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CBL - CH10 - Property Law, Remember: its not about the item, its about the…

- - - - General information
        
        fixtures that are attached to land or buildings are also categorized as real property, real property is tangible property
        
        When real estate is sold, all fixtures are included in the sale unless specified otherwise.
        
        commonly known as real estate, is immovable property and includes land, buildings, and any physical structures attached to land.
        
        Technically only the government owns real property.
      - Interests in Land
        
        Fee Simple, ownership rights in land where the owner can do what they want, including transfer, sell, and dispose of it.
        
        as the true "owner" of all property, the government may impose taxes on property owners, and an owner's failure to pay may result in the loss of the property to the government.
        
        The government also has the right to limit how an owner uses land by imposing zoning bylaws or through environmental regulations
        
        Equivalent to have "the maximum interest in the land"
        
        Life Estate, interest in land for the duration of a person's life and where, upon death, ownership rights transfer automatically to another.
        
        the "life tenant" has the full rights of ownership until the "life tenant" dies, once the "life tenant" dies the ownership returns to the grantor of the life estate.
        
        the life tenant does not have full ownership of the property, they do not have the right to sell or to use it as they desire.
        
        the property is not the life tenant to keep, but to use and return in good condition.
        
        Easement, create s a temporary interests or right in another's land for a specific purpose.
        
        it is granted in the land, a new owner of a piece of land can benefit from an easement if the time limit on it use has not expired because the land that was transferred to the new owner has this benefit or right "attached" to it.
        
        the usage of passage of another's land to get to a road would be an example.
        
        leasehold interest, temporary to occupy real property
        
        when someone has rented a property or unit for a specific duration and sometimes for a specific purpose.
        
        leases can be residential or commercial.
        
        the lessor, is the owner of the property, the lessee is the renter of the property
      - Agreement of Purchase and Sale
        
        is the usual first step in transferring ownership in real property, is a legal contract that obligates the buyer to buy and the seller to sell.
        
        only lawyers can provide legal advise, a broker can help with the sale.
        
        exceptions to the rules governing the law of contracts when it comes to contracts relating to real property
        
        a contract involving the transfer in ownership of or interest in real property must be evidenced in writing
        
        in a real estate transaction where the purchaser breaches the contract, the seller can forfeit the deposit and still sue the buyer for the full extent of the damage caused by the breach.
        
        Conditions Precedent, in which something must happen before a party is required to fulfill contractual obligations
        
        conditional on financing, condition that the buyer is not required to complete the sale unless the buyer is able to arrange a mortgage or other financing by a specified date
        
        conditional on zoning approval, condition that the buyer is not required to complete the sale unless the buyer is able to obtain the zoning approval required to use the land in the manner intended.
        
        conditional on inspection, not required to complete unless a building inspection indicates that there are not hidden structural problems with the building
        
        conditional on environmental audit, not required to complete unless an environmental audit indicates that there are no hidden environmental hazards on the property. Particularly important to protect buyers of industrial land
        
        Environmental laws can hold buyers responsible for the high costs of cleaning up toxic wastes, even if they were unaware that environmental problems existed at the time of purchase.
        
        Warranties, a clause in a contract that creates an obligation that, if breached, does not terminate the agreement.
        
        warranting no toxic wastes on property, the vendor may warrant that there are no toxic wastes on a land, if toxic waste IS found, the buyer can sue the vendor for breach of contract. The vendor would likely be required to reimburse the buyer for the costs of restoring the environment to a non-toxic state.
        
        Warranting no asbestos in buildings,
        
        closing, real property is not legally transferred when the parties sign an agreement, rather is transferred at a time specified in the agreement, called "closing date". When closing, the buyer pays the vendor the purchase price and title transfers. this requires that the transfer in ownership be filed formally with the government
      - Transfer of Ownership
        
        the Land Registry System, a system for the registration of title to lands that required a historical search of deeds to establish valid ownership.
        
        Land titles system, Ontario uses a system that has significantly simplified the administration of land registration., the land titles system does not require a prospective buyer to make a historical search of the title, the system ensures that the chain of title is established and that the last registered owner appearing on the registry is certified as being the correct and legal owner.
        
        in this sense, the government guarantees title, and if the system is incorrect, the party who suffers a loss from this error is entitled to seek compensation from the (provincial) government for the mistake.
        
        a deed is referred to as a transfer, and a mortgage is referred to as a charge.
        
        a transfer of ownership of a parcel of land is completed by the land registrar, whose duty is to ensure that the transfer are legally valid.
      - Mortgages, a loan secured by real property, it gives the lender the right to sell the property, and recoup any loss if the borrower fails to repay the loan.
        
        the owner of the property who borrows funds is the mortgagor, and the lender (usually a bank) is the mortgagee
        
        while the mortgage is in effect, the mortgagor may make full use of the real property, provided the obligations are fulfilled.
        
        make periodic mortgage payments (monthly or biweekly)
        
        pay all property taxes
        
        insure the property against loss
        
        make repairs necessary to ensure that the property does not lose value
        
        The amortization period, is the length of time required to pay entire mortgage debt
        
        mortgage payments consist of a combination of principal and interest.
        
        the mortgage term, usually between 1 to 5 years, during which a stipulated interest rate applies.
        
        at the end of the mortgage term, the mortgagor and the mortgagee must negotiate a new interest rate.
      - Default, when a mortgagor fails to pay a mortgagee
        
        most mortgages include an "acceleration clause" which provides that full payment of the entire debt becomes due on default
        
        The mortgagee might seek an order for possession of the property and then obtain relief in one of three different ways
        
        sell the property under the power of sale authorized by the mortgage,
        
        once sold the mortgagees get their debt paid back, if its insufficient, the mortgagor is liable for the shortfall.
        
        obtain a title in a foreclosure action
        
        this is more complex, it involves transferring legal title to the property from the mortgagor to the mortgagee
        
        a final order of foreclosure extinguishes the debt owed by the mortgagor to the mortgagee, the mortgagor is not liable for any shortfall, nor are they entitled to any of the proceeds of sale.
        
        Sell the property in a judicial sale action
        
        a sale by court order, the sheriff sells the property by tender or public auction, the proceeds are distributed in the same manner as a sale under power of sale.
        
        the mortgagees and other registered creditors are entitled to payment of the debts owed to them, in priority sequence, and anything left over is returned to the mortgagor.
    - - real property
      - chattels (like cars, computers, furniture, etc, any item that can be picked up from one place to another)
    - - something one can have, that has no physical substance, it has value, but its value does not arise from its physical attributes.
      - referred to as choses in action, ej. Goodwill, which is a business reputation with its customers and others, and negotiable instruments, such as cheques, money orders, etc. which have no value in and of themselves, but represent rights or claims to something of value.
    - - the rights that arise from the product of a person's mental efforts and comes in many forms,
      - it is generally deal with as a separate category of property because of its rules, and the rationale behind them, are quite different from those that govern other types of property.
        
        copyright
        
        patents
        
        trademarks
        
        trade secrets
- - - - has a duty of care to take care that the bailor's goods do not cause harm to those using them and to warn the bailee of any defects or inherent dangers in the goods.
    - - has a duty of care of the goods as a prudent owner may reasonable be expected to take of their own goods, if not, it can be sued by the tort of negligence.
    - - Lucrative Bailment, AKA bailment for reward, is the most common in the business world, it includes transactions such as renting storage, leasing vehicles, etc.
        
        Types of Lucrative bailment
        
        Consignment, owners of clothing and antiques are the bailors, and they approach these shops to ask if the goods can be sold there, the shops (bailee) agree to display and sell them on behalf of the owners in return for a commission.
        
        Parking Lots, short term bailment relationship
        
        if its a valet parking, then it is a bailment, because the person gets possession of the car and the keys.
        
        if it is a parking lot, then it is a licence agreement, because the parking lot grants a licence to use a spot, but the possession of the keys stays with the owner
        
        Bailment for repair or service, when the bailor pays the bailee for repairing or servicing the bailor's goods.
        
        Liability for Lucrative Bailment
        
        a contract dictates the terms of the bailment relationship and liability.
        
        most standard contracts for the commercial rental of goods will set out some limits on the bailor's liability for defective goods and exemption cases.
        
        Where there is no contract and common law tort principles prevail, the standard of care applicable to a bailee in a lucrative bailment is usually the care that an ordinary or reasonable diligent person would take of the goods in the circumstances
        
        if the leased good has defect, the bailor will be liable for any damage caused by the defect. (loss of business or damage of equipment).
        
        Payment
        
        if the bailee receives payment to possess the bailed goods, the bailee has a duty to preserve the values of the goods., the bailee is obliged to care for the goods at least as well as, and probably better than, if the bailee owned the goods.
        
        when goods are particularly valuable or fragile, a higher standard of care is required.
        
        if theres a defect in the bailed goods, then the bailee may not be liable for the loss
        
        when a bailor refuses to pay, in a repair or service, the bailee has the right to a lien, which is a legal claim on the property of another until a debt has been paid pack, he could even sell the machine in order to collect his debt.
      - Constructive Bailment, is involuntary, it happens when a bailor accidentally loses an item that the bailee finds.
        
        the bailee has an obligation to return the good to the bailor.
        
        if the bailee fails to locate the bailor, then it can keep the good, but the bailor still has the right to claim it in the future.
        
        Purchasing a similar good, or stopping the search could be considered an abandonment of the claim of the bailor.
        
        if the good is severely damaged, the bailor will be liable only if it was grossly negligent.
      - Special Bailment, when a bailment relationship is created by statute, rather than by common law principles.
        
        ej. where businesses have a special obligation in relation to the property in their charge, such as inkeepers in a hotel room
        
        a hotel owner must allow guests to deposit their goods for "safe custody", the Ontario Inkeepers act limits the hotel's liability for valuables that are lost or stolen from a room to 40 dollars.
        
        to benefit from this limitation of liability, the hotel owners must also accept guest's goods for "safe custody", adding a safe in which guests can store their valuable belongings.
        
        if the goods that were held in safe custody are lost or stolen, and if the hotelier refuses to accept the guest's goods for safekeeping, the hotel may be liable for an amount exceeding 40 dollars.
      - Gratuitous bailment, possession of property where the benefit flows to only one party, (either the bailor or the bailee).
        
        liability wise for the bailee, the standard of care, if the bailor is the party being benefited, is quite low because the bailee is doing a favour. it can only be liable for gross negligence, such as leaving the good in a table besides the front door while hosting a 200 person party.
        
        liability wise for the bailor, the standard of care, if the bailee is the party being benefited, is quite high, and can be sued for even slight negligence.
- - - - fixed tenancy, a lease exists for a fixed term, such as 1 year, 5 years, or even 99 years.
        
        a fixed tenancy might convert into a periodic tenancy if, after the termination date, no new term is negotiated, but the tenant continues paying rent and the landlord continues to collect it.
      - in a periodic tenancy, the lease does not specify a rental term or a termination date. Instead it continues to operate indefinitely unless one of the parties gives notice to the other to terminate the lease.
    - - the amount of rent payable under most commercial and industrial leases is determined on the basis of the square footage of the space leased, and other attributes such as logation, etc.
      - most long term leases provide for renegotiation of the rate at specified intervals, (every five years, for example) since commercial property tends to vary much in price
      - the parties are able to include an arbitration clause in the lease agreement.
      - even if the property is render unusable by a fire, the obligation to pay rent continues. so it is important to consider clauses that permit you to stop paying rent under certain conditions.
      - if a tenant fails to pay rent, the landlord has several remedies available, sue for the payment of the debt, under the small claims court.
      - commercial landlords also have the right of distress against their tenants' goods. Meaning they can seize a portion and sell a tenant's personal property, such as computers and office equipment. (this is not available for residential tenancy)ç
      - commercial landlords have the right of re-entry or forfeiture, which allows them to regain possession of the premises when a tenant fails to pay the rent. Changing the locks is the most common method of regaining possession.
        
        once a landlord uses forfeiture, the landlord no longer has the right of distress.
    - - a well drafted lease sets out both a landlord's and a tenant's responsibilities for repairing and maintaining the premises.
      - commercial tenants have very little protection because legislation requires landlords only to maintain basic safety, the common law does not oblige them to make repairs, only to warn tenants of any dangers.
      - commercial tenants are not entitled to withhold rent for any purpose, even if their landlord breaches a provision in a lease.
      - if a landlord refuses to make repairs according to the requirements of the lease, the tenant must seek other remedies, such as suing the landlord for breach of contract. If successful, in such a suit, the tenant may be awarded a rent abatement, which is a reduction in the amount of rent payable.
    - - tenants have the right to the quiet enjoyment of the premises, use the leased property for the intended purpose without interference from the landlord or others under the landlord's control
      - the lease should specify the purpose of the lease in the clearest terms.
      - the lease should also clarify both the landlord's and the tenants responsibilities for maintaining the premises in a condition agreeable to both.
    - - tenants have the right to sublet the premises unless the lease states otherwise.
      - the tenant still has the responsibility for fulfilling all of the obligations under the lease, such as paying rent for the property and maintaining it.
      - the new tenant is responsible only to the original tenant; the subtenant has no contractual obligations to the landlord.
      - a tenant might charge as much rent as the market will bear, it need not be the amount specified in its lease, if a subtenant wants to pay a higher rent, the tenant may be able to make a profit.
    - - tenants also have the right to assign the lease, where a new tenant becomes a party to the lease and deals directly with the landlord according to the terms of the lease.
      - unless the landlord releases the first tenant from its obligations under the lease, the landlord may still sue the first tenant in the event that the new tenant fails to pay the rent or otherwise abide by the lease.
    - - if a tenant adds fixtures to the rented premises, what happens when the tenant leaves? Generally fixtures stay on the premises and tenants are not permitted to remove them.
      - the law creates an exception for trade fixtures, which are specific to the tenants business, it is wise to specify when signing the lease, which fixtures the parties intend to be trade fixtures to avoid confusion and disagreement later.
    - - they are complicated because they include space that is shared among tenants.
      - the common interests of the tenants and landlord are reflected in the special obligations that they all assume under shopping centre leases,
      - also, because of the parties shared interest in the shopping centre's success, rental payments are usually arranged so that the landlord shares in the profits of the tenants. the lease may require a minimum monthly rental payment, but also a percentage of gross sales.
- - - - property loss, to protect themselves against loss from catastrophes such as fire, flood, theft, accident, and extreme weather. It protects business against losses of real property, such as factories, personal property, machinery and equipment inside these factories
      - liability for property loss, to protect themselves against the financial consequences of failing to take adequate care of the property of customers and others. This type of insurance is important for businesses that act as bailees where property in their possession may be damaged.
      - occupiers liability, protects an occupier against negligence lawsuits by covering legal costs and any damage awards. tenants of shared spaces, such as shopping malls, should review the extent of their responsibility for maintenance and insurance always.
      - business interruption, if a business is temporarily shut down when a fire devastates its premises, business interruption insurance compensates it for the loss of its operating income.