Not long ago, I received a message from a realtor with whom I’ve had many prior transactions. They reached out in a bit of a panic after helping a client purchase a vacant lot. The deal seemed straightforward: vacant land, sold by what was thought to be a private individual, with no expectation that Harmonized Sales Tax (HST) would apply. But as closing day approached, the situation took a sharp turn.
The buyer was suddenly told they owed an additional HST. Understandably, everyone was caught off guard. The realtor’s client had been relying on a mortgage broker’s lawyer for the transaction, and when the tax issue surfaced, the deal’s smooth close quickly turned into a scramble for answers.
That’s when the realtor contacted me. Not to intervene in the deal itself, but to better understand how this could happen. The goal was to learn from the situation and to avoid future surprises. So, we broke it down.
In Ontario, the sale of vacant land can be either subject to HST or exempt, depending on a few critical factors. The Canada Revenue Agency (CRA) doesn’t look only at what’s being sold—but also at who is selling it, how they’re classified for tax purposes, and the nature of their business activity, if any.
Here are some general rules that apply:
In the case that came across my desk, it turned out the lots were not being sold by a private individual after all. The seller had registered the land under a business, and this key detail hadn’t been disclosed upfront. That changed everything.
Once that came to light, the seller’s lawyer took the position that HST applied, and the buyer would need to cover it in addition to the purchase price. For a buyer who had budgeted carefully—and was already at their financial limit—that additional sum on money in tax came as a major blow.
The situation was eventually resolved when the seller agreed to proceed at the agreed-upon price, with HST included. That was a fair outcome under the circumstances, but it came with a lot of last-minute stress that could have been avoided with earlier due diligence.
We weren’t involved in this transaction from the outset, but the realtor reached out after the fact to better understand the legal and tax framework. That alone is commendable. Too often, professionals move on from deals without unpacking what went wrong.
From a legal perspective, there were a few key questions that should have been addressed at the beginning:
These questions aren’t just legal formalities—they’re critical to protecting the buyer’s financial interest and ensuring the deal closes without surprises.
Land sales, especially of the vacant variety, can appear simple on the surface. No structures, no tenancies, no title issues. But tax issues like HST can turn a smooth file into a high-stakes puzzle overnight. That’s why conducting proper due diligence from day one is essential—starting with understanding who owns the property and how it's held.
Whether you're a buyer, seller, or realtor, it's important to work with legal counsel who knows the landscape, can spot these issues early, and ask the right questions before closing day. HST isn’t something you want to be sorting out while the moving truck is idling in the driveway.
Deals don’t unravel because people are careless. More often, they hit snags when key details are overlooked in the rush to close. This experience was a reminder that even experienced professionals can be caught off guard when assumptions are made about ownership, tax status, or contract terms.
At Nungisa Law, we treat each file like its own story—because it is. Whether you're buying a home, investing in land, or working on behalf of a client, we’re here to make sure the legal side of the transaction supports your success, not surprises it.
Looking to avoid closing day curveballs? Let’s talk early—before the countdown begins.
The Trust in Real Estate Services Act, 2002 (TRESA), effective since December 1, 2023, heralds a new era in Ontario's real estate sector. Replacing the Real Estate and Business Brokers Act, 2002 (REBBA), TRESA introduces many changes to enhance consumer protection, transparency, and professional standards in real estate transactions.
The introduction of the Self-Represented Party (SRP) is a significant development. SRPs, individuals not receiving services from a brokerage, can interact with realtors in limited capacities. Realtors can provide general real estate information or assist with mechanics, such as filling out an Agreement of Purchase and Sale, without offering advice or causing the SRP to rely on their judgment or skill.
The optional Designated Representation model allows a brokerage to work with both buyer and seller in a single transaction without entering into Multiple Representation. In this model, the duty owed to clients applies to designated salespersons within a brokerage for specific transactions, not the brokerage as a whole. This model enhances clarity in representation, allowing different salespersons from the same brokerage to represent the interests of the buyer and seller separately.
Another notable change is the mandatory Consumer Information Guide prepared by the Real Estate Council of Ontario (RECO). Realtors are now required to provide this guide to clients and self-represented parties before offering any services. Previously, there was no standardized information guide. This new requirement enhances consumer awareness and sets clear expectations for real estate transactions. However, it also adds an administrative layer for realtors, who must now ensure that every client receives and understands this guide.
TRESA's enhanced disclosure requirements now necessitate written disclosures in clear, concise language, prominently featuring the word "disclosure." This includes material facts, latent defects, conflicts of interest, and the existence of a Seller Property Information Statement (SPIS). Realtors must obtain a written acknowledgment from clients, ensuring they have received and understood these disclosures, and provide them with a copy of the acknowledgment.
Amendments to the disclosure section are not entirely new but expand upon previous obligations. Previously, real estate professionals were required to disclose known facts about a property. TRESA now mandates more explicit and detailed disclosures, including every service and marketing effort, like staging, involved in the transaction. This has caused some confusion among professionals, as it seems to add complexity to pre-existing practices. The key change is the need for clarity and specificity in disclosures, which must be explicitly documented in contracts or Agreement of Purchase and Sale (APS).
The Code of Ethics under TRESA is getting a focused makeover, primarily concentrating on conflicts of interest and confidentiality. Additionally, the RECO discipline committee is empowered to handle allegations of law breaches, not just code of ethics violations. This enhancement in regulatory powers aims to improve accountability and ethical standards in the real estate profession. While this increases the professionalism and integrity of the sector, it could be perceived as an added regulatory burden by some professionals.
A significant shift under TRESA pertains to multiple offer scenarios. Previously, the details of individual offers in such situations were confidential. TRESA introduces a potential shift towards open bidding or auction-style processes. If all parties involved in a multiple offer scenario consent, details of the offers can now be disclosed to other interested parties. This change aims to make bidding more transparent, allowing participants to know who they are outbidding. However, there's ambiguity, as it's not mandatory but optional, leading to a mix of closed and open bidding processes depending on the participants' agreement.
Lastly, TRESA necessitates updates to standard Real Estate forms. OREA is revising existing forms to ensure compliance with the new rules. This update aims to standardize and clarify terminology related to brokerage/consumer relationships and disclosures. This standardization is crucial for legal compliance and consistency in real estate documentation. However, it requires realtors to adapt to new forms and potentially undergo retraining.
In conclusion, TRESA's reforms represent a significant stride towards enhancing trust and reliability in Ontario's real estate services. While these changes offer substantial benefits in terms of consumer protection and ethical standards, they also introduce new challenges and responsibilities for real estate professionals. For more information or assistance in understanding how these changes impact your real estate transactions, feel free to contact Nungisa Law at info@nungisa.com. Our team is dedicated to providing you with comprehensive legal support in this new regulatory environment.
Welcome to the dynamic world of Ontario's commercial real estate. This sector holds the potential for robust returns, but it also presents unique considerations. We'll uncover the attractive elements and potential difficulties of this field, all the while providing a roadmap for your investment journey.
Why Consider Ontario's Commercial Real Estate?
1. Steady Income Stream
Commercial properties often yield a more substantial and steady cash flow compared to residential real estate, a statement backed by the Real Property Association of Canada. They quote a potential return on investment of 6-12%, while residential typically ranges from 1-4%.
2. Lease Durability
With longer lease agreements, commercial real estate offers stability. Businesses typically commit to multi-year contracts, reducing vacancy rates and the headache of frequent tenant turnovers.
3. Economic Development
Ontario is experiencing rapid growth, resulting in a rising demand for commercial properties. Investing here could capitalize on this economic expansion, providing an opportunity for asset appreciation.
Delving Deeper: Potential Complications
1. Higher Initial Investment
Commercial real estate generally demands a higher upfront investment than residential. The Canada Mortgage and Housing Corporation points out that higher purchase prices, down payments, and property maintenance costs should be factored into your budget.
2. Market Complexity
This sector can be challenging to navigate for first-time investors. The value of commercial properties is often linked to the usable square footage - a distinct difference from residential real estate. Understanding these intricacies is vital.
3. Regulatory Landscape
Commercial real estate is subject to specific zoning laws and environmental regulations. For instance, according to the Ontario Ministry of Municipal Affairs and Housing, a property used for retail might not be approved for a restaurant due to zoning restrictions.
A Calculated Approach: Navigating the Journey
Facing an issue during any stage of the process calls for a measured approach.
1. Research: Knowledge is power. Thoroughly understand the local market trends, property values, and potential growth.
2. Professional Assistance: Seek guidance from experts like real estate brokers, appraisers, and legal counsel.
3. Financial Analysis: Run the numbers. Consider all potential costs against your projected returns.
4. Risk Management: Have a plan for potential downturns. Include strategies such as diversified investments and comprehensive insurance coverage.
Conclusion: Seize the Commercial Real Estate Opportunity
Ontario's commercial real estate market is a land of opportunity waiting to be explored. However, this journey demands a careful, measured approach. Balancing the enticing prospects with the potential pitfalls is key.
Remember, every real estate venture is unique. Tailor your strategy to align with your financial goals, risk tolerance, and investment timeline. A calculated approach, complemented by professional advice, can help you unlock the potential of commercial real estate in Ontario.
When it comes to legal matters in real estate, Nungisa Law is here to assist. Our team of experts specializes in real estate law, guiding you through the intricacies of the process and providing comprehensive advice. For all your real estate matters, contact us at info@nungisalaw.ca. Together, we can make your commercial real estate investment journey a successful one.
Embarking on the journey to homeownership can seem like a daunting task, especially for first-time buyers. As a lawyer specializing in real estate law in Ontario, I've simplified this process into a step-by-step guide. Let's navigate the path to your dream home together.
The first step towards homeownership is understanding your financial capabilities. Tools like mortgage calculators can help estimate your potential monthly mortgage payments, including taxes and insurance. Remember, as a rule of thumb, your housing costs shouldn't exceed 30% of your gross monthly income [1].
Having a pre-approved mortgage will help you understand exactly how much you can afford and provide you with a competitive edge in a heated market. However, bear in mind that pre-approval isn’t a guarantee of a loan.
Identify what you need in a home. Consider factors like location, size, proximity to schools or workplaces, and community amenities. Be flexible and ready to balance your wants and needs against your budget.
An experienced real estate agent is a valuable asset, offering market insights, negotiation skills, and access to homes that may not be publicly listed yet. Their commission is usually paid by the seller, so this expert advice comes at no cost to the buyer [2].
This is where the exciting part begins! Tour homes that fit your criteria, and don't rush. Take the time to evaluate each property thoroughly. Ask about the age and condition of key elements like the roof, electrical systems, and appliances.
Once you've found the perfect home, your agent will help you prepare an offer. This will include the price you're willing to pay, the conditions of purchase, and your desired closing date.
A home inspection is a crucial step in due diligence. It can uncover hidden issues such as structural damage or outdated electrical systems. Don't skip this step, as the cost of an inspection is small compared to potential repair costs down the line.
Once your offer is accepted and you've completed a satisfactory home inspection, you'll finalize your mortgage with your lender. Be sure to understand the terms of your loan fully.
This is the home stretch. A real estate lawyer will conduct a title search, ensuring there are no liens on the property. They'll also prepare the necessary documents to transfer the home's title to you.
Congratulations, you are now a homeowner! Time to move in and start creating memories in your new home.
While these steps lay a clear roadmap, be prepared for a few bumps along the way. Here are a few tips to help you navigate:
1. Saving for Down Payment: This can be a considerable challenge. Consider utilizing a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA) for saving purposes.
2. Choosing the Right Mortgage: With so many options, it can be overwhelming. Take the time to understand the difference between variable and fixed interest rates, and the terms of the loan.
3. Understanding Legal Terms: Legal jargon can be complex. Don't hesitate to ask your real estate lawyer to explain any terms or conditions you don't understand.
With careful planning, professional assistance, and diligent research, the home-buying process can be a rewarding journey. As Robert Kiyosaki once said, "Real estate investing, even on a very small scale, remains a tried and true means of building an individual's cash flow and wealth"[3].
[1]: The Financial Consumer Agency of Canada, "How Much You Can Afford to Spend on a Home", 2022.
[2]: Ontario Real Estate Association, "Hiring a Real Estate Agent", 2022.
[3]: Kiyosaki, Robert. "Rich Dad Poor Dad", 1997.
In the realm of workplace investigations, the debate between the merits of informal and formal methods is an enduring one. To unravel this complex issue, we must first define what distinguishes these two approaches.
An informal investigation is usually a less structured process, often conducted internally, and may involve an informal chat, a conflict-resolution meeting, or a low-key inquiry. It typically comes into play with minor disputes or misunderstandings and tends to prioritize open dialogue and swift resolution.
On the other hand, a formal investigation is a more structured, systematic procedure. It might involve external investigators, witnesses, written statements, and meticulous documentation. This method is commonly employed for serious allegations, like harassment, bullying, or fraud.
In recent times, a shift has been observed with more HR professionals leaning towards formal investigations, even for minor issues. This shift could be attributed to the increasing emphasis on transparency, accountability, and legal compliance.
However, it's too soon to declare the informal investigation a relic of the past. While the formal route ensures a comprehensive and impartial inquiry, it can also be time-consuming, costly, and disruptive. The informal approach, though less rigorous, promotes dialogue and can often defuse conflicts before they escalate.
Choosing between formal and informal investigations involves a delicate balancing act. Here's a look at how this decision can impact three key areas:
A formal investigation will typically yield a detailed report, which can be a valuable tool for making decisive conclusions. It provides substantial evidence and can stand up to legal scrutiny if necessary.
On the contrary, an informal investigation might not yield as much tangible evidence. However, it can still offer insights into the issue and guide the HR team in making an informed decision. Its less intimidating nature can encourage more open and honest feedback.
The choice of investigation method sends a powerful message about the organization's culture. Formal investigations underscore a commitment to fairness and accountability, but if overused, they might foster a climate of fear and distrust.
On the flip side, while an informal approach might help maintain a more relaxed atmosphere, it may risk trivializing serious issues, giving the impression that the company does not take such matters seriously enough.
Post-investigation, the rehabilitation process is crucial. A formal investigation, though thorough, can leave a trail of strained relationships. The informal approach, with its emphasis on dialogue and reconciliation, might fare better in this regard.
Yet, each case is unique. Sometimes, the severity of an issue mandates a formal investigation, irrespective of the potential fallout.
As HR professionals, the responsibility of striking the right balance falls on us. Though the trend leans towards formal investigations, the informal approach still has its place. Each has its strengths and pitfalls, and the choice should be dictated by the nature and severity of the issue at hand.
In an era where workplace culture is under the spotlight, we must remember that our ultimate goal is to create an environment of respect, trust, and fairness. The choice between formal and informal investigations is just one tool in our arsenal to achieve this goal.
Remember, regardless of its formality, every investigation requires empathy, sensitivity, and a commitment to fairness. Done right, it can be an opportunity to strengthen our workplace culture, reinforce trust, and demonstrate that we value every employee's dignity and well-being.
If you would like to discuss whether your organization may benefit from a formal or informal investigation, please get in touch with us at investigation@nungisalaw.ca.