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Enforce Your Rights, or Lose Them #542 – British Columbia Real Estate Association – BCREA

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Anyone who has been involved in a transaction for a property under construction is likely familiar with the potential for delays of completion. While developers don’t often fail to deliver, it can happen. What happens when significant delays do occur? Can a developer be in default under the contract? What about the innocent party in a transaction: can they fail to deliver on their obligations after the other party has already defaulted? While the answer isn’t always simple, it comes down to enforcing your rights, or losing them.

A recent decision out of the Ontario Court of Appeal has confirmed that an innocent party to a real estate transaction must enforce their rights when the defaulting party repudiates a real estate contract, otherwise they can lose their right to terminate the contract or seek other remedies.

Repudiation of a contract occurs when a party defaults on their obligation(s) under a contract and demonstrates “an intimation of an intention to abandon and altogether refuse performance of a contract”[i]. Some examples of repudiation in real estate contracts are as follows:

  • failure of the buyer to pay the deposit when due and payable;
  • failure of a buyer to complete a purchase on the completion date;
  • failure of a seller to transfer a property to a buyer on the completion date; or
  • the buyer (or its representative) communicating to the seller that they cannot, or will not, complete the purchase of the property.

Once a contract has been repudiated, the innocent party has two options:

  1. accept the repudiation, and seek remedies against the defaulting party; or
  2. elect not to terminate, and the contract remains in force.

Under the second option both parties are obligated to continue performing their obligations under the contract.

In Ching v. Pier 27 Toronto Inc.[ii] the Ontario Court of Appeal denied the buyer’s request for the return of their deposit, even though the seller was in default under the contract. The reason the court denied their request was because the buyers had failed to accept the repudiation by the seller and then the buyer ultimately failed to perform their obligations under the contract. The facts of the case are as follows:

  • The buyers, Mr. and Ms. Ching, entered into a presale contract in 2008 to purchase a condo that was under construction
  • The Ching’s paid deposits totalling $214,238.85
  • The original completion date was set to occur in 2010
  • The developer extended the completion date eight times between 2010 and 2014
  • The presale contract only allowed the developer to extend the completion date by 24 months from the original completion date, meaning the developer was in default.
  • The buyers never actively enforced their rights with respect to the contract every time the developer extended the completion date, meaning they acted is if the contract was still in effect
  • In August of 2014 the buyers finally requested the termination of the contract due to the developer’s numerous unpermitted extensions
  • The developer stated they did not have the right to terminate the contract
  • The buyers did not close the transaction nor take possession of the property at closing because their mortgage approval had expired and they believed they should be entitled to the return of their deposit due to the developer’s ongoing default in extending the completion date.

The trial judge in this case decided that while in fact the developer was in default under the contract, the Ching’s had failed to “‘clearly and unequivocally’ accept the repudiation to terminate the Agreement[iii] when the developer was in default, and they were therefore bound to also perform their obligation under the contract to complete the purchase.

The trial judge treated the presale contract as subsisting because after each event of default by the developer (ie. each unpermitted extension), the buyers acted in a way that affirmed the contract was subsisting, these actions included requesting the ability to assign the contract and doing “nothing for too long”[i]. Based on this, the trial judge denied the return of the buyer’s deposit. The Court of Appeal upheld the trial judge’s decision and refused the Ching’s request for the appeal of the original judgement and to have their deposit returned.

Conclusion

It is important for Realtors to advise clients to seek independent legal advice if one party to a contract is in default. This advice should be sought as soon as they become aware of the default as simple actions may be inferred that the innocent party elected not to terminate the contract or seek other remedies.


[i] Freeth v. Burr, (1874) 9 L.R.C.P 208, from Donald M McRae, Repudiation of Contracts in Canadian Law, 1978 56-2 Canadian Bar Review 233, 1978 CanLIIDocs 22

[ii]Ching v. Pier 27 Toronto Inc., 2021 ONCA 551 (CanLII)

[iii] See paragraph 27 of Ching v. Pier 27 Toronto Inc., 2021 ONCA 551 (CanLII)

[iiii] See paragraph 49 of Ching v. Pier 27 Toronto Inc., 2021 ONCA 551 (CanLII)

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Over A Quarter of Toronto Real Estate Is Bought By Investors With Multiple Properties – Better Dwelling

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Over A Quarter of Toronto Real Estate Is Bought By Investors With Multiple Properties  Better Dwelling



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Staying Competitive- How The Power And Voice Of The Real Estate Industry Are Changing – Forbes

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Last week, Warburg Realty* became part of Coldwell Banker’s Global Luxury Group. Warburg is just the latest in a series of mergers and acquisitions which is gradually shrinking the pool of independent luxury brokerages in New York City. With CORE’s 50 percent sale to The Related Companies, followed by the sale of Stribling to Compass in 2018, and now Warburg, the landscape of New York’s luxury firms echoes the brand consolidation which has swept almost all industries in recent years. And the rest of the country fares no differently. For most brokerage CEOs, this decision is being spurred by an awareness of how profoundly the business of real estate has changed in the last decades. Here is the how and why:

Through the early 1980s the residential sales business in New York, as in most of the rest of the country, was a family affair. Most brokerages were run by founders or long-time owners. Douglas Elliman was the exception, having already had more than one corporate owner. The firms were small, as was the entire business. Property listings were written on file cards and were given non-exclusively to a handful of firms. Agents worked hard to acquire those listings, making cold calls and walking the avenues chatting up and tipping doormen. No one co-broked listings, since none were given exclusively to agents. There was no central listing repository. The only advertising was columns of listing ads in the New York Times Real Estate section and the occasional display ad in the Times Magazine or, as time went on, Quest Magazine. No firm had more than 60 or 70 residential agents; L.B. Kaye, where I (along with a number of other industry executives) started my career, had fewer than 50.

There were no condominiums at that time and a limited number of co-ops. Artists actually lived in Soho, in unimproved or barely improved loft spaces. Alphabet City was not a safe place to venture, and the Lower East Side was not much better. The Bowery was still inhabited by winos. 

The mid-80s brought a cascade of rental-to-co-operative conversions to New York. Landlords saw an opportunity to cash out of buildings. At the same time, they maintained cash flow by creating wraparound mortgages at high interest rates which they imposed on these conversions. Because of this trend, the number of apartments for sale probably tripled between 1980 and 1988, until the market crashed and conversions and sales both ran aground. 

During the early 1990s, multiple changes shook the market. First, we were forced to acknowledge that, as the number of co-op buildings exponentially increased, the old way of handling listings no longer worked. File cards gave way to the first clunky computer listing systems. Exclusive listings and co-broking came to Manhattan, championed by a small company led by Susan Byrd; her work transformed the way we sell property here (the superbroker Sharon Baum is one of the few remaining Susan Byrd veterans still plying her trade among us). Equally significant, the brilliant innovator Barbara Corcoran forced upon her reluctant colleagues the twin ideas of branding and marketing, which many of us were slow to understand were NOT the same thing as advertising. 

And so, as the millennium turned, the industry was poised on the cusp of a sea change: technology, branding, and capital pushing their way to center stage of our formerly tame backwater of a business. Over the past 20 years, the goalposts which enabled small firms to continue to succeed kept moving.  Cendant (now Realogy) acquired Corcoran and then Sotheby’s Realty, Douglas Elliman changed hands to become a part of the Vector Group portfolio, Terra Holdings took over Brown Harris Stevens and Halstead, Town Residential came and went in New York to be replaced by its vastly better capitalized and more sophisticated sibling Compass, which spread throughout the country like a wildfire fed by a seemingly bottomless pit of capital. The worst excesses of the finance and tech industries came to the real estate brokerage market, as huge companies offered six-figure signing bonuses as well as multiple assistants and vast marketing budgets to agents, all in the belief that today’s loss leader would somehow morph into tomorrow’s profitable company. 

In such an environment, a small residential company faces the ultimate challenge: not how to be profitable but how to provide competitive, best-in-class technology, customer relationship management, and seller engagement tools to its agents. In the end, these considerations drive many small and mid-sized brokerage owners into the arms of big national firms. These national players connect agents with like-minded agents in every major city and town in the country and often throughout the world. In addition, they provide their agents with the ability to match any tools a competitor may offer to win client business. The power and voice of the industry have thus gradually moved from the many to the few. With so many issues critical to real estate at stake before the Department of Justice and other government agencies, we all trust that these few have the deep understanding of the industry required to create a best-case outcome for us all. 

*Disclaimer: Frederick Warburg Peters is the CEO of Warburg Realty, which he sold to Coldwell Banker. Warburg Realty, of which Peters will remain CEO, will operate under the name Coldwell Banker Warburg starting in January 2022.

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Real estate secrets; Family blindsided after others profit off obituary; CBC's Marketplace Cheat Sheet – CBC.ca

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Miss something this week? Don’t panic. CBC’s Marketplace rounds up the consumer and health news you need.

Want this in your inbox? Get the Marketplace newsletter every Friday.

Real estate agents caught on hidden camera breaking the law, steering buyers from low-commission homes

Marketplace’s latest investigation is uncovering some shady real estate practices.

Posing as homebuyers and sellers, Marketplace tested if real estate agents are engaging in steering, an anti-competitive practice that steers potential homebuyers away from properties that offer agents lower commission. The team’s hidden cameras found some agents deceiving the buyers they are supposed to represent in an effort to pad their own bottom line.

Experts and industry insiders say what Marketplace has uncovered is indicative of an industry working for the benefit of real estate agents at a cost to home sellers and buyers.

“There’s a huge inertia, and maintaining the status quo, it absolutely benefits existing realtors 100 per cent,” said broker and real estate agent Michael Walsh, one of the few speaking out on this issue.

After learning about our findings, the Real Estate Council of Ontario issued a notice about steering to more than 93,000 real estate agents, brokers and brokerages under its purview, noting that such behaviour breaches their code of ethics. Read more

Real Estate Secrets

2 days ago

Investigation catches real estate agents breaking the law to keep commissions high, hamper competition and block private sellers. 22:30

Family blindsided after marketing company, funeral home cash in on father’s obituary

Before pancreatic cancer took his life in April, John Rothwell made his dying wishes clear: if mourners wanted to donate to a cause in his name, the money should go to an educational fund he and his family set up.

Instead, family and friends unwittingly paid for a product that puts money into the pockets of companies profiting from grief, says son Nathan Rothwell

Rothwell told Go Public that while he knew the obituary would be on the website of the Mackey Funeral Home in Lindsay, Ont., he made sure it included a request for mourners to consider donating to the educational fund, in lieu of flowers. 

What no one told his family is that Frontrunner — a Kingston, Ont.-based marketing company that runs the funeral home’s website and many others across the country — uses obituaries to sell what it calls “memorial” trees and other products.

The obituary included links that said, “Plant a tree in the memory of John Rothwell” and led to a different website where mourners paid for products the family knew nothing about, said Rothwell. 

“Family and friends spent money out of their own pockets for what they thought were my dad’s wishes,” Rothwell said.

After Rothwell complained and got a lawyer involved, Frontrunner doubled what mourners paid for the trees, and donated that money — more than $2,000 — to the educational fund. The company maintains that it did nothing wrong. Read more

Nathan Rothwell says his dad wanted memorial donations to go to an educational fund. Instead, some money went to private companies using obituaries to sell memorial-themed tree plantings. (Robert Krbavac/CBC)

The U.S. land border is reopening, but Canadians with mixed vaccines are still in limbo

While it’s welcome news that the U.S. will reopen its shared land border with Canada to non-essential travel on Nov. 8, some Canadians with mixed vaccine doses aren’t celebrating just yet.

That’s because at the same time the U.S. reopens the land border, it will start requiring that foreign land and air travellers entering the country be fully vaccinated. 

The U.S. Centers for Disease Control (CDC) currently doesn’t recognize mixed COVID-19 vaccines — such as one dose of AstraZeneca and one dose of Pfizer or Moderna — and hasn’t yet said if travellers with two different doses will be blocked from entry when the vaccine requirement kicks in. 

“CDC will release additional guidance and information as the travel requirements are finalized later this month,” spokesperson Jade Fulce said in an email on Wednesday. Read more

A U.S. Customs and Border Protection agent directs vehicles re-entering the United States from Canada at the Ambassador Bridge in Detroit on Aug. 9. Starting in early November, Canadians entering the U.S. by land and air will have to be fully vaccinated, but there’s uncertainty over whether two doses of different vaccines will count. (Matthew Hatcher/Getty Images)

What else is going on?

What we know about kids and COVID-19 vaccines
If parents feel heard and understood, they’re in a much better position to make decisions, say pediatricians

Zellers returns — kind of — but the lowest price isn’t quite the law 
Discount store brand reappears months after HBC appears to lose trademark registration.

Sweatpants forever? Why the ‘athleisure’ fashion trend may outlast the pandemic
The pandemic has changed fashion trends — and experts say our desire for comfort is here to stay.

Canada seeks to claw back $25M in COVID relief from thousands of fishers 
More than half of the harvesters affected by the repayment request are in Nova Scotia.

Specialized Tarmac SL7 Bicycles recalled due to fall hazard
Consumers should immediately stop using the bicycles and contact an authorized Specialized retailer.

Marketplace needs your help

Have you ever signed up for a session with a life coach? We want to hear all about your experience! Email us at marketplace@cbc.ca.  

Watch this week’s episode of Marketplace and catch up on past episodes any time on CBC Gem.

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