge of distributing your assets in accordance with your wishes expressed in your will. Instead, someone first needs to apply to the Ontario Superior Court of Justice to take on this role. This leads to a delay in the distribution of the deceased person’s assets, along with increased legal costs. Under a will that properly appoints an executor, the executor has the power to take action immediately, and even where an application is required, the process is less complex.

Not everyone can be appointed the executor of a will. The law sets out an order of preference, ranking first the married spouse or conjugal partner who lived with the deceased immediately before death. Next are the children of the deceased, then the grandchildren, if no children have survived the deceased, and if no grandchild is alive, the great-grandchildren are next. It follows the father and mother of the deceased, but only if there are no descendants, and if the parents have predeceased the deceased person, their siblings are next in rank and so forth.

If a person having a prior right to be the executor does not want to take on this role, their consent is still required for a person lower in rank to be appointed the executor. If several persons are standing in the same degree of kinship and more than one is applying for the executor role, the court can select one of them at its discretion.

Appointing an executor in one’s will circumvents many potential issues that can arise from a disagreement among family members who should be the executor of the will. If the deceased thought that it would be his or her, business partner or life-long friend who is best suited for the role, there is little chance that this wish can be accommodated in the absence of a will nominating this person as the executor.

Another important consideration in the appointment of the executor is that this person will also manage any trust(s), and monies, for minor beneficiaries in the will.

Succession Laws

If the deceased person dies intestate and was not married to their partner, this partner has no statutory entitlement with respect to the deceased property. The Succession Law Reform Act’s (SLRA) definition of ‘spouse’ only captures married spouses.

Under the SLRA, a married spouse is entitled to receive the entire estate, if there are no children. However, if there are children, the surviving spouse will receive a preferential share of $200,000 of the deceased assets, if he or she died intestate. The remainder of the estate, if any, will be distributed equally between the spouse and one child, and if there is more than one child, the spouse receives one-third of the remainder, and the children receive the rest in equal shares.

A common-law spouse, again, is not entitled to the preferential share, or in fact to any share of the deceased’s assets upon death. This result may be quite the opposite of what the deceased person would have wanted.

Disabilities protection – Henson trust

Another scenario where having a will in place is most important is that of a disabled dependant surviving the deceased. A will would often provide for a so-called Henson trust. A Henson trust is a discretionary trust designed to benefit a disabled individual in such a manner as to protect that disabled individual’s entitlement to collect means-tested government benefits, such as benefits payable under the Ontario Disability Support Program. The trustee will have full discretion over the allocation of income and capital to the disabled beneficiary.

Without a trust in place for the disabled, it would fall to the court to administer the deceased’s assets for the benefit of the disabled individual. It may be in the interest of the deceased to have a say in who will take on this important responsibility, and not leave it to strangers. Also, if the gift is given outright to a disabled individual, this could disqualify him or her from collecting said government benefits.

If you need advice relating to the drafting of your will, contact Vanessa Romanino at 905-668-4486 ext 246 or vanessa@durhamlawyer.ca.

 “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.”