Legal issues: Land deals gone bad

REM – Real Estate Magazine
27 January, 2011 8:14 AM
by Jim Adair

Legal issues: Land deals gone bad

A town sold a piece of land under a tax sale. As it turned out, the land allegedly was formerly used as a landfill site and was unsuitable for residential development. This was not disclosed by the town.

However, when the developer who purchased the land took legal action, the action was dismissed inter alia on its merits. The act governing municipal tax sales states that the municipality makes no representations on title or any other matters relating to the land to be sold.

The court also found that the plaintiff was a knowledgeable land developer and could have made investigations of the suitability of the land.

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I have always been a proponent of having insurance, whether it’s E & O as a professional, general liability for home, or office or business insurance. In a different vein, consider automobile insurance and the following scenario:

A woman walked out of a store and hit her head on a pole protruding from a parked truck (parked the wrong way in front of the store). This resulted in a serious head injury. The truck’s owner could not be identified, so the woman (owner of a motor vehicle policy) sued her own insurance company for injuries sustained when struck or hit by an unidentified vehicle.

The Appeal Court allowed the coverage, even though the truck was stopped when the injured woman was struck by the pole protruding from it.

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In an Alberta case, the purchaser agreed to buy some land, intending to construct industrial condominiums. In the agreement, the purchaser agreed to undertake the expense of access.

Subsequently, the vendor unilaterally demanded that the purchaser guarantee payment of the costs of access and prepay certain expenses.

The purchaser refused and the vendor treated the contract as if it were at an end. The purchaser sued for specific performance.

The vendor attempted to use a summary count procedure to dismiss the purchaser’s action for specific performance on the basis that the property was not unique. This was refused. The court ruled the purchaser had an “arguable” case since the property was close to the purchaser’s location and the purchaser had spent some money designing buildings for the specific property elevation. The vendor had also represented to the purchaser that this property was the “best available”.

Donald Lapowich, Q.C. is a partner at the law firm of Koskie, Minsky in Toronto, where he practices civil litigation, with a particular emphasis on real estate litigation and mediation, acting for builders, real estate agents and lawyers.

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