Real estate law column by Bob Aaron

A decision of the British Columbia Human Rights Tribunal late last year could have an enormous effect on owners and occupants of condominiums and rental apartments across Canada in the coming months.

 

Paul and Rose Kabatoff live in a suite in an attractive three-storey condominium building in Langley, B.C. They both have a number of health problems including respiratory illnesses and allergies that are negatively affected by second-hand cigarette smoke.

 

In August 2008, smokers moved into the suite below their own. The Kabatoffs appealed for help to their condominium corporation (known in B.C. as a strata corporation), claiming that the second-hand smoke coming from their neighbours downstairs worsened their health problems. They provided a letter from their doctor supporting their request.

 

Ideally, the Kabatoffs wanted the condominium to adopt a no smoking bylaw, which it would not do.

 

In 2005, Stuart signed an agreement to purchase a condominium unit for $326,900 in an upscale 20-storey project not far from the Annex area.

 

He was able to take possession of his unit early in 2008 and final closing occurred on Aug. 12, 2008.

 

On Stuart's closing, as with every other real estate transaction, the seller's lawyer prepared what's known as a statement of adjustments. The statement is used to calculate the unpaid balance of the purchase price due on closing. In addition, it allocates adjustable items like tax bills between the parties as of the closing date.

 

As set out in the purchase agreement, the builder adjusted 2008 taxes with Stuart (and the other 215 owners) on the assumption that it would pay all of the taxes for the year of closing when the bills were issued.

 

On this basis, the builder would be responsible for 222 days of taxes (to Aug. 12), and Stuart would be responsible for the remaining 143 days of the year.

 

But since the actual 2008 tax bills were unknown at the time of closing, the builder estimated the taxes and adjusted with the purchasers on the assumption that the taxes had been (or would be) paid.

 

A recent decision of the Ontario Court of Appeal has come down strongly in favour of the rights of individual condominium owners.

 

The case deals with Wentworth Condominium Corp. 198, a residential project in Waterdown, Ont. Each of its 31 condominium townhouse units has a backyard that forms part of the common elements of the corporation, and each owner has exclusive use of that backyard.

 

In late 2007, Jim McMahon, one of the unit owners, asked the condominium board for permission to install an above-ground hot tub on his back patio. The board refused.

 

Eventually, without the board's consent, McMahon installed the hot tub on the patio. The tub itself is 1.8 metres wide, two metres long and a little over one metre high. It is a one-piece unit that weighs about 136 kilograms empty.

 

It is filled by a garden hose and holds 1,000 litres of water weighing 1,000 kilograms. The tub occupies about 25 per cent of the backyard and its heater is hard-wired to the electrical panel in the McMahon unit.

 

 

I've always found it strange that the organized real estate community in Ontario is still highly concerned about urea formaldehyde foam insulation (UFFI) in houses, years after it was proved that it carries no health risks, and yet radon gas and other environmental contaminants – which exist in many homes and can be fatal – are hardly ever mentioned in residential purchase agreements.

 

For several decades, the standard Ontario Real Estate Association agreement of purchase and sale has contained a warranty that the seller has not insulated the house with UFFI. This, despite the fact that 15 years ago a Quebec court ruled, after an eight-year trial, that there was no basis for fear of health risks and no justification for removing UFFI from houses.

 

Radon, on the other hand, has one known health risk – exposure above certain levels increases the risk of developing lung cancer.

 

In a precedent-setting move, a recently discovered decision of the provincial Assessment Review Board (ARB) has cut a homeowner's assessment in half because the house is located near a noisy hydro substation. The hydro plant serves a nearby wind farm producing "clean" electricity.

 

The decision of ARB member Ana Cristina Marques was issued following an appeal by Paul Thompson of the assessment on his house.

 

Thompson's one-storey home is located on the 10th Line in Amaranth Township. It was built in 1989 and sits on a lot with a frontage of 183 feet (55.7 metres) and a depth of 240 feet (73.15 metres).

 

In 2008, the Municipal Property Assessment Corp. assessed the 1,320-square-foot house at $255,000. Thompson agreed with the assessment except for one thing: The house sits across the road from a Canadian Hydro Developers transformer station. The station converts the output of the nearby Melancthon I wind plant into electricity for the Ontario power grid.

 

Thompson told me last month that the station emits a "wicked buzz" all day, every day, and that's what prompted him to appeal his assessment.

 

The problems caused by the strike of civic workers in Toronto last summer are now coming home to roost. Last June, John purchased a newly constructed $600,000 freehold townhouse in downtown Toronto.

 

When the transaction closed, city building inspectors were on strike and it was impossible for purchasers or their lawyers to determine whether or not occupancy had been granted by the city for newly built homes.

 

John closed his purchase in the belief that any outstanding issues would eventually be resolved by the city and the builder; but that in any event he would be fully protected by the title insurance policy his lawyer arranged with Stewart Title.

 

In October, John decided to downsize and sold the townhouse with closing scheduled for mid-December. I was retained to represent him on the sale of the property.

 

When the lawyer for the purchasers checked with the city building department prior to closing, she discovered that five building permits were still outstanding, and that final occupancy had never been authorized.

 

Last week's column told the story of the illegal chimney on a north Toronto bungalow owned by Ruta Benjamin and her husband.

 

When the house next door to the Benjamins' was torn down in 2007 and a monster home erected in its place, the couple discovered that their chimney was now lower than the roofline of the new house next door and too close to it.

 

Suddenly their chimney became illegal.

 

The column brought some interesting email responses.

 

Bernadette Celis, communications advisor with the Technical Standards and Safety Authority (TSSA), explained why the Benjamin chimney became illegal: as a result of the construction of the new house, the chimney on their bungalow was in violation of the Natural Gas and Propane Installation Code and Ontario regulation 212/0 – Gaseous Fuels.

 

The code requires a fuel distributor to report to the TSSA when it finds a contravention or hazard. In this case, since the Benjamin chimney was less than two feet higher than the roof next door and less than 10 feet closer to the new house, it became a code contravention.

 

The code required the Benjamins to make their chimney comply at their own expense.

 

Ruta Benjamin and her husband were sitting in their house, minding their own business, when they suddenly found themselves in violation of regulations of the Technical Standards and Safety Authority without doing anything wrong.

 

They live near Avenue Rd. and Highway 401, where many of the older bungalows have been torn down and replaced with what she calls "monster homes."

 

The bungalow next to the Benjamin home was torn down 18 months ago and replaced with a large two-storey home. The City of Toronto Committee of Adjustment had approved some minor zoning variances for the new house, and the city issued a building permit for it.

 

Last month, when an inspector from Enbridge Gas Distribution came to complete the final safety check of the new house, the Benjamins were served with a notice of infraction. It stated that their chimney no longer complied with the fire safety regulations of the Technical Standards & Safety Authority (TSSA) because it suddenly wasn't tall enough.

 

They were given a deadline to raise the chimney at their own expense or have their gas supply cut off.

 

The strange thing is that the new house is in full compliance with the zoning bylaws and Ontario Building Code.

 

With less than a month to go, the Ontario court system is in for one of its biggest shake-ups in recent memory.

 

Effective Jan. 1, 2010, the monetary jurisdiction of the Ontario Small Claims Court jumps from $10,000 to $25,000, and new streamlined rules will apply in Superior Court to all claims over that amount. The changes were recommended in 2007 by Justice Coulter Osborne, who was asked by the Ontario government to suggest improvements to the civil justice system.

 

The net result will be to provide wider and cheaper access to justice for all Ontarians. In the real estate field, I anticipate that unhappy parties to a transaction will be less hesitant to sue for damages. Lawyers will not be necessary for claims under $25,000, and the cost of litigation for damages exceeding that amount should be much less expensive in future.

 

Whether the changes will result in a litigation explosion remains to be seen.

 

Whatever money Pauline Rudling saved by using a will kit instead of a lawyer to prepare her last will and testament was spent hundreds of times over on legal fees so that a judge could figure out what she meant.

 

Shortly before she died in January 2003, Pauline Rudling made a will using a will kit. In it she left her two properties on Shaw St. in Toronto to her two sons, one house to each. Because of some ambiguous wording in the will, her sons wound up in a seven-day trial back in 2007, spending tens of thousands of dollars on lawyers to try to determine how the estate should be divided.

 

The blanks on the will kit document were filled in, in Pauline's presence, by her son Larrie. Pauline read it before she signed it.

 

The standard form pre-printed wording directed that all of Pauline's debts, estate expenses, inheritance and death taxes be paid by her executor following her death.

 

The will then provided that one of her houses on Shaw St. be left to her son Ron, "with all loans, liens, mortgages attached." The other house was left to Larrie, "free and clear of all debt."

 

Essentially, there were no other assets in the estate.