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real estate disputes at Vancouver firm Boughton Law Corp., represented the vendor. He has submitted an application for leave to appeal to the Supreme Court of Canada. The case "poses substantial issues for real estate professionals and for counsel advising others," he says. He adds: "The question really is how does this decision potentially alter the law of caveat emptor [buyer beware]? Wherever we go across the country what we find is that, in essence, buyers bear the burden of ensuring that the property they want to acquire is [actually] what they want to acquire." with current zoning rules, they can apply for rezoning approval, or a minor variance approval. This could be relatively simple. For example, a minor variance could be completed within three to six months. However, a full rezoning might take between nine and 12 months and can be a "very public process," says Park. In Toronto, where he is based, there would typically be at least one community meeting, with time allowed for comments to be submitted. After the city writes its final report, there is normally a statutory public meeting before it is considered by city council. "With a lot of the downtown sites, it typically takes one to two years," says Park. The risk of failing to check whether the current use of the land complies with zoning rules is illustrated in an Ontario Court of Appeal decision from May 15, 2013. In Lee v. 1435375 Ontario Ltd., the vendor and purchaser entered into an agreement for purchase and sale of the vendor's BI dry cleaning business. G ST B The agreement stated the parties should OR O E X seek independent advice regarding zoning changes. The vendor did not realize that, under a bylaw amendment, the zoning had been changed two years beforehand to mixed-use commercial, which did not list a dry cleaning facility as a "permitted use." Justice George Strathy's decision said: "There was no evidence of any communications between the parties, eiA lot of u.s. developers ther during the negotiaaren't used to paying tion of the agreement, or development charges. prior to closing, concerning the zoning of the JAsoN pArK, Dentons canada LLp premises. "The parties admitted that they never turned The decision is good news for buyers, their minds to the possibut not sellers, of commercial property, he bility that there was a believes. His take away for counsel inzoning issue." volved in buying or selling commercial After the execution of the purchase docproperties? "I would recommend they uments and delivery of funds, the buyer's look very closely at the warranty language lawyer learned of the zoning change. The and at due diligence provisions." buyer said the transaction had not closed, Jason Park, a partner with Dentons Can- and the vendor held onto the funds. ada LLP's municipal and property developOn March 30, 2012, the buyer launched ment group, says the first thing to check an action for, among other things, resciswhen buying commercial real estate in sion, damages, and a mandatory injuncCanada is that the existing uses of the site tion for the return of the purchase price. are legal and conform with zoning rules. The vendor counterclaimed for damages If a prospective buyer wants to do some- for breach of contract. thing with the site that does not comply Justice Carole Brown concluded it www.ca na dia nl awy e r m a g . c o m / i n h o u s e december 2013/january 2014 • 29

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