5 Common Real Estate Disputes in Ontario & How to Avoid Them?

Real estate transactions in Ontario often lead to disputes, affecting buyers, sellers, and landlords alike. Understanding these conflicts and knowing how to avoid them can save you time, stress, and money.

The Canadian real estate market presents various challenges. Common disputes range from breach of contract and misrepresentation to boundary disagreements. These conflicts arise from unclear terms, hidden defects, or disputes over zoning regulations.

Cowan & Carter Law Firm is experienced in real estate law Ontario. With our guidance, you can protect your rights and avoid legal pitfalls in your property transactions. Contact us today to navigate the complex real estate landscape with confidence.

5 Most Common Real Estate Disputes and How You Can Prevent Them

1. Breach of Contract

A breach of contract in real estate occurs when one party to a real estate agreement fails to fulfill their obligations as outlined in a real estate agreement. This could include not securing financing, failing to transfer funds, not completing necessary documentation, or acting in bad faith. These breaches disrupt transactions and can lead to legal consequences, such as forfeiture of deposits or even lawsuits for additional compensation.

How to Avoid Breach of Contract

Define and Understand Terms: Clearly outline every term in the agreement. This ensures both parties are aware of their obligations and avoids ambiguity.
Use Subject Clauses: Include clauses that protect against issues, such as securing financing or conducting property inspections. However, be mindful that these clauses should not be misused to exit a contract without valid reasons.
Consult a Real Estate Lawyer: Before signing, have a lawyer review the contract to ensure compliance with legal requirements. An experienced real estate lawyer in Ontario can help draft better agreements, address potential issues early, and provide proactive advice on obligations. This extra step minimizes the risk of disputes and contract breaches.

2. Misrepresentation and Fraud

Misrepresentation and fraud occur when false or misleading information about a property is provided, either intentionally or unintentionally. This can include false statements about the property’s condition, boundaries, past repairs, or other key aspects.

Misrepresentation can be either negligent (due to carelessness) or fraudulent (done with the intent to deceive). Both types can lead to legal consequences and financial losses for buyers and sellers.

Fraudsters may even go as far as impersonating owners to sell properties they don’t own or manipulate real property values for unjust gain, which can devastate buyers, sellers, and the real estate market in general.

How to Avoid Misrepresentation and Fraud

Sellers: Provide Full Disclosure

Sellers must disclose all material facts about the property, including any renovations, defects, and ongoing repairs. Failure to do so can result in legal action by buyers, such as recovering damages or even rescission of the sale.
Disclose any latent defects (hidden issues that may not be obvious during a standard inspection). Use tools like the Seller Property Information Statement (SPIS) to provide a comprehensive disclosure to potential buyers.
Consult a real estate lawyer for guidance on how to properly disclose material facts and avoid misrepresentation.

Buyers: Conduct Thorough Due Diligence

Buyers should not rely solely on the information provided by sellers. Conducting independent inspections, verifying property titles, and checking for inconsistencies in documentation is crucial.
Beware of deals that seem “too good to be true.” Sellers who pressure buyers into making quick decisions could be trying to hide issues or engage in fraudulent activities. Always review documents thoroughly and seek legal advice to ensure there are no irregularities.

3. Failure to Disclose Defects

Failure to disclose defects occurs when sellers do not inform buyers about known issues, such as structural problems, mold, or pest infestations, that can affect the property’s value and habitability.

In Canada, sellers have a legal obligation to disclose both material facts and latent defects. Latent defects are hidden issues not apparent during a typical inspection, while material facts include anything that may influence the client’s decision, such as renovations or repairs. Not fulfilling these obligations can result in legal action, leading to financial liability for the seller.

How to Avoid Failure to Disclose Defects

For Sellers

Comply with Provincial Laws: Sellers must adhere to provincial regulations on defect disclosure. Disclose all material facts and latent defects even if they have been repaired. Using a Seller Property Information Statement (SPIS) can help document known defects. While it is not a legal requirement in all provinces, providing one demonstrates transparency and reduces the risk of disputes. Consulting with a real estate agent or lawyer can also help ensure compliance with disclosure laws, minimizing potential risks and liabilities.
Provide Full Disclosure: If the home has latent defects, such as structural issues or mold, sellers are obligated to disclose them. Concealing or failing to disclose can lead to legal action by buyers who may seek compensation for repair costs or loss of property value.

For Buyers

Conduct Thorough Inspections: Buyers should not rely solely on seller disclosures. Conducting a detailed home inspection can uncover issues that may not be obvious. Reviewing the SPIS (if provided) and asking questions about the property’s condition is crucial. Buyers should also verify property titles and conduct due diligence to avoid future disputes.

4. Boundary and Property Line Disputes

Boundary and property line disputes often arise when there is uncertainty or disagreement about the exact location of property lines. These disputes often stem from unclear property descriptions, survey errors, or encroachments by neighboring properties.

Issues can include misplaced fences, walls, or even buildings that extend beyond rightful boundaries. These conflicts can escalate if not addressed promptly and professionally.

How to Avoid Boundary and Property Line Disputes

Conduct a Professional Land Survey

Before purchasing a property, hire a licensed surveyor to conduct a professional survey. A survey provides accurate measurements and defines the precise location of property lines, eliminating ambiguities. The surveyor can also place physical markers on the property, like stakes or painted survey bars, to clearly indicate boundaries.

Reviewing property documents such as deeds, legal descriptions, and official land records further clarifies boundaries. This step ensures the property you are acquiring is accurately mapped and recorded.

Consult a Real Estate Litigation Firm

Legal documents can be complex, and property boundaries are often defined in technical terms. Consulting with a real estate law firm in Toronto helps in reviewing these documents, ensuring they accurately reflect the property boundaries.

A real estate law firm can also advise clients on the benefits of obtaining quiet title actions or boundary agreements if disputes persist. When negotiation and mediation fail, they can counsel you through legal action to protect your legal rights and responsibilities.

5. Title Issues

Title issues occur when there are problems related to the legal ownership of a property. These issues include undisclosed liens, errors in public records, tenant issues, fraudulent deeds, or unresolved inheritance claims. These complications can delay or even invalidate real estate transactions, leading to financial loss and legal disputes.

How to Avoid Title Issues

Perform a Comprehensive Title Search

Before completing any property transaction, conducting a thorough title search is crucial. This search involves examining public records, legal descriptions, and the property’s ownership history to identify any potential claims, liens, or inaccuracies.

A title search reveals the property’s registered owner(s), any existing liens, easements, and restrictive covenants. It ensures that the property’s dimensions match the purchase agreement, providing clarity and reducing the risk of future disputes.

Purchase Title Insurance

Title insurance protects you from financial loss due to unknown title defects, such as errors in public records, fraudulent deeds, or undisclosed liens. It offers coverage for costs associated with resolving encroachment or survey disputes and easements.

See How Cowan & Carter Law Firm Can Help with Real Estate Litigation

Real estate transactions often face common disputes, including breaches of real estate contracts, misrepresentation, failure to disclose defects, boundary issues, and title complications. These conflicts can cause delays, financial losses, and stress for both buyers and sellers.

Navigating these complexities requires expert legal services. Cowan & Carter Law Firm offers experienced real estate law services in Ontario to resolve disputes efficiently and ensure a smooth transaction in your best interests. Trust our knowledgeable team to negotiate and safeguard your property rights and provide clear guidance through every step.

For legal assistance with commercial and residential real estate disputes or transactions, contact us today for consultation and for more information and professional support.

DISCLAIMER: Please note this article is not legal advice. You should always consult a lawyer for legal advice regarding your particular situation. The article is not necessarily a complete and/or accurate explanation of the law – it is an article of a general nature.

Published on October 18, 2024