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Legal Issues: Not ready to close

Don Lapowich 2007In a recent case, after a real estate deal failed to close, the vendor took legal action against the would-be purchaser. The vendor resided in the U.S. and hired a local Ontario lawyer to complete the sale of a property.

The vendor’s lawyer was to be away on the closing date and the purchaser’s lawyer had offered to extend closing until the former expected to return to work. This offer was “rejected” and was probably a significant fact in the court’s ultimate decision.

On the closing date, the vendor’s lawyer’s office had only faxed documents from the vendor, because the originals were in transit.

The court dismissed the vendor’s action because he was not ready to close and the purchaser had signed original documents for fire and title insurance and private mortgage arrangements, with funds in the hands of the purchaser’s solicitor.

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In a commercial real estate deal, the vendor agreed to sell its strip mall to the purchaser. The standard Ontario Real Estate Association Agreement of Purchase and Sale indicated a closing on Nov. 30 at 6 pm, but the registry office closes at 5 pm.

Before closing, the purchaser said it did not understand that it was responsible for tenants’ rent in the mall that was in arrears. The vendor wasn’t happy about this, but the vendor’s lawyer did deliver closing documents to the purchaser’s solicitor for closing, in escrow.

Seven minutes before 5 pm, the vendor’s solicitor gave the okay for the purchase’s solicitor to register.

As it turned out, the clerk stamped the sale transfer at one minute after 5 pm and then refused to register transfer. The purchaser registered first thing the next day, but not before the vendor put on title a “fictitious” mortgage against the property.

The vendor moved to strike the transfer that was registered the next day, and the purchaser asked the court to strike the fictitious mortgage and confirm the transfer and new ownership.

The court considered whether the purchaser was precluded from seeking an equitable order, since the vendor only allowed seven minutes to close, when the OREA agreement form allowed to 6 pm although the office closed at 5 pm. It ruled in favour of the purchaser, and struck the vendor’s motion.

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In another case, the plaintiffs and defendants lived side by side in a residential suburb.

The defendant installed an air conditioning unit outside his home, but just a few feet away from the plaintiff’s home. The plaintiff complained about the noise “nuisance” and sued for damages and an injunction.

The court found that a “nuisance” may be created even if the activity of the neighbour is lawful and meets municipal bylaws. The noise prevented the neighbours from sleeping at night and was a factor affecting the plaintiff’s health.

The defendant did try to dull the sound with a noise reduction blanket but it did not reduce the noise enough. The court held that the plaintiffs were not “unduly sensitive” and the noise was unreasonable.

Donald Lapowich, Q.C. is a partner at the law firm of Koskie, Minsky in Toronto, where he practices civil litigation, with a particular emphasis on real estate litigation and mediation, acting for builders, real estate agents and lawyers.