A recent order of the Ontario Superior Court illustrates the
complexities of the right of rescission in real estate
transactions. The purpose of the remedy of rescission is to
restore the parties to the position they were in prior to the
entering into of the transaction in question. When there has
been a conveyance of interests in real property and consequently,
the transfer of legal ownership of those interests, which often
triggers tax consequences, restoring the parties to their
pre-contractual position and unwinding the transaction can be
complicated and is akin to "putting Humpty Dumpty back
The recent order referred to above is that of Partners REIT, in
which the REIT sought to rescind its April 2014 transaction whereby
it acquired three Ontario retail centres in Hamilton, London and
Kemptville from Holyrood Holdings valued at approximately $90
million. The problematic aspect of the transaction under
securities laws was that the interim CEO of the REIT had a
relationship with the owner of the vendor sufficient that they
might be considered as acting together. The rescission was
completed pursuant to terms set out in a Rescission Agreement
originally dated June 6, 2014.
As a result of the Superior Court's order, the three retail
centres were returned to Holyrood and the securities were returned
to the REIT. One of the most significant aspects of restoring
the parties to their original positions to be dealt with had to do
with the reality of the significant tax consequences that had been
triggered as a result of the transaction. An important aspect
of the parties obtaining the order was to engage the Canada Revenue
Agency to assist with achieving a workable solution for all
parties. These circumstances highlight the unique nuances and
complexities of real property transactions and how rescission is
not an impossible remedy, but certainly not a straight-forward one
in restoring the parties to their pre-contractual positions.
The Ontario Court of Appeal confirmed that courts will generally support and uphold decisions of condominium directors because they are better positioned than judges to make decisions pertaining to their buildings.
According to the city bylaws in Calgary, the grading of lots for new buildings must be done properly so that the water never flows toward the new building or any other nearby properties, but away from those buildings.
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