So You Want to Help a Friend Finance His Business?

(Ontario Real Estate Source)

By Brian Madigan LL.B.

Let's assume that for some reason you feel compelled to offer and assist someone who needs financing for their business.

What security do you want?

Well, you should get everything you can!

In the case of a business, this truly does mean everything. Because, the parts have little to no value.

So, my first advice is: don't get involved.

My second advice: take a collateral security on a non-business asset, like a house or a car. You can always sell a house or a car.

Finally, if you must offer the loan, here is what might be available:

1) Chattel mortgage, upon specific chattels for major purchases, big ticket items, tools of the trade,

2) Assignment of Leases upon specific chattels for major purchases, big ticket items, tools of the trade,

3) accounts receivable,

4) assignment of book debts,

5) General Security Agreement,

6) Assignment of Leases upon business premises,

7) Assignment of Options to Lease upon business premises,

8) Assignment of Agreements to Purchase upon business premises,

9) Assignment of Options to Purchase upon business premises,

10) A pledge of the shares of the operating company,

11) A pledge of the shares of the holding company,

12) An assignment of the suppliers' accounts,

13) A pledge of any intellectual property,

14) An agreement to be named as an additional insured on the insurance policy

15) An agreement by the insurer to waive its rights of subrogation,

16) An agreement to the assignment of the telephone number,

17) An agreement to the assignment of the website,

18) An Authorization to examine the books,

19) An Authorization to examine the bank accounts,

20) An Authorization to examine the HST returns,

21) An Authorization to examine the Income Tax returns,

22) An Authorization to examine the Workplace Safety assessments and payments,

23) A personal guarantee of the owner, proprietor,

24) A personal guarantee of the spouse of the owner proprietor,

25) A copy of all suppliers' contracts, including books of accounts, inventories and entitlements.

Of course, I'm still telling you that you should have second thoughts about this. But, you should have the above security for starters!

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Use Sunflowers to Stop Erosion

(Ontario Real Estate Source)

By Brian Madigan LL.B.

You sometimes need a cheap way to prevent erosion over an embankment.

So, what works?

Call a contractor and the concrete retaining wall will cost you $10,000 to $20,000. It's a good fix, but then again this is just a cottage property and you only use it 10 weekends throughout the summer.

The retaining wall which is obviously the best solution will just have to wait until you win the lottery.

So, what works in the meantime?

PLANT Sunflowers!

They grow rather tall in 2 months, and they have a great root system. Nevermind what they look like; it's the root system you're after.

Within 4 to 6 weeks the top of the bank will stop eroding and the root system of the sunflowers will have stabilized the land. That will allow you to plant bushes or trees. They work too, but not quite as fast as sunflowers.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Landlords Face Risk of Tenants" Bank Financings

(Ontario Real Estate Source)

By Brian Madigan LL.B.

If you are a Landlord you may expect from time to time to have to engage in some form of battle with your tenants. But what about the secured lenders?

In commercial premises, the tenant may have acquired some of the chattels by financing them. Most of the time, the lender will take something as security. And, they may take that major purchase.

Landlords often think that anything attached to the real property is theirs. They think that it is a fixture. Not so! The ordinary rules related to the law of attachment do not apply, if there has been some sort of security registered against the item under the Personal Property Security Act (PPSA). However, it all depends on the timing.

If the security is registered before the item is affixed; it will remain as a chattel.

If the security is registered after the chattel has been affixed; then it's too late. It's already a fixture, and has become part of the Landlord's property.

Naturally, this will effect re-financings and the sale of businesses.

Landlords should pay strict attention to what items the tenant is bringing on site. It can delay enforcement proceedings substantially. And, don't forget, secured parties being banks and other financial institutions have lots of money to litigate.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Commercial Landlords Should Consider Restoration Deposits

(Ontario Real Estate Source)

By Brian Madigan LL.B.

Here's the problem. The Landlord is looking for tenants to occupy its industrial complex. Most of the units are about 3,000 sq. ft. in size.

It's difficult enough to find good tenants, so what happens when the tenant's business requires something that occupies most of the unit? Consider the large ovens of an industrial baker, an MRI, a large paint booth for custom painting, massive printing equipment, industrial freezers and compressors.

These items require customized facilities, and special venting, and related accommodations. The cost of acquisition and installation may be the responsibility of the tenant. But, this is the time when the tenant has money.

What happens 5 years into a 10 year lease, when the tenant is out of money? In all likelihood the asset has been pledged to the bank or finance institution as security. If the security was registered under the Personal Property Security Act, that means it remains as a chattel and the secured party has first claim over the asset.

But, it will cost $50,000 to remove! The secured party is under no obligation to remove it and the Landlord has limited remedies.

Eventually, the Landlord may simply have to absorb the cost, remove the chattel and chalk most of it up to experience.

The solution? Actually, that was easy. At the outset, get a deposit for the cost of removal or get the tenant to post a "performance bond". Remember when the tenant had lots of money, lots of enthusiasm and lots of optimism right before they moved in, that was the time for the Landlord to deal with this matter.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Marriage in Ontario ~ Real Estate Implications

(Ontario Real Estate Source)

By Brian Madigan LL.B.


The legal responsibility for marriage is divided between the federal and provincial governments. The province is responsible for the “solemnization of marriage”.

What does that mean?

There is a Marriage Act in Ontario. Essentially, that means the procedural rules related to marriage.

In Ontario, you must be 18 years of age, which is the age of majority, or 16 years of age with the consent of both parents in order to marry. There are two routes, either through the issuance of a marriage licence or the publication of banns, a rather ancient and religious authorization. Over time, the role of marriage in society has become more civil and less religious.

The Marriage Act states:

“No person may solemnize the marriage of any person who, based on what he or she knows or has reasonable grounds to believe, lacks mental capacity to marry by reason of being under the influence of intoxicating liquor or drugs or for any other reason”.

It is rather interesting that permanent lack of capacity due to the failure to develop to maturity for any medical reason, or the loss of capacity due to physical injury is dealt with in the same section as “drugs and alcohol”.

Naturally, the candidate must be free to marry, that is, either no prior marriages, or any such marriage would have been dissolved (possibly by divorce) annulled, or ended due to the death of the spouse. These “facts” all need to be proved prior to the issuance of a marriage licence, or placed upon inquiry by the publication of banns.

There must be at least two witnesses present at the ceremony. A register is then signed by the married couple and the two witnesses. Whether the marriage takes place civilly or in accordance with the customs of a church or religious congregation, the “register” is the property of the Province of Ontario. The person solemnizing the marriage, then issues a “marriage certificate”, which constitutes official evidence of the marriage.

The old common law action for “breach of promise” was abolished in Ontario on 1 August 1978.

There is an important provision which deals with property. This provision means any property. So, that includes both real and personal property.

See, section 33:

“Recovery of gifts made in contemplation of marriage

33. Where one person makes a gift to another in contemplation of or conditional upon their marriage to each other and the marriage fails to take place or is abandoned, the question of whether or not the failure or abandonment was caused by or was the fault of the donor shall not be considered in determining the right of the donor to recover the gift.”

It is quite common for couples to live together prior to marriage. It is also quite common for them to purchase a house or condominium while they are still “living together”.

This section of the Marriage Act seems to have little to do with the solemnization of marriage. Nevertheless, it does still fall within the jurisdiction of the province which is “property and civil rights”.

This provision simply eliminates the consideration of “fault” in the determination of the entitlement to conditional gifts of property in contemplation of marriage.

It does not deal with entitlement. It simply makes matters “no-fault”, which is a principle enunciated in the Family Law Act and the Divorce Act.

It is a provision that real estate agents should consider, particularly if they are providing advice to young couples purchasing property together.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Marriage Laws in Ontario

(Ontario Real Estate Source)

By Brian Madigan LL.B.

You might wonder about the laws that apply to marriage in Ontario.

In accordance with the Constitution Act, 1867 (formerly the British North America Act), legislative powers relating to marriage between the federal and provincial governments were divided between the federal and provincial governments.

•· The federal government has exclusive jurisdiction over "Marriage and Divorce": s. 91(26).

•· The provinces have exclusive jurisdiction over the solemnization of marriage: s. 92(12).

Federally, there is one Act, known as "Marriage (Prohibited Degrees) Act.

It imposes certain restrictions upon the entitlement of parties to marry one another based upon degrees of consanguinity. The key operative provision is as follows:

"No person shall marry another person if they are related lineally, or as brother or sister or half-brother or half-sister, including by adoption."

This simply means ascendants and descendants may not marry at all. Collaterals may marry provided they are not of the second degree which would be brothers and sisters.

The Ontario Court of Appeal changed the long standing definition of marriage on 10 June 2003 in Halpern vs. Attorney General of Canada.

The Court sumarized the issue as follows:

"The definition of marriage in Canada, for all of the nation's 136 years, has been based on the classic formulation of Lord Penzance in Hyde v. Hyde and Woodmansee (1866), L.R. 1 P.&D. 130 at 133: "I conceive that marriage, as understood in Christendom, may for this purpose be defined as the voluntary union for life of one man and one woman, to the exclusion of all others." The central question in this appeal is whether the exclusion of same-sex couples from this common law definition of marriage breaches ss. 2(a) or 15(1) of the Canadian Charter of Rights and Freedoms ("the Charter") in a manner that is not justified in a free and democratic society under s. 1 of the Charter."

The Court concluded:

1)the rights of the applicants (same sex couples) were violated, by preventing them from marrying one another, contrary to the Charter of Rights and Freedoms.

2)the new reformulated the common law definition of marriage is "the voluntary union for life of two persons to the exclusion of all others".

The matter of marriage, its qualifications, restrictions, definition, prohibitions, conditions, rights, and entitlements has not been made subject to further review.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com

Can a Landlord Prevent a Tenant from having Pets?

(Ontario Real Estate Source)

By Brian Madigan LL.B.

I know you're going to like this answer:

"yes" and "no".

The Residential Tenancies Act in Ontario allows for pets. There is a specific pet rule.

"No pet" provisions void

14. A provision in a tenancy agreement prohibiting the presence of animals in or about the residential complex is void.

And, just to be on the safe side, the Act contains an override provision:

Provisions conflicting with Act void

4. Subject to section 194, a provision in a tenancy agreement that is inconsistent with this Act or the regulations is void.

So far, so good. If you have a pet and you are a tenant, the landlord has to go along with it?

But, what if you decide to have a reptile? What if you want to raise a 25 foot Ananconda? Is that permitted? What about the safety and security of the other tenants?

The saving provision here, is "nuisance". So, as long as the pet does not constitute a nuisance, then it can stay.

Most of the time, little "yappy" dogs would be fine.

The next question, before you decide to head to the pet store should be whether or not the complex is a condominium. If it is, and the condo declarations does not permit pets, then the answer is "no". No one, including the owner of the condo can have a pet in the complex.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com