REAL ESTATE LAW

1 / 87
About This Presentation
Title:

REAL ESTATE LAW

Description:

Real Estate Brokers Program Barbara Grodaes Sources of Law Common Law foundation of other elements of law, legislation and case law. Legislation statutes ... – PowerPoint PPT presentation

Number of Views:63
Avg rating:3.0/5.0
Slides: 88
Provided by: grodi2the

less

Transcript and Presenter's Notes

Title: REAL ESTATE LAW


1
REAL ESTATE LAW
  • Real Estate Brokers Program
  • Barbara Grodaes

2
Sources of Law
  • Common Law foundation of other elements of law,
    legislation and case law.
  • Legislation statutes and regulations passed by
    government.
  • Case Law (decisions on the basis of earlier
    ruling/judgment) precedents.

3
Real Property Law
  • Deals with rights or interests in land and all
    that is erected, growing upon or fixed to the
    land.
  • Not dealing with moveable property or all types
    of property other than land and fixtures
    (personal property law).
  • Tenure theoretical basis in that only the Crown
    is the absolute owner.

4
Estates
  • Defines the nature, degree, extent and duration
    of ownership in land.
  • Real estate and real property mean the rights or
    interest an individual holds with respect to
    land.
  • 4 types of estates in land fee simple, life
    estate, leasehold and dower.

5
4 Types of Estates in Land
  • Fee Simple most common, can be inherited, any
    heir can inherit, absolute owner of the land.
  • Life Estate has most of the rights of fee
    simple owner except right to sell.
  • Leasehold fixed period of time.
  • Dower spouse right to life estate.

6
Methods of Holding Land
  • In Trust legal estate held by one for the
    beneficial interest of another.
  • Co-Ownership joint tenancy (right of
    survivorship) and tenancy in common (interests
    split)
  • Co-operative Housing Ownership incorporated,
    non-profit business.

7
Methods of Holding Land cont.
  • Time Share Ownership rights of ownership
    limited for a specific part of the year
    (undivided or interval).
  • Strata Title Ownership subdivision plan
    subdivides the volumetric space above or beneath
    land surface (3-dimensional drawings necessary).

8
Surface and Mineral Rights
  • Generally, surface rights only, title showing
    excepting thereout all mines and minerals.
  • Most titles separated into surface only and
    minerals only titles.
  • Surface Rights Act regulates rights and
    relationship between holders.

9
Law of Agency
  • Agency is a contractual relationship in which the
    principal and the agent agree that the agent will
    do certain acts on the principals behalf in
    dealing with a third party.
  • Legal relationship between the brokerage and the
    client (written).

10
Fiduciary Duties
  • Loyalty (RANCOLD)
  • Obedience
  • Disclosure
  • Confidentiality
  • Reasonable care and skill
  • Non-delegation
  • Full accounting

11
Single Agency
  • Single agent represents either the buyer or the
    seller, never both.
  • The Sellers Agent represents seller.
  • The Buyers Agent represents buyer.
  • Buyers and/or Sellers can represent themselves or
    by their legal counsel.

12
Dual Agency
  • Same brokerage represents more than 1 party in
    same transaction Seller and Buyer or 2 or more
    Buyers or all 3, all competing for property.
  • Brokerage canNOT disclose price OR motivation and
    no confidentiality concerning material facts.

13
Dual Agency continued
  • Agent MUST have proper written authorization of
    both (all) clients.
  • Agent MUST be particularly careful and act
    fairly, honestly with integrity.
  • Agent MUST obtain written acknowledgement in
    timely manner.
  • Agent MUST obtain informed consent.

14
Other Agency
  • Dual agency also applies to lease transactions by
    substituting Landlord for seller and Tenant for
    buyer and is otherwise the same.
  • No Agency Relationship if one party acts on his
    or her own behalf Ethical duties be honest,
    fair, careful and do not misrepresent.

15
Contract Law
  • An agreement, based on a promise or a set of
    promises, which results in some legally
    enforceable obligations between two parties.
  • Written or verbal, long or short, are essential
    parts of many business transactions.
  • Legally binding get legal advice!

16
Elements Must Exist
  • Capacity of parties (legally competent).
  • Legality of object (lawful).
  • Legal intention (intent to be legally binding).
  • Consideration (each receives something of value
    promise is value).
  • Mutual agreement (offer/acceptance).
  • Genuine consent (all facts needed to make a
    reasonable decision and have free will).

17
Contract valid if all 6 present, otherwise,
contract is
  • Void (never existed).
  • Voidable (originally valid but able to be
    rejected by one of the parties later.
  • Illegal (contravene a law and not enforceable).

18
Capacity of Parties (Competent)
  • Individuals NOT considered to have the capacity
    to make a contract are
  • Infants or minors (gt18 years).
  • Mentally incapacitated persons.
  • Intoxicated persons.
  • Cannot read OR speak English or vision impaired.

19
Legality of Object (Lawful)
  • Courts will not enforce contracts made for
    illegal purposes and violate criminal laws.
  • Contracts can NOT contravene regulatory statutes
    or public policy.
  • Though no longer legality of object, practical
    reasons suggest contracts be made during a
    weekday as opposed to being conducted on a
    weekend (closing date).

20
Legal Intention
  • Parties to contract MUST have intended their
    actions to be legally binding.
  • In real estate, there MUST be an invitation to
    treat in the form of a statement inviting
    prospective buyers to negotiate a purchase
    contract.
  • Listed price is intended to solicit offers.

21
Consideration
  • To be enforceable, a contract MUST be made under
    seal or be supported by consideration.
  • What each party in a contract receives in
    exchange for the promise to act in a specified
    way.
  • Past consideration NO consideration.

22
Mutual Agreement ? Offer
  • MUST be definite made with intent to create
    legal, binding obligation.
  • MUST contain all essential terms of the proposed
    agreement so that a contract exists upon
    acceptance.
  • CAN remain open until acceptance and/or until a
    stated time limit unless withdrawn before
    acceptance is communicated.

23
Agreement ? Offer, cont
  • CAN lapse after the passing of a reasonable
    amount of time if it contains no time-limit or
    acceptance.
  • MAY be revoked if communication of the revocation
    is communicated to the offeree prior to the
    communication of the acceptance of the offeror.

24
Mutual Agreement ? Acceptance
  • MUST be unconditional (NO changes to the Offer
    any change is a rejection and making it a
    counter-offer).
  • MUST be communicated to the offeror in the manner
    required by the offer.
  • MUST be made within the time specified in the
    offer OR a reasonable amount of time if no
    time-limit.

25
Mutual Agreement
  • If the offer does not specify a manner of
    communication, then the method of acceptance MUST
    be in a manner as good or better than
    communication of the offer.
  • If this is mail or fax, contract is binding even
    if mail or fax not received.

26
Genuine Consent
  • To form binding contract, mutual agreement MUST
    be real and genuine. Inducements that may
    invalidate a contract are
  • Mistake.
  • Misrepresentation.
  • Failure to disclose.
  • Duress or undue influence.

27
Contract Deemed Invalid
  • MAY be deemed invalid if one of following occurs.
    Courts ultimately decide if contract is
    enforceable they are not automatically void
  • Mistake
  • Misrepresentation
  • Failure to Disclose
  • Duress and Undue Influence

28
Mistake
  • May nullify apparent consent, contract has no
    legal effect as is based on mistake that has a
    narrow meaning in contract law.
  • May remove the element of genuine consent
    essential to a contract.
  • MUST be a mistake of fact and go to root of
    contract.
  • General rule people are bound by their
    signatures, whether theyve read it or not.

29
Misrepresentation
  • Any statement made before or at the time of
    contracting, with regard to any existing fact
    which induces other party to enter contract. Can
    be
  • Innocent (false without realizing).
  • Negligent (intended to be fact without checking
    for accuracy).
  • Fraudulent (knows it is false).

30
Note for Misrepresentation
  • The law treats a statement of opinion made by a
    real estate agent as a statement of fact.
  • An agent making statement of opinion about real
    estate may be found having made negligent
    representation and be liable for compensation to
    the person who relies of this statement.

31
Failure to Disclose
  • Agents have a legal DUTY to exercise care when
    providing information. Hiding a significant
    defect can be considered FRAUD.
  • Caveat emptor (let the buyer beware).
  • Patent defects (visible to the eye should be
    discovered on examination).
  • Latent defects, must be disclosed. Failure to do
    so or conceal may INVALIDATE.

32
Duress and Undue Influence
  • Duress is compulsion which forces a person to act
    through fear of personal suffering not of
    his/her own free will.
  • Undue influence is the improper use of ones
    power over another to induce into a contract
    (such as educated/uneducated, experienced/inexperi
    enced) takes advantage because of his/her
    position.

33
Conditions
  • Condition precedent (normal in real estate) calls
    for event or act to occur before agreement
    becomes binding.
  • Condition subsequent (after contract is binding)
    that if not met can give right to end contract.
  • Conditions are fundamental to the contract and
    warranties important when a breach occurs.

34
5 Ways to Terminate Contract
  • Performance (fulfillment).
  • Agreement (mutually agree).
  • Frustration (events beyond control).
  • Non-fulfillment of a condition (subject to
    clauses/condition not met in time.
  • Breach of contract (fails to complete).

35
Remedies
  • Rescission (court have contract set aside).
  • Damages (financial compensation for losses
    caused) damages not available where innocent
    misrepresentation occurred rescission is only
    available recourse.
  • Specific performance (court force).
  • Injunction (court order).
  • Quantum Meruit (as much as he deserves).

36
Considerations for Agent
  • Requirement of writing (Statute of Frauds
    requires any contract for the sale of lands or
    any interest in lands must be in writing and
    signed by parties. Any contract must be
    performed in one (1) year unless written).
  • Dower act IMPORTANT only when title shows only
    one owner and that owner is married.

37
Duty of Care
  • Special relationship where one party relies on
    information supplied by second party in position
    of knowledge.
  • Relationship exists brokerage/client.
  • Agent MUST represent information honestly and
    accurately to others.

38
Further Considerations
  • Power of Attorney (general/specific).
  • Trustee/Guardian of Mentally Incompetent (court
    appointed under the Dependent Adults Act or
    other.
  • Bankruptcy trustee has power to deal with land
    (files caveat on title).
  • Privity binding to parties in contract.

39
Listing Contract
  • MUST contain essential elements.
  • MUST contain clear description of 3 Ps (Parties,
    Property, Price Property is professional
    service of selling).
  • Other information and documentation is important
    as Agent independently verify ALL information
    wherever possible.

40
Purchase Contract
  • MUST contain essential elements.
  • MUST contain clear description of 3 Ps (Parties,
    Property, Price to render contract certain of
    intentions).
  • Possession Date, completion date, adjustment
    date, payment date or closing date ALL same
    thing.
  • Deposit NOT required to be binding.

41
2 Common Seller Financing
  • Vendor Take-Back Mortgage title transfers and
    mortgage registered.
  • Agreement for Sale possession transfers but
    title remains in Sellers name until paid in full.
  • Sellers foreclosure procedures are same,
    protecting buyers interest.

42
Option/First Right of Refusal
  • Option buyer acquires right to purchase within
    a specified time (sole control of buyer
    interest in land and subject to caveat against
    title).
  • First Right of Refusal (not absolute right to
    acquire) Two Steps (1)make offer to holder and
    (2)its acceptance by the holder, or not.

43
Encroachments
  • MUST make reference to any encroachments on real
    estate purchase contract if there is any on
    title.
  • Check the standard real estate purchase contract
    to ensure that seller is not providing warranty
    wrongly.

44
Commercial Transactions
  • Unique in nature and encompasses
  • Industrial sales
  • Commercial sales
  • Investment sales
  • Sale of businesses and companies.
  • AREA has customized contracts.

45
Sale of Assets Versus Shares
  • Business can be sold by either sale of assets or
    sale of shares different tax consequences do
    NOT give advice.
  • This field has securities law implications and
    must comply with the Securities Act obtain
    legal advice.

46
Recognize and Be Aware
  • Business records searches obtain and analyse to
    better advise client.
  • Employment conditions MUST comply with the
    Employment Standards Code.
  • Non-Competition Agreements seek legal advise
    contracts restricting trade.
  • Warranties and representations vary.

47
Commercial Leases
  • Leasing involves complex negotiations and
    contractual terms.
  • MUST contain specific elements to be valid and
    enforceable.
  • Closely examine lease and confirm information.
  • Advise client to seek legal advice.

48
Land Titles System
  • Torrens Land Registration System in Alberta under
    the Land Titles Act (111)
  • 1 one piece of paper
  • 1 one piece of property
  • 1 located in one place (North or South Alberta
    Land Titles Office Edmonton or Calgary)

49
Legal Land Descriptions
  • Meridians north/south W4, W5 and W6.
  • Ranges N/S every 6 miles starting meridian line.
  • Townships E/W every 6 miles apart (1-126 1-34
    SALS, 35-126 NALS 36 sq.miles divided into 36
    sections 1sq.mile.
  • Sections measurement 1x1 mile (640 acres/259
    hectares) (correction lines for earth curvature).
  • LSDs (legal subdivisions) divide sections in 16
    (40 acres each or 4/quarter).

50
Exceptions
  • Settlement Plans plans accommodating settlements
    (St. Albert, Fort McMurray and Edmonton) small
    fixed areas, no fixed pattern.
  • Metes and Bounds irregular shape that is
    difficult to describe.
  • Unsubdivided to subdivided, description is
    replaced except condominiums.

51
Principles of Torrens System
  • Curtain MUST be registered.
  • Mirror WYSIWYG what you see is what you get
    (rely on accuracy).
  • Insurance Assurance Fund created to pay for any
    errors caused by the Land Titles Office
    compensation for Loss of Rights.

52
Good to Know
  • Torrens system provides many advantages, the most
    important one is they system guarantees the state
    of the title. Deed registry systems do not.
  • Land Titles Act provide administrative framework
    of Torrens System.
  • Title search is imperative.
  • Agent expected to be good detective.

53
Law of Property Act
  • Provides remedies to recover security, protecting
    the owner personally (except for CMHC insured or
    corporate mortgagor).
  • Foreclosure, Quit Claim, Statement of Claim,
    Order Nisi, Final Order for Foreclosure, RICE
    Order, are all part of the foreclosure process.
  • All documents in action are public.

54
Foreclosure Process
  • If borrower does not file Statement of Defence or
    Demand of Notice, will be unaware of action is
    being taken and when.
  • RICE Order is last step for CMHC Mortgagees
    allowing lender to pursue debt recovery.

55
Condominium Property Act
  • Every condominium development in Alberta is
    governed by the Condominium Property Act.
  • Role of Agent is to identify issues and direct
    clients to appropriate legal advice.

56
Condominium Ownership
  • Rights allocated to owners via individual titles
    with 2 distinct yet inseparable parts
  • 100 exclusive ownership of unit.
  • Co-ownership share as tenant in common of common
    property, in proportion to the unit factor
    assigned to the unit.

57
Condo Corporation
  • Owners are members of corporation.
  • Governs by board of directors.
  • MUST maintain common property and comply with
    municipal regulations regarding repairs and work
    to be done.
  • MUST enforce bylaws do all things in the best
    interest of all owners.

58
Regulation
  • ALL condo corps have a total of 10,000 unit
    factors.
  • LTO uses CADS (Condominium Additional Sheet) to
    record registered documents against a Condo Plan.
  • Reserve funds are MANDATORY and MUST have a
    reserve fund study.

59
Condominium Potpourri
  • As agent, beware of rental pools contract could
    affect sale of property.
  • Condominium refers to land.
  • Bare Land Condominiums are popular with
    developers because they can phase their
    development.

60
Potpourri Cont
  • Leasehold condominium where government does not
    provide for fee simple title (national/provincial
    parks, crown land, etc.)
  • Parking stall MAY have separate title as may
    storage facilities.
  • Restrictive covenants MAY limit the freedom of
    use of the property.

61
Residential Tenancies Act
  • If property is residential, the Residential
    Tenancies Act governs the relationship between
    landlord (seller or buyer) and the tenant.
  • Provides for the obligations and remedies of the
    landlord and tenants as well as regarding
    security deposits.

62
Definition
  • Written, oral or implied agreement to rent
    residential premises.
  • Fixed term ends on specified day.
  • Periodic tenancy renewed or continued without
    notice.
  • Commercial, industrial and other types of
    tenancies NOT governed by Act.

63
Termination for Landlord
  • The landlords rights to terminate a periodic
    tenancy is severely restricted. Landlord MUST
    have prescribed reason which may make it
    difficult.
  • Notice to terminate MUST be in writing and not
    until all conditions of an offer to purchase have
    been met.

64
Termination for Tenant
  • MAY terminate the periodic tenancy by serving the
    appropriate notice, with sufficient time
  • Week to week one tenancy week.
  • Month to month 1 full tenancy months (3 full
    tenancy months for landlord).
  • Year to year 60 full days prior to last day of
    year (90 for landlord).

65
Need to Know!
  • ANY provision waiving rights, benefits or
    protection under the Act is VOID and
    unenforceable.
  • Landlord NOT entitled to deduct from damage
    deposit unless beginning report and final report
    produced.
  • Knowledge of the Act is IMPORTANT.

66
Municipal Government Act
  • Provides legislative basis to determine how
    property may be used.
  • Province divided into municipalities (city,
    town, village, summer village, municipal
    district).
  • Required to pass a Land Use Bylaw which develops
    plan policies (critical for Realtors to know).

67
Land Use Bylaw (Zoning)
  • Will generally contain
  • Section for administrative matters.
  • General rules applicable to all land use classes.
  • Detailed land use classes and subclasses.

68
Land Use Control Methods
  • Zoning Control specifies every aspect of how
    property may be used.
  • Development Control allows each proposed
    development to be considered according to its own
    merits.

69
4 Kinds of Land Use Districts
  • Residential (R)
  • Commercial (C)
  • Industrial (I)
  • Special catch-all for special needs
  • For each land use classification the bylaw lists
    a number of permitted uses or discretionary
    uses, or both.

70
Permitted Vs Discretionary
  • Permitted are uses that entitle applicant to
    permit if the development conforms with the bylaw
    (inflexible but certain).
  • Discretionary are uses that are deemed to be
    generally appropriate but not necessarily
    compatible with the surrounding (may/may not be
    approved flexible but uncertain).

71
Land Use Compliance Matters
  • Real Property Report is necessary to verify
    buildings comply with sideyard and setback
    requirements of the Land Use Bylaw and shows
    where they are relative to the property lines.
  • Municipality will stamp a compliance certificate
    or legal but non-conforming.

72
Compliance Matters cont
  • Burden is generally on the seller to rectify any
    problems.
  • To allow seller to maintain the structure as is,
    encroachment agreement or relaxation is
    necessary.
  • Buyer MAY choose to or NOT to complete
    transaction.

73
Permits
  • Development permit document issued under the
    bylaw authorizing development.
  • Building permit document issued and required
    for the actual construction. If not issued, can
    be appealed.

74
Illegal/Non-Conforming Uses
  • Illegal use of a property (not allowed under the
    Land Use Bylaw) may require change or removal.
  • Non-conforming use (not allowed under the current
    bylaw but was okay at the time in came into use
    note if discontinued for more than 6 months, the
    use must stop).

75
Environmental Law
  • Environmental Protection and Enhancement Act
    deals with environmental concerns.
  • Encourage buyers to investigate any issues of
    concern to them.
  • Include a professional environmental audit as a
    normal condition to contract.

76
Common Concerns
  • Release of Substances, Contaminated Sites,
    Conservation and Reclamation, Groundwater and
    Related Drilling, Potable Water, Hazardous
    Substances Pesticides, Recycling Waste
    Management.
  • Urea Formaldehyde Foam Insulation, Radon,
    Polychlorinated Biphenyl, Under-ground Storage
    Tanks, Post Tension Cable, Lead Paint/Plumbing,
    Farm Disposal Sites.

77
Be Alert to Types of Land!
  • Old service station locations.
  • Industrial site - heavy construction occurred.
  • Storage sites batteries, tires, scrap metal.
  • Truck depots, old landfills.
  • Lumber treating sites (creosote/bluestone (wood
    preservative).
  • Pay attention smells, stains, soil, taste, etc.

78
Environmental Audits
  • Three-Phased Approach to analyze to determine the
    extent of damage or to determine compliance.
  • Sampling and/or Testing required in Phase II may
    include Sampling Plan, Analytical Plan, Health
    and Safety Plan, then Final Report.
  • Phase III is remedial action plan. MAY include
    Repair, Isolation, Encapsulation, Enclosure,
    Removal Disposal, hopefully limiting a problem
    of Stigma.

79
Other Legislation
  • Fire Prevention Act.
  • Federal Environmental Protection Act.
  • Once terms are in contract and agreed on,
    investigation and searches begin.
  • If there is any indications of potential
    environmental problems, it is important to be
    more diligent.

80
Municipal Taxation
  • Property Taxes Assessed Value (land and
    buildings) x Mill Rate.
  • A mill is one one-thousandth of a dollar
    (1/1000 of 1).
  • Taxes due and payable June 30th of each year.

81
Tax Adjustment
  • Taxes are based on calendar year (January 1 to
    December 31 but due June 30th).
  • Before June 30th, Buyer gets tax credit.
  • After June 30th, Seller gets tax credit.
  • Tax adjustment based on ofdays/365(yearly
    taxes x ofdays/365).

82
Tax ACCOUNT Adjustment
  • Tax Account based on tax year (July1-June30).
  • Tax Accounts are savings for next June 30th .
  • If assuming mortgage, Buyer reimburse Seller,
    Seller gets tax credit, Tax Account remains.
  • If new mortgage, Buyer creates tax account with
    mortgagee so that, combined with the tax portion
    of PIT payments left before June 30th, lender
    will have sufficient funds to pay.
  • Adjustment may be in Mortgage Statement, or not,
    but it will affect the Cash required to Close.

83
Municipal Government Act
  • Once tax notification registered on title for one
    year and before three, land can be offered for
    tax sale.
  • If taxes not paid by March 31 of next year,
    property for sale by public auction with reserve
    bid and Sold.
  • If reserve not achieved, then Municipality
    becomes owner usually redeemed.

84
Caution .. Tax Considerations
  • Business Taxes.
  • Allocation of Purchase Price (beware assets that
    allow high rate of depreciation).
  • Income Tax.
  • Note principal residence exemption.

85
Lawyers
  • The function of Real Estate Lawyers in
    residential transactions is VERY important,
    timely (always working with deadlines) and
    similar, yet each is different.
  • The real estate agents quality of work,
    thoroughness and ability to help clients aids the
    lawyers in the ease of closing.

86
Miscellaneous Considerations
  • Dealing with Estates have knowledge about how
    death affect contracts.
  • Personal Property Security Act.
  • Expropriation Act.
  • Mobile Home Sites Tenancies Act (similar to
    Residential Tenancies Act).

87
Legal Concerns Land Types
  • Some types of land requires special
    consideration. Some of these concerns are found
    in
  • Agricultural Land.
  • New Construction.
  • National Parks.
  • Indian Lands.
Write a Comment
User Comments (0)