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LAW 703 Nick Iannazzo Fall Term 2020 INTRODUCTION: BUYING AND SELLING REAL ESTATE Legal System - Common Law System (Except Quebec) - Common Law = Statute Law + Common Law - Statute Law - government made law - Common Law - court made law Public Law vs.Private Law Public Law ● Constitutional law ● Criminal Law ● Tax ● Administrative Private Law ● Tort Law ● Contract Law ● Property Hierarchy of Law The Constitution Legislation Courts Section. 91 -- Federal Banks - Money - Criminal Law - Taxation - Bankruptcy and insolvency - Patents and copyrights - International and interprovincial trade and commerce - Etc. Section. 92 -- Provinces - Property rights - Civil rights (e.g. contract, torts) - Taxation - Corporations with provincial objects - Municipalities - Administration of justice

- Matters of a merely local or private nature in province - Etc. Conflicts/ Disputes - Conflicts/disputes arise between different levels of government over real estate - Federal vs provincial - Municipality vs. province - City of toronto wants new revenue generation tools - Building and financing affordable housing - Airports - Waterfront development - Waterways - Etc. Charter of Rights & Freedoms ● Protect basic rights and freedoms ○ Fundamental rights, democratic rights, legal rights, mobility rights, equality rights, official languages,etc. Section.2 - everyone has the following fundamental freedoms: - Freedom of conscience and religion - Freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication. - Freedom of peaceful assembly - Freedom of association Section.15(1) every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and , in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability. ● No property rights (to own and enjoy property) in the Charter. ● Government can regulate real estate. ○ Regulate development (e.g. zoning, planning, subdividing) ○ Regulate resource industries ○ Protect environment ○ Restrict foreign ownership ○ Real estate is predominantly governed by the provinces. ○ No property or economic rights in the Charter therefore governments can restrict property rights Jurisdiction & Authority over Real Estate - Provincial statutes (some federal statutes can impact on real estate) - Court decisions - Municipalities - Provincial Delegated Authorities (Examples) - TARION

- Real Estate Council of Ontario - Condominium Authority - Provincial Tribunals (examples) - Residential landlord & tenant board - Condominium tribunal - Assessment review board - Ontario municipal board Examples of Government Intervention in Public Interest - Crown patent - Expropriations - Public easements - Fire regulation - Building code - Criminal code - Family law act - Planning act - Assessment act - Environmental protection act Real Estate: Estates and Interests ESTATES in Land INTERESTS in Land CHAPTER 1: REAL ESTATE TRANSACTION Initial Stages of the Transaction - Real estate agent - Seller’s listing agreement (i.e. seller’s representation agreement) - Buyer’s representation agreement - Multiple representation (buyer and seller) Seller property information statement Oral Contracts & Statute of Frauds Section 4, Statute of Frauds (Ontario) ● No action shall be brought...to charge any person upon any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them, unless the agreement upon which the action is brought, or some memorandum or not thereof is in writing and signed by the party to be charged therewith or some person thereunto lawfully authorized by the party. ● Contracts for sale of land must be in writing and signed (s.4 Statute of Frauds) Exception: Doctrine of Part Performance ● Deglman v. Guaranty Trust (1954) SCC - 5 Elements for Doctrine of Part Performance.

○ Allege oral contract; ○ Show part perf. of alleged contract by person alleging contract; ○ Show detriment to person alleging contract by part perf.; ○ Show part perf. Is preferable and consistent with alleged contract for land; and ○ Rove contract by parol evidence, part perf, and any other means - Parol evidence rule prevents the introduction of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary the contractual terms of a written contract when the written contract is intended to be a complete and final expression of the parties' agreement. - Nephew lived in aunt’s home for 6 months Aunt died. - Nephew claims aunt orally promised an investment property if he did chores and ran errands for her DECISION: court did not approve; doctrine does not apply; chores weren’t connected to the land ● Taylor v Rawana (1990) O H Ct. ○ Oral agreement between 2 friends ○ Agreed on price, down payment and closing ○ Buyer and his wife moved into house and started renovating it ○ Seller argues no contract based on s.4 Statute of Fraud DECISION: court agreed with buyer; part performance was renovations ● Erie Sand & Gravel Ltd. v Tri-B Acres Inc. (2009) ONCA. ○ Series family owns three properties and sold it off; sold north east property to Erie Sand; sold north west to Tri-B (negotiated for right of first refusal on south east). ○ Erie wants south east property as they are connecting properties. ○ Erie presented an offer of 1.2M and deposit of 1.2M. ○ Tri-B said they’ll give a lower deposit upfront and change of closing date. ○ Seres ad Tri-B created a new agreement and accepted Tri-B terms DECISION: Erie wins on appeal because courts said Erie satisfied doctrine of part performance, even though it doesn’t satisfy SCC rules AD IDEM - all essential terms must be agreed upon between the parties for an enforceable contract - Essential terms - are what the parties consider to be essential terms. Hunter v Baluke (1998) O Gen Div ● Gretzky’s buying a Muskoka cottage.

○ All terms had been settled between parties except the term regarding possession of the boat house. ○ B proposed an amendment in writing regarding the boat house. ○ S did not sign the amendment ○ S assert that there is no enforceable APS DECISION: Ad idem: Doctrine of part performance Mental Incompetence ● A contract may not be enforceable if one of the parties was mentally incompetent or drunk or otherwise lack capacity TEST: party trying to avoid contract due to MI must prove: - He/she was MI; and - Other party to the contract had actual or constructive knowledge of MI ● Browser v Prager (1999) OSCJ ○ S had been involuntarily committed to a psychiatric hospital for delusional disorder and mixed personality disorder. 2 months later he was released. S was on medication ○ No one involved in the transaction was aware of S’s medical history nor condition. ○ At time of sale the medical evidence showed that S was suffering from depression and mental illness. ○ B and S sign APS. ○ S does not want to complete transaction DECISION: No sign that he knew there was MI; contract was valid ● York Condo Corp #301 v James (litigation Guarding of) 2014 ONSC. ○ A unit owner was being violent, harassing and exhibited inappropriate conduct. ○ Unit owner was arrested under the Mental Health Act. ○ Unit owner was released about 1 month later and was on medication. ○ Condo corp. Seeks a court order to force the unit owner to sell unit and move out DECISION: Condo Corp wins; owner must be evicted Duty to Bargain in Good Faith - No duty to negotiate a contract in good faith - Each party pursues his/her own self-interest ● Peel Condo Corp 505 v Cam-Valley Homes Ltd. (2001) OCA ○ Approved to build 5 high rise condos. ○ Marketed as “woodland community with an outdoor recreational area at its centre nestled among trees” (Ora Lands) ○ One condo tower was built but the others cancelled due to change in the market. ○ Developer decided to keep ORA Lands and build townhouses on it.

○ The condo documents stated that the developer had the option to keep and developed the ORA Lands. ○ Buyers sue developer DECISION: Does a developer owe a fiduciary duty to buyers? No Does a developer have a duty of good faith to buyers during negotiations? No; they had the option to do it but did not have to do it ● Bhasin v Hrynew 2014 SCC - Good faith contractual performance is a general organizing principle of the common law of contract which underpins and informs other rules (e.g. honesty, candor, reasonable performance) - In all contract there is a common law duty to act honestly in the performance of the contract - Note: Good faith is not the higher duty of fiduciary. Good faith does not impose loyalty or to put the interests of the other party first Illegality - Illegality as to contract formation vs. illegality as to performance of a contract ● Beer v Townsgate I Ltd. (1997) OCA ○ Builder enters into APS to sell new home ○ ONHWPA states that a builder cannot sell homes. ○ Builder was not registered at time of APS ○ Beer sues -- wants APS declared void of illegality DECISION: Because he registered later, he was able to perform; happened before closing. Contract is valid Letter of Intent General Guidelines - Courts will not enforce “agreements to agree” - When parties have agreed on all essential terms and have agreed to finalize agreement later, there is a binding contract - When parties have agreed on all essential terms but make it clear there is not contract until a formal agreement is entered into, there is no binding contract Caution re: Letters of Intent - Substance over form - Post - “Letter of Intent” conduct - Wallace v Allen, 2009 (ONCA) LECTURE 2: REAL ESTATE AGENCY RELATIONSHIP

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