The notion of a contract is as old as time.
The notion of a contract is as old as time.
Two parties make a promise to one another, they settle on the terms and compensation, then they shake hands to bind the agreement.
I will give you this if you give me that; I will do this if you do that.
Should one party to the agreement fail to come through, the contract is breached and the other party is entitled to legal remedy.
A contract is a contract.
Of course, this is a wild oversimplification — contract law is actually quite complex and nuanced — but fundamentally we all understand the concept.
For example, when deciding to purchase a home, a buyer signs an offer and usually accompanies that offer with a healthy deposit cheque. If and when that offer is accepted by the seller, they then have a firm and binding contract that clearly outlines the obligations of both parties and a date upon which the deal is to be transacted.
What happens if the buyer wakes up the next morning with cold feet? What if they can’t obtain financing from the bank? What if the following week they find their dream home and want to bail on the first deal?
Well, they would be in breach of the contract they signed. Their deposit would be forfeited. And the other party would be entitled to pursue damages against the other.
You’d be shocked at how often this happens.
You may have read this week about a 250-year-old heritage tree at the centre of a whole legal brouhaha in Toronto. Long story short, on a fairly random lot up in North York sits a house. And but inches from that house sits a red oak tree that pre-dates Confederation.
So glorious and significant is this tree that in 2019, after the community rallied to protect and preserve it, the City of Toronto entered into an agreement with the homeowner to purchase the property with the intention to demolish the house and turn the lot into a parkette. They settled on a price, which was agreed to be fair market value at the time. The deal was contingent on the city putting up a portion of the money with community donors responsible for the rest. Hence the lengthy gap between signing and completion to allow for fundraising, which was fulfilled.
Nearly two years later the seller has changed his mind, citing the substantial increase to market value for the property. If the city wants the deal to go ahead, he’d like more money.
Hopefully someone has told him he signed a contract; the simple fact of no longer liking the terms of that contract does not make it invalid.
It will be settled in court in October.
It’s the classic case I have seen a number of times. When one party realizes the terms they agreed to could be more favourable and wants a do-over.
The thing is, that’s not how contracts work, even if it’s something that parties to real estate transactions have been getting away with for years.
As the Toronto market has been on its upward climb for most of recent memory, if a buyer wanted to bail on a deal, you could usually count on another buyer being ready and willing to step in, grateful for the opportunity.
With prices rising month-over-month, by and large the seller wouldn’t suffer much of a loss so rather than dragging it out into a protracted battle, typically both parties would simply sign a mutual release, the deposit would be returned and everyone would move on.
The problem with all of that is that it appears to have given the impression that real estate contracts are flexible. Contracts by definition are not flexible.
Especially now that we are starting to see prices coming down from the highs of March. A buyer refusing to close on a house purchased at the top of the market will result in a substantial loss for sellers who will be unlikely to hit the same number now that the market activity has slowed.
That’s a financial loss suffered by one party as a result of the other’s breach of contract. That party would be entitled to pursue damages against the other, and based on recent cases, it’s a near certainty the courts would side with the aggrieved party. Courts are in the business of upholding contracts.
The moral of the story? A contact is a contract. You are bound to the terms you agreed and signed on. And if you wish you hadn’t? Think long and hard because bailing is surely going to cost you.
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Blackstone Inc. BX-N said Monday it has no interest in investing in single-family homes in Canada, laying to rest speculation the giant global asset manager would scoop up hundreds of Canadian houses and turn them into rental properties.
After Blackstone announced plans in May to establish a Canadian office in Toronto, rumours abounded that the private equity firm would unleash its firepower, gobble up homes and increase competition for individuals and families looking to buy homes. The typical home price across the country has climbed 50 per cent over the past two years and real estate investors have come under scrutiny for their role in ramping up competition and driving up prices.
But Blackstone’s head of real estate Americas, Nadeem Meghji, said that is not in the cards for the company’s Canadian expansion.
“It’s just not an area that we are focused on in Canada,” he said in a joint interview with Janice Lin, the new head of Blackstone Canada.
The New York-based company, which has US$915.5-billion in assets under management, has been accused of profiting off the 2007 U.S. housing meltdown after it bought swaths of distressed properties and then rented them out to U.S. residents.
Blackstone has said it did not own any single-family homes before the crisis and didn’t foreclose on any of the properties. It has also said many of its purchases were homes that had been sitting vacant and dragging down local property values.
Blackstone has since sold that business and owns a rent-to-own business called Home Partners of America – one of the many players in a growing single-family home rental market in the U.S.
“We don’t have a similar platform in Canada and we don’t have the intention of launching one because, from our perspective, we think there are just more interesting places to deploy capital in the Canadian market,” Mr. Meghji said.
Ms. Lin, a former Canada Pension Plan Investment Board executive, is in charge of Blackstone’s expansion in Canada. She cited the country’s favourable immigration policies and its strong population growth as two key factors that make Canada a winner for Blackstone’s capital.
Blackstone mostly owns warehouses and other industrial space in Canada, as well as a couple of office towers. It also has some investments in apartment building developments. All together, they are worth about US$14-billion, according to Blackstone, representing just a tiny fraction of the company’s global real estate portfolio.
Ms. Lin and Mr. Meghji both said the company will continue to invest in industrial and top office buildings, as well as hotels.
Blackstone has previously said it expects its growth here will be significant. Mr. Meghji would not quantify “significant” except to say he expects growth will be material and Canada could eventually command a larger share of Blackstone’s global real estate portfolio.
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MONTREAL — When Soufia Khmarou moved from Morocco to Montreal in 2009, she thought finding an affordable house for her and her three children was going to be easy.
“I was not expecting this,” Khmarou said in an interview Monday. “What we see, what we hear about Quebec … the reality doesn’t reflect the ad.”
Khmarou appeared next to Manon Massé, a spokesperson with Quebec’s second opposition party, Québec solidaire, who told reporters Montreal’s affordable housing shortage is going to get worse if more money isn’t made available.
Standing next to a construction site of high-end condominiums near downtown Montreal, Massé said, “There are housing units being built in Montreal. But for the families that want to find a place to stay and afford to pay rent each month, there’s a crisis.”
The need for affordable housing will be especially acute after June 30, she said, when most of the leases across the province end. Many families will be forced to remain in or move into homes that are unsanitary or unfit for their needs. Massé said low-income families in Montreal and in the rest of the province are spending up to 85 per cent of their monthly incomes on housing.
Khmarou said she’s been on waiting lists to access subsidized housing for the past three years, hoping to move her family out of a Montreal apartment she said is unsanitary.
“But I don’t have any answers; all I see is more and more people on the same lists,” Khmarou said. “There’s no hope; there’s no low-rental housing that’s being added on the market.”
Montreal Mayor Valérie Plante held a separate news conference on Monday, also to lament the lack of affordable housing in the city. Plante said Montreal has been waiting for the past four years for millions of dollars promised by the federal government to build around 1,200 affordable housing units and renovate an additional 4,700 units.
“We know that there’s a housing crisis — it’s hard on July 1,” Plante told reporters. “To know that there are almost 6,000 units that are taken hostage, that aren’t made available for citizens, it’s unacceptable. It’s been four years, at one point, patience has a limit.
“When we talk about the safety and healthiness of housing units, that’s what’s at stake,” she said.
A coalition of housing committees and tenant associations in Quebec released a report over the weekend indicating a widespread rent increase across the province. The coalition analyzed 51,000 rental listings from February to May and said rents across the province increased by nine per cent between 2021 and 2022, reaching an average of $1,300 per month.
The coalition said that less-populated parts of the province were used to an accessible market but are now seeing strong increases.
Rentals.ca, a Canadian website for apartment rental searches, said the average rent for all Canadian properties listed on its site was $1,888 per month in May — a year-over-year rise of 10.5 per cent. With an average of about $2,000 a month for a two-bedroom unit, Montreal ranked 22nd out of 35 cities. Vancouver, the front-runner, had the same size units listed for an average of $3,495 per month.
The association of homebuilders, called the Association des professionnels de la construction et de l’habitation du Québec, said in a report last week that Quebec is missing 100,000 homes, with more than 37,000 families on waiting lists to access subsidized housing.
Paul Cardinal, director of economic services with the association, wrote that “the only way to sustainably reduce real estate overheating is to increase supply.”
This report by The Canadian Press was first published on June 27, 2022.
This story was produced with the financial assistance of the Meta and Canadian Press News Fellowship.
Virginie Ann, The Canadian Press
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