Local Improvement Rates in Ontario

Local Improvement Charges December 2012
Local Improvement Rates

Question:

A few weeks after closing the Buyers client call their salesperson Joe and they are very upset. They have received a notice from the municipality that an additional $2,200 will be added to the property tax bill over and above the $3,800 expenses for the taxes, Joe quoted them. This is due to local improvement charges for the new storm sewers, pavement, curbs, and sidewalk. According to the notice, this charge will be for the next 10 years.   

         Now the buyers demand compensation. Salesperson Joe replies that this charge was not included on the data sheet provided by the listing brokerage and that is why the buyers were not quoted the correct amount of taxes.

 Which of the following statements correctly describes the legalities of this problem? 

                A. The local improvements may increase the value of the property and the buyers have no claim against the brokerages.

                B. Joe is a buyer representative and should have checked out whether the new street, curbs, etc. might result in local improvement charges.

                C. The improvements to the street were clearly visible to the buyers and they have no reason to complain that the taxes are not the amount they were told they would be.

         D. Joe is probably negligent and did not protect the interests of clients

14. Are there any local levies or unusual taxes being charged at the present time or contemplated?  If so, at what cost? ………………………………………….. Expiry date…………………………………

820 Residential Property Checklist

14. Are there any local levies or unusual taxes being charged at the present time or contemplated?  If so, at what cost? ………………………………………….. Expiry date…………………………………

Answer:

I find this a rather strange question. Is it found among the questions in the text or in Passit?

  1. It’s possible that there could be an increase, but that would not affect the issue of whether or not, Joe did his job.
  2. I really don’t think that Joe is expected to walk around the neighbourhood looking for things like this. No one does, and that standard can’t be reasonably expected of Joe.
  3. The street improvements were “visible”, but how would the Buyers ever know whether or not they were included in the taxes as quoted?
  4. This is rather unusual. Negligence as far as I recall was never defined in the Law Course, nor was there a reference to the Law of Torts, so to expect a conclusion, based upon a subject of law which was never addressed in the material seems rather peculiar.

I suppose that the expectation here is that Joe himself should have made an inquiry.

Ordinarily, this would have come up in a search of taxes. So, when the buyer’s solicitor requested a “Tax Arrears Certificate”, this information would have been included. That would cover off year 1, but there are 9 more years of $2,200 each. And, for the first year, it would simply ensure that the Seller paid the proper apportionment. The next 9 years would all be paid by the Buyer.

In all likelihood, the Buyer would have purchased title insurance. Again, that might cover off the first year of the local improvement levy, but not likely the additional and unknown 9 further years.

Let’s look to the possibility of coming across this information in the first place by the Listing Agent. There’s no spot on the MLS Data Information Form for this entry, just taxes alone. So, if the Listing Agent knew about it, they would have had to added a note about this in “remarks”.

There are two other possible locations: the SPIS (signed by the Seller) and the Residential checklist (unsigned):

Paragraph 14 in both documents appears as follows:

“14. Are there any local levies or unusual taxes being charged at the present time or contemplated?  If so, at what cost? ………………………………………….. Expiry date…………………………………”

An additional $22,000.00 charge even if it is paid over 10 years is material in this case. This would suggest that something should have taken place to protect the Buyer.

I don’t recall any particular mention of the fact that Listing Agents and Buying Agents were both to check with the municipality, appeared in the Course material.

Rather unusual test question!


Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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