Real Estate in BC: Misrepresentation in Property Disclosure

, ,

In real estate transactions, parties rely on the information provided by one another to form a clear understanding of the deal.

Mutual trust and honest communication are essential for meaningful engagement among all involved. The act of misrepresentation, whether through a false statement or the omission of a material fact, undermines that trust. Misrepresentation can significantly influence a party’s decision and expose the other to serious legal consequences.

A recent decision, Sewell v. Abadian, a 2025 British Columbia Court of Appeal ruling, illustrates how courts in BC address the issue of misrepresentation by omission.

In Sewell, the seller, a former realtor, failed to disclose in the disclosure statement that an addition to the home did not have a permit, even though it was known to him. He crossed out relevant sections of the disclosure statement stating only that he had not lived in the home himself. The Court concluded that the buyer had reasonably relied on the seller to disclose everything he knew about the property. By crossing out parts of the disclosure statement, the buyer believed the seller was indicating he was unaware of the answers to those questions.

The seller’s omission was found to constitute misrepresentation, entitling the buyer to rescind the deal and recover a $300,000 deposit. The Sewell decision reinforces the legal and ethical responsibility of full disclosure in real estate transactions. It makes clear that silence or selective omission can amount to misrepresentation with serious consequences, and that courts will scrutinize attempts to obscure or withhold material information.

For anyone involved in real estate, this case underscores the importance of transparency and the potential risks of failing to disclose known issues.

/by

Real Estate: Misrepresentation by Phantom Bidding

, ,

In real estate transactions, buyers rely on information provided by the sellers and their realtors to make informed decisions.

Practices like phantom bidding, where false or non-existent offers are alluded to in order to create a sense of competition, undermine that trust. This deceptive tactic misrepresents the actual interest in a property, manipulating buyers into making higher offers based on misleading information. Such behavior erodes the integrity of the transaction and can damage the credibility of those involved. Tran v. Brickman, a recent 2025 Ontario Superior Court decision illustrates how courts in Canada address issues of misrepresentation.

The seller in Tran fabricated offers, falsely communicating to the only buyer that there were other offers in play. To complete the deal, the buyer would have to increase their offer. The court found that these offers, allegedly made by other parties, were nothing more than “oral puffery.” They were not valid under Ontario’s real estate regulations, which require offers to be in writing.

As a result, these were found to be phantom bids.

The buyer was awarded $28,600 in damages under the loss of opportunity doctrine, recognizing the buyer’s lost chance to negotiate fairly. The ruling reinforced that offers must comply with real estate regulations or they could be seen as phantom bids in Ontario, leading to misrepresentation.

Ontario has taken steps to regulate phantom bidding, including rule changes in 2015 and increased enforcement. British Columbia has seen fewer formal complaints and has therefore not adopted similar regulations, instead continuing to rely upon existing ethical standards. The case law in British Columbia on phantom bidding is limited, however, there are signs of growing attention to the issue. In July 2023, real estate boards across British Columbia’s lower mainland introduced the Disclosure of Multiple Offers Presented form.

This form requires listing agents to disclose the number of offers and brokerages involved, enhancing transparency and aiming to boost buyer confidence in competitive offer situations. Transparency does remain limited, as actual offer details remain hidden.

While not a direct response to phantom bidding, it is a clear step toward increased accountability in offer presentation.

 

/by

What are the usual adjustments in the purchase or sale of a home in Nanaimo?

, ,

In British Columbia, certain adjustments need to be considered to ensure a fair distribution of costs between the Buyer and the Seller. Adjustments are typically based on the Buyer and Seller’s ownership of the property throughout the year. There are many potential adjustments that may be required in a transaction. However, in this article, we will explore the typical adjustments involved in the purchase or sale of a home in British Columbia.

  1. Property Taxes: Property taxes are payable once in a calendar year. The Seller pays taxes up to the closing date, while the Buyer assumes responsibility thereafter. Often the precise amount of taxes is not known at the time of the adjustment calculation, so a 5% increase from the previous year’s taxes is used. However, upon receipt of the tax bill, the amount may have to be readjusted.
  2. Strata Fees: For transactions involving strata properties, the strata fees are adjusted. The Seller pays the fees up to the closing date, and the Buyer takes over from then on. If a Special Levy has been issued prior to closing, it is usually the Seller’s obligation to pay it in full.
  3. Utilities: Utilities, such as electricity, gas, sewer, garbage collection, and water, are often adjusted. The Seller is responsible for paying the utility costs up to the closing date, while the Buyer takes over the expenses from the closing date onward.
  4. Deposits: Any deposit made by the Buyer is credited to the Buyer on the Buyer’s statement of adjustments.
  5. Rent and Security Deposit: If the transaction involves a rental property, an adjustment for rent may be needed unless the adjustment date falls on the same day that rent is payable. The Security Deposit is usually credited to the Buyer as it becomes an obligation owed by the Buyer to the tenant.

Are you purchasing or selling a home in Nanaimo and have a question? Contact us to ensure that all of your obligations and rights are covered.

/by

What are standard conditions that a Purchaser of a vacant residential lot may want in a contract where they intend to build a home?

, ,

This article will explore the conditions that a Purchaser may want to consider when buying a vacant residential lot in British Columbia.

  1. Due Diligence Period: One of the first conditions that should be included in the purchase contract is a broad due diligence period. This allows the Purchaser to conduct thorough investigations into the property before finalizing the purchase. The Purchaser may look into the implications of the Speculation and Vacancy Tax if they plan on leaving the lot vacant for a period of time prior to building. Another consideration is to assess whether the transaction will be subject to the Goods and Services Tax (GST). Further, the Purchaser may want to determine whether the property is subject to a Heritage Designation, or archaeological site. It may be prudent to conduct environmental and engineering assessments of the property prior to purchasing it. A Purchaser may want to consult with the City or Municipality to determine the size or siting of a future residence intended for the property. The Purchaser may want to consult with Geotechnical engineers on potential construction issues and soil testing. Lastly, a Purchaser may want to inquire about available utility services, such as sewer, water, hydro and gas.
  2. Zoning and Land Use: Verifying the zoning regulations and land use designation is necessary to ensure you can build your dream home. The Purchaser must ensure that the lot is zoned appropriately for residential use and that it aligns with their building plans. Additionally, checking for any building restrictions or design guidelines imposed by local authorities or homeowner’s association helps protect the Purchaser’s interests.
  3. Buyer Financing: Including a financing clause in the contract allows the Purchaser to withdraw if they are unable to obtain satisfactory mortgage financing within a specified timeframe. This condition is essential as it ensures that the Purchaser is not obligated to proceed with the purchase of the home if their financing falls through.
  4. Review of Title: This condition allows the Purchaser to perform a review of the land title to address the potential encumbrances on the land. These could include covenants, liens, easements, and statutory building schemes. A thorough review of the title is essential to ensure that the property meets the Purchaser’s needs.

It is critical to make sure that you understand any restrictions on the zoning of your property, as well as the property itself to ensure that you don’t lose thousands, or end up in a lawsuit for demolishing a heritage-designated and protected home. A little bit of effort can make all the difference. Call Heath Law if you’re purchasing a residential property lot on Vancouver Island.

/by

A Seller’s Guide: Completing Real Estate Transactions in Nanaimo

, ,

Completing a real estate transaction as a Seller in Nanaimo involves various steps and considerations. The Buyer’s lawyer prepares almost all of the documents in a real estate transaction. The Seller’s lawyer will review the agreement of purchase and sale as well as the remainder of the transaction documents to ensure the Seller’s interests are protected. This article will provide a concise guide outlining the standard procedures after there is a contract of purchase in place and the conditions have been satisfied.

  1. Deposit: Once the conditions have been satisfied, the Buyer will provide the remaining deposit required under the purchase contract, if any. The deposit is typically held in trust by the Realtors until completion.  
  2. Document Execution: The Buyer’s lawyer will prepare and forward to the Seller’s lawyer a set of documents that must be signed by the Seller. Once signed, the documents are returned to the Buyer’s lawyer. The Seller’s lawyer must provide the Buyer’s lawyer with an undertaking to clear from the title any financial charges or encumbrances, such as a mortgage or lien.
  3. Completion: The funds provided by the Buyer are first used to pay out the Seller’s existing mortgage, outstanding taxes, and other encumbrances on title that must be cleared. Once the Seller’s lawyer completes their undertakings, the remaining funds are transferred to the Seller. The Realtor’s commission is usually paid by the Buyers and deducted from the monies due to the Seller.
  4. Possession: The date of possession is often the day after completion. The Realtors exchange keys, transferring possession to the Buyer.

Discharging Mortgage: Once the existing mortgage has been paid out, the Mortgage Lender will either file a Discharge of Mortgage with the Land Titles Office or forward the Seller’s lawyer a signed Discharge of Mortgage to be filed with the Land Titles Office.

Did you know: Sellers are as at-risk of being taken advantage of as home buyers? Don’t be left with costs that should be incurred by the purchaser or lose a good deal because you didn’t have a lawyer experienced in local real estate backing you. Contact Heath Law today.

/by

A Buyer’s Guide: Completing Real Estate Transactions in Nanaimo.

, ,

Completing a real estate transaction as a Buyer can be a complex process. Once the Buyer and Seller have a contract of purchase and sale in place and the conditions have been satisfied, the Buyer’s lawyer will conduct a land title search and review any charges on the title. The Buyer’s lawyer will also prepare the conveyancing documents, and coordinate signatures, registration and money transfers.

  1. Completing the Purchase of Sale: The Buyer’s lawyer prepares almost all of the documents in a real estate transaction in Nanaimo. These include conveyancing documents, mortgage documents (if any), land title searches, and a statement of adjustments. Any financial charges on title are to be discharged by the Seller.
  2. Prior to Closing: The Buyer’s lawyer meets with the Buyer prior to closing to review the entire transaction and sign the documents. The transfer documents are sent to the Seller’s lawyer to be executed by the Seller. The documents are then returned to the Buyer’s lawyer. Once the Buyer’s lawyer has received the down payment from the Buyer, and the Buyer has satisfied all conditions of the mortgage lender, the lawyer registers the land title transfer document, along with the mortgage document at the Land Title Office.
  3. Closing: Once the documents are registered and the Buyer’s lawyer receives the mortgage proceeds, then the down payment and mortgage proceeds are paid to the Seller’s lawyer. Often, the Buyer takes possession the next day after closing.
  4. Post-Closing: The Buyer’s lawyer will provide a final reporting letter to the Buyer once the state of title certificate is received from the Land Title Office and will also provide the state of title certificate to the Mortgagee.

Don’t let the above steps in the real estate process fool you with their seeming simplicity. These four steps each have their own complexity in the home buying and selling process and missing the wrong step can cost you thousands of dollars, or even the sale of your desired property. Be certain you’ve done everything right. Contact an experienced real estate lawyer at Heath Law, in Nanaimo BC.

/by

Update and reminder! URGENT: B.C. LAND OWNER TRANSPARENCY REGISTER (“LOTR”)

, , ,

URGENT: B.C. LAND OWNER TRANSPARENCY REGISTER (“LOTR”)

We write to advise that effective November 30, 2021, the B.C. Government requires that
any Corporation, Trust or Partnership that owns an interest in real estate must file a
Land Owner Transparency Report with the Land Owner Transparency Registry.
Failure to file may result in government-imposed penalties.

What is the Land Owner Transparency Registry?

The Land Owner Transparency Registry is a publicly searchable registry of information about
beneficial ownership of land in British Columbia. Beneficial land owners are people who own or
control land indirectly, such as through a corporation, partnership, or trust.

The Registry is intended to end hidden ownership of land and combat money laundering in B.C.
The B.C. provincial government created the LOTR to identify the individuals that actually own
real estate in the province.

Does the Land Owner Transparency Registry apply to you?

With few exceptions, all corporations, partnerships, and trusts that own real estate in British
Columbia must register. Trusts include formal trusts, bare trusts, and prescribed trusts.

What do you need to do?

If you own an interest in land in a corporation, partnership, or trust, you must prepare and
register a Transparency Report with the LOTR by November 30, 2022. An interest in land
includes a fee simple interest, life estate, or long-term lease.

Only a Legal Professional can register the Report.

The Transparency Report contains information about:

1. The corporation, partnership, or trust that owns real estate (“Reporting Bodies”);
and,

2. The individuals who are beneficial owners of the corporation, partnership, or
trust, as well as settlors of trusts (“Interest Holders”).

The Transparency Report discloses information about Interest Holders, including:

1. Name
2. Citizenship
3. Social Insurance Number (or Individual Tax Number)
4. Date of Birth,
5. Residency for Tax Purposes, and
6. Address

Only some of this information will be publicly searchable, and certain Interest Holders are
eligible to restrict what is available to the public. Government agencies will have access to all
information. All Interest Holders must be advised that their personal information was included
in a Transparency Report and a special letter giving notice under the legislation must be
provided to the Interest Holder.

The Transparency Report must be uploaded to the LOTR Registry online.

The report must also be updated when the information concerning the Interest Holder changes, for
example, a change in residential address, name, or ceasing to be an interest holder.
Specific reporting requirements apply for each type of corporation, partnership, trust, and
Interest Holder.
A failure to prepare and upload a Transparency Report may result in the government pursuing
administrative penalties of up to $50,000 or 5% of the assessed value of the real estate.

What can Heath Law LLP do to help?

We have a team of lawyers and staff well versed in preparing Transparency Reports and
compliance under this new LOTR legislation.

Please advise our office by November 1, 2022, if you own real estate in a corporation, trust or
partnership, and if you would like our assistance in preparing and filing a Land Owner
Transparency Report.

Yours truly,
HEATH LAW LLP

/by

Limitation of Liability Clauses in Contracts

, , ,

6362222 Canada Inc. v. Prelco Inc., 2021 SCC 39: A Victory for Limited Liability Clauses

In general, limitation of liability clauses are valid in both Quebec’s Civil system and in the Common Law provinces. However, in Quebec limitation of liability clauses are tempered by articles in the Civil Code of Quebec prohibiting the exclusion of liability for intentional fault, bodily injury, and other public order issues. A recent Supreme Court of Canada case has strengthened the power of limited liability clauses and narrowed the applicability of the Breach of Fundamental Obligation Doctrine.

The case centered on a contractual dispute between 6362222 Canada Inc. (“Createch”), and their client, Prelco Inc. Createch is a consulting firm offering integrated management systems and performance improvement solutions. The parties entered into a contract which included a limited liability clause, stipulating that Createch’s liability to Prelco for damages for any cause whatsoever would be limited to amounts paid to Createch under the contract. A further stipulation was that Createch could not be held liable for any damages resulting from the loss of data, profits or revenue, from the use of products, for any other special, consequential, or indirect damages relating to services and/or material provided pursuant to the contract.

Two years into the contract, Prelco opted to terminate the relationship due to numerous problems with the system and Createch’s implementation. Prelco brought an action against Createch for $6,246,648.94 in damages for the reimbursement of an overpayment, costs for restoring the system, claims from customers, and loss of profits. The Superior Court found the limited liability clause to be unenforceable as it went to the essence of a fundamental obligation, and as such ordered a substantial judgment against Createch. The Court of Appeal dismissed the appeal.

The Supreme Court allowed the appeal, stating that the test for unenforceability due to the Doctrine of Breach of a Fundamental Obligation had not been satisfied. In order to find a clause inoperable on this basis, the validity of the clause has to either (a) be contrary to a public order limitation or (b) deprive a contractual obligation of its purpose. The SCC found that the clause did not run contrary to a public order limitation and that since Createch still owed significant obligations to Prelco the validity of the clause would not deprive the contract of its purpose to the extent required by the Doctrine. As such, the principle of freedom of contract supported the enforceability of the limited liability clause.

Takeaway: if you are contracting with a party that is insisting that there be clauses within the contract whereby they are excused from any liability, even for their own negligence, be aware that a Court will probably uphold the limitation of liability clause in the contract. In such a situation, you should consider the extent to which you can insure over the risks that flow from the contracting party’s negligence.

/by

B.C Land Owner Transparency Register

, , ,

URGENT: B.C. LAND OWNER TRANSPARENCY REGISTER (“LOTR”)

We write to advise that effective November 30, 2021, the B.C. Government requires that
any Corporation, Trust or Partnership that owns an interest in real estate must file a
Land Owner Transparency Report with the Land Owner Transparency Registry.
Failure to file may result in government-imposed penalties.

What is the Land Owner Transparency Registry?

The Land Owner Transparency Registry is a publicly searchable registry of information about
beneficial ownership of land in British Columbia. Beneficial land owners are people who own or
control land indirectly, such as through a corporation, partnership or trust.

The Registry is intended to end hidden ownership of land and combat money laundering in B.C.
The B.C. provincial government created the LOTR to identify the individuals that actually own
real estate in the province.

Does the Land Owner Transparency Registry apply to you?

With few exceptions, all corporations, partnerships and trusts that own real estate in British
Columbia must register. Trusts include formal trusts, bare trusts, and prescribed trusts.

What do you need to do?

If you own an interest in land in a corporation, partnership or trust, you must prepare and
register a Transparency Report with the LOTR by November 30, 2021. An interest in land
includes a fee simple interest, life estate, or long-term lease.

The Transparency Report contains information about:

1. The corporation, partnership or trust that owns real estate (“Reporting Bodies”);
and,

2. The individuals who are beneficial owners of the corporation, partnership or
trust, as well as settlors of trusts (“Interest Holders”).

HEATH LAW LLP

The Transparency Report discloses information about Interest Holders, including:

1. Name
2. Citizenship
3. Social Insurance Number (or Individual Tax Number)
4. Date of Birth,
5. Residency for Tax Purposes, and
6. Address

Only some of this information will be publicly searchable, and certain Interest Holders are
eligible to restrict what is available to the public. Government agencies will have access to all
information. All Interest Holders must be advised that their personal information was included
in a Transparency Report and a special letter giving notice under the legislation must be
provided to the Interest Holder.

The Transparency Report must be uploaded to the LOTR Registry online.
The report must also be updated when the information concerning the Interest Holder changes, for
example, a change in residential address, name, or ceasing to be an interest holder.
Specific reporting requirements apply for each type of corporation, partnership, trust, and
Interest Holder.

A failure to prepare and upload a Transparency Report may result in the government pursuing
administrative penalties of up to $50,000 or 5% of the assessed value of the real estate.

What Heath Law LLP can do to help?

We have a team of lawyers and staff well versed in preparing Transparency Reports and
compliance under this new LOTR legislation.

Please advise our office by November 1, 2021, if you own real estate in a corporation, trust or
partnership, and if you would like our assistance in preparing and filing a Land Owner
Transparency Report.

Yours truly,
HEATH LAW LLP

/by

What are a Spouse’s Rights upon Foreclosure?

, , , , ,

When a home falls into foreclosure the property is sold to satisfy the owner’s creditors. The sale proceeds first go to the mortgagee, and then to other creditors in order of priority. Priority is generally determined based on various factors such as the type of creditor and the date of registration of the debt. In general, a judgment creditor cannot claim an interest in property beyond that held by the judgment debtor. The Court Order Enforcement Act (CEA) confirms this common law principle, and clarifies in s. 86(3)(a) that a judgment creditor’s interest is subject to any equitable interests that may have existed prior to the registration of the judgment.

In a recent decision, Chichak v Chichak, 2021 BCCA 286 the court had to determine priority between a judgment creditor with a registered judgment, and the unregistered equitable interest of a spouse.

In this case, Mr. Chichak was the sole registered owner of the property subject to a mortgage. Ms. Chichak had transferred her interest in title to him several years earlier. In 2014, Cardero Capital and First West Credit Union both obtained judgments against Mr. Chichak and registered them against the title of the property. The property was foreclosed and sold in 2016, and $312,830.83 of the sale proceeds remained after satisfying the debts owed to the highest ranking creditors. Cardero and First West applied to the courts for access to the remaining proceeds. At the same time, Ms. Chichak applied to have a 50% equitable interest in the property declared in her favour and argued that this interest should outrank the judgment creditors in priority. The chambers judge found in favour of Cardero and First West by applying the statutory presumption of indefeasibility (meaning the only valid interests in reference to the land are those that are registered against the title) and by looking at case law where transfers of title between family members had been considered gifts which extinguished the equitable interests of the giftor.

On appeal, the Court ruled that the chambers judge had mistakenly applied the principal of indefeasibility, stating that while a genuine purchaser for value would take priority over an unregistered equitable interest, a judgment creditor is not a genuine purchaser and therefore does not have the same priority. To allow the judgment creditors to take priority over the equitable interest would be to grant an interest in the property beyond what was held by the debtor, which would be contrary to the CEA. The Court allowed the appeal and sent the case back to the Supreme Court of B.C for redetermination.

/by