In real estate, the concept of marketability of title refers to ownership. Specifically, a marketable title refers to property that is free from claims, allowing for the transferability of possession of real property. Although a good and marketable title does not assume absolute absence of defect, buyers can expect that their ownership will not be challenged by outside claims if marketability of title is addressed in the contract for sale. Marketable title is not to be confused with marketability of property. Marketability of a property involves the physical state of the property, specifically in the eyes of mortgage lenders.
Involving a lawyer can ensure that you get a good and marketable title to a property. Prior to closing, a lawyer can conduct a thorough title search to determine multiple factors that can affect the marketable title. Specifically, they can determine previous ownership of the property, as well as prior dealings in relation to the property. In addition, a comprehensive title search can reveal any existing mortgages on the property, outstanding taxes, and any utility charges.
In some cases, defects regarding the title of the property are not discovered until after closing. This uncertainty poses as an issue because, if the buyer were to subsequently sell the property, the marketable value can decrease. As well, a buyer may have to remedy the issue, increasing spending costs on the property. The buyer can be exposed to other risks, such as fraudulent conveyance of property to another buyer.
Conversely, the risks caused by defects can be mitigated by title insurance. Title insurance can be issued in favour of the buyer, as well as the mortgage lender. Sometimes, mortgage lenders may require a buyer to purchase title insurance as a condition for the loan.
Depending on the title insurance policy sought out by the buyer, the following risks are generally covered:
Claims due to fraud, duress, or forgery
Work orders
Zoning non-compliance
Forced removal of existing structures
Lack of vehicular or pedestrian access to property
At 6ix Estates LLP, we represent clients in all aspects of residential real estate transactions; both resale and new construction of detached homes, townhouses, and condominiums. Our office will take the time to understand your intended use and characteristics of the property and ensure that you get good and marketable title to the property. Contact us today for a free 30-minute, no obligation consultation.
With the convenience of online search engines and the easy attainability of information, it may seem tempting to skip professional guidance when incorporating your business and instead rely on what is found online. Although there is no legal requirement to retain a lawyer, there can be challenges associated with incorporating a business independently. Therefore, this article will outline the difficulties that may arise with incorporating a business without the assistance of a lawyer and how including one in the process can help ensure that your entrepreneurial beginnings lead to success in the marketplace.
To incorporate a business, one must first determine the law that will regulate the corporation. Is the business a federal corporation – in that it is incorporated under the Canada Business Corporation Act, or is it provincial – incorporated under the law of incorporation of Ontario? It is essential to understand the differences between the two as legal consequences may occur if a business is being conducted provincially but is only registered federally. Incorporating under the federal Act does not exempt you from the obligation of incorporating in the province in which you operate. Thus, a lawyer will ensure that the business is incorporated under the appropriate regulations.
Next, before a business can be incorporated, a name for the company must be reserved, allowing the submission of up to three names for approval. It is crucial to ensure that the corporate name chosen is free of rights – not being used by another company. A lawyer can ensure the corporate name is not already in use as they have the materials to conduct proper checks. Allowing a lawyer to do these checks can avoid a corporate name refusal from the appropriate government authority, saving time in the process. Even if government services approve the name, the approval does not ensure that a trademark is not owned on the name. If this is the case, and one chooses to continue using the corporation name, legal penalties and sanctions can occur. Government services do not conduct trademark checks on the proposed names when approving corporation names. Therefore, a lawyer will do their due diligence to ensure all proper verifications are completed before the proposal is submitted.
Aside from the name proposal, other business start-up legalities that a lawyer can assist with include, but are not limited to:
determining a share structure that is suitable for the business
obtaining the appropriate licenses specific to operating the business
preparing contracts such as distribution, employment, service etc.
tax planning tools
and more
At 6ix Estates LLP, we can help your business in drafting Corporate and Commercial documents. Ask us about how we can help you start your business, or to protect your ongoing business interests by contacting us for a free 30-minute consultation.
With the drastic change in the housing market compared to pre-pandemic times, many have chosen to buy and sell property. It is apparent that one would seek the assistance of a real estate agent, but some may not be aware of the significance a real estate lawyer can play in the transaction. Understandably, one may ask what is a real estate lawyer? This blog piece will address the specific roles and responsibilities of a real estate lawyer, and how they can further improve your property transaction experience.
The textbook definition of a real estate lawyer is a lawyer involved in legal practice relating to real property. The broadness of this definition is to show that real estate lawyers are involved in much more than just the buying and selling of homes, such as development, acquisition, disposition, and rezoning. Not only in residential circumstances, but real estate lawyers can also advise in commercial real estate transactions such as negotiating leases, refinancing, and providing due diligence where needed.
It may be common knowledge to seek a lawyer only when a transaction goes awry, but an attorney can assist even before a real estate contract is signed and finalized. Having a lawyer involved early in the process allows for an avoidance of obstacles, as they can be discovered by the lawyer doing their due diligence of the transaction. Whether you are the buyer or the seller, a lawyer can assist you in different ways. If purchasing property, the lawyer can act as a mediator between you and your mortgage lender, they can review the agreement of purchase with you to ensure all your questions are answered, and further help you better understand your rights as a buyer. Likewise, as a seller, an attorney will assist with negotiating terms and conditions, exchanging legal documentation with the buyer’s lawyer, and guaranteeing all closing conditions are satisfied.
Next time you are involved in a real estate transaction, consider seeking the advice of a lawyer. A real estate lawyer has the legal background to both access information that may not be easily obtained by the public and translate its meaning to better assist you in making a sound decision on how to further proceed.
At 6ix Estates LLP, whether you are purchasing, selling, or refinancing real property, we will not only seek to close your matter effectively and efficiently, but we’ll also personally guide you throughout the transaction and answer any questions. We bring extensive experience and professionalism to every transaction and customize our support to your specific needs and concerns. We’re on the pulse of modern technology and have monitored its evolution to inform our own legal approaches—all to give you exceptional timely advice and service.
Contact us today for a free 30-minute no obligation consultation, to discuss all your real estate needs!
What inheritance rights does a family have when a loved one passes away without a Will? In Ontario, your rights may differ, depending on whether you’re a married spouse, a cohabiting spouse (also known as a common-law spouse), or child. In today’s blog post, we will examine the similarities and differences of each category and help underscore the importance of having a properly drafted Will and estate plan.
Legally Married Spouses
When a person dies without a Will, they are said to have died “intestate”, i.e. in the absence of a Will, the rules of intestacy apply to determine who gets what from a deceased’s estate.
Upon the death of a loved one, the surviving spouse (now widowed) should first determine whether they are better off making an election for an equalization payment under the Family Law Act (FLA) or seeking an entitlement to the deceased’s estate under the rules of intestacy.
If you are a surviving spouse, you should essentially ask yourself: “under which scenario will I receive a greater inheritance? Do I stand to make more if I opt for an equalization payment under Family law? Or am I entitled to a larger share of my deceased spouse’s estate through the rules of intestacy?”
If the surviving spouse elects to inherit under the former option (i.e. an equalization payment), then they will receive half the difference when compared to the net family property of both spouses at the date of death of the deceased spouse. To determine which option grants a larger inheritance, the surviving spouse must value both their and the deceased spouse’s assets and liabilities.
This calculation is to be determined at the dates of marriage and death of the deceased spouse. The former date is then subtracted from the latter date and the difference is to be divided between the estate and the surviving spouse.
For example:
Assume that when they got married, one spouse had a value of $20,000 and the other $4,000;
Later, when one spouse died, their value was $520,000, but the other’s remained $4,000;
The deceased’s net value is now $500,000 (520,000 – 20,000). The surviving spouse’s net value would be $0 (4,000 – 4,000).
If the surviving spouse elected to receive an equalization payment under the FLA, they would receive $250,000 (500,000/2).
However, what if the surviving spouse elected to inherit under the rules of intestacy pursuant to the Succession Law Reform Act (SLRA) instead? If the deceased had no children conceived before and born alive after the spouse’s death, then the surviving spouse would receive the entirety of the deceased’s estate.
On the other hand, if the deceased did have children, then the surviving spouse would only be entitled to a preferential share of the first $350,000 of the estate (the balance is then split depending on how many children the deceased had). It should be noted, however, that $350,000 is the prescribed amount for the preferential share of an estate of anyone who dies on or after March 1st, 2021. For those who died before March 1st, 2021, the prescribed amount for the preferential share is $200,000.
For example:
Assume that when they got married, a couple had two children, and the deceased died after March 1st, 2021, leaving behind an estate valued at $500,000;
The surviving spouse would be entitled to the first $350,000, leaving a balance of $150,000;
The surviving spouse then also gets one-third of this balance, i.e. $50,000 (150,000/3), for a total payout of $400,000;
The two children will then divide the remainder of the balance between them, i.e. each would receive $50,000.
Cohabiting Spouses (aka Common-law spouses)
Unfortunately, cohabiting spouses do not enjoy the same inheritance rights as legally married spouses. In fact, cohabiting couples have no legislative right to inherit any assets. Indeed, they aren’t even entitled to make an election for an equalization payment under the FLA, nor are they entitled to a preferential share.
However, a surviving common-law spouse is not without recourse. One option they have is to bring a lawsuit against the estate for support if the deceased never made adequate plans to properly support their dependents after they die. In this circumstance, a court order may be obtained to have the estate pay out a dependency and support claim for the proper support of the dependents in question.
Another option is to bring an unjust enrichment claim against the deceased’s estate (aka a quantum meruit claim). For this type of claim to be successful, the surviving common-law spouse has to be able to show that they contributed to the estate of the deceased and, as a result, they deserve compensation for their contribution. This entails proving that the deceased spouse received an “enrichment” (for no legal reason) that resulted in a parallel deprivation to the surviving common-law spouse.
Children
Pursuant to the SLRA, children are entitled to support and property rights. If, after paying the surviving spouse their preferential share, the monies the children received from the estate are inadequate to support them, then the child may seek a court order against the estate for support as a dependent. In a nutshell, the child would argue that their deceased parent had a legal obligation to support them at the time of the deceased parent’s death. If successful, a court could order access to the assets of the deceased’s estate to fund support for the dependent children.
Conclusion
Losing a loved one is never easy. Dying without a Will or estate plan further compounds the issues that a family must deal with in the aftermath of a death. Absent a Will, although spouses and children enjoy a certain degree of inheritance rights, these rights aren’t shared across the board, nor are they comparable in effect. The difference in outcomes and entitlements underscores the importance of having a properly drafted Will and estate plan that provides clarity, certainty and that helps families navigate the difficult aftermath of dealing with the loss of a loved one.
It is no surprise that death is not a pleasant topic. As lawyers, we empathize with our clients when discussing sensitive topics that come with the conversation of Wills. We understand that making a Will takes more time than many people think, with some people planning for months before finally creating their Will. Naturally, it is normal to have several questions and concerns when it comes to this topic; who will I give my property to? How will I split it amongst several beneficiaries? What will happen to my minor children if my spouse were to pass away too? Where will my pets go?
Making a Will is the most important decision you can make for two reasons: Death is unexpected, or an event may occur where an individual’s mental capacity becomes questionable. In these two scenarios, any specific gifts or instructions you may have intended to give will be gone. And in regard to your real estate, it will be given back to the Government through the Succession Law Reform Act, R.S.S. 1990, c. S. 26. This Act will determine how your property will be distributed.
A Will has much more power than people may think. A Will explains the distribution of your assets, your obligations to your children and elderly parents, and gives any specific instructions or wishes you want.
Although preparing a Will is an uneasy and sensitive topic, it is very important to address because death or major traumatic injury is unexpected. However, it does occur unfortunately. At 6ix Estates LLP, we can make this difficult decision easier for you. During our meetings with prospective clients, we ask the appropriate questions to make a legal determination about your capacity, your wants, your wishes, and any other important information that we may need to know to help you draft your Will. One of the major benefits of obtaining representation is that in the event that a death occurs and the Will is questioned for any reason, a lawyer’s notes will be crucial in providing evidence for what the client wanted.
Get in touch with our firm at 416-206-6816 anytime Monday to Friday between 9am and 5pm. We will be more than happy to assist you with Will drafting needs and answer any questions you may have.
Important new changes to Ontario’s estate laws have come into force on January 1st, 2022. These changes are meant to better serve and reflect the modern-day experience of Ontarian’s in the new decade.
The first big change makes the virtual signing and witnessing of wills and powers of attorney a permanent option for Ontarian’s. Unfortunately, however, an ink signature is still required for wills, as electronic signatures of wills are not yet approved.
The second big change concerns a marriage’s effect on wills. Previously, if someone had an existing will but then later got married, the will was automatically revoked. This is no longer the case. As of January 2022, a will made before marriage continues to remain valid.
The third big change involves separated spouses. Under the old laws, an ex-spouse could apply for part of their deceased spouse’s estate if they were not yet legally divorced at the time of the deceased spouse’s death. However, as of January 2022, that is no longer the case. The new rules state that separated spouses will be treated the same as divorced spouses. This means that at the time of the deceased spouse’s death, if the spouses lived apart for three years as a result of the breakdown of the marriage or had a valid separation agreement (or court order or family arbitration award), then the ex-spouse of the deceased is no longer entitled to any property rights from the deceased’s estate.
Finally, the fourth big change concerns improperly drafted, witnessed & signed wills. Under the old laws, a will that did not comply with the appropriate legal formalities was automatically considered invalid & of no force or effect. However, as of January 2022, an application can be made to a court to decide on a case-by-case basis whether an improperly drafted will is valid or not. It is important to remember, however, that an ink signature is still required for wills. Therefore, a court still cannot validate a will that is signed electronically.
In conclusion, these new rules are a welcome change that help modernize Ontario’s estate laws for the 2020’s. They help facilitate better access to justice for Ontarian’s as well as aid individuals and families to better address the death of a loved one. We welcome these progressive changes, and urge you to contact us to schedule a 30-minute free consultation so we can better discuss how to plan your estate needs in light of these new developments.
With the advent of pandemic induced lockdowns, many businesses have been forced to shut their doors. As a result, there has been an influx of commercial tenants looking to transfer their commercial leases and with it, the obligation of having to pay rent. Unfortunately, however, a 2021 Ontario court decision determined that landlords could be given wide discretion to refuse the transfer of a commercial lease, even if a replacement tenant has been lined up to assume the lease.
In the case of Rabin v. 2490918 Ontario Inc., the lease in question stated that the lease could not be assigned (transferred) to another commercial tenant without the landlord’s consent. The assignment clause in the lease itself contained language that stated that consent could not be “unreasonably withheld” by the landlord. Of course, the landlord refused to allow the transfer of the commercial tenant’s lease. Therefore, the court had to come to a determination as to whether the landlord’s refusal to consent to the transfer in the circumstances was unreasonable.
The commercial tenant was a dental practice in Toronto that operated for more than four decades. The lease in question was set to expire in 2025. Earlier in the year, the tenant looked to sell its dental practice to another group of dentists, who would form a new business to assume the lease for the remainder of the term.
When the commercial tenant requested the consent of the landlord to transfer the lease to the new commercial tenants, the landlord refused to allow it unless the existing commercial tenants agreed to the insertion of a “demolition clause” into the lease agreement. This clause would have given the landlord the ability to terminate the lease with only two years notice if it later wanted to demolish and redevelop the building. Indeed, the landlord acknowledged that its request to insert this clause was an opportunistic measure to get the tenants to move out of the building. Naturally, the new tenants did not agree to the insertion of the demolition clause as they did not want their lease term cut short.
After further negotiations took place, the landlord agreed to consent to the transfer of the commercial lease only if the new tenants provided very extensive financial information for the new dental practice, which had not even been incorporated at the time. As such, the tenants refused this request and went to court seeking an order to affect the transfer of the lease. The tenant consequently claimed that the landlord was unreasonably withholding its consent to transfer the commercial lease.
In analyzing the case at hand, the court observed that since commercial landlords where the ones who chose who to lease their property to, then they should also have the discretion of deciding whether to transfer those leases to new tenants. Indeed, the court stated that landlords can take a variety of factors into account when making such a determination. Some of these factors include the surrounding circumstances of the lease and the property itself as well as the realities of the commercial marketplace, the financial situation of the new tenants and any impact the transfer of the lease may have on other tenants in the property.
Ultimately, the court ordered that the tenant ought to be given another chance to respond to the landlord’s request for information regarding the transfer of the lease. If the landlord still withheld its consent to transfer the commercial lease, the judge observed that the tenant could seek another court order to permit the transfer.
In conclusion, commercial tenants who are experiencing difficulties in paying rent during the pandemic should take note of this decision. Their ability to transfer their lease to another commercial tenant hinges on whether the landlord provides its consent to the assignment. Even if a commercial tenant finds another party willing to assume its lease, a landlord has wide discretion in this regard, although it cannot act unreasonably in denying such a request. At the end of the day, it will come down to the facts and context of the case at hand. We welcome the insight and clarity that this decision brings, and urge you to contact us to schedule a 30-minute free consultation so we can better discuss how to plan your commercial needs in light of these new developments.
Any homebuyer in Canada looking to apply for a mortgage with an Institutional lender will encounter the mortgage stress test. This test, to put it simply, determines your ability to maintain payments of your mortgage should interest rates rise. It helps to ensure that a borrower is still able to afford their mortgage at an interest rate higher than the one stated in their contract. As we have seen in recent months, mortgage interest rates continue to fluctuate. Therefore, the Government has established and set up this test to reduce the risk involved in mortgage lending.
The test was first introduced by the Federal Government in 2018. As of June 1st, 2021, the test has been adapted to reflect the current housing market conditions. Borrowers should expect a mortgage stress test when they are buying a home, taking out a homeowner line of credit, refinancing, or switching to another mortgage provider. A borrower will not have to undergo the stress test when renewing a mortgage with the same lender.
What Does the Stress Test Look at?
To determine affordability of a mortgage, the mortgage lender will look at the following:
The amount of the mortgage
Interest rates
Mortgage amortization period
Household income
Current debt
Household costs and monthly fees
The mortgage lender will then make two calculations using the above information. First, a gross debt service (GDS) ratio is calculated. This value is the percentage of your gross income that will be used to pay housing costs, such as the mortgage, utilities, and property taxes. The GDS ratio should not be more than 35%. Second, the lender will calculate a total debt service (TDS) ratio that includes all outstanding personal debt. This value should not be more than 42% of your gross income. A low GDS and TDS ratio is preferential, as it allows you to qualify for a low-interest mortgage with an Institutional lender.
To stress test your mortgage, you would need to prove you can afford to pay the higher of:
The rate offered by your mortgage provider plus 2%, or
5.25%
To improve your stress test results, the following can be done:
Lowering your GDS and TDS ratios by saving up to increase down payment
Paying off as much debt before applying for a mortgage
Having a co-signor on your mortgage
How Can We Help?
At 6ix Estates LLP, we represent clients in mortgage financing or refinancing transactions, both with institutional and private mortgage lenders. We will meet with all borrowers before closing to review the entire transaction, sign the documents and arrange for funds. We also offer all our services remotely. Our lawyers are happy to meet with you virtually or at a location of your choice. Get in touch with us to set up a free 30-minute consultation.
We quiet often get questions from clients & colleagues alike asking us what kind of work goes into a standard real estate file. As such, for the sake of transparency, today’s article will discuss in detail what goes on behind the scenes, real estate wise, at 6ix Estates LLP.
When we first open a file for you, we begin a record-keeping process to ensure all your documentation and information is stored safely with us. This includes items such as IDs, a retainer agreement, contact information, contracts, notices, reports, tax documents, funds etc. We also provide a detailed Real Estate Guide that seeks to provide an overview of your entire transaction.
The next step involves a client or their realtor sending us a copy of the Agreement of Purchase & Sale (APS). The APS is said to be “firm” if all of its conditions have been fulfilled. Our office will check with you or your realtor to determine if the APS is indeed firm or not, prior to moving onto the next stage in the transaction.
If the APS is firm, our office will then contact the lender (if there is a mortgage) to obtain their instructions, whilst also doing a thorough search of the title history of the property to date. Our office also works closely and coordinates with the other side representing the buyer/seller and their lawyers, to ensure that the correct documents, funds, and keys end up with the right person at the right time.
Once we’ve compiled all the necessary information and documents, we book a final signing appointment with our clients in advance of the closing date of the property transaction. The signing appointment can be done in person at any of our three GTA office locations, at a location of the client’s choice (for e.g. their home or a coffee shop), or via video conference (for e.g. Zoom). If you choose to video conference, then our office will e-courier your file to you prior to your signing appointment.
During the signing appointment, our clients are encouraged to ask us any questions they may have with respect to their transaction, prior to signing off on all the documents. If the documents were couriered, then our office will arrange to pick them up from you either the same or the following day.
Our office then ensures that all relevant banking is complete prior to signing off on all the required legal documents. Once the transaction closes, we send you a reporting letter along with a copy of all of the documents pertaining to the transaction, for your own record keeping. Our office will also make back up copies of these documents in case anything comes up in the future.
Contact us today for a free 30-minute no obligation consultation, to discuss all your real estate needs!
The simplest way to define commercial real estate is property that is used to conduct business activities to generate a profitable gain. This broad definition of commercial property can include anything from office buildings and retail facilities to farmland, garages, and warehouses. Compared to residential real estate, purchasing commercial property tends to be more complex with many factors influencing the transaction process. It is important to understand the steps involved.
Before you begin the process of purchasing commercial property, hiring a real estate lawyer will ensure a smooth and efficient transaction process, from start to finish. Examples of what a lawyer can assist with are (but not limited to) the following:
Agreements of Purchase and Sale
An agreement of purchase and sale is a legally binding written agreement that is utilized by both the buyer and seller in a commercial real estate transaction. The transaction begins when a buyer writes an offer of purchase and submits it to the seller. If the seller accepts, then the agreement of purchase and sale is established. A lawyer will assist you by drafting and negotiating Agreements of Purchase and Sale, offering legal advice where needed.
The following are examples of what is included in an Agreement of Purchase and Sale:
Property address and legal description
Offer and closing dates
Legal names of the buyer(s) and seller(s)
Offer price and deposit amount
Conditions related to the sale
Due Diligence of Title Searches
A lawyer ensures proper checks are done to make sure that the property being purchased has a clear and marketable title. As well, the proper title checks will include reviewing everything registered to the property title such as subdivision agreements, right of way agreements, municipal by laws, development agreements and any registered leases.
Harmonized Sales Tax (HST) and Land Transfer Tax
As a buyer, it is important to know and understand the relevant taxes imposed on the purchasing of commercial property. Specifically, Land Transfer Tax is levied by the Province of Ontario against buyers when purchasing real property. Additionally, in the city of Toronto, municipal land tax is collected on all property purchases in Toronto. Buyers are also obligated to pay HST on purchased commercial property, with non-residents of Canada paying a Resident Speculation Tax when buying within Canada.
How We Can Help
At 6ix Estates LLP, whether you are purchasing selling, or refinancing real property, we will not only seek to close your matter efficiently, but we’ll also personally guide you throughout the transaction. We bring extensive experience and professionalism to every transaction and customize our support to your specific needs and concerns. We’re on the pulse of modern technology and have monitored its evolution to inform our own legal approaches – all to give you exceptional timely advice and service.
Contact us today for a free 30-minute no obligation consultation to discuss all your real estate needs.
