VOLUME 1 - Thomson Reutersproducts.thomsonreuters.ca/ProductDocs/TableofContents/toc-0-88820... · VOLUME 1 TABLE OF CONTENTS ... No Obligation on Mortgage to Advance Funds ... Resolutory

TABLE OF CONTENTS

VOLUME 1

TABLE OF CONTENTS ............................................................. 1-1

TABLE OF CASES .................................................................... 2-1

INDEX: SUBJECT...................................................................... 3-1

INDEX: AGREEMENTS, PRECEDENTS ANDCHECKLISTS ......................................................................... 4-1

TERMINOLOGY ......................................................................... 5-1

FINANCING

THE LAW OF MORTGAGESTHE LAW OF MORTGAGES.......................................................... 6-11

An Introduction to the Law of Mortgages ................................... 6-11

(a) Common Law Mortgages.................................................. 6-11

(b) Legal Mortgages.............................................................. 6-12

(c) Equitable Mortgages ........................................................ 6-13

(d) Short Forms Acts ............................................................ 6-14D

(e) Subject Matter of a Mortgage ............................................ 6-14D

Fixtures ......................................................................... 6-14D

(f) Rights and Liabilities of the Mortgagor................................. 6-15

(i) The Personal Covenant.......................................... 6-15

(ii) The Covenant to Pay Taxes.................................... 6-20

(iii) The Covenant for Insurance.................................... 6-21

(iv) The Covenant to Maintain Property in Good Repair ... 6-24

(v) Rescission............................................................ 6-24A

Detailed Analysis Of A Standard Form Mortgage Document ....... 6-24A

Property Description ............................................................. 6-24A

Dower and Spousal Consent.................................................. 6-24D(1)

The Defeasance Clause ........................................................ 6-24D(3)

Interest................................................................................ 6-24F

Bonus of Interest upon Default ............................................... 6-32F

Insurance ............................................................................ 6-36C

Prepayment Clause .............................................................. 6-36D

Compound Interest and Rests................................................ 6-38

No Obligation on Mortgage to Advance Funds ......................... 6-39

Extended Forms................................................................... 6-40.1

(CCREM)2016—Rel. 1

1-1

Power of Sale, Possession, and Power to Lease Provisions ...... 6-40A

Mortgagee’s Costs................................................................ 6-40B

Acceleration Clause .............................................................. 6-40E

Successors and Assigns ....................................................... 6-43

Special Privileges ................................................................. 6-43

Extinguishment of a Mortgage................................................... 6-44B

Chapter 23 Remedies of Foreclosure and Sale ........................ 6-46

Statutory Forms of Discharge................................................. 6-50

Forged Discharges ............................................................... 6-52A

Change of Ownership of a Mortgage ......................................... 6-52C

Change of Ownership of the Equity of Redemption .................... 6-55

Leases and Mortgaged Land ..................................................... 6-57

Priorities................................................................................... 6-60C

Covin .................................................................................. 6-66D

Distinction Between Land Titles and Registry Systems.............. 6-66D

Fraudulent Mortgages ........................................................... 6-66N

Executions........................................................................... 6-72I

Profit a Prendre.................................................................... 6-74.5

Real Estate Commissions...................................................... 6-74.10A

Construction Liens, Builders’ Liens or Mechanics’ Liens ............ 6-74.10J

Conditional Sale Contracts and Security Interests..................... 6-74D.4

Bankruptcy .......................................................................... 6-74E

Workers’ Compensation Act ................................................... 6-74F

Crown Judgments................................................................. 6-74F(1)

Tacking .................................................................................... 6-74F(1)

Consolidation ........................................................................... 6-74H

Marshalling and Subrogation..................................................... 6-74I

Subrogation.............................................................................. 6-74L

Close Connectedness ............................................................... 6-75

Regulations Affecting the Mortgage Broker................................ 6-75

Comparative Summary of Canadian Mortgage BrokerLegislation ............................................................................ 6-81

Ontario Mortgage Brokerages, Lenders and Administrators Act,2006 ...................................................................................... 6-94.27

Report of the Sub-Committee of the Professional ConductCommittee of the Law Society of Upper Canada in Respect ofthe Role of the Lawyers Acting as Mortgage Brokers.............. 6-95

Debentures ............................................................................... 6-97

Due Diligence in Mortgage or Loan Transactions ....................... 6-99

MORTGAGE LAW—THE PROVINCE OF QUEBECDefinition of Hypothec ........................................................... 6-201

1-2 Table of Contents (CCREM)2016—Rel. 1

The Forms of Hypothec......................................................... 6-201

Conventional Hypothec ......................................................... 6-201

The Formalities .................................................................... 6-201

The Recourses of the Hypothecary Creditory ........................... 6-202

Sheriff’s Sale ....................................................................... 6-203

Resolutory and Dation-en-Paiement (Giving-in-Payment)Clauses............................................................................ 6-204

Dation-en-Paiement (Giving-in-Payment) ................................. 6-204

The 60-Day Notice................................................................ 6-205

Construction Hypothec vs. Mortgages ..................................... 6-206

The Grant of Priority and Total Reunuciation to the Right ofPrivilege ........................................................................... 6-207

REMEDIESMORTGAGE REMEDIES IN ONTARIO......................................... 8-11

Preliminary Considerations ....................................................... 8-11

Land Registration in Ontario................................................... 8-11

Rules of Civil Procedure........................................................ 8-11

Jurisdiction of Courts ............................................................ 8-11

Mortgages Act...................................................................... 8-12

Condominium Act ................................................................. 8-12

Family Law Act .................................................................... 8-12

Construction Lien Act ............................................................ 8-13

The National Housing Act ...................................................... 8-13

Residential Tenancies Act...................................................... 8-13

The Language of Mortgage Remedy Law ................................ 8-13

Selecting The Appropriate Remedy ........................................... 8-14

The Collection Letter............................................................. 8-14

Transfers and Quit Claims ..................................................... 8-15

Merger of Interests ............................................................... 8-15

Legal Remedies ................................................................... 8-16A

Foreclosure vs. Power of Sale ............................................... 8-17

Advantages of Power of Sale ........................................... 8-17

Disadvantages of Power of Sale....................................... 8-17

Advantages of Foreclosure .............................................. 8-18

Disadvantages of Foreclosure .......................................... 8-18

Summary of Alternative Remedies .......................................... 8-19

Defences: Undue Influence—Independant Legal Advice ............. 8-20

Foreclosure And Judicial Sale ................................................... 8-22A

Preliminary Considerations .................................................... 8-22A

Mortgagees’ Claims ........................................................ 8-22C

Legal Costs ................................................................... 8-22F

Determining Defendants .................................................. 8-22F


Table of Contents 1-3

Right to a Certificate of Pending Litigation ......................... 8-23

Commencing and Defending the Action................................... 8-23

The Right of Redemption....................................................... 8-24

Right to Redeem ............................................................ 8-24

Right to a Judicial Sale ................................................... 8-26

Motions ............................................................................... 8-26A

Pre-Judgment Settlement ...................................................... 8-26A

Settlement Negotiations................................................... 8-26A

Partial Payments ............................................................ 8-26A

Judgment ............................................................................ 8-26B

Encumbrancer Not Named as Defendant................................. 8-26B

Reference............................................................................ 8-27

After Judgment and Before the Reference ......................... 8-27

The Reference ............................................................... 8-27

Proving the Plaintiff’s Claims and Taking Accounts ............. 8-27

Referee’s Report .................................................................. 8-28

Redemption ................................................................... 8-28

Extending the Redemption Period..................................... 8-29

Abridging the Redemption Period ..................................... 8-30

Judicial Sale ........................................................................ 8-30

Sale After The Redemption Period.................................... 8-31

Final Order of Foreclosure ..................................................... 8-32A

No Redemption .............................................................. 8-32A

Reopening Final Order of Foreclosure ............................... 8-32B

Power Of Sale........................................................................... 8-34B

Preliminary Considerations .................................................... 8-34B

Statutory Power of Sale................................................... 8-35

The Notice of Sale.......................................................... 8-36

Service of the Notice of Sale............................................ 8-38

The Notice (Redemption) Period............................................. 8-41

Partial Payments During the Notice Period ........................ 8-41

Curing Defective Notices ................................................. 8-42A

Other Proceedings.......................................................... 8-43

Sale of the Property.............................................................. 8-46

Conventional, Uninsured Mortgages.................................. 8-46

MICC Insured Mortgages................................................. 8-46

NHA Insured Mortgages .................................................. 8-46

Conveyance to CMHC .................................................... 8-46

New Home Warranty Obligations ...................................... 8-47

Conduct of Sale ............................................................. 8-47

Appraisals ..................................................................... 8-48D

Methods of Sale ............................................................. 8-48G

The Mortgagee Acting as Its Own Real Estate Agent .......... 8-48I


The Agreement of Purchase and Sale............................... 8-49

Sale Papers ................................................................... 8-49

Contents of the Deed or Transfer...................................... 8-50

Land Transfer Tax........................................................... 8-50

Undertakings.................................................................. 8-50

Re-Searching Title After Closing ....................................... 8-50A

Accounting for the Sale Proceeds........................................... 8-50A

The Mortgagee’s Liability to Account ................................. 8-51

Application of the Sale Proceeds ...................................... 8-52

Calculating the Mortgagee’s Account ................................ 8-52.1

Allowable Expenses........................................................ 8-53

The Right to Share in the Surplus..................................... 8-53

Conflicting Claims to the Surplus ...................................... 8-54

Holding the Surplus ........................................................ 8-54B

Appointment of Receiver........................................................... 8-56

The Right To Distrain ................................................................ 8-56.2

Possession............................................................................... 8-56C

Right to Possession .............................................................. 8-56C

Writ of Possession................................................................ 8-56D

Mortgagee-in-Possession....................................................... 8-56F

Rights and Liabilities ............................................................. 8-56F

Property Protection ......................................................... 8-57

Liability for Occupation Rent ............................................ 8-57

Liability for Waste ........................................................... 8-57

Liability to Account.......................................................... 8-58A

Staying in Possession ..................................................... 8-58A

Recovering On The Deficiency .................................................. 8-58A

Who may be Sued................................................................ 8-59

Default ................................................................................ 8-60

Acceleration of Payment........................................................ 8-60

Claim for Bonus ................................................................... 8-60

Assignment of Mortgage........................................................ 8-61

After Foreclosure.................................................................. 8-61

Land Transfer Tax Liability ..................................................... 8-62

After Power of Sale............................................................... 8-62

Collateral Mortgages ............................................................. 8-62A

Status of Claim Under Writ of Seizure and Sale ....................... 8-62B

Special Problem Areas.............................................................. 8-62B

Condominium Common Expense Liens ................................... 8-62B

Notice Provisions and Priorities ........................................ 8-62C

Lien Amount .................................................................. 8-63

CMHC Requirements ...................................................... 8-64



Mortgage Insurance Corporation of CanadaRequirements (MICC) .................................................. 8-64

Corporation Taxes ................................................................ 8-64A

Guarantors .......................................................................... 8-64A

Construction Lien Claims....................................................... 8-68B.3

Municipal Taxes.................................................................... 8-68F

Public Utilities ...................................................................... 8-68H

Spousal Interests.................................................................. 8-72

Bankruptcy .......................................................................... 8-74C

Tax Arrears as a Default........................................................ 8-76A

Table of Concordance ..................................................... 8-101

STRUCTURING THE TRANSACTIONSTRUCTURING THE TRANSACTION ............................................. 10-11

Introduction ........................................................................ 10-11

Interest Rate .................................................................. 10-11

Amortization................................................................... 10-11

Mortgage Term............................................................... 10-11

Prepayment Privileges .................................................... 10-11

An Analysis of the Security for the Loan............................ 10-12

Partial Discharge Provisions ............................................ 10-12

Tenant Leases ............................................................... 10-12

Conditions of Disbursement ............................................. 10-13

Factors to be Reviewed by a Lender When Makinga Mortgage Loan.............................................................. 10-14

The Mortgage Commitment and the Disbursement ofFunds.............................................................................. 10-14

Structuring the Transaction: Considerations of the Lenders’Counsel ..................................................................... 10-15

Additional Considerations: Options to Purchasein Association With Mortgages ......................................... 10-18D

Review of Relevant Cases ................................................... 10-18D

Samuel v. Timber and Wood Paving Corporation ................... 10-18D

Kreglinger and New Patagonia Meat and Cold StorageCompany Limited ........................................................... 10-18E

Ottawa Construction Limited v. Barnhart-Cochrane ConstructionLimited .......................................................................... 10-20

Memramcook Transport Limited v. Irving Oil Co. Ltd. .............. 10-21

Lewis v. Frank Love Ltd...................................................... 10-22

Re Moore and Texaco Canada Ltd. ..................................... 10-23

Athabasca Realty Co. Ltd. v. Lee......................................... 10-24

Laurin v. Iron Ore Co. of Canada ......................................... 10-24

Lender’s Considerations ..................................................... 10-26A

Current Procedures ............................................................ 10-26B


Optionee’s Interest Valued by an Appraisal ........................... 10-26B

Legislative Approach.......................................................... 10-26B

Optionee is Different Party.................................................. 10-27

Lender Obtains Participating Leasehold Mortgage with Option toAcquire Undivided Interest in Reversionary Freehold .......... 10-27

Fully Convertible Mortgage ................................................. 10-27

ADVANCED MORTGAGE LENDING ............................................ 10-101

A Review of Selected Techniques In Order to Achieve MaximumMortgage Financing ...................................................... 10-101

Mortgage Bonds................................................................ 10-101

Leasehold Mortgages......................................................... 10-101

Sale-Leasebacks ............................................................... 10-104

Participation Mortgages ...................................................... 10-105

Joint Ventures ................................................................... 10-105

Syndicates........................................................................ 10-106A

Credit Mortgages............................................................... 10-107

Variable Interest Rate Mortgages......................................... 10-107

Drafting Suggestions for VRMs ........................................... 10-109

Alternatives to the VRM...................................................... 10-110

Permanent Mortgage with Option to Purchase....................... 10-110

Wrap Around Mortgages..................................................... 10-111

Additional Funds Wrap Around Mortgage —Alternative Number One ............................................ 10-112

Additional Funds Wrap Around Mortgage —Alternative Number Two ............................................ 10-112

Extended Term Wrap Around Mortgage .......................... 10-112

Simultaneous Wrap Around Mortgage ............................ 10-112

Graduated Payment Mortgages ........................................... 10-114

Reverse Mortgage Loan ..................................................... 10-114

Origination and Processing ........................................... 10-117

Age of the Borrower..................................................... 10-117

Appraisal .................................................................... 10-117

Intervening Indebtedness.............................................. 10-117

Periodic Inspections ..................................................... 10-117

Sale Clause ................................................................ 10-117

Service of Loans ......................................................... 10-117

Flip Mortgages .................................................................. 10-118

Shared Appreciation Mortgage (SAM) or AppreciationParticipation Mortgage (APM) .......................................... 10-118

Price Level Adjustment Mortgage (PLAM)............................. 10-119

A Review of Mortgage Financing Techniques to beConsidered in a Tight Money Market................................. 10-119

Cash Purchase ........................................................... 10-119



Long-Term Mortgage with Prepayment ........................... 10-119

Vendor Take Back Mortgage ......................................... 10-119

Bridge Financing ......................................................... 10-120

Standby Loan Commitment Financing ............................ 10-120

Consider Combinations of Flexible Payment Mortgages ... 10-120

Variable Payment Mortgage .......................................... 10-120

Variable Principle Loan Mortgage .................................. 10-120

Intermediate Term Commercial Loan .............................. 10-121

Convertible Mortgage Financing .................................... 10-121

Deferred Interest Mortgages.......................................... 10-121

Pension Trust Investments in Realty Joint Ventures ............ 10-121

The U.S. Experience.................................................... 10-122

Analysis by Type of Property......................................... 10-122

(a) Office Buildings ................................................. 10-122

(b) Shopping Centres.............................................. 10-123

(c) Hotels .............................................................. 10-123

(d) Industrial Properties ........................................... 10-123

CREATIVE REAL ESTATE FINANCING ....................................... 10-201

Changing Trends In Real Estate Financing........................... 10-201

Prior to 1980..................................................................... 10-201

Impact of Inflation .............................................................. 10-201

Equity Participation Financing ............................................. 10-202

Interim Financing ............................................................... 10-204

Return on Investment......................................................... 10-205

Current Situation ............................................................... 10-205

Creative Types Of Real Estate Financing .......................... 10-206

Real Estate Mortgage Bonds .............................................. 10-206

Leasehold Mortgages......................................................... 10-208

Credit Mortgages............................................................... 10-216

Wrap-Around Mortgages..................................................... 10-217

Income Participation Mortgages........................................... 10-221

Sale and Leaseback .......................................................... 10-227

Shared Appreciation Mortgages........................................... 10-232

Mortgage/Equity Financing.................................................. 10-235

Mortgage/Equity Option Financing ....................................... 10-237

Convertible Mortgages ....................................................... 10-242

Equity Joint Ventures ......................................................... 10-246

SHOPPING CENTRE FINANCING TODAY ................................... 10-251

Introduction....................................................................... 10-251

Shopping Centre Financing: Some Considerations................. 10-251

The Lender’s Perspective ................................................... 10-254

Securitization of Real Estate ............................................... 10-257


LOAN SUBMISSIONS ................................................................ 10-301

Mortgage Application ......................................................... 10-301

Detailed Credit Analysis ..................................................... 10-302

Appraisal .......................................................................... 10-302

Review of Selected Matters to be Considered in thePresentation of a Commercial Mortgage Application ........... 10-303

Total Debt Service Ratio and Gross Debt Ratio ..................... 10-303

Total Debt Service Ratio ............................................... 10-303

Gross Debt Service Ratio ............................................. 10-303

The Cash Flow Analysis Approach ...................................... 10-304

Stabilized Income and Expenses ......................................... 10-304

Deferred Maintenance .................................................. 10-304

Extent of the Vacancy Allowance................................... 10-304

Requirement for Substantial Capital Improvement ............ 10-305

Provision for Adequate Replacement Reserves ............... 10-305

Improper Capitalization of Expenses .............................. 10-305

Lease Concessions ..................................................... 10-305

Verification that all Tenants are Bona Fide and QualityTenants ................................................................... 10-305

Summary of the Procedure Relating to OperatingExpenses ................................................................ 10-306

Net Income Calculation ................................................ 10-306

Feasibility Analysis ......................................................... 10-306

Loan Submissions And Feasibility Analysis In A Nutshell .... 10-307

COMMERCIAL LOAN AGREEMENTS ......................................... 10-401

Interpretation..................................................................... 10-401

Currency Options .............................................................. 10-402

Interest............................................................................. 10-402

Loan Facilities and Accommodations ................................... 10-403

Purpose of Facility ............................................................. 10-403

Borrower’s Entitlement to Repay.......................................... 10-403

Notice of Drawdown........................................................... 10-403

Representations and Warranties by the Borrower .................. 10-404

Covenants ........................................................................ 10-404

Security............................................................................ 10-404

Default and Remedies........................................................ 10-405

Rights of Lender in the Event of Default ............................... 10-405

Judgment Currency............................................................ 10-405

Precedent Credit Agreement ............................................... 10-407

INTERIM FINANCINGINTERIM FINANCING................................................................. 12-11

Introduction .............................................................................. 12-11



Types Of Loans ........................................................................ 12-11

Development Loans ........................................................... 12-11

Construction Loans............................................................ 12-11

Bridge Loans .................................................................... 12-12

Gap Loans........................................................................ 12-13

Stand-by Commitments or Stand-by Loans ........................... 12-13

Intermediate Term Loans .................................................... 12-14

Construction Loans without a Prior Permanent MortgageCommitment .................................................................. 12-14

Construction Financing Based on Pre-Sale Arrangements ...... 12-14

Summary of the Steps Involved in the Construction LendingProcess......................................................................... 12-15

Personal Guarantees of the Developer................................. 12-16

Bonding............................................................................ 12-16

Short Term or Interim Financing of Raw Land ....................... 12-16

How a Stand-by Mortgage Loan Commitment may be Used forPermanent Financing at a Time of High Interest Rates........ 12-17

CONDOMINIUMSCONDOMINIUM MORTGAGES ................................................... 14-11

THE PURCHASE OF NEW CONDOMINIUM UNITS INONTARIO............................................................................... 14-53

Introduction.......................................................................... 14-53

Buying a New Condominium—What the Purchaser Needs toKnow ............................................................................... 14-53

The “Cooling-Off” Period and the Disclosure Statement ............. 14-53

Agreement of Purchase and Sale ..................................... 14-57

Title Closing............................................................ 14-57

Designation of Units................................................. 14-57

Payments on Account of Purchase Price .................... 14-57

Financial Information re Purchaser............................. 14-58

Extension of Date Set for Title Closing ....................... 14-58

Time Limit on Registration of Declaration/Description ... 14-58

Occupancy Agreement ............................................. 14-58A

Releases of Agreements .......................................... 14-58A

Transfer of Interest in Agreement............................... 14-58A

Inclusions in the Purchase Price................................ 14-58A

Miscellaneous ......................................................... 14-58A

Interim Occupancy.......................................................... 14-58I

The Declaration.............................................................. 14-59

Statement that Act Governs ...................................... 14-60

Consent of Encumbrancers....................................... 14-60

Unit Boundary Description ........................................ 14-60


Common Interest Allocation ...................................... 14-60

Common Expense Allocation .................................... 14-60

Exclusive Use Common Elements ............................. 14-60

Mailing Address and Address for Service ................... 14-61

Reserve Fund ......................................................... 14-61

Use of the Common Elements .................................. 14-61

Ownership and Leasing of Parking Units .................... 14-61

Occupation and Use of Units .................................... 14-61

Repairs and Maintenance ......................................... 14-62

Insurance ............................................................... 14-62

General Matters ...................................................... 14-62

By-laws and Rules.......................................................... 14-64I

Turnover Meeting ........................................................... 14-64L.7

Right to Sue on Behalf of Unit Owner ............................... 14-64P

Ontario New Home Warranties Plan Act ............................ 14-64Q

Types of Condominiums ........................................................ 14-68.1

Vacant Land Condominiums ............................................ 14-68.1

Phased Condominiums ................................................... 14-69

Common Elements Condominiums ................................... 14-69

Leasehold Condominiums................................................ 14-69

Summary............................................................................. 14-69

Disclosure Statement ...................................................... 14-70

Agreement of Purchase and Sale ..................................... 14-70

Declaration .................................................................... 14-70

THE ONTARIO NEW HOME WARRANTIES PLAN ACT ANDINVESTMENT CONDOMINIUMS .............................................. 14-101

Introduction.......................................................................... 14-101

Application of the Act ............................................................ 14-101

Coverage Provided by the Act................................................ 14-103

Other Coverage.................................................................... 14-105

Recent Developments ........................................................... 14-106A

Delayed Occupancy Warranty .......................................... 14-106A

New Customer Service Standard...................................... 14-106C

New Monetary Cap for Claims from Guarantee Fund .......... 14-106D

Procedure for Registration ..................................................... 14-106E

Ontario Consumer Protection Act............................................ 14-106.1

Builder Bulletin 25 ................................................................ 14-106.2B

Builder Bulletin 28 ................................................................ 14-106.11

Builder Bulletin 27 ................................................................ 14-107

Builder Bulletin 19 ................................................................ 14-111

CONDOMINIUM UNIT TITLE SYNDICATIONS IN CANADA ........... 14-151

Introduction.......................................................................... 14-151



Investment Contracts ............................................................ 14-151

The U.S. Position ........................................................... 14-151

The Canadian Position .................................................... 14-157

Real Estate and Business Brokers Act .............................. 14-159

Sources......................................................................... 14-161

APPENDIX I: NEWS RELEASE, ONTARIOSECURITIES COMMISSION, RESIDENTIALREAL ESTATE SYNDICATIONS ............................................... 14-163

ONTARIO SECURITIES COMMISSION NOTICEAPPLICATION OF SECURITIES ACT TOCERTAIN RESIDENTIAL REAL ESTATE OFFERINGS ............... 14-165

Summary............................................................................. 14-165

Interim Relief for Certain Offerings of Residential Real EstateSecurities ......................................................................... 14-166

Scope .............................................................................. 14-166

Applications to the Commission for Relief ............................. 14-166

Conditions for Relief .......................................................... 14-167

Disclosure ........................................................................... 14-167

Advertising........................................................................... 14-168

Sales Activities..................................................................... 14-169

Compliance Timetable........................................................... 14-170

SCHEDULE A: CONTRACTUAL RIGHTS OF ACTION FORDAMAGES ORRESCISSION AND RIGHT OF WITHDRAWAL ..... 14-171

Application........................................................................... 14-171

Interpretation........................................................................ 14-171

Parties ................................................................................ 14-171

Defences............................................................................. 14-172

MORTGAGE SERVICINGMORTGAGE SERVICING ........................................................ 16-11

Documentation And Solicitors’ Final Report On Title............... 16-11

Documentation Required ....................................................... 16-11

Mortgage Document ....................................................... 16-11

Survey .......................................................................... 16-11

Sheriff’s Certificate.......................................................... 16-12

Tax Certificates .............................................................. 16-12

Certificate of Encumbrances ............................................ 16-12

Certificate of Charge ....................................................... 16-12

General Register Certificate ............................................. 16-12

Proof of Insurance .......................................................... 16-12

Borrowing By-Law .......................................................... 16-12

Director’s Resolution ....................................................... 16-13


Assumption or Amending Agreement ................................ 16-13

Assumption Agreement ................................................ 16-13

Amending Agreement................................................... 16-13

Estoppel Certificates (Condominium Loans Only)................ 16-13

Chattel Mortgage ............................................................ 16-14

Assignment of Rental ...................................................... 16-14

Land Lease ................................................................... 16-14

Solicitors’ Report on Title....................................................... 16-14

Insurance .............................................................................. 16-15

The Standard Fire Insurance Policy ........................................ 16-15

Name of Insured............................................................. 16-15

The Property Insured ...................................................... 16-15

The Sum Insured by a Policy ........................................... 16-15

Loss Payable Clause ...................................................... 16-15

The Mortgage Clause...................................................... 16-16

The Term of the Policy .................................................... 16-17

Copy of Policy................................................................ 16-17

Extended Coverage Endorsement .................................... 16-18

Replacement Cost Endorsement ...................................... 16-18

Deductible ..................................................................... 16-18

Cancellation ................................................................... 16-18

Rental Insurance .................................................................. 16-19

Boiler Insurance ................................................................... 16-19

Liability Insurance................................................................. 16-19

Percentage Co-Insurance Clause ........................................... 16-19

The Nature of Co-Insurance............................................. 16-19

Problems Caused by Co-Insurance................................... 16-20

Stated Amount Co-Insurance ........................................... 16-20

Fluctuating Value Endorsement ........................................ 16-21

Builder’s Risk Policy ............................................................. 16-21

Subrogation ......................................................................... 16-21

Condominiums ..................................................................... 16-22

Condominium Declaration or By-Laws ............................... 16-21

Insurance Trust Agreement .............................................. 16-22

The Actual Policy ........................................................... 16-22

Mortgage Impairment Insurance Coverage............................... 16-23

Loss Drafts — Fire Claims..................................................... 16-23

Status of Payments and Taxes ......................................... 16-24

NHA Loans .................................................................... 16-24

Conventional Loans ........................................................ 16-24

Placing of Insurance by Mortgagee......................................... 16-24

A Glossary of Some Common Insurance Terms........................ 16-25

Taxes .................................................................................... 16-26



Blended Repayment Plan ...................................................... 16-27

Flat-Rate Repayment Plan..................................................... 16-27

Payment Methods .................................................................. 16-28

Pre-Authorized Cheques........................................................ 16-29

Post-Dated Cheques............................................................. 16-30

Individual Cheque or Money Order ......................................... 16-30

Amortization And Mortgage Prepayment Considerations......... 16-30

Legislation ........................................................................... 16-31

Mortgage Document Provisions Relating to Prepayment............ 16-32

Renewals .............................................................................. 16-33

Collection Procedures ........................................................... 16-34

Small Arrears — Occasional Delinquent .................................. 16-34

Small Arrears — Chronic Delinquent....................................... 16-36

Large Arrears — Income Producing Properties......................... 16-36

First Telephone Contact................................................... 16-37

Further Follow Ups ......................................................... 16-37

Referring to Solicitors ...................................................... 16-37

Past Unfavourable Payment Record ................................. 16-37

Quit Claim Deeds................................................................... 16-38

Dishonoured Cheques ........................................................... 16-38

History of N.S.F. Cheques ..................................................... 16-39

Initial Non-Payment Of Solicitor’s Costs ................................. 16-39

Second Mortgage Card System .............................................. 16-40

Resales To New Owners ........................................................ 16-40

Need For Cooperation Of Appointed Solicitors ....................... 16-40

Computerization .................................................................... 16-40

Display................................................................................ 16-41

Up-date ............................................................................... 16-41

Error Messages.................................................................... 16-41

Terminal — T ................................................................. 16-42

Error — E ...................................................................... 16-42

Warning — 2 ................................................................. 16-42

Decentralization.................................................................... 16-42

VOLUME 2

TAXATION AND INVESTMENT ANALYSIS

APPRAISALREAL ESTATE APPRAISAL FOR MORTGAGE

PURPOSES......................................................................... 20-11

Introduction ........................................................................ 20-11

Description of Property ....................................................... 20-12


Other Interest in Land ........................................................ 20-12

Definions Of Terms Used In Appraisal Theory...................... 20-12

Some Basic Principles Affecting Real Property Value........... 20-13

Cost Approach — Estimate of Value by the Cost Approach .... 20-13

Advantages of the Cost Approach ................................. 20-14

Disadvantages of the Cost Approach ............................. 20-14

Methods of Estimating Reproduction Cost ...................... 20-14

Market Approach — Estimate of the Value by the Market DataApproach ...................................................................... 20-15

Definition of Market Value ............................................. 20-15

Advantages of Market Data Approach ............................ 20-16

Disadvantages of Market Data Approach ........................ 20-16

Income Multipliers........................................................ 20-16

Gross Rent Multiplier ................................................... 20-16

Monthly Rental Factor .................................................. 20-17

Income Approach — Estimate of Value by the IncomeApproach ...................................................................... 20-17

Income Approach to Value.................................................. 20-17

The Capitalization Process ................................................. 20-18

Capitalization Rate....................................................... 20-18

Interest Rate ............................................................... 20-19

Recapture Rate ................................................................. 20-19

Formula for Converting Net Income Stream into Indication ofValue ...................................................................... 20-19

Selection of Capitalization Rate ..................................... 20-19

Correlation Analysis and Final Estimate of Value ............. 20-19

Income And Expense Statement For A 30-Unit ApartmentBuilding ....................................................................... 20-20

THE NATURE OF ASSESSMENT IN ONTARIO ............................ 21-1

Introduction ........................................................................ 21-1

Provincial Function ......................................................... 21-1

Contents of the Assessment Roll ...................................... 21-1

Time for Return of the Roll and Appeal ............................. 21-2

Defining land.................................................................. 21-2

The Frozen Roll ............................................................. 21-3

Reassessment ............................................................... 21-4

Assessment Notice ......................................................... 21-4

Increase in Value to be Added to the Roll .......................... 21-5

Rights of the Assessors to Obtain Information and to Be GivenAccess to Property ...................................................... 21-6

INVESTMENT ANALYSISMORTGAGE MATHEMATICS AND INVESTMENT ANALYSIS ........ 22-11



Interest................................................................................ 22-11

Nominal and Effective Interest Rates ...................................... 22-11

Annuities ............................................................................. 22-12

Discounted Cash-Flow Analysis.............................................. 22-13

Using Mortgage Tables.......................................................... 22-14

Calculations Involving Gross Debt Service Ratio andTotal Debt Service Ratio ..................................................... 22-14

How to Calculate the Interest Component of aMortgage Payment ............................................................ 22-16

How to Calculate the Outstanding Principal Balanceof a Loan Using Mortgage Tables ........................................ 22-17

Using Mortgage Value Tables to Calculate the Yieldor Discount ....................................................................... 22-18

Calculation of the Yield with a Bonus Mortgage........................ 22-19

Calculation of the Yield in a Bonus MortgageWhere the Term of the Mortgage and theAmortization Period of the Mortgage are the Same .......... 22-19

Calculation of the Yield In a Bonus MortgageWhere the Term of the Mortgage and theAmortization Period of the Mortgage arenot the Same .............................................................. 22-20

Mortgage Averaging Formula ................................................. 22-21

Quick Rule of Thumb for Mortgage DiscountingPurposes.......................................................................... 22-22

Quick Rule of Thumb for Determining the Yield on aWrap Around Mortgage ...................................................... 22-22

Calculating the Yield on the Sale of Mortgages in theSecondary Market ............................................................. 22-22

INVESTMENT ANALYSIS ........................................................... 22-27

The Components of Return on Investment............................... 22-27

Measuring Real Estate Investment Returns.............................. 22-28

The Free and Clear Run.................................................. 22-29

Cash on Cash Return ..................................................... 22-29

Before-Tax Cash Flow and First Year’s AmortizationReturn on Equity ......................................................... 22-30

The Payback Period ....................................................... 22-31

The Accounting Return.................................................... 22-31

Net Present Value .......................................................... 22-32

The Profitability Index...................................................... 22-33

The Internal Rate of Return ............................................. 22-34

Timing of Cash Flows .............................................. 22-34

Reinvestment Assumptions ....................................... 22-35

Positive and Negative Cash Flows............................. 22-35

The Adjusted Rate of Return............................................ 22-35


The Financial Management Rate of Return ........................ 22-36

Table of Investment Formulas and Operating Expense Ratios .... 22-36

Table of Annual Cash Flow from Operations ............................ 22-37

Summary Table of Investment Rules of Thumb ........................ 22-38

SYNDICATIONREAL ESTATE SYNDICATION IN CANADA ................................. 32-11

Introduction.................................................................... 32-11

The Participants in the Syndication Process....................... 32-11

The Objectives of Investing in a Real EstateSyndication................................................................. 32-12

The Tax Shelter Motivated Syndication........................... 32-12

The Tax Shelter Assisted Syndication ............................ 32-13

The Business Real Estate Syndication ........................... 32-13

Legal Structures for Real Estate Syndication............................ 32-13

Limited Partnership ......................................................... 32-14

Co-Tenancy or Co-ownership ........................................... 32-14

Direct Ownership............................................................ 32-15

Small Business Development Corporations........................ 32-15

Evaluating the Project and the Developer ................................ 32-16

Identifying and Mitigating Risk Factors in Real EstateSyndication....................................................................... 32-17

REGULATION OF REAL ESTATE SYNDICATIONS ....................... 32-51

Public Real Estate Offerings .................................................. 32-54

Exemption from Prospectus Requirements............................... 32-58

Offering Memoranda ............................................................. 32-62

Limited Market Dealer Registration ......................................... 32-63

Nature and Extent of a Lawyer’s Responsibility ........................ 32-64

Penal Consequences of Non-Compliance ................................ 32-73

Appendix 1 .................................................................... 32-77

Schedule A.................................................................... 32-79

SYNDICATING U.S. PROPERTY TO CANADIANS ........................ 32-91

A. Introduction.................................................................. 32-91

1. General Comment ................................................. 32-91

2. Scope of Paper ..................................................... 32-91

B. Key Differences............................................................ 32-92

1. Is it a Partnership? ................................................ 32-92

2. Fiscal Year End..................................................... 32-96

3. Personal Interest Expense...................................... 32-97

4. Allocation of Losses............................................... 32-97

5. Deductibility of Tax Losses ..................................... 32-98

6. Estate Tax ............................................................ 32-99

7. Soft Costs ............................................................ 32-100



8. Retroactive Allocations ........................................... 32-101

9. Non-Arm’s Length Loans ........................................ 32-102

10. Cash Basis Accounting .......................................... 32-103

11. Liquidity Options.................................................... 32-105

12. Information Filing ................................................... 32-105

13. Trustees ............................................................... 32-106

14. Other Differences .................................................. 32-106

C. Withholding Tax Issues.................................................. 32-107

1. The U.S. Code ...................................................... 32-107

(a) Partnerships .................................................... 32-107

(b) Corporations.................................................... 32-108

(c) Interest ........................................................... 32-109

2. The Canadian Tax Act............................................ 32-109

(a) Interest ........................................................... 32-109

D. FIRPTA ....................................................................... 32-109

1. Tax Liability........................................................... 32-109

(a) Information Returns .......................................... 32-110

E. Foreign Tax Credits....................................................... 32-110

F. Foreign Exchange ........................................................ 32-111

G. Structural Variations ...................................................... 32-112

1. Single United States Limited Partnership .................. 32-112

(a) Pros ............................................................... 32-112

(b) Cons .............................................................. 32-112

2. Two-Tier Structure (U.S. Partnership/CanadianPartnership) ....................................................... 32-114

(a) Pros ............................................................... 32-114

(b) Cons .............................................................. 32-116

3. Hybrid Structure .................................................... 32-117

(a) Pros ............................................................... 32-117

(b) Cons .............................................................. 32-118

H. Financing Issues .......................................................... 32-119

1. U.S. Lender .......................................................... 32-119

2. Canadian Lender................................................... 32-120

I. U.S. Securities Regulation ............................................. 32-120

1. Applicable Laws .................................................... 32-120

2. Jurisdiction ........................................................... 32-120

3. Exemptions........................................................... 32-121

(a) Securities Act of 1933....................................... 32-121

(b) Texas Securities Act ......................................... 32-122

CONSTRUCTION AND DEVELOPMENTA GUIDE TO PROJECT MANAGEMENT

The Project Management Concept.......................................... 36-11


The Definition of Project Management..................................... 36-11

Preliminary Requirements...................................................... 36-12

General Functions ................................................................ 36-12

Basic Requirements.............................................................. 36-12

Defining Client’s Requirements............................................... 36-13

Conceptual Design and Planning............................................ 36-13

Budgeting and Cost Controls ................................................. 36-13

Project Accounting................................................................ 36-14

Scheduling........................................................................... 36-14

Reporting ............................................................................ 36-14

Operational Procedures......................................................... 36-14

Design and Contract Documents ............................................ 36-15

Procedure and Expediting...................................................... 36-15

Construction ........................................................................ 36-16

Quality Control ..................................................................... 36-16

Commissioning..................................................................... 36-16

Scale of Fees for Project Management Services....................... 36-17

Expenses and Disbursements .......................................... 36-17

Definitions ..................................................................... 36-17

Time Expended .............................................................. 36-17

CONSTRUCTION AND DEVELOPMENTSITE PLAN CONTROL AGREEMENTS........................................ 36-18.1

Introduction.......................................................................... 36-19

History of Site Plan Control.................................................... 36-19

Site Plan Approval ................................................................ 36-21

Preconditions to Site Plan Approval .................................. 36-21

Approval of Plans or Drawings ......................................... 36-22C

Limitations on Scope....................................................... 36-22F

Conditions to Approval of Plans........................................ 36-22F

Precondition to Building Permit Issuance ........................... 36-24

Site Plan Agreements ........................................................... 36-27

Statutory Authority .......................................................... 36-27

Structure of Agreement ................................................... 36-28

Levies and the Provision of Services................................. 36-29

Parkland Dedication........................................................ 36-30

Security......................................................................... 36-30

Enforcement .................................................................. 36-31

Nature of Site Plan Agreements ....................................... 36-32

Parties .......................................................................... 36-33

Fees ........................................................................... 36-34

Appeals............................................................................... 36-34

Referral ......................................................................... 36-34



Standing........................................................................ 36-34.1

Jurisdiction of O.M.B....................................................... 36-36

Conclusion........................................................................... 36-38

Schedule A: Sections 41 and 42 of the Planning Act, R.S.O.1990, c. P. 13, as amended ............................................. 36-39

Section 41

Definition ....................................................................... 36-39

Exception ...................................................................... 36-39

Establishment of site plan control area .............................. 36-39

Designation of site plan control area ................................. 36-39

Consultation................................................................... 36-40

Approval of plans or drawings .......................................... 36-40

Exclusions from site plan control ...................................... 36-40

Dispute about scope of site plan control ............................ 36-41

Final determination ......................................................... 36-41

Drawings for residential buildings...................................... 36-41

Proviso.......................................................................... 36-41

Conditions to approval of plans ........................................ 36-41

Where area is in upper-tier municipality ............................. 36-42

Widening must be described in official plan........................ 36-42.1

Limitation....................................................................... 36-43

Registration of agreements .............................................. 36-42.1

Application of Municipal Act, 2001 or City of Toronto Act,2006 .......................................................................... 36-42.1

Appeal to O.M.B............................................................. 36-42.1

Hearing ......................................................................... 36-42.1

Classes of development, delegation.................................. 36-42.1

Proviso.......................................................................... 36-42.2

Certain agreements declared valid and binding .................. 36-42.2

City of Toronto ............................................................... 36-42.2

Section 42

Conveyance of land for park purposes .............................. 36-42.3

Definition ....................................................................... 36-42.3

Alternative requirement.................................................... 36-42.3

Official plan requirement.................................................. 36-42.3

Use and sale of land....................................................... 36-42.3

Payment instead of conveyance ....................................... 36-42.3

No building without payment ............................................ 36-42.4

Redevelopment, reduction of payment............................... 36-42.4

Same ........................................................................... 36-42.4

Determination of value .................................................... 36-42.4

Where land conveyed ..................................................... 36-42.4

Non-Application .............................................................. 36-42.4


Changes ....................................................................... 36-42.5

Disputes........................................................................ 36-42.5

Same ........................................................................... 36-42.5

Payment under protest .................................................... 36-42.5

Notice ........................................................................... 36-42.5

Park purposes................................................................ 36-42.5

Special account.............................................................. 36-42.5

Investments ................................................................... 36-42.6

Schedule B: Short Form Site Plan Control Agreement............... 36-43

Schedule C: Long Form Site Plan Control Agreement ............... 36-49

DEVELOPMENT COST SHARING AGREEMENTS........................ 36-53

Introduction.......................................................................... 36-53

The Methodologies ............................................................... 36-54B

Part I — Community Land Compensation .......................... 36-54B

Compensation by Land ............................................ 36-55

Compensation in Cash ............................................. 36-56

Part II — Community Service Cost Sharing........................ 36-56

Front-Ending ........................................................... 36-57

Security.................................................................. 36-57

Part III — Other Provisions .............................................. 36-57

Default ................................................................... 36-57

Transfer of Interest .................................................. 36-58

Subsequent Signatories............................................ 36-58

Mortgagee Position .................................................. 36-59

FORM 1 Secondary Plan — Cost Sharing AgreementCondition.................................................................... 36-60

FORM 2 Draft Plan — Cost Sharing AgreementCondition.................................................................... 36-61

FORM 3 Subdivision Agreement — Cost SharingAgreement Condition ................................................... 36-62

FORM 4 Notice of Compliance......................................... 36-63

FORM 5 Cost Sharing Agreement Condition — StandardForm.......................................................................... 36-64

FORM 6 Assumption Agreement ...................................... 36-64.20

FORM 7 Letter of Credit .................................................. 36-64.21

FORM 8 Cost Sharing Checklist ....................................... 36-64.22

SUBDIVISION AGREEMENTS .................................................... 36-65

Contents ............................................................................. 36-65

Introduction.......................................................................... 36-67

History of Subdivision Control ................................................ 36-67

Subdivision Approval............................................................. 36-69

Scale of Subdivision ....................................................... 36-69



Approval of Plans ........................................................... 36-70F

Application.............................................................. 36-70F

Contents of Draft Plan.............................................. 36-70F

Matters to be Considered ......................................... 36-71

Prematurity/Public Interest Considerations .................. 36-72

Draft Plan Approval.................................................. 36-73

Deregistration of Subdivision Plan ............................. 36-73

Conditions to Approval of Plans........................................ 36-73

Subdivision Agreements ........................................................ 36-76D

Statutory Authority .......................................................... 36-76D

Parties .......................................................................... 36-77


Provision of Municipal or Other Services ........................... 36-81

Security......................................................................... 36-82

Servicing and Maintenance....................................... 36-82

Performance Guarantee ........................................... 36-83

Security for Other Matters......................................... 36-83

Parkland Dedication........................................................ 36-83

Development Charges, Lot Levies and Front-EndPayments ................................................................... 36-84

Enforcement .................................................................. 36-86A

Release of Agreement .................................................... 36-88

Appeals............................................................................... 36-88A

Appeal Matters............................................................... 36-88A

Jurisdiction of the Ontario Municipal Board ........................ 36-89

Reconsidering or Appealing the O.M.B.’s Decisions ............ 36-90

Judicial Review .............................................................. 36-91

Conclusion........................................................................... 36-91

Appendix A.......................................................................... 36-93

Sections 51, 51.1 & 51.2 of the Planning Act ..................... 36-93

Appendix B.......................................................................... 36-105

Subdivision Agreement — Long Form ............................... 36-105

Schedules A-P ............................................................... 36-143

Appendix C.......................................................................... 36-146.17

Subdivision Agreement — Short Form............................... 36-146.17

Schedules A-I ................................................................ 36-146.25

DEVELOPMENT AGREEMENTS ................................................. 36-149

Introduction.......................................................................... 36-149

Development Agreements...................................................... 36-150

Judicial Recognition ........................................................ 36-150

Severance Agreements ................................................... 36-154D

Agreements to Rezone.................................................... 36-154E

Form of Development Agreements.......................................... 36-154I


Terms and Agreements of Development Agreements ................ 36-156

Municipal Services.......................................................... 36-156

Financial Payments & Guarantees .................................... 36-157

Development Standards .................................................. 36-158A

Enforcement of Development Agreements ............................... 36-158A

Conclusion........................................................................... 36-158D

Appendices “A” Development Agreement ................................ 36-159

“B” Combined Development/Site Plan Agreement ............... 36-179

“C” Assumption Agreement .............................................. 36-199

BONUSING AGREEMENTS ........................................................ 36-201

Introduction.......................................................................... 36-203

Bonusing Authority................................................................ 36-204

Official Plan Authorization...................................................... 36-206

Jurisdiction of Ontario Municipal Board.................................... 36-208

Bonusing Agreements ........................................................... 36-209


Parties .......................................................................... 36-209

Purpose and Scope of Agreement .................................... 36-209

Range of Facilities, Services or Matters............................. 36-210


Registration and Enforcement of Agreement ...................... 36-211

Conclusion ......................................................................... 36-212

Appendices “A” Section 37 of Planning Act .................................... 36-213

“B” Official Plan Bonusing Policies .............................. 36-214

“C” Bonusing Agreement (Daycare Facilities)................ 36-216

“D” Bonusing Agreement (Heritage Preservation andPublic Art) .......................................................... 36-225

“E” Bonusing Agreement (Public Park and OpenSpaces).............................................................. 36-244

DEVELOPMENT CHARGES ....................................................... 36-277

Introduction.......................................................................... 36-279

History ................................................................................ 36-279

Evolution of Lot Levies .................................................... 36-279

Evolution of Development Charges Legislation ................... 36-281

Development Charges........................................................... 36-284

Authority to Impose Development Charges ........................ 36-284

Increased Need for Services ..................................... 36-284

Exempt Entities ....................................................... 36-284B

Events Triggering Development Charges .................... 36-284C

Restrictions on the Imposition of Development Charges ...... 36-286B

Ineligible Services.................................................... 36-286E

Local Services ........................................................ 36-286E

Residential Development .......................................... 36-286E



Municipal or School Board Land................................ 36-286F

Expansion of Industrial Buildings ............................... 36-286F

Municipal Capital Facilities........................................ 36-287

Cost Containment of Services .......................................... 36-287

Capital Costs ................................................................. 36-288

Calculation of Development Charge .................................. 36-289

Challenges to Development Charges ................................ 36-292

Appeals.................................................................. 36-292

Complaints ............................................................. 36-292

Payment of Development Charges.................................... 36-294A

Credits .......................................................................... 36-296A

Local Services ............................................................... 36-296C

Front-End Financing ............................................................. 36-296D

Authority to Enter into Front-Ending Agreements ................ 36-296D

Contents of Agreements .................................................. 36-296E

Objections to Agreements................................................ 36-297

Transitional Provisions .......................................................... 36-297

Purpose of Transition Rules ............................................. 36-297

Transition Period and Sunset Clause ................................ 36-297

Reserve Funds............................................................... 36-297

Debts ........................................................................... 36-298

Early and Late Payments ................................................ 36-298

Regulations ................................................................... 36-298

Education Development Charges............................................ 36-298

Nature of Development Charges............................................. 36-300.2

Conclusion........................................................................... 36-305

Appendices “A” Development Charges Act, 1997 ..................... 36-307

“B” Education Act................................................ 36-333

“C” Model Form of Development Charges By-law.... 36-351

“D-1” Subdivision Agreement Clauses ................... 36-365

“D-2” Development Agreement Clauses ................. 36-367

“D-3” Upper-Tier Municipality Development ChargeCollection Agreement .................................. 36-369

“E-1” Development Charge Pre-PaymentAgreement ................................................. 36-377

“E-2” Development Charge Deferral/PhasingAgreement ................................................. 36-383

“E-3” Development Charge Late PaymentAgreement ................................................. 36-391

“F-1” Credit Agreement Under Special AreaDevelopment Charge By-Law....................... 36-397

“F-2” Credit Agreement Covering Specific WorksUnder Development Charge By-Law ............. 36-409


FRONT-ENDING AGREEMENTS ................................................. 36-423

Introduction.......................................................................... 36-423

History ................................................................................ 36-424

Best Efforts.................................................................... 36-424

Front-Ending Under Original Development Charges Act....... 36-428

Front-Ending Under New Development Charges Act, 1997 .. 36-429

The Concept of Front-Ending .................................... 36-429

Limited Services...................................................... 36-430

Development Charge By-law Must Be in Force ........... 36-430

Tiering.................................................................... 36-430

Works Commenced ................................................. 36-430

Reimbursement Collection and Payment .................... 36-430

Front-Ending Agreements ...................................................... 36-431

Authority to Enter into Front-Ending Agreements ................ 36-431

Parties .......................................................................... 36-431

Commencement of Front-Ended Works ............................. 36-431

Restrictions on Services .................................................. 36-432

Restrictions on Reimbursement ........................................ 36-432

Tiering of Front-End Costs ............................................... 36-433

Associated Costs............................................................ 36-434

Contents of Agreements .................................................. 36-434

Objections to Agreements................................................ 36-434A

Notice .................................................................... 36-434A

Who Can Object...................................................... 36-435

Powers of Ontario Municipal Board ............................ 36-435

No Right to Petition.................................................. 36-436

General Provisions ............................................................... 36-436

Date Agreement in Force................................................. 36-436

Non-Parties Bound by Agreement and PaymentRequirements.............................................................. 36-437

Withholding of Building Permit.......................................... 36-437

Management of Front-Ending Funds ................................. 36-438

Credits .......................................................................... 36-438

Registration on Title ........................................................ 36-439

Transitional Rules ........................................................... 36-439

Conclusion..................................................................... 36-440

Appendix “A” Comparison of Front-Ending Agreement Provisions inFormer Act to New Development Charges Act,1997...................................................................... 36-441

Appendix “B” Front-Ending Agreement .......................................... 36-453

MISCELLANEOUS MUNICIPAL DEVELOPMENTAGREEMENTS....................................................................... 36-503

Introduction.......................................................................... 36-503



Parking Exemption Agreements.............................................. 36-504

Parking Standards .......................................................... 36-504

Minor Variance and Rezoning .......................................... 36-504

Parking Exemption Agreements........................................ 36-504

Special Account ............................................................. 36-505

Registration of Agreement ............................................... 36-505

Certificate ...................................................................... 36-505

Appendices “A-1” Planning Act, s. 40................................ 36-507

“A-2” Installment Payment Agreement.............. 36-509

“A-3” Lump Sum Payment Agreement ............. 36-515

Conditional Building Permit Agreements .................................. 36-520

Permit Issuance ............................................................. 36-520

Pre-conditions to Issuance of Conditional Permit ................ 36-520

Unreasonable Delays...................................................... 36-521

Criteria .......................................................................... 36-521

Authorization for Agreement............................................. 36-521

Registration of Agreement ............................................... 36-521

Enforcement .................................................................. 36-522

Revocation .................................................................... 36-522

Conclusion..................................................................... 36-522

Appendices “B-1” Building Code Act, 1992, s. 8 ....................... 36-523

“B-2” O. Reg. 430/97 ........................................... 36-527

“B-3” Conditional Permit Agreement ...................... 36-529

Municipal Capital Facilities Agreement .................................... 36-533

Introduction.................................................................... 36-533


Meaning of Municipal Capital Facilities .............................. 36-533

Assistance by Municipality ............................................... 36-534

Tax Exemptions.............................................................. 36-534

Development Charge Exemptions..................................... 36-534

Appendices “C-1” Municipal Act, ss. 220.1, 111 ........................ 36-535

“C-2” O. Reg. 46/94............................................. 36-539

“C-3” Operation and Maintenance Agreement ......... 36-541

“C-4” Municipal Capital Facilities Agreement........... 36-557

Subdivision Pre-Servicing Agreement...................................... 36-567

Appendix “D-1” Pre-Servicing Agreement........................... 36-569

Heritage Easement Agreements ............................................. 36-575

Introduction.................................................................... 36-575



Primacy of Agreement..................................................... 36-576

Heritage Agreements ...................................................... 36-576

Nature of Agreement....................................................... 36-576


Conclusion..................................................................... 36-577

Appendices “E-1” Ontario Heritage Act, s.37 ............................ 36-579

“E-2” Heritage Easement Agreement ..................... 36-581

Conservation Easement Agreements ...................................... 36-593

Introduction.................................................................... 36-593


Applicable Lands ............................................................ 36-593

Meaning of Conservation Body......................................... 36-594


Assignment.................................................................... 36-594

Nature of Agreement....................................................... 36-594

Conservation Agreements................................................ 36-594

Tax Incentives ................................................................ 36-594.1

Agricultural Easements.................................................... 36-594.2

Conclusion..................................................................... 36-594.3

Appendices “F-1” Conservation Land Act................................. 36-595

“F-2” Conservation Easement Agreement............... 36-599

“F-3” Agricultural Easement Agreement.................. 36-609

Demolition and Construction Agreements ................................ 36-616.5

Introduction.................................................................... 36-616.5

Use of Demolition and Construction Agreement.................. 36-616.5

Registration of Agreement ............................................... 36-616.6

Penalty.......................................................................... 36-616.6

Conclusion..................................................................... 36-616.6

Appendix “G-1” Planning Act, s. 33 ......................................... 36-616.7

Appendix “G-2 Demolition and Construction Agreement............. 36-616.11

Encroachment Agreements .................................................... 36-617

Introduction.................................................................... 36-617

Adverse Possession and Prescriptive Rights...................... 36-617

Permitting Encroachments ............................................... 36-617

Encroachment Agreements .............................................. 36-618

Authority................................................................. 36-618

Form and Structure of Agreements ............................ 36-619

Conclusion..................................................................... 36-620

Appendices “H-1” Real Property Limitations Act, ss. 4,16, 31, 32 ......................................... 36-621

“H-2” Encroachment Agreement (Streets andHighways) ...................................... 36-623

“H-3” Encroachment Agreement(Easements) ................................... 36-631

“H-4” Encroachment Agreement (Parks)......... 36-639

ACQUISITIONS AND DISPOSITIONS .......................................... 38-11

Introduction.......................................................................... 38-11



Acquisitions and Dispositions ................................................. 38-14J

Risks ........................................................................... 38-14J.1

Development risks ................................................... 38-14L

Speculation risks ..................................................... 38-14N

Investment risks ...................................................... 38-14N

Controls and cycles ........................................................ 38-14O

Mortgaging property ........................................................ 38-14O

Diversification................................................................. 38-14O

Value............................................................................. 38-14O

Interest rates.................................................................. 38-14P

Tax shelters ................................................................... 38-14P

Depreciation .................................................................. 38-15

Life of the investment...................................................... 38-15

Disadvantages of real estate investment............................ 38-15

Protecting the investment ................................................ 38-16

Zoning .......................................................................... 38-16

Soil tests ....................................................................... 38-18

Unzoned land ................................................................ 38-18

Pro Forma ..................................................................... 38-18

Commercial Land ........................................................... 38-18

Industrial Development .......................................................... 38-18.1

Industrial Parks .............................................................. 38-18.1

Shopping Centres................................................................. 38-18.1

Acquisition of Neighbourhood Shopping Centre Sites .......... 38-18.2

Convenience Centres...................................................... 38-19

Development of a Community Shopping Centre ................. 38-20

Regional Shopping Centres ............................................. 38-20A

Office Buildings .................................................................... 38-20A

Development Sites.......................................................... 38-20A

A Downtown Location .................................................. 38-20A

Pro forma-major considerations ................................. 38-21

Critical assumptions................................................. 38-21

Income of the project ............................................... 38-21

Tenant inducements................................................. 38-22

Time to lease-up property ......................................... 38-22

Post-construction leasing costs ................................. 38-22

Rewards to developers and investors......................... 38-23

Development of a suburban office building......................... 38-23

Acquisition of existing office buildings................................ 38-23

Evaluation of an existing office building ...................... 38-23

Existing income properties for long-term development .. 38-24

Strategies For Buying Up Land ........................................ 38-25

Long-Term Land Leases........................................................ 38-26B


Alternative Means of Acquisitions ........................................... 38-26B

Income and Investment Income Considerations........................ 38-26D

Growth of the income stream ........................................... 38-26D

Reasons for Selling .............................................................. 38-27

Reasons for an Investor to Sell Property ........................... 38-27

The Independent Appraiser.............................................. 38-27

TITLE OPINIONS IN COMMERCIAL REALESTATE TRANSACTIONS ....................................................... 38-101

Introduction.......................................................................... 38-101

What is an opinion? .............................................................. 38-101

Opinion vs Certificate ............................................................ 38-101

Essential Elements of the Title Opinion ................................... 38-102

Addressee ..................................................................... 38-102

Scope of Searches Forming Basis of Opinion .................... 38-102

Assumptions .................................................................. 38-103

Reliances ...................................................................... 38-103

Title Opinion .................................................................. 38-103

Title Qualifications .......................................................... 38-104

Specific Survey Problems ......................................... 38-104

Up-To-Date Survey .................................................. 38-106A

Registered Interests ................................................. 38-106B

Unregistered Easements .......................................... 38-106D

Reservations in Crown Patent ................................... 38-106E

Realty Taxes, Liens, etc ........................................... 38-106E

Construction Lien Act, R.S.O. 1990, C.30 ................... 38-106E

Land Titles Act, R.S.O. 1990, c. L.5,Registry Act, R.S.O. 1990, c. R.20 ......................... 38-106F

Municipal By-Laws................................................... 38-106F

Reporting Matters ................................................................. 38-107

Example Opinion Letter ......................................................... 38-107

Suggested References .......................................................... 38-108

Appendix I: Form of Opinion Letter to Purchaser ...................... 38-109

TITLE INSURANCE.................................................................... 38-121

Introduction to Title Insurance ................................................ 38-121

A Historical Look at Title Insurance................................... 38-121

An Overview .................................................................. 38-123

The Canadian Policies .................................................... 38-128.2

What is Title Insurance? ........................................... 38-128.2

The Loan Policy ...................................................... 38-129

The Owner’s Policy.................................................. 38-129

The Plain Language Policy ....................................... 38-129

The Schedules ........................................................ 38-130

An American Attorney’s View of Title Insurance.................. 38-130A



About First American Title Insurance Company .................. 38-132

Corporate Structure ................................................. 38-133

Financial Review ..................................................... 38-133

Certificate of Registry............................................... 38-133

Provincial Licensing ................................................. 38-134

Trade Marks ........................................................... 38-134

Procedures .......................................................................... 38-134

Introducing Title Insurance to Clients................................. 38-134

By Lender............................................................... 38-134

By the Company ..................................................... 38-134

By Solicitor ............................................................. 38-134

The “Acknowledgement” .................................................. 38-134

Title Searching Procedures .............................................. 38-135

Registry Office Searches .......................................... 38-135

Other Searches ....................................................... 38-141

Transaction Closing Procedures ....................................... 38-143

Policy Issuance .............................................................. 38-143

When..................................................................... 38-144

To Whom................................................................ 38-144

What Policy Form .................................................... 38-144

Certificate of Title .................................................... 38-145

Commitment Preparation ....................................................... 38-146

Policy Preparation ................................................................ 38-150.3

Loan Policy-Form 1......................................................... 38-150.4

Owner’s Policy (Commercial)–Form 2 ............................... 38-150.8

Plain Language Policy (Residential)–Form 3 ...................... 38-150.11

Underwriting Practice ............................................................ 38-150.15

Form and Endorsement Samples............................................ 38-150.17

Rate Schedule ..................................................................... 38-150.47

Solicitor’s Agreement ............................................................ 38-150.49

Schedule “A”: TITLE INSURANCE RATES............................ 38-150.55

SAMPLE INSURANCE POLICIES ISSUED BY STEWART TITLE

Commercial Title Insurance.................................................... 38-151

Minimizing Lawyer/Notary Liability..................................... 38-151

Commercial Lender......................................................... 38-151

Sample Policies.................................................................... 38-153

VOLUME 3

ENVIRONMENTAL CONSIDERATIONS

ENVIRONMENTAL LIABILITIES AND DUE DILIGENCE IN LANDREDEVELOPMENT................................................................. 39-1

1 Introduction ..................................................................... 39-1


2 Acquisition of Lands by the Developer ............................. 39-1

3 Civil Liabilities ................................................................. 39-2

3.1 Spills.................................................................... 39-2

3.2 Tort ...................................................................... 39-2

3.2.1 Nuisance ..................................................... 39-2

3.2.2 Strict Liability ................................................ 39-4A

3.2.3 Trespass...................................................... 39-4A

3.2.4 Negligence................................................... 39-4A

3.2.5 Riparian Rights ............................................. 39-4B

3.2.6 Removal of Ground Water.............................. 39-4B

3.3 Directors and Officers ............................................ 39-5

3.4 Contract ............................................................... 39-5

3.4.1 Contract Rights and Obligations...................... 39-5

Land Purchase Agreements...................... 39-5

Leases ................................................... 39-6.6

3.4.2 Latent Hazards ............................................. 39-6.7

3.5 Limitation Periods .................................................. 39-6C

3.6 Offences/Prosecutions............................................ 39-7

4 Environmental Protection Act........................................... 39-8C

4.1 Waste Management-E.P.A. Pt. V ............................. 39-8C

4.1.1 Use of Former Waste Disposal SitesProhibited ................................................. 39-8C

4.1.2 Waste Removal Order ................................... 39-8D

4.2 Other Orders......................................................... 39-8D

4.2.1 Preventive Order........................................... 39-8D

4.2.2 Remedial Order ............................................ 39-8D

4.2.3 Control Order ............................................... 39-8E

4.2.4 Stop Order ................................................... 39-8E

4.3 Enforcing Orders ................................................... 39-9

4.3.1 Inspection .................................................... 39-9

4.3.2 Financial Assurance ...................................... 39-9

4.3.3 Ministry Performance and Recovery of Costs ... 39-9

4.3.4 Injunction ..................................................... 39-9

4.3.5 Orders Binding on Successors........................ 39-9

4.4 Decommissioning Guidelines .................................. 39-10

5 The Purchase of Land ...................................................... 39-11

5.1 Vendor Covenants/Conditions for Purchaser’sBenefit .............................................................. 39-11

5.1.1 Audit ........................................................... 39-11

5.2 Vendor Representations and Warranties................... 39-13

5.3 Survival of Warranties ............................................ 39-13

5.4 Limits on Liability ................................................... 39-14

5.5 Security for Surviving Warranties and Indemnities...... 39-14



5.6 Purchaser’s Warranty and Indemnity ........................ 39-14

6 Site Development Approvals ............................................ 39-14

6.1 Planning Act ......................................................... 39-14

6.2 Environmental Assessment..................................... 39-15

6.2.1 Environmental Assessment Act....................... 39-15

6.2.2 Environmental Assessment and Review ProcessGuidelines Order........................................ 39-16

6.2.3 Assessment Conditions in Control Orders andApprovals ................................................. 39-16

6.3 Practical Consequences ......................................... 39-16

7 Waste Generation, Handling and Disposal ........................ 39-16

7.1 Waste Generator Reporting..................................... 39-17

7.2 Waste Management Systems.................................. 39-18

7.2.1 Prohibited Use/Operation of Waste ManagementSystems ................................................... 39-18

7.2.2 Manifests ..................................................... 39-18

7.3 Waste Disposal sites.............................................. 39-18

7.3.1 Prohibited Use/Operation of Waste DisposalSites ........................................................ 39-18

7.3.2 Manifests ..................................................... 39-19

7.4 Asbestos and PCBs............................................... 39-19

7.4.1 Asbestos...................................................... 39-19

7.4.2 PCB Wastes................................................. 39-19

7.5 Waste Categories .................................................. 39-20

Hazardous Waste .................................................... 39-20

Registrable Waste ................................................... 39-20

Non-Registrable Waste (Mildly Toxic) ......................... 39-20

Clean Fill ................................................................ 39-21

7.6 Municipal By-Laws................................................. 39-21

7.7 Practical Concerns................................................. 39-22

7.8 Contaminated Sites................................................ 39-22

Rationale for Site Condition Standards in O. Reg.153/04 ................................................................ 39-22

General Information ................................................. 39-22

Rationale for Site Condition Standards (SCS) inTables 1 to 5........................................................ 39-23

Petroleum Hydrocarbon Rationale ............................. 39-23

Full Depth Background Ground Water Site ConditionStandards............................................................ 39-23

Rationale for Site Condition Standards in Table 6 (SoilExtract and Ground Water Standards to

Determine Whether a Property is a “Shallow SoilProperty”) ............................................................ 39-24

Use of the Tables of Site Condition Standards ............ 39-24


Risk Assessment Requirements ....................................... 39-25

Comparison of the 1996 Guideline and the New Record ofSite Condition Regulation (153/04) ................................ 39-25

When to Use the New Regulated Requirements .......... 39-25

What Are the New Requirements?............................. 39-25

7a Landfill Standards............................................................ 39-22I

Ontario’s landfill standards............................................... 39-28I

Mandatory air emissions control ................................ 39-28I

Hydrogeology and surface water ............................... 39-28J

Hydrogeologic assessment ....................................... 39-28J

Surface water assessment........................................ 39-28J

Design report .......................................................... 39-28J

Site design for groundwater protection ....................... 39-28J

Site specific design.................................................. 39-28J

Generic design........................................................ 39-28J

Site operations and monitoring .................................. 39-28K

Reasonable Use Guideline ....................................... 39-28K

Closure and post-closure care................................... 39-28K

Financial assurance ................................................. 39-28K

8 Certificates of Approval ................................................... 39-28L

8.1 Equipment and Processes: Construct, Alter, Operateor Use .............................................................. 39-28L

8.2 OWRA (Ontario Water Resources Act) ..................... 39-28M

8.3 Approval Delays .................................................... 39-28M

9 EPA Offences .................................................................. 39-28M

9.1 Pollution ............................................................... 39-28M

9.2 Reporting ............................................................. 39-28M

9.3 Spills Clean-Up ..................................................... 39-28N

9.4 Injunction.............................................................. 39-28O

9.5 Offences............................................................... 39-28O

9.5.1 General ....................................................... 39-28O

9.5.2 Corporate Liability ......................................... 39-28O

9.5.3 Employee Liability ......................................... 39-28O

9.5.4 Officers and Directors .................................... 39-28P

9.6 Defences.............................................................. 39-28P

9.6.1 Compliance with Order/Approval ..................... 39-28P

9.6.2 Burden of Proof ............................................ 39-28P

9.6.3 Due Diligence............................................... 39-28Q

9.7 Limitation Period.................................................... 39-28Q

9.8 Penalties and Enforcement ..................................... 39-28Q

9.8.1 EPA and OWRA ........................................... 39-28S

9.8.2 Municipal By-Laws ........................................ 39-28T



10 Occupational Health and Safety Act—Canada Labour Code .................................................. 39-29

10.1 Constructors........................................................... 39-29

10.2 Notification to Constructors and Contractors ............... 39-29

10.3 Workplace Hazardous Material Information Systems ... 39-29

10.4 Inventories Available ............................................... 39-30

10.5 Employer Liable for Employee Conduct ..................... 39-30

10.6 Directors and Officers.............................................. 39-30

10.7 Architects and Engineers ......................................... 39-31

11 Risk Management .......................................................... 39-31

11.1 Construction Documents .......................................... 39-31

11.2 Consultants ............................................................ 39-32

11.3 Incorporation .......................................................... 39-32

11.4 Insurance............................................................... 39-32

11.5 Contractual Indemnities............................................ 39-33

11.6 Due Diligence......................................................... 39-33

12 Lender Liability .............................................................. 39-34

12.1 Self-protection ........................................................ 39-34

12.2 Jurisprudence......................................................... 39-34A

13 Remediation Projects ..................................................... 39-34B

Environmental Protection Act.................................................... 39-80.1

Concordance ...................................................................... 39-80.3

THE IMPACT OF BILL 220 ON REAL ESTATE ANDCOMMERCIAL LENDERS .......................................................... 39-81

1 Introduction ..................................................................... 39-81

1.1 CERCLA ................................................................. 39-81

1.2 Present Owners ....................................................... 39-82

1.3 Prior Owners............................................................ 39-82

1.4 Secured Lenders ...................................................... 39-82

1.5 Innocent Landowners ................................................ 39-83

1.6 Liens....................................................................... 39-84

2 Bill 220 ............................................................................ 39-84

2.1 Appeals................................................................... 39-85

2.2 Accountability........................................................... 39-85

2.3 Regulatory Authority.................................................. 39-85

2.4 Secured Lenders and Trustees................................... 39-86

2.5 Property Transfer Audits ............................................ 39-86

2.6 Phase-One .............................................................. 39-87

2.7 Phase-Two .............................................................. 39-87

3 Loan Documentation ........................................................ 39-87

3.1 Representations and Warranties ................................. 39-87

3.2 Indemnification ......................................................... 39-88


3.3 Covenants ............................................................... 39-88

3.4 Environmental Due Diligence ..................................... 39-88

4 Conclusion ...................................................................... 39-88

REDUCING COSTS THROUGH REDUCTION OF REALPROPERTY TAXES ON CONTAMINATED PROPERTIES

Introduction ........................................................................ 39-91

Real Property Assessment in Ontario .................................. 39-91

Assessment is Distinct From Property Taxation .................. 39-91

Annual Assessments and Rights of Appeal........................ 39-92

Market Value, Comparables and Inequitable

Assessments .............................................................. 39-92

Different Types of Assessment Programs .......................... 39-93

Non-Reassessed Areas............................................ 39-93

Section 58 – Equalization Reassessment Areas .......... 39-93

Sections 63 – Market Value Reassessment Areas ....... 39-94

Routes of Appeal............................................................ 39-94

Impact of Contamination on Market Value ............................ 39-95

The U.F.F.I. Experience ................................................... 39-95

Contaminated Industrial Properties ................................... 39-96

Relationship of Clean-up Costs to Market Value ................. 39-96

Regulatory Compliance ............................................ 39-96

Continue Existing Use.............................................. 39-97

Change in Use ........................................................ 39-97

Nuisance ................................................................ 39-97

Assessment Cases Dealing With Contaminated Property ........... 39-98

New Jersey Supreme Court Decisions .................................... 39-98

Leading Quebec Tribunal Decision ......................................... 39-98

Recent Alberta Tribunal Decision............................................ 39-99

Disclosure of Information .......................................................... 39-99

Disclosure Provisions in the Assessment Act ........................... 39-100

Practical Steps to Safeguard Confidential Information ............... 39-100

Disclosure by Assessor of Information on Comparables ............ 39-101

Contesting Assessments of Contaminated Properties ................ 39-102

The Use of Experts............................................................... 39-102

Negotiations......................................................................... 39-102

Potential Disadvantages to Assessment Appeals...................... 39-103

Concluding Remarks: The Test of Equity ................................... 39-103

Appendix 1

Assessment Act ................................................................... 39-104

Appendix 2

Dominion Tar & Chemical v. Town of Cochrane ........................ 39-118.4



WHEN SHOULD DIRECTORS AND OFFICERS BE PERSONALLYLIABLE FOR CLEAN-UP ORDERS? ........................................ 39-123

1 INTRODUCTION ............................................................... 39-123

2 Re 724597 Ontario Ltd...................................................... 39-124

2.1 Relief from Liability ................................................... 39-127

2.2 Application of Principles of Fairness............................ 39-128

2.3 Benefit from Participation........................................... 39-129

2.4 The Standard of Care ............................................... 39-129

2.5 Degree of Influence Over Underlying Factors ............... 39-130

2.6 The Steps Taken to Reduce the Risk .......................... 39-130

3 Re Valentine Developments Ltd. ....................................... 39-131

3.1 Evidence and Findings .............................................. 39-132

3.1.1 Due Diligence............................................... 39-132

4 Sheridan v. Director ......................................................... 39-135

5 A Few Concluding Remarks ............................................. 39-137

LIMITATION OF ENVIRONMENTAL LIABILITIES — RECEIVERS,RECEIVERS AND MANAGERS, TRUSTEES IN BANKRUPTCYAND EXECUTORS AND EXECUTORS ..................................... 39-139

I. Introduction .................................................................. 39-139

II. Environmental Liabilities — Overview of Legal Conceptsin Public and Private Law .......................................... 39-145

III. Duties and Responsibilities of Trustees in Bankruptcy,Receivers, Receivers and Managers and Executors .... 39-160

IV. Review of Canadian Case Law — Receivers andManagers and Trustees in Bankruptcy — EnvironmentalConditions and Issues of Personal Liability and PriorityClaims in the Estate................................................... 39-200

IV. Review of U.S. Case Law — Executors and OtherFiduciaries — Environmental Conditions and Issues ofPersonal Liability ....................................................... 39-221

VI. Statutory Exclusions of Personal Liability of a Trustee inBankruptcy — Subsections 14.06(2) and (3) of the BIA39-225

VII. Consideration of Alternatives to Receivership orBankruptcy................................................................ 39-231

VIII.Considerations Prior to Receivership, Bankruptcy orExecutorship ............................................................. 39-243

IX. Limitation of Liabilities — Receivers, Receivers andManagers, Trustees in Bankruptcy and Executors....... 39-250

X. Proposed Amendments to Subsections 14.06(2) and (3)of the BIA — Extension of Statutory Exclusions andIncorporation of Receivers and Receivers andManagers .................................................................. 39-273

Appendix 1


Standard Trust Co. (In Liquidation) v. Lindsay HoldingsLtd.......................................................................... 39-289

Appendix 2

Draft Agreement for Non-Intrusive EnvironmentalInspections ................................................................. 39-297

Appendix 3

Draft Agreement for Intrusive Environmental Inspections ..... 39-300

Appendix 4

Draft Comprehensive Agreement ...................................... 39-305

Appendix 5

Task Force on Environmental Issues................................. 39-310

Appendix 6

Working Group #6 .......................................................... 39-319

SHOULDERING THE RISK: COMING TO GRIPS WITHENVIRONMENTAL LIABILITY

GUARDING THE BANK: MINIMIZING LENDERS’ENVIRONMENTAL RISK

I. Introduction .................................................................. 39-323

II. Classes of Potentially Responsible Parties .................... 39-324

A. Ontario’s Environmental Protection Act ......................... 39-324

B. Ontario’s Gasoline Handling Act and Regulations........... 39-326

C. Canadian Environmental Protection Act ........................ 39-327

D. Fisheries Act ............................................................. 39-328

III. Risk to the Lender ........................................................ 39-328

IV. Update ......................................................................... 39-329

A. Significant Canadian Case Law and OtherDevelopments ........................................................ 39-329

B. U.S. Developments .................................................... 39-332

V. Realization upon Security ............................................. 39-332

A. Foreclosure ............................................................... 39-332

B. Power of Sale............................................................ 39-333

C. Receivership ............................................................. 39-333

D. Bankruptcy................................................................ 39-335

VI. Preventive Measures — What’s a Lender To Do? ........... 39-337

A. Prior to Financing....................................................... 39-337

B. During the Term of the Loan........................................ 39-340

C. At Loan Default ......................................................... 39-342

1. Loan Workout ..................................................... 39-343

2. Selective Realization............................................ 39-343

3. Court Application ................................................. 39-343

4. Agreements with the Ministry of the Environmentand Energy...................................................... 39-344

5. Abandonment...................................................... 39-344



VII. Conclusion ................................................................... 39-346

APPENDIX A —CBAO Environmental Section (Application Form) .... 39-348

APPENDIX B —Extract from Bankruptcy and Insolvency Act ........... 39-350

APPENDIX C —Extract from Bill C-109, An Act to Amend theBankruptcy and Insolvency Act, the Companies’Creditors Arrangements Act and the Income TaxAct................................................................. 39-353

APPENDIX D —Discussion Paper—Clarifying the Liability ofSecured Creditors, from Lender Liability WorkingGroup to Assistant Deputy Minister, Policy Division,Ministry of Environment and Energy, March 17, 1995

........................................................................ 39-357

APPENDIX E —Extract from Draft Ministry of the Environment andEnergy Compliance Guideline F-2 re Field Orders

......................................................................... 39-374

APPENDIX F —MOEE News Release on Policy and Guideline onAccess to Environmental Evaluationsand Policy and Guideline document ................... 39-379

APPENDIX G —MOEE News Release on Standard AgreementConcerning Environmental Investigations andStandard Agreement precedent form.................. 39-386

DEALING WITH CONTAMINATED LANDS: ALLOCATING RISKSFOR ENVIRONMENTAL LIABILITY

I. INTRODUCTION ............................................................ 39-390

II. OVERVIEW OF ENVIRONMENTAL LIABILITY ................. 39-390

A. General — Statutory Liability ....................................... 39-390

B. Statutory Liability for Offences ..................................... 39-391

C. Statutory Liability for Administrative Orders ................... 39-392

1. General .............................................................. 39-392

2. Types of Administrative Orders.............................. 39-392

3. Appeals of Orders ............................................... 39-393

D. Liability at Common Law............................................. 39-394

III. CLEAN-UP OF CONTAMINATED LAND........................... 39-395

IV. ALLOCATING RISKS FOR ENVIRONMENTAL LIABILITY . 39-395

A. General .................................................................... 39-395

B. Assessing the Risks ................................................... 39-396

1. Due Diligence ................................................... 39-396

2. Environmental Assessments ............................... 39-396

C. The Agreement.......................................................... 39-398

1. Representations and Warranties.......................... 39-398

2. Covenants ........................................................ 39-398

3. Indemnities ....................................................... 39-399

4. Landlord/Tenant Situations.................................. 39-399


V. CONCLUSION ............................................................... 39-399

IS ENVIRONMENTAL INSURANCE THE ANSWER?

I. INTRODUCTION ............................................................ 39-401

II. COMPREHENSIVE GENERAL LIABILITY POLICIES ........ 39-401

III. INTERPRETING THE POLLUTION EXCLUSION CLAUSE:RULES OF CONSTRUCTION ...................................... 39-402

A. Contra Proferentum and Reasonable Expectations......... 39-402

IV. CASES FAVOURING INSURED ...................................... 39-402

V. CASES FAVOURING INSURER ...................................... 39-404

VI. CANADIAN CASES ....................................................... 39-405

VII. MEANING OF “DAMAGES”............................................ 39-406

VIII. THE ABSOLUTE EXCLUSION ........................................ 39-407

IX. WHAT IS AVAILABLE NOW............................................ 39-408

A. Environmental Impairment Liability Policy (“EIL”) ............ 39-408

B. Environmental Protection Program (“EPP”).................... 39-408

C. Contractors’ Pollution Liability Insurance (“CPL”)............ 39-408

D. Preferred Risk Pollution Liability Insurance (“PRPL”) ...... 39-409

E. Underground Storage Tank Pollution Insurance (“USTP”) 39-409

F. Environmental Remediation Insurance (“ERI”) ................ 39-409

G. Casualty Programs for Environmental Risks (“CPER”) .... 39-409

H. Owner-Controlled Insurance Programs for EnvironmentalRemediation and Abatements (“OCIP”)...................... 39-409

X. CONCLUSION ............................................................... 39-409

ALTERNATE RISK FINANCING: WHAT CAN YOU DO WHENENVIRONMENTAL IMPAIRMENT LIABILITY INSURANCE IS NOTA VIABLE OPTION?

INTRODUCTION ........................................................................ 39-411

TYPES OF ENVIRONMENTAL RISKS ......................................... 39-411

COMPREHENSIVE GENERAL LIABILITY .................................... 39-412

ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL) POLICY ........... 39-413

ENVIRONMENTAL COVERAGE AND THE SALE OFCONTAMINATED PROPERTY TO THIRD PARTIES ................... 39-413

OTHER INSURANCE POLICIES.................................................. 39-413

CURRENT MARKET CONDITIONS ............................................. 39-414

ALTERNATIVE FINANCING BEGINS TO FILL THE GAP ............... 39-415

SOME SPECIFIC ADVANTAGES TO ALTERNATIVE RISKFINANCING ........................................................................... 39-416

POSSIBLE ALTERNATE STRUCTURES ...................................... 39-417

CONCLUSION ........................................................................... 39-417

GUIDELINE FOR USE AT CONTAMINATED SITES INONTARIO............................................................................... 39-419

EXECUTIVE SUMMARY ............................................................. 39-419

TABLE OF CONTENTS .............................................................. 39-423



GLOSSARY .............................................................................. 39-425

FREQUENTLY ASKED QUESTIONS............................................ 39-428

SECTION 1—Introduction .......................................................... 39-431

SECTION 2—Principles ............................................................. 39-434

SECTION 3—Communication .................................................... 39-434

SECTION 4—Restoration approaches ........................................ 39-436

SECTION 5—Background approach........................................... 39-438

SECTION 6—Generic approach ................................................. 39-439

SECTION 7—SSRA approach .................................................... 39-457

SECTION 8—Site assessment ................................................... 39-461

SECTION 9—Land use planning ................................................ 39-476

ACKNOWLEDGEMENTS............................................................ 39-483

REFERENCES........................................................................... 39-485

APPENDIX 1: Table — Summary of approvals information ... 39-487

APPENDIX 2: Tables A–F — Summary of soil, groundwaterand sediment criteria .................................. 39-488

APPENDIX 3: Environmental Protection Act sections 18 &197............................................................. 39-512

APPENDIX 4: Ministry office listings .................................... 39-523

HOW LEAN IS CLEAN? ONTARIO’S NEW GUIDELINE FOR THECLEAN-UP OF CONTAMINATED SITES. THINGS YOU WILL NOTLEARN FROM A QUICK READ OF THE GUIDELINE: ANOTHERPERSPECTIVE ON CONTEXT ................................................. 39-525

INTRODUCTION ............................................................ 39-525

I. BUSINESS PLAN .......................................................... 39-525

A. What Insight Does This Provide? ................................. 39-527

II. COMPLIANCE GUIDELINE ............................................. 39-527


III. COMPLIANCE STRATEGY ............................................. 39-528


IV. AUDIT PROGRAM ......................................................... 39-531


V. LAND USE PLANNING .................................................. 39-532


CONCLUSIONS ......................................................................... 39-533

APPENDICES

1. References................................................................ 39-535

2. Decision Making at Fuel Outlets Chart .......................... 39-536

3. Performance and Accountability Table........................... 39-537

GUIDELINE FOR USE AT CONTAMINATED SITES IN ONTARIO — ALAWYER’S PERSPECTIVE ON HOW IT WILL WORK

I. INTRODUCTION ............................................................ 39-539

A. Background............................................................... 39-539

B. Overview .................................................................. 39-539


II. GUIDELINE AND COMPANION DOCUMENTS ................. 39-540

III. GUIDELINE — EXECUTIVE SUMMARY........................... 39-541

IV. NEW TERMINOLOGY — GLOSSARY ............................. 39-541

V. ANSWERS TO FREQUENT QUESTIONS......................... 39-543

VI. GUIDELINE INTRODUCTION (SECTION 1) ...................... 39-543

VII. GUIDELINE PRINCIPLES (SECTION 2) ........................... 39-543

VIII. PUBLIC COMMUNICATION (SECTION 3) ........................ 39-544

IX. RESTORATION APPROACHES (SECTIONS 4 TO 7) ........ 39-544

X. SITE ASSESSMENT (SECTION 8) .................................. 39-544

A. Report Documentation ................................................ 39-544

B. Completion Documentation — Record of Site Condition.. 39-545

C. Registration on Title to Land........................................ 39-545

D. Use of the RSC Without MOEE Involvement ................. 39-546

XI. LAND USE PLANNING (SECTION 9) .............................. 39-546

A. Planning Approvals .................................................... 39-547

B. Municipalities Reviewing Reports ................................. 39-547

C. Nonpotable Groundwater ............................................ 39-547

D. Site Specific Risk Assessments — Municipal Agreements............................................................................... 39-548

E. Potentially Sensitive Sites ........................................... 39-548

XIII.APPENDIX 3 — DRAFT ORDERS AND SCHEDULE ARECORD OF SITE CONDITION ................................... 39-548

A. Draft Orders .............................................................. 39-548

B. Record of Site Condition ............................................. 39-548

XIII.ROLE OF LEGAL COUNSEL .......................................... 39-551

A. Understand the Deal .................................................. 39-551

B. Define and Implement Approaches Due Diligence .......... 39-551

C. Assist in Structuring and Negotiating the Contract.......... 39-552

D. Advise as to Post-Closing Matters................................ 39-552

XIV.CONCLUSIONS ............................................................. 39-552

A. Major Improvements and Innovations ........................... 39-553

B. Major Changes .......................................................... 39-553

C. Areas of Concern....................................................... 39-553

APPENDIX 1 — OUTLINE OF KEY ENVIRONMENTALPROVISIONS IN AGREEMENTS RELATING TOPURCHASE, SALE, LEASE OR LOANTRANSACTIONS............................................ 39-554

APPENDIX 2 — SPECIFIC ENVIRONMENTAL AGREEMENTS ...... 39-556

APPENDIX 3 — AGREEMENTS WITH ENVIRONMENTALCONSULTANTS AND CONTRACTORSRELATING TO ENVIRONMENTALASSESSMENTS ............................................. 39-558



SPECIAL AGREEMENTSAN ANALYSIS OF GROUND LEASE PROVISIONS ...................... 40-1

A. Introduction ................................................................... 40-11

1. Advantages and Disadvantages to the Landlord............. 40-11

2. Advantages and Disadvantages to the Tenant................ 40-11

3. Advantages and Disadvantages to the LeaseholdMortgagee.............................................................. 40-12

B. Applicable Legislation.................................................... 40-14

C. Drafting Considerations ................................................. 40-16D

1. Quiet Enjoyment......................................................... 40-16.3

(a) Landlord’s Covenant ............................................ 40-16.3

(b) Title to the Freehold............................................. 40-16.3

(c) Registration of the Lease...................................... 40-16.4

(d) Subordination Agreement ..................................... 40-16.7

(e) Zoning ............................................................... 40-16.7

2. Term......................................................................... 40-16.8

3. Rent ......................................................................... 40-20

(a) Base Rent .......................................................... 40-20

(b) Percentage Rent ................................................. 40-20B

(c) Additional Rent.................................................... 40-21

4. Improvements ............................................................ 40-22

(a) Construction by Tenant......................................... 40-22

(b) Security to Landlord............................................. 40-22.3

(c) By-laws and Municipal Agreements........................ 40-23

(d) Ownership of Improvements.................................. 40-23

5. Use .......................................................................... 40-24

6. Repairs and Maintenance............................................ 40-26.3

7. Damage or Destruction ............................................... 40-26.3

(a) Right of Termination............................................. 40-26.3

(b) Obligation to Rebuild............................................ 40-26B

8. Insurance .................................................................. 40-26B

(a) Types of Insurance .............................................. 40-26B

(b) Named Insureds.................................................. 40-26C

(c) Disposition of Insurance Proceeds ......................... 40-26D

(d) Insurance Trustee................................................ 40-26D.1

(e) Release of Insurance Proceeds............................. 40-26D.1

9. Expropriation ............................................................. 40-26D.1

10. Estoppel Certificates ................................................. 40-26G

11. Dispositions ............................................................. 40-26G

(a) Dispositions by the Tenant .................................... 40-26G

(b) Space Leases ..................................................... 40-27

(c) Dispositions by Landlord ...................................... 40-28


12. Events of Default and Rights of the LeaseholdMortgages ............................................................ 40-30B.2

(a) Limitation of Events of Default............................... 40-30B.2

(b) Right to Notice .................................................... 40-30D.2

(c) Right to Cure ...................................................... 40-30D.2

(d) Right to Take Over Lease ..................................... 40-30D.2

(e) Limitation of Landlord’s Right of Termination ........... 40-30D.2

(f) Right to a New Lease .......................................... 40-30F

13. Other Special Covenants ........................................... 40-30H

14. Limited Recourse or Indemnities................................. 40-30H

D Financing Considerations ................................................ 40-30I

1. Form of Ground Lease................................................ 40-30J

2. Form of Leasehold Mortgage ....................................... 40-30J

(a) Assignment or Sublease....................................... 40-30J

(b) “Split Fee” Situations............................................ 40-31

(c) Assignment of Space Leases................................ 40-31

(d) Assignment of Ancillary Rights .............................. 40-31

(e) Purchase by Tenant of Fee................................... 40-32

(f) Covenants by Tenant ........................................... 40-32

(g) Appointment of Receiver ...................................... 40-32

(h) Attornment by Tenant to Lender ............................ 40-32

3. Registration(s)............................................................ 40-32

4. Documentation from the Landlord................................. 40-32

5. Space Leases............................................................ 40-33

6. Bankruptcy of Tenant .................................................. 40-33

AGREEMENTS, PRECEDENTS AND CHECKLISTS

AGREEMENTS, PRECEDENTS AND CHECKLISTS................ 49-1OFFER TO PURCHASE ............................................................. 49-11

MORTGAGE CLAUSES

Representations of the Mortgagor ........................................... 56-11

Covenant re Notice of Default under Leases ............................ 56-11

Covenant Prohibiting the Collection of Pre-paid Rents............... 56-11

Covenant of Mortgagor to Give Mortgagee Notice of Casualty ofLegal Claim ...................................................................... 56-11

Mortgagor to Comply with Laws etc ........................................ 56-11

Mortgage Clause for Insurance Policies................................... 56-12

Prepayment Privileges—Special Clauses................................. 56-13

Prepayment Clause (When Acting for Mortgagor) ..................... 56-14

Prepayment Clause (When Acting for Mortgagee)..................... 56-14

Restricted Payment Clause.................................................... 56-14

Guarantee Clause—Short Form ............................................. 56-15



Guarantee Clause—Expanded Form....................................... 56-15

Guarantor Clause—Alternate Forms........................................ 56-16

No-Recourse Mortgages........................................................ 56-20

Tax Clauses......................................................................... 56-20

Covenants of Mortgagor re Leased Premises........................... 56-24

Collateral Assignment of Leases and Rents ............................. 56-27

Assignment of Leases and Rents to Morgagee ........................ 56-29

Assignment of Rents and Profits to Mortgagee......................... 56-30

Partial Release or Discharge.................................................. 56-31

— Alternate Forms......................................................... 56-32

Sale Clause ......................................................................... 56-33

— Alternate Forms......................................................... 56-33

Collateral Mortgage Clause.................................................... 56-35

— Alternate Form .......................................................... 56-35

Management Clause and Liquidated Damages for ChequesNot Honoured ................................................................... 56-35

Financial Statements............................................................. 56-35

Right of Inspection................................................................ 56-37

Pre-Authorized Payment Plan Payment Authorization PlanRequest ........................................................................... 56-37

Post-dated Cheque Provision ................................................. 56-38

Renewal Provision ................................................................ 56-39

Spouse Clause (Ontario) ....................................................... 56-39

Demolition Clause ................................................................ 56-40

Cumulative Remedies ........................................................... 56-40

Appointment of Receiver ....................................................... 56-40

Postponement Clause ........................................................... 56-42

Absolute Priority Clause to be Inserted in a SubsequentMortgage.......................................................................... 56-42

Acceleration Clauses ............................................................ 56-43

Interest Clauses ................................................................... 56-71

Solicitor’s Final Report on Title ............................................... 56-85

Loan Participation Agreement ................................................ 58-11

Participation Provisions ......................................................... 58-51

Co-Ownership Agreement...................................................... 58-101

Co-Ownership Agreement between Developer and InsuranceCompany—Equal Participation ............................................ 58-113-2

Limited Partnership Agreement............................................... 58-114

Limited Partnership Agreement—Alternate Form....................... 58-149

Limited Partnership Agreement-Real Estate DevelopmentFund ................................................................................ 58-175

Limited Partnership Agreement-Residential CondominiumDevelopment..................................................................... 58-200.29


General Partnership Agreement-Commercial Real EstateDevelopment..................................................................... 58-200.60(1)

Partnership Agreement-Residential Real EstateDevelopment..................................................................... 58-200.86(1)

Joint Venture Agreement ....................................................... 58-201

Checklist for Negotiating Joint Venture DevelopmentAgreement........................................................................ 58-277

Construction Management Agreement..................................... 58-301

Project Management Agreement Between Co-owners andDeveloper as Project Manager ............................................ 58-315

VOLUME 4

Syndicate Mortgage Agreement.............................................. 58-377

Mortgage of Leasehold Land.................................................. 60-11

Tri-Party Agreement, Mortgagor, Mortgagee and Lessee ........... 60-51

Leasehold Mortgage Clauses................................................. 60-57

Ground Lease ...................................................................... 60-68

Operating Lease................................................................... 60-74

Sale and Leaseback Agreement............................................. 60-83

Ground Lease—Phased Mixed-use Development—Option toPurchase to Lessee ........................................................... 60-97

Whole Building Leases.......................................................... 60-171

Office Lease ........................................................................ 60-235

Gross Multi-Tenant Industrial Lease ........................................ 60-313

Subordination Agreements..................................................... 62-11

Nondisturbance Agreements .................................................. 62-21

Subrogation Agreements ....................................................... 62-31

Agreement Postponing Mortgage............................................ 62-41

Wrap Around Mortgage ......................................................... 64-11

Net Net Commercial Lease—Two-Stage Lease—Mixed UseDevelopment..................................................................... 68-16-1

Indemnity Agreement ............................................................ 68-17

Tenant Financing by Landlord—Loan Agreement andPromissory Note................................................................ 68-61

Tenant Financing by Third Party Lender .................................. 68-64

Landlord/Tenant Joint Venture Agreement................................ 68-68

Occupancy Agreement Under Landlord/Tenant Joint VentureAgreement........................................................................ 68-85

Lease Participation Provisions—Anchor Tenant IncomeParticipation in Net Cash Flow of Regional Shopping Centre .. 68-91

Lease Participation Provisions—Tenant Income Participation inOffice Building................................................................... 68-93

Lease Participation Provisions—Tenant Obtains Specified FeeInterest at Maturity of Lease in Office Building....................... 68-99



BROKERAGE AGREEMENTS AND LOAN SERVICING AGREEMENTS

Brokerage Agreements.......................................................... 72-11

Application for Mortgage Loan................................................ 72-12

Agreement to Purchase Mortgage .......................................... 72-14

Agreement for Sale of Mortgage............................................. 72-16

Agreement to Purchase Mortgage by Broker............................ 72-18

Option to Purchase Mortgage................................................. 72-20

Authorization to Mortgage Broker............................................ 72-22

Statement of Mortgage Form—Ontario .................................... 72-24

Disclosure Statement—Mortgage Brokers Act—BritishColumbia.......................................................................... 72-26

Borrower’s Right to Cancel—British Columbia .......................... 72-28

Borrower’s Notice of Rescission ............................................. 72-29

Mortgage Participation and Loan Servicing Agreement .............. 72-101

Mortgage Sale and Servicing Agreement ................................. 72-115

MORTGAGE REMEDIES—ONTARIO

Notice of Sale under Mortgage............................................... 74-201

General Heading of Documents — Actions .............................. 74-201

Statement of Claim (Mortgage Action) ..................................... 74-204

Statement of Claim — Action Commenced by Notice ofAction .............................................................................. 74-207

Order for Substituted Service by Advertising ............................ 74-213

Notice of Intent to Defend...................................................... 74-217

Default Judgment ................................................................. 74-217

Requisition for Default Judgment ............................................ 74-217

Notice of Appearance............................................................ 74-220

Request to Redeem.............................................................. 74-220

Default Judgment for Foreclosure with a Reference .................. 74-221

Default Judgment for Immediate Foreclosure ........................... 74-222

Default Judgment for Foreclosure without a Reference.............. 74-223

Final Order for Foreclosure .................................................... 74-224

Request for Sale .................................................................. 74-226

Default Judgment for Sale with a Redemption Period................ 74-227

Default Judgment for Immediate Sale...................................... 74-228

Default Judgment for Sale Conditional on Proof of Claim........... 74-230

Default Judgment for Immediate Sale...................................... 74-231

Default Judgment for Sale without a Redemption Period ........... 74-232

Final Order for Sale .............................................................. 74-233

Default Judgment for Redemption........................................... 74-234

Notice of Reference to Subsequent Encumbrancer added inReference......................................................................... 74-234

Notice of Reference to Subsequent Encumbrancer Named asOriginal Party .................................................................... 74-235


Notice of Reference to Original Defendants ............................. 74-236

Notice to Added Defendant Having Interest in Equity ................ 74-237

Density Transfer Agreement................................................... 76-11

Checklist for Purchasing Income Producing Property ................ 76-19

Checklist for Agreement of Purchase and Sale — ShoppingCentre Development .......................................................... 76-201

Conditional Agreement of Purchase and Sale — ShoppingCentre Development .......................................................... 76-209

CONSTRUCTION AND DEVELOPMENTCCDC2 Stipulated Price Contract ........................................... 84-1

Cost Plus Construction Contract ............................................. 84-101

Design-Build Stipulated Price Construction Contract.................. 84-151

Specimen for Construction Management Proposal .................... 84-201

ACQUISITIONS AND DISPOSITIONSPro-Forma Prospectus — Offering of Condominium Units

Located Outside of Ontario .................................................... 86-1

Table of Contents ........................................................... 86-3

Schedule “A”: Index of Exhibits ........................................ 86-11

Schedule “B”: Appointment of Resident Agent for Service ofProcess...................................................................... 86-13

Schedule “C”: Affidavit..................................................... 86-14

Schedule “D”: Bond of Indemnity ...................................... 86-15

Schedule “E”: Statement on Advertising ............................ 86-16

PROPERTY MANAGEMENTBuilt-in Property Management: The Basics............................... 88-3

Energy Conservation — Lighting ............................................ 88-3

Energy Conservation — HVAC — The Basics.......................... 88-4

Fire Protection — Life Safety ................................................. 88-5

Emergency Evacuation Checklist............................................ 88-5

Organization Chart of Emergency Action ................................. 88-7

Parking Signage................................................................... 88-8

Liability — Parking................................................................ 88-8

Claims Handling Procedures .................................................. 88-9

Security — Vigilance Pays..................................................... 88-10

Security — An Employee’s Duty............................................. 88-10

Physical maintenance of Chiller Evaporator ............................. 88-11

Chiller Equipment Overhaul ................................................... 88-11

Electric Motor Overhaul ......................................................... 88-12

Roof Inspections — A Check-list ............................................ 88-12

Waterproofing Window Troughs.............................................. 88-12

Window Draperies ................................................................ 88-13



Preventive maintenance Inventory Check-list ........................... 88-13

Property Administration — Tenant Liaison................................ 88-14

Protecting Tenants’ Equipment ............................................... 88-15

Tenant Insurance Coverage ................................................... 88-16

Certificate of Insurance — Liability.......................................... 88-16

Certificate of Insurance — Property ........................................ 88-17

Property Administration—Terminations .................................... 88-18

Conflicting Moves ................................................................. 88-18

OPERATING AND MANAGEMENT AGREEMENTSFundamental Terms of Real Estate Operating andManagement Agreements................................................... 90-1

Checklist ....................................................................... 90-1

Scope of Retainer........................................................... 90-1

Authority of the Manager ................................................. 90-1

Term ........................................................................... 90-2

Termination.................................................................... 90-2

Turnover Provisions Upon Termination .............................. 90-3

Insurance ...................................................................... 90-3

Management Fees.......................................................... 90-4

Reserves....................................................................... 90-4

Responsibility for Employees ........................................... 90-5

The Use of Funds........................................................... 90-5

Segregation of Funds...................................................... 90-5

Annual Plan [Optional] .................................................... 90-5

Monthly Financial Reporting [Optional] .............................. 90-6

Annual Financial Reporting .............................................. 90-6

Manager’s Use of Own Funds.......................................... 90-6

Protection of Owner’s Proprietary Rights/Exercise of theManager’s Proprietary Rights on Behalf of the Owner ...... 90-7

Index of Agreements....................................................... 90-9

Residential Property Management Agreement (shortform).......................................................................... 90-13

Residential Property Management Agreement (long form).... 90-23

Commercial Property Management Agreement................... 90-43

Management and Guarantee Contract............................... 90-69

Hotel Consulting and Management Agreement (U.S.form).......................................................................... 90-81

Franchise and Management Agreement ............................ 90-101

Syndication Services Agreement ...................................... 90-123
