CANADA Law and Practice Contributed by: Rachel V Hutton, Michael L Dyck, Mario Paura and Miguel Manzano, Stikeman Elliott LLP
specified risks are known, but are sometimes found in larger transactions with institutional par - ties (often subject to certain exceptions for such cap). A purchaser’s remedies for a breach of representation and warranty will be determined by what is in the contract, and may include an unsatisfied condition to closing or the ability to pursue a claim for such breach (or both). Typically, the buyer has no security for the enforcement of remedies. The buyer may con - sider obtaining security in the form of a letter of credit, hold-back, or set-off under a vendor take-back mortgage, or obtaining a guarantee or indemnity from a related vendor party. Rep - resentation 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 investiga - tions to determine whether any registered or unregistered agreements affect the land, and whether the land is free from undisclosed liabili - ties impacting use and value. Applicable zoning/ land-use legislation should be reviewed to deter - mine the current and intended uses of the land. Transfer-tax considerations are increasingly impacting real estate transactions in most juris - dictions 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 primarily at the provincial or ter - ritorial level, and clean-up requirements vary. Although responsibility and liability to regulators,
buyers and third parties for remediation general - ly 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 gener - ally occurs when the subsequent owner/occupi - er fails to perform diligence, knowingly accepts the environmental condition of the lands, and/ or contractually assumes environmental liability. Between buyers and sellers, environmental risk and liability are often allocated contractually by representations, 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 zon - ing 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 government has authority to expropriate interests in land for public works or other pub - lic purposes, pursuant to the Expropriation Act
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