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[BUYING AND SELLING REAL ESTATE IN CANADA - ONTARIO]
not usually obtained for an apartment building as the rental income in usually less significant and parties do not want to disturb the residential tenants. The tenant acknowledgement confirms the material facts about the lease, including, but not limited to, any outstanding landlord work, arrears of rent, rent amounts (including additional rent), square footage, the existence of any amendments to the lease, the lease term, expiry date, renewal rights, escalations in rent, deposits, prepaid amounts and that there are no disputes or rights of set off, or if there are, details of such claims. The tenant acknowledgement is important as it confirms the lease information but may limit the potential for disputes post-closing with the buyer as the tenant will be estopped from later asserting a different interpretation of the lease terms. It is important for the buyer and seller to assess and determine what the consequence will be if the seller is unable to provide the estoppel certificates, or if the certificates differ materially from the leases and disclosures made by the seller. Examples may include termination of the transaction without either party being liable for damages, an abatement of the purchase price or a temporary hold-back. Since commercial properties come in a variety of forms, it is prudent to hire professionals such as engineers, planners, appraisers and surveyors to assist in the transaction who have expertise in the type of property being sold or purchased, and to determine if the intended future use of the property is allowed. In some instances, the professional may have to contact various third parties, such as utility providers, conservation authority, fire department, building department, and municipal zoning departments to determine if encumbrances that are not registered on title exist or if historical environmental violations exist. The carriage of business on the property warrants a
higher level of scrutiny for commercial real estate transactions than for residential transaction. IV. HOLDING TITLE There are several ways in which title to a property can be held. Consideration should be given to the Planning Act, liability and tax planning. A buyer should consult with its counsel and tax advisors prior to determining how the title will be held. When multiple parties are registered owners on title, the ownership can be as "joint tenants" or "tenants in common." Joint tenancy is used when the owners want that if one of them dies, the survivor(s) become the owner(s) by right of survivorship. Joint tenancy is frequently used by spouses for their matrimonial home. Tenancy in common means each owner owns a percentage of the registered title. If one owner dies, that owner's share is then an asset of the deceased owner's estate and may eventually be transferred to the heirs of the estate in accordance with the deceased's will or intestate laws of their jurisdiction. Individuals contracting regarding property must be 18 years old, not be incapable, and not be an undischarged bankrupt. If the party does not have such capacity, legal representatives such as estate trustees, attorneys under power of attorney, the Public Guardian and Trustee, the Office of the Children's Lawyer and others may be required to be a part of the transaction. Corporations must be authorized by resolution of their directors and, if required, shareholders. The purchase agreement and closing documents must accurately set out the names of offices of the signing officers. Real property in Ontario must be held by a legal person or corporation. Partnerships are not a legal person and therefore cannot hold registered title. Limited liability partnerships
ILN Real Estate Group – Buying and Selling Real Estate Series
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