Published by the B.C. Real Property & Planning Group
McCarthy Tétrault VOL.4,
Real Estate MATTERS

Welcome to Volume 4, Issue 2 of Real Estate MATTERS, a periodic publication of our B.C. Real Property & Planning Group. This publication is intended to give you a summary of recent developments in real estate law in British Columbia and, more importantly, what they mean to you.

We hope you will find Real Estate MATTERS informative and useful. Please let us know if you have any suggestions to make this publication even more helpful, or if there are topics or issues you would like to see covered in future issues.

Scott Smythe and Craig Shirreff, Editors

Strata Property Act Amendment Offers Remedy for Deadlocks on Special Levies
On December 12, 2013, amendments to section 173 of British Columbia’s Strata Property Act, SBC 1998, c. 43, came into force that allow strata corporations with majority support to apply to the British Columbia Supreme Court to require strata owners to pay for certain repairs.

Is Time on Your Side? Best Practice for Purchase Contract Date Extensions
The "time is of the essence" clause in a standard purchase contract is often treated as boilerplate, but this short, simple statement can be critically important, as it makes it "essential" that the parties perform their obligations by the relevant dates and times specified in the contract (e.g., the date by which a deposit must be paid or closing must occur). What is not well understood is that, if the parties subsequently agree to extend a date specified in the contract, they may lose their ability to rely on the "time is of the essence" clause. This somewhat surprising result arises from the decision of the British Columbia Court of Appeal (BCCA) in Salama Enterprises (1988) Inc. v. Grewal, 1992 CanLII 4035 (Salama).

Distressing Decision for Landlords
Landlords that exercise the remedy of distress rarely recover sufficient funds to satisfy the arrears of rent owing by the tenant. A recent decision of the British Columbia Supreme Court held that, in such a case, a landlord cannot immediately terminate the lease without first giving the tenant any required written notice of default and allowing the applicable cure period to expire.

Managing Management Fees
Landlords hold their management fees dear, and need to ensure they are fully recoverable. Offers to lease routinely provide that the tenant will pay a management fee equal to a fixed percentage (say, 5%) of the "Basic Rent" payable by the tenant. Despite this clear contractual arrangement, landlords occasionally (and inadvertently) shortchange themselves when preparing the final form of lease.

Update on Directors’ and Officers’ Environmental Liability: Lessons From Northstar Aerospace
The recent Ontario Environmental Review Tribunal case of Baker et al. v. Director, Ministry of the Environment raised more than a few eyebrows when former directors and officers of Northstar Aerospace, Inc. (Company) and its parent, Northstar Aerospace (Canada) Inc., were held personally liable by the Ontario Ministry of Environment for contamination at the now insolvent Company’s former manufacturing and processing facility in Cambridge, Ontario (Site). The environmental contamination arose from the migration of trichloroethylene from the Site to nearby residential properties, which resulted from the Company’s aircraft parts manufacturing activities at the Site from 1981 to 2009. The Company commenced voluntary remediation of the Site in 2005, but no funding was set aside for the multi-million-dollar remediation work. After the Company began to encounter financial difficulties, the MOE issued a remediation order in March 2012 to secure continued performance of the work. Following the sale of substantially all the Company’s operating assets (other than the Site) in July 2012 under the Companies’ Creditors Arrangement Act, no personnel or resources were left to continue the work. Due to human health concerns, the MOE intervened in August 2012 and took over the remediation work.


Keeping It Enforceable: The Essential Terms of a Purchase Contract
It is not uncommon for parties to enter into contracts for the purchase and sale of real estate that contain defects which may affect their enforceability.

To be enforceable, a purchase contract must set out the essential terms of the agreement; in particular, it must clearly describe the "three Ps" (parties, property and price) and other key terms such as the completion date and the particulars of any vendor financing or leaseback. Although these legal requirements are well known, even the most experienced real estate professional will occasionally fail to adequately describe one or more essential terms in a purchase contract.

There are several basic steps that can be taken when preparing a purchase contract to help ensure it is enforceable.


Lien on Me: Purchasers as Secured Creditors
Pan Canadian Mortgage Group v. 679972 B.C. Ltd., 2013 BCSC 1078, addresses the nature and priority of a purchaser’s lien, which, in general terms, is a financial charge that results when a purchaser pays a deposit toward the purchase price under a contract of purchase and sale.