Consider terms of exit agreement before purchase
By Shari Elliott
This month I have reviewed two situations, both dealing with tenant relationships. The first is the traditional tenant relationship of landlord and tenant. The warning here is to be aware that the legislation that governs residential tenancies can, and is, often abused by tenants. The second article deals with a different kind of tenancy resulting from multiple ownership. The moral of this article is to consider the terms of an exit agreement before you purchase.
It is important to insert a condition even when it appears the tenant is leaving before the closing date. As can be seen in the recent decision D’Amico v. Hitti, 2012 ONSC 4467 out of the Ontario Superior Court of Justice, there are many “unscrupulous residential tenants” that will take advantage of the Ontario justice system by manipulating the law and taking advantage of legal loopholes.
Justice Ted Matlow recognized this problem when reviewing this case, and a number of other similar cases, which prompted him to call for changes to be made in relation to how landlord and tenant disputes are approached and handled within Ontario.
In situations in which one of the owners involved with a joint tenancy or tenancy in common relationship would like to sell their share of the property, and the other owners do not, there are different options available. When title is held as tenancy in common, any owner involved is entitled to deal with their interest or share in the property in whatever way they choose, without permission of the other owners. However, it is often difficult for one of the multiple owners to sell the portion they own separately, as there are not many buyers who are looking to purchase a partial interest in a home.
With both joint tenancy and tenancy in common, one solution is to sell their portion to one or more of the other owners. However, if the parties are unable to reach an agreement about how the property should be divided, the tenancy may be terminated by filing a ‘partition action,’ which can force the sale of a property.
Read Elliott & Elliott Full September 2012 Newsletter
