Air Rights

By Brian Madigan LL.B.

There are “air rights” and then again there are “air rights”, and of course they are two completely different things.

So, let’s deal with the two concepts:

1) common law air rights, and
2) zoning air rights.

Common Law Air Rights

Actually, these are probably the types of rights that would easily come to mind. They involve your rights as a property owner to use, have, or restrict the use of the air that is above your property. It is easy to understand your property rights at surface level, but what happens when you go higher and higher?

There would appear to be several matters to take into consideration, and you have the right at common law to:

1) build or construct buildings above the surface of your property,
2) restrict others from building above the surface of your property,
3) receive and breathe fresh air that is not polluted,
4) view the sunlight in an unobstructed fashion,
5) receive transmission by various wavelength varieties (radio, television, satellite, x-ray, infared, sound etc.)
6) prevent others from travelling in the air space (well, not too low) above your property,
7) remove limbs from trees that enter into your air space,
8) attend to the removal of limbs of your trees encroaching the air space of neighbours,
9) require the removal of an eavestrough or other encroachment that might exist above the surface of your property.

The above matters are not intended to be an exhaustive list. There still may be other rights because the common law is always evolving.

Zoning Air Rights

When you hear discussion about “air rights”, these types of rights are commonly the subject. In fact, they are not “air rights” at all. They represent the transfer of an entitlement to construct a building in accordance with the provisions of the local zoning by-law.

So, here’s how they work. Let’s assume a developer wishes to construct a substantial office building. The local zoning by-law permits 12 times coverage. That means that if the developer buys a property which has 10,000 square feet of space, he could then build an office building that was 120,000 square feet. Naturally, he would still have to comply with the appropriate height and setback requirements.

What happens to the neighbourhood? All the short buildings get torn down and replaced with new taller buildings. Skyscrapers are incompatible with old historic buildings! That happened in the ‘50’s and ‘60’s. But, that just isn’t good town planning.

The result was a rather innovative approach that was used to help preserve the older historic buildings in downtown urban areas. The 10,000 square foot lot that is immediately adjacent to the potential skyscraper now has value. If you tore it down, you could build a 120,000 square foot building on site. Let’s assume that there is already a 10,000 square foot historically and architecturally significant building in place. This leaves 110,000 square feet of undeveloped potential leftover.

Now, the trick is to sell that 110,000 square feet of potential building entitlement (pursuant to the zoning by-laws), to the developer of the office building. He can build 12 floors on his own. Now, he can build another 11 floors, so that he has a 23 storey building. Due to setback requirements, he might only use one half of the land footprint, and provided he does not exceed the maximum height limitation, he would then be able to construct a 46 storey office building. Perhaps, it’s not quite a skyscraper by today’s standards, but that’s the way the scheme goes.

The “air rights” (in this context) are really “unused development potential”. They are transferred from one property owner to another. The historic property is then “downzoned”, so that the air rights cannot be sold again. In many municipalities, the building to be preserved is provided with an “historic designation”. This restricts the use of the property in the future. The intent is to preserve historic buildings in downtown areas, and provide for their increase in market value.

A case in point, would be the National Club on Bay Street in the heart of Toronto’s financial district. The air rights were transferred to Scotiabank so that it could build a bigger and better Scotia Plaza.

Just remember, when you are walking along Bay Street that buying the National Club, only to tear it down and build your own skyscraper won’t work.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Coldwell Banker Innovators Realty

905-796-8888

http://www.ontariorealestatesource.com/

Legal Non-Conforming Use

By Brian Madigan LL.B.

This is an issue under the zoning by-laws. It is important to note that all zoning by-laws are forward looking. They speak to the future and not the past. They regulate future uses of a property not existing ones. They are prospective not retrospective in nature. They are not retroactive.So, if you have a present use which is legal, then it may continue forever. But, that entitlement applies to that property and that property alone, no others.

If a new zoning by-law is enacted, it will apply only to other properties which do not have the existing and now prohibited use.Let’s say that the municipality does not want a parking lot in the area. It will first have to designate the area to which the new zoning will apply. Once the by-law is enacted, it will apply to every property in the area.

If any property had a parking lot in use at the time of passage of the by-law, then the owner will be able to demonstrate that this use is a “legal non-conforming” use. The activity predates the by-law. The use was a legal use at that time, and that same use has continued in an uninterrupted fashion since the by-law. It’s not enough simply to show the start date, there must also be evidence that this particular use has not been abandoned. It has been continuous.This continuous and uninterrupted use is at times difficult to prove.

Let’s take the example of a restaurant which is the only restaurant in an area that now excludes restaurants. What if the property closed down? What if the property were sold? How long can the property not be open to the public? What if it had a sign: “closed for renovations”? In all such cases, this is ultimately a matter for the Courts. For a vendor who wishes to ensure that such a use may continue, then legal advice should be sought in order to document the continuance of the use, particularly during lengthy periods of renovation and repair.

Property owners should not assume that the municipality will not seek to enforce its by-law. They have a very specific by-law BECAUSE they want to enforce it. There’s no free ride here. Document the continued use! The lack of documentation is the precise reason why the legal non-conforming status is lost in most cases.

The building structure may no longer comply with the area requirements or the minimum setbacks. Generally, these properties may be repaired so long as the new structure complies with the existing use, and the legal non-conformity is not extended.You will often see a number of buildings with modest setbacks from the sidewalk, perhaps they abut the sidewalk or may be set back just a foot or two.

You will often find a row of commercial stores constructed in the early part of the 20th century that follow this alignment. Then, every so often you will find one brand new store set back from the street line, on its own, by about 20 feet. Why is this? The reason is that the new setback requirement under the current by-law calls for 20 feet from the sidewalk. The prior building was probably demolished and then the owners submitted an application for a building permit. These buildings are typically 30 to 40 years old.

Since that time, builders have become a little smarter. They repair and renovate. They never demolish and reconstruct. No matter how bad the structure might be, it is always improved or shored up. It is never torn down and replaced. This allows the “new” building to be reconstructed over the old building and retain its right to abut the sidewalk.This is a very valuable right and should not be lost through oversight. If you own a legal non-conforming property, be sure to document its start date, and its continuous use.

Would you have the evidence available if the municipality claimed that the use was lost? It’s up to you to prove the legal non-conforming status. All the municipality needs to do is prove its current by-law. The onus to prove the right to non-compliance is upon the property owner. Paper the file!

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Coldwell Banker Innovators Realty

905-796-8888

http://www.ontariorealestatesource.com/

Ignore the Landlord at your Own Risk!

By Brian Madigan LL.B.

From time to time, tenants will wish to take advantage of the favourable lease rates under a long term lease.For one reason or another, the property is no longer suitable for them to continue to occupy the premises.

So, they decide to sublet. Only one little problem: they forget to notify the landlord. And, the reason is quite simple, the landlord would probably say “no”.

After a 15 year initial term, and a 5 year renewal, the landlord is anxious to see the lease come to an end so that he can raise the rates to market levels.At one time, the courts would come to the tenant’s assistance and relieve the tenant from the forfeiture provisions contained in the Lease. This was relatively commonplace. There appeared to be a predisposition on the part of the judicial system to err on the side of the tenant. (Barrow vs. Isaacs, England, Court of Appeal, 1891). That proposition was commented upon with approval recently by the English House of Lords in Shiloh vs. Harding.

However, as time went by, tenants became larger and in many cases far more sophisticated than the landlords. So, there was no longer a compelling reason to assist tenants to the ultimate disadvantage of the landlords.Today, both sides are on equal footing. Basically, this means that the courts, notwithstanding a long line of cases to the contrary are likely to prefer the interests of the tenant. Accordingly, tenants who fail to seek the approval of the landlord to the new sub-tenant, do so at their own peril. No longer can a tenant simply come to court and confess that he forgot to obtain the landlord’s consent.

There are provisions for relief from forfeiture contained in the Commercial Tenancies Act:

"Relief against re-entry or forfeiture

20. (1) Where a lessor is proceeding by action or otherwise to enforce a right of re-entry or forfeiture, whether for non-payment of rent or for other cause, the lessee may, in the lessor’s action, if any, or if there is no such action pending, then in an action or application in the Superior Court of Justice brought by the lessee, apply to the court for relief, and the court may grant such relief as, having regard to the proceeding and conduct of the parties under section 19 and to all the other circumstances, the court thinks fit, and on such terms as to payment of rent, costs, expenses, damages, compensation, penalty, or otherwise, including the granting of an injunction to restrain any like breach in the future as the court considers just.

Exceptions

(7) This section does not extend,

(a) to a covenant or condition against the assigning, underletting, parting with the possession, or disposing of the land leased; or to a condition for forfeiture on the bankruptcy of the lessee, or on the lessee making an assignment for the benefit of creditors under the Assignments and Preferences Act, or on the taking in execution of the lessee’s interest; or

(b) in the case of a mining lease, to a covenant or condition for allowing the lessor to have access to or inspect books, accounts, records, weighing machines or other things, or to enter or inspect the mine or the workings thereof."

The Ontario Court of Appeal in Leon’s Furniture v. 1497777 Ontario Inc. (2003) that:

• The prohibition under s. 20(7) does not oust the general equitable jurisdiction of the courts

• s. 98 of the Courts of Justice Act provides that a court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just.

• Section 98 supercedes s20(7)

One issue is now quite clear the Court will examine both the conduct of the landlord and the conduct of the tenant in determining the result of a relief from forfeiture application.The Court also quoted with approval the following decision of Justice Donnelly of the Supreme Court of Ontario (now the Superior Court of Justice and upheld by the Court of Appeal) in Federal Business Development Bank vs. Starr (1988):

“These cases illustrate that the test of a landlord’s reasonableness extends beyond and is moving away from the restrictive two-part test based on the personality of the proposed assignee or the intended use of the premises as established in the early English authorities.The more liberal approach, close to the “reasonable man” standard, is to consider the surrounding circumstances, the commercial realities of the market-place and the economic impact of an assignment on the landlord.”

This means that courts will view the conduct of a landlord who wishes to bring to an end a long term lease with options as being reasonable in the circumstances. Tenants no longer should ignore their landlord’s right to approve their su-tenants. Or, they do so at their own peril!

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Coldwell Banker Innovators Realty

905-796-8888

www.OntarioRealEstateSource.com

Terminating Residential Tenants Prior to Sale

By Brian Madigan LL.B.

This is not going to be the easiest thing to do, but it can be done. Sometimes, tenants are simply a liability. They are rude and objectionable and nobody wants them. And, what’s more, no one wants your building with these undesirable tenants.

So, the question is how do you get rid of them?The best solution is probably to sell the building to a new owner who will arrange to terminate the tenancies. This is a reasonable course of action and makes a great deal of sense. In fact, it’s often wise to suffer a little depreciation on the purchase price if your purchaser is willing to assume them.

There are some special rules relating to small landlords who have 5 or fewer residential tenants. This applies to a great number of small plazas, strip malls, four-plexes and the like.The first item to be considered is the applicable legislation. The Residential Tenancies Act replaced the Tenant Protection Act in January 2006. By now, it is expected that most residential landlords will be aware of its existence and will be complying with the new legislation. The Act applies to all matters relating to a residential tenancy. The parties cannot opt out of the protections offered by the Act. Any such provision is void as against public policy and will not be enforced by the Courts. The Act applies, and that’s it. There’s no way around it.So, you had better become familiar with the rules.

Assuming that you wish to sell your small building, and the purchaser does not wish to assume your tenants, what do you do?

Let’s also assume that your tenants have no leases, they are there simply on a month to month basis. If they do have leases, then there are some ways mentioned later to terminate prior to expiration of the term. Or, you can always buy them out.

Here is a customary termination provision at the end of the lease term:

Notice, landlord personally, etc., requires unit

48. (1) A landlord may, by notice, terminate a tenancy if the landlord in good faith requires possession of the rental unit for the purpose of residential occupation by,

(a) the landlord;

(b) the landlord’s spouse;

(c) a child or parent of the landlord or the landlord’s spouse; or

(d) a person who provides or will provide care services to the landlord, the landlord’s spouse, or a child or parent of the landlord or the landlord’s spouse, if the person receiving the care services resides or will reside in the building, related group of buildings, mobile home park or land lease community in which the rental unit is located. You will notice that it is somewhat restrictive.

Personal occupancy is a requirement. It is a must. And, it has to be a close relative or a caregiver.The notice must provide at least 60 days to vacate. This means that a notice for the end of June must be given before May. There are special provisions to treat February as a full 30 day month, whether it actually be 28 or 29 days. Thus, a notice to vacate by the end of February must be given on or before 1 January.

Once the tenant receives the notice, the tenant may give notice to leave after 10 days. So, the landlord who might ordinarily expect to receive two full months rent, may only get 10 days of rent. But, that’s the law, and one thing that you might have imagined is that the legislation is very pro-tenant.In our case, the building is to be sold.

Let’s have a look at another similar provision:

Notice, purchaser personally requires unit

49. (1) A landlord of a residential complex that contains no more than three residential units who has entered into an agreement of purchase and sale of the residential complex may, on behalf of the purchaser, give the tenant of a unit in the residential complex a notice terminating the tenancy, if the purchaser in good faith requires possession of the residential complex or the unit for the purpose of residential occupation by,

(a) the purchaser;

(b) the purchaser’s spouse;

(c) a child or parent of the purchaser or the purchaser’s spouse; or

(d) a person who provides or will provide care services to the purchaser, the purchaser’s spouse, or a child or parent of the purchaser or the purchaser’s spouse, if the person receiving the care services resides or will reside in the building, related group of buildings, mobile home park or land lease community in which the rental unit is located.

This time, the complex must be small containing no more than 3 residential units. It could have 10 commercial tenancies but that doesn’t matter. It’s only the number of residential units that counts.Here, the present owner can give notice on behalf of the new owner. However, examine the requirements closely, the notice is restricted to good faith residential occupancy. The conversion of the unit to other purposes does not count.Again, 60 days notice must be given by the present owner and the tenant automatically acquires the right to leave (provided he gives proper notice) after 10 days.

It is noteworthy that there is no definition of a small building. So, you will see different rules from clause to clause. Sometimes a small building will be 3 or fewer, sometimes 4, and sometimes 5. You will have to look at the particular paragraph.Not all new purchasers will have an instant family that is desirous of moving into the premises. Maybe they would like to use it for another purpose.

They may wish to convert the residential premises into retail, commercial, office or industrial uses that might otherwise be compatible with the remainder of the building.The applicable section of the Act is:

Notice, demolition, conversion or repairs

50. (1) A landlord may give notice of termination of a tenancy if the landlord requires possession of the rental unit in order to,

(a) demolish it;

(b) convert it to use for a purpose other than residential premises; or

(c) do repairs or renovations to it that are so extensive that they require a building permit and vacant possession of the rental unit.

The owner of the facility may give notice of demolition, conversion or extensive repairs. These reasons will justify a termination of the tenancy. The notice period in these circumstances moves up to 120 days or four full months. Again, the tenant acquires the right to vacate on 10 days notice at anytime throughout this 120 day period.Also, it should be noted that if extensive repairs are being undertaken to the premises, then the tenant has the right of first refusal to occupy the premises once again.

The landlord is obligated to inform the tenant of this fact.This provision applies to all residential complexes, not just small ones.

There are a few more rules that you need to consider in such circumstances:

Compensation, demolition or conversion

52. A landlord shall compensate a tenant in an amount equal to three months rent or offer the tenant another rental unit acceptable to the tenant if,

(a) the tenant receives notice of termination of the tenancy for the purposes of demolition or conversion to non-residential use;

(b) the residential complex in which the rental unit is located contains at least five residential units; and

(c) in the case of a demolition, it was not ordered to be carried out under the authority of any other Act.Yes, you actually read this quite correctly. If the landlord wants to improve his building in any way, he must provide compensation to the tenants, equal to 3 months rent. So, tearing it down or converting it to a commercial use requires payment of the 3 month penalty.

The only saving grace this time is that the number of residential units must be 5 or more. If, the landlord has another unit in the same complex that is available, that unit could be offered in lieu of compensation.The corollary of this proposition is that a landlord of a small building, (in this paragraph meaning 4 or fewer residential units) does not have to pay any compensation by way of penalty.

There is also a similar provision concerning extensive repairs:

Tenant’s right to compensation, repair or renovation

54. (1) A landlord shall compensate a tenant who receives notice of termination of a tenancy under section 50 for the purpose of repairs or renovations in an amount equal to three months rent or shall offer the tenant another rental unit acceptable to the tenant if,(a) the tenant does not give the landlord notice under subsection 53 (2) with respect to the rental unit;

(b) the residential complex in which the rental unit is located contains at least five residential units; and

(c) the repair or renovation was not ordered to be carried out under the authority of this or any other Act.

Again, you will notice similar provisions. Five or more units, and the tenants gets at least 120 days notice and 3 months compensation. You might wonder who really owns the building. If this potential liability were to be assessed against the value of the building it could make a rather substantial dent in the equity.At the end of the term of any lease, or in the case of a monthly tenancy, the landlord can give notice of termination upon 60 days notice for the following reasons:

1) the tenant persistently failed to pay the rent on time,

2) misrepresentation of income by tenant (ie. qualifying for low rental housing),

3) illegal acts, trade or business being conducted on premises,

4) wilfully or negligently causes undue damage to the premises,(10 days notice is sufficient),

5) conduct by the tenant that substantially interferes with the reasonable enjoyment of the residential complex for all usual purposes by the landlord or another tenant,

6) conduct of the tenant, another occupant of the rental unit or a person permitted in the building by the tenant is such that it substantially interferes with the reasonable enjoyment of the building for all usual purposes by the landlord (applies only to small buildings of 3 or fewer residential units, and 10 days notice is sufficient),

7) an act or omission of the tenant, another occupant of the rental unit or a person permitted in the residential complex by the tenant seriously impairs or has seriously impaired the safety of any person, (10 days),

8) if the number of persons occupying the rental unit on a continuing basis results in a contravention of health, safety or housing standards required by law, (20 days),

9) within six months after the notice was given to the tenant, (and the termination cancelled) an activity takes place, conduct occurs or a situation arises that constitutes grounds for a notice of termination (this time 14 days).

Accordingly, any of the above matters will also constitute grounds for the termination of the tenancy.But, before we leave entirely the sale issues what if the tenant simply won’t leave. Then, the landlord has to bring an application under the Act to terminate the tenancy and evict the tenant.

Landlord or purchaser personally requires premises

72. (1) The Board shall not make an order terminating a tenancy and evicting the tenant in an application under section 69 based on a notice of termination under section 48 or 49 unless the landlord has filed with the Board an affidavit sworn by the person who personally requires the rental unit certifying that the person in good faith requires the rental unit for his or her own personal use.

And, if the building is to be demolished, converted or extensively repaired:

Demolition, conversion, repairs

73. The Board shall not make an order terminating a tenancy and evicting the tenant in an application under section 69 based on a notice of termination under section 50 unless it is satisfied that,(a) the landlord intends in good faith to carry out the activity on which the notice of termination was based; and(b) the landlord has,(i) obtained all necessary permits or other authority that may be required to carry out the activity on which the notice of termination was based, or(ii) has taken all reasonable steps to obtain all necessary permits or other authority that may be required to carry out the activity on which the notice of termination was based, if it is not possible to obtain the permits or other authority until the rental unit is vacant.

You will appreciate that it is not quite so easy to prove all this. In most cases, the building permits for the work will be required. At the very least, the co-operation of the municipality would have to be sought so as to encourage the Landlord and Tenant Board that the work is to be legitimately undertaken.

That brings us back to the basic question. What do you do, if the purchaser will not accept your tenants and insists upon vacant possession?Here are your options:

1) have the tenant agree to leave prior to closing,

2) if necessary, offer the tenant some monetary inducement to leave,

3) give 60 days notice requiring possession for occupancy by your family,

4) give 60 days notice requiring possession for occupancy by the purchaser’s family,

5) give 120 days notice requiring possession for demolition, extensive repairs, or conversion to non-residential uses,

6) pay compensation (if required), namely 3 months rent provided total number of units is equal to five or more.

Unquestionably, if there are unruly and undesirable tenants, let the other party deal with them. That’s probably the simplest advice that can be given to both vendors and purchasers. However, fundamentally, the tenants belong to the owner, and they are the owner’s responsibility. Rather than being an asset, they are really a liability, and the property is worth less with them in it.

So, the easiest and quickest way would be to reoccupy the premises yourself with your family. At the same time, be aware that a reasonable amount of compensation might have to be offered to the tenants in order to induce them to move. But, it should be worth it. The building gets sold at a higher price without the tenants.

Note: a number of the paragraphs are direct quotes from the Residential Tenancies Act, please refer directly to the Act.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters,

Coldwell Banker Innovators Realty

905-796-8888

http://www.ontariorealestatesource.com/

Unfair Business Practices

By Brian Madigan LL.B.

The Business Practices Act was a very good piece of legislation, but not too many people knew about it, so last year the Ontario Government replaced it with the Consumer Protection Act.

When it comes to real estate there are some important provisions. While the conveyance of real estate is exempt from the Act, advertising, the conveyance of chattels and agreements with realtors are all affected.No one is allowed to engage in an “unfair practice” with a consumer, and specifically it is an unfair practice for a person to make a false, misleading or deceptive representation.

These will include the following:

1. A representation that the goods or services have sponsorship, approval, performance characteristics, accessories, uses, ingredients, benefits or qualities they do not have.

2. A representation that the person who is to supply the goods or services has sponsorship, approval, status, affiliation or connection the person does not have.

3. A representation that the goods or services are of a particular standard, quality, grade, style or model, if they are not.

4. A representation that the goods are new, or unused, if they are not or are reconditioned or reclaimed, but the reasonable use of goods to enable the person to service, prepare, test and deliver the goods does not result in the goods being deemed to be used for the purposes of this paragraph.

5. A representation that the goods have been used to an extent that is materially different from the fact.

6. A representation that the goods or services are available for a reason that does not exist.

7. A representation that the goods or services have been supplied in accordance with a previous representation, if they have not.

8. A representation that the goods or services or any part of them are available or can be delivered or performed when the person making the representation knows or ought to know they are not available or cannot be delivered or performed.

9. A representation that the goods or services or any part of them will be available or can be delivered or performed by a specified time when the person making the representation knows or ought to know they will not be available or cannot be delivered or performed by the specified time.

10. A representation that a service, part, replacement or repair is needed or advisable, if it is not.

11. A representation that a specific price advantage exists, if it does not.

12. A representation that misrepresents the authority of a salesperson, representative, employee or agent to negotiate the final terms of the agreement.

13. A representation that the transaction involves or does not involve rights, remedies or obligations if the representation is false, misleading or deceptive.

14. A representation using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use or failure deceives or tends to deceive.

15. A representation that misrepresents the purpose or intent of any solicitation of or any communication with a consumer.

16. A representation that misrepresents the purpose of any charge or proposed charge.

17. A representation that misrepresents or exaggerates the benefits that are likely to flow to a consumer if the consumer helps a person obtain new or potential customers. (s. 14 (2))

It is also an unfair practice to make an unconscionable representation, and there are some “rules” which will help determine if this is the case.A Court may take into that the person making the representation or the person’s employer or principal knows or ought to know,

(a) that the consumer is not reasonably able to protect his or her interests because of disability, ignorance, illiteracy, inability to understand the language of an agreement or similar factors;

(b) that the price grossly exceeds the price at which similar goods or services are readily available to like consumers;

(c) that the consumer is unable to receive a substantial benefit from the subject-matter of the representation;

(d) that there is no reasonable probability of payment of the obligation in full by the consumer

(e) that the consumer transaction is excessively one-sided in favour of someone other than the consumer;

(f) that the terms of the consumer transaction are so adverse to the consumer as to be inequitable;

(g) that a statement of opinion is misleading and the consumer is likely to rely on it to his or her detriment; or

(h) that the consumer is being subjected to undue pressure to enter into a consumer transaction. (s.15(2))

Section 18 provides that “any agreement, whether written, oral or implied, entered into by a consumer after or while a person has engaged in an unfair practice may be rescinded by the consumer and the consumer is entitled to any remedy that is available in law, including damages.”

These common law remedies are available in addition to the opportunity to report the matter to the Director and have the dispute investigated and resolved under the Act. The Director has been given rather broad powers by the legislation.And further, “each person who engaged in an unfair practice is liable jointly and severally with the person who entered into the agreement with the consumer for any amount to which the consumer is entitled under this section.”

So, this means that the particular salesperson is responsible as well as the company.Although, the actual “conveyance” of real property is not subjecty to the provisions of the Act, the matter of advertising is specifically noted as an included matter.Under section 109 of the Act, “if the Director believes on reasonable grounds that any person is making a false, misleading or deceptive representation in respect of any consumer transaction in an advertisement, circular, pamphlet or material published by any means, the Director may order the person to cease making the representation; and further order the person to retract the representation or publish a correction of equal prominence to the original publication”.

This section applies to any representations involving residential real property. If the purchaser cannot be described as a “consumer”, then the Act will not apply. So, commercial transactions are not affected. Houses, and vacation properties are included. There is a real grey area when it comes to farms. Large commercial operating farms would not be included, but a hobby farm might.

You will recall earlier that both principals and agents were jointly and severally responsible. This means that a vendor who provides false and misleading information to his realtor is jointly and severally responsible to the purchaser.All in all, the new Consumer Protection Act should be quite helpful to purchasers and consumers in Ontario.

Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Coldwell Banker Innovators Realty, Brokerage 905-796-8888http://www.ontariorealestatesource.com/