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would not be fair to force the purchaser to proceed with the purchase where there was uncertainty regarding the property's zoning and permitted use. On appeal, Strathy found the buyer, by apparently ignoring the advice of his solicitor and signing the agreement without any condition as to zoning, had "implicitly assumed the risk that the zoning would not permit his contemplated use." In other words, the decision confirmed the caveat emptor principle that Cadman hopes to defend at the Supreme Court. In a post on McCarthy Tétrault LLP's blog Canadian Appeals Monitor, litigation lawyer Kate Findlay reflected on Lee and the Salmon Arm case. She wrote: "As a vendor, any representations made should be truthful and careful attention should be paid to any warranties provided. On the other hand, purchasers are not permitted to act blindly and should investigate a property fully before completing a transaction." If land contains rental properties, there may well be zoning or planning restrictions on future commercial or residential developments. Under 2006 changes to s. 111 of the City of Toronto Act, any site with six or more rental units on the whole development site falls under a strict regime, partly aimed at preserving the rental housing stock. The change, outlined in chapter 667 of the City of Toronto Municipal Code, allows the city to regulate residential housing demolition and conversion. Landowners can be mandated to take certain actions, such as replacing all the rentals as part of any development. The rules can also force landowners to maintain "affordable" rents for a period of 10 years or more, or to sacrifice the right to convert those units to condos for 25 years. "If the units were ever used as rental properties, if it's there on historical record, they qualify," says Park, adding there is no registry with which to verify the information. "You have to ask the [current] landowner," he explains. If a municipality refuses to issue a permit to demolish a residential unit, there's no right of appeal to the Ontario Municipal Board. In general, the OMB has vast powers over real estate transactions, including those involving zoning laws. The controversial body hears applica- tions and appeals in relation to municipal planning, financial, and land matters including official plans and zoning bylaws. It has been heavily criticized for what detractors see as its nebulous accountability, unpredictable decisions, slow processes, and tendency to overturn decisions made by elected representatives. The provincial government has pledged to reform the OMB, but concrete proposals have been slow to come forward. In the meantime, the potential for lengthy OMB appeals needs to be taken into account. The OMB is an entity unique to its eponymous province. Alberta has the Subdivi- ZONING ISSUES TO CONSIDER: • Do existing uses comply with zoning rules? • Parking • Density restrictions • Is it a heritage property? • Appeals • Public consultations • Municipal powers over residential housing stock • Neighbouring properties sion and Development Appeal Board, with more limited powers, while Nova Scotia and New Brunswick have tribunals that are very restricted in scope. Across Canada, sometimes an apparently peripheral concern such as parking can become a zoning stumbling block. Buyers need to identify whether there is sufficient parking for existing uses and, if not, apply for a variance. "Often it's difficult to know who's responsible for getting the variance," says Park. "That needs to be identified in the purchase and sale agreement." It is also important to consider the zoning uses of neighbouring properties, says Stella Di Cresce, real estate lawyer at Osler Hoskin & Harcourt LLP. "Gas stations are the big issues," she says. If chemicals have been used at nearby properties, there is a chance the surrounding land could be contaminated. "You always want to make sure that the environmental surveys [have been carried out]," Di Cresce advises. She strongly rec- www.ca na dia nl awy e r m a g . c o m / i n h o u s e ommends obtaining title insurance. Zoning information, including all the potential uses of the land, can be found on building reports. Buyers who are considering constructing a highrise tower, or expanding upwards from an existing building, will also want to take account of density restrictions. This is because, to comply with density bylaws, a new structure can only be built up to a certain size. "This is important for a purchaser who plans on expanding the building," says Di Cresce. "They will have to check with the municipality in order to ensure that such expansion will not violate the density restrictions in place," she adds. They may be restricted in the extent to which they can expand.  In-house counsel would do well to check whether a property has been designated as having heritage status. Municipalities have powers to designate properties that provide architectural significance and merit, but be warned; the property doesn't have to be old, or particularly beautiful. Heritage policies are often enshrined in zoning bylaws, and even if a property is not currently a designated building, it could be on a list of "properties of interest." "That's just one step from being designated," says Park. "It will have an impact on the future development of that property." An aspect of Canadian real estate purchases that may come as a surprise to buyers south of the border is the cost of development charges. These are fees charged by municipalities for hard and soft services, such as roads, which do not necessarily have to be within the development site, or even be located nearby. "A lot of U.S. developers aren't used to paying development charges," says Park. In Toronto, there are plans to raise these charges by 75 per cent. Fees for a residential development are scheduled to increase by February 2014 to $21,582 per single unit from $12,366 in January 2009, according to a city council report dated June 18, 2013. Non-residential charges are due to a rise in 2014 to $153.91 per ground floor square metre from $99.30 in 2009. "Make sure it's clear who's responsible for that charge," says Park. It can be either the owner's or leaser's duty to pay the fee, he warns. IH december 2013/january 2014 • 31

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