CANADA Law and Practice Contributed by: Rachel V Hutton, Michael L Dyck, Mario Paura and Miguel Manzano, Stikeman Elliott LLP
party. Representation and warranty insurance has become increasingly common in Canada. 2.6 Important Areas of Law for Investors An investor will seek comfort that the value of the property and its revenue stream is retained over time. An investor will conduct investigations to determine whether any registered or unregistered agreements affect the land, and whether the land is free from undisclosed liabilities impacting use and value. Appli - cable zoning/land-use legislation should be reviewed to determine the current and intended uses of the land. Transfer-tax considerations are increasingly impact - ing real estate transactions in most jurisdictions in Canada – see 2.10 Taxes Applicable to a Transaction . 2.7 Soil Pollution or Environmental Contamination Environmental contamination and remediation of real property is governed by both federal and provincial or territorial legislation; however, enforcement is primar - ily at the provincial or territorial level, and clean-up requirements vary. Although responsibility and liability to regulators, buyers and third parties for remediation generally rests with the seller or person that caused the contamination, subsequent owners, occupiers and those exercising control over real property can be liable for that contamination. This generally occurs when the subsequent owner/occupier fails to perform diligence, knowingly accepts the environmental con - dition of the lands, and/or contractually assumes envi - ronmental liability. Between buyers and sellers, environmental risk and liability are often allocated contractually by repre - sentations, warranties and indemnities and, in some cases, adjustment of the purchase price. However, parties cannot contract out of regulatory liability; their liability for environmental contamination is potentially unlimited, although certain provincial governments recognise the contractual allocation of liability. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law Permitted uses of a parcel under applicable zoning or planning law can be ascertained through enquiries
with local planning authorities and review of municipal land-use by-law regulations. For larger developments, developers must enter into agreements with the applicable municipality to facilitate the development, whether to obtain construction approvals, subdivide the land, or change the applicable land-use by-laws. These agreements commonly relate to servicing and public facilities commitments, land dedications and bonding. 2.9 Condemnation, Expropriation or Compulsory Purchase Expropriation of real estate falls under both federal and provincial regulatory regimes. The federal gov - ernment has authority to expropriate interests in land for public works or other public purposes, pursuant to the Expropriation Act (Canada). Each province and territory has similar legislation. Expropriation legislation across the country sets out procedural requirements for expropriating authorities, such as prescribed notice periods. Compensation is generally based on fair market value of the subject lands and may include costs and damages. 2.10 Taxes Applicable to a Transaction Transfer tax is imposed at the provincial level and is typically payable upon registration of the transfer instrument in the relevant land registry. Certain munic - ipalities (such as the City of Toronto, Ontario and vari - ous municipalities in Quebec) may levy land transfer tax in addition to the tax levied by the province. In Quebec, municipalities charge and collect transfer duties. Taxation rates vary across the country, from no tax at all in Alberta, Newfoundland and Labrador, and parts of Nova Scotia, to 11.1% of the considera - tion for certain residential properties in Toronto. All provinces charge registration fees, which are generally nominal. In Ontario and Quebec, unregistered transfers of ben - eficial interests in real property are also taxed, subject to some exceptions. In Ontario (but not in Quebec), the transfer of an interest in a partnership that owns land is considered a taxable transfer of beneficial interest in that land.
83 CHAMBERS.COM
Powered by FlippingBook