The Real Deal on Real Estate in Quebec: Real Estate Considerations in Business Transactions

The Real Deal on Real Estate in Quebec: Real Estate Considerations in Business Transactions


Welcome to my presentation everybody,
thank you for joining us this afternoon. Today we’re going to talk about real
estate considerations in business transactions. What I mean by
that is real estate matters, matters related to Quebec real estate, which should be relevant to you even if you’re not in the business of buying and selling
commercial real estate, even if you’re not in the commercial real estate
industry. If you are in the commercial real estate industry, if you have any
sort of exposure to pure real estate transactions, some of this may be a little bit basic but I wager not all of it. I think some of it might catch you by
surprise as well. Eight things we’re gonna be talking about today. We’re gonna do a little basic work on title possession in the Index, possession is actually something that we’re gonna spend a bit of time on because of a recent Supreme Court case. Transfer duties often called the Welcome Tax which is not much of a welcome. Transfers in corporate reorganizations
when you’re doing a wind up in particular, that I want to raise. The importance of registering a lease. What happens when you acquire a property and there’s already a lease in place. What happens when you acquire a revenue-producing property and there are employees who are employed in connection with that real estate. Agricultural lands issues which surprisingly come up in the context far more often than you
would expect, and relate more to what you would typically consider to be farmland. Finally, exclusion of legal warranty. Title possession in the
Index. Quebec has an online searchable registry system which is very good, it does have a couple of shortcomings, I was talking about it just before this presentation with one of the audience and one of the main shortcomings of the Index is it’s not searchable by name, so if you search the name of your company that you know full well owns real estate nothing will show up when you search the online registry system. In fact, the only
way to search the online registry system in a complete manner is to search by lot
number. Now a lot number you may know if your business owns real estate you may have a copy of the deed of sale by which it acquired and certainly the lot number will be on that. It’s also on the tax account and the tax account is probably the easiest place to find the lot number when you’re
trying to identify that. Now it’s always a good idea when you are either buying
a company that owns real estate even if that’s not its main line of business, or when you’re actually buying a piece of real estate for your own
business: very first thing you should do is go on and see who the apparent registered owner is because that’s going to show up on the Index, as well as what the encumbrances are that are affecting that
property. It’s very easy to do, you go and google “Registre foncier Québec” and you’ll get to an online site called the “Registre foncier”. With a credit card you can sign up and at a very low cost, it’s a dollar per deed or a dollar
per index, you can pull up everything that is registered against the parcel in
question. So first thing you do is you find a lot number. The next thing you do
is you go on. So what it will tell you is it’ll show you all of the title deeds
that led to the current ownership. And you can go back all the way to the 1800s, I wouldn’t recommend doing that but that’s something you could do and it’ll also show you dismemberments of the right of ownership,
so from law school for those of you don’t do this all day long that would include servitudes, emphyteusis use, and hypothecs, and
would also show you if the property is held in co-ownership, it will
include the declaration of co-ownership, if it’s divided
co-ownership or the indivision agreements or the agreement of undivided
co-ownership if it’s held in indivision. It also will list registered leases, and we’ll talk more about registered leases after, and reserves. Reserves we used to not spend a lot of time talking about because expropriation is fairly rare, although it is more relevant today than it was because of the REM, the
light rail system, there are all sorts of properties that are being expropriated along the path of the REM. Also, it includes what I would call
statutory pre-emptive rights. The City of Montreal announced or actually enacted a bylaw at the end of last year where it has a right of first refusal to buy properties within certain zones if it is registered to notice. So the regulations set out the zones and they’re actually huge zones, they include a lot of Old Montreal and other areas. If, when you look at the Index, you find a notice that’s published underneath that registration, the City actually has a right of first refusal to purchase the property and you should know that if you’re in the process of doing something with that property. It made the news because the Molson brewery, which was being sold, had this notice of pre-emptive rights registered against it and it threatened to derail the transaction. As I said full deeds and the indexes are only a click and a dollar away so it’s really not a costly exercise and you will get tremendous information. If you’re being a little Snoopy, you could do this to your neighbour’s house. So you want to know how much they paid for it, just put the civic address into the website you’ll find yourself the lot number. You can see everything they’ve ever done on that property. It’s important to know that Quebec is not what we call a “Torrens” system. In Alberta and British Columbia, the State guarantees the quality of title. That’s called the Torrens system and if you pull up the equivalent of the Index in Alberta or BC, you’ll get a single sheet of paper that lists who the owner is, and guarantees that’s the owner by a good valid title, and lists all of the encumbrances that affect it. In Quebec, you don’t get that. You get this index that just tells you everything that’s been registered. So you have to establish what we call the chain of title. You’ll see very easily what the last deed of sale was and hopefully the purchaser under that deed of sale is the entity that you think it is: either the target you’re buying or the vendor of the property if it’s an asset sale. But that title is only as good as the chain, so if there was a break in the chain at some point in the past due to a bad transfer, not having properly described the property. Sometimes you know, even commercial properties today were at one point residential and you know maybe they were owned by a married couple that, pursuant to the matrimony regime, the spouse has a 50% interest and that spouse didn’t sign the deed of transfer. Well that means, technically, that the person who should have signed the deed, still today would have a 50% ownership, subject to acquisitive prescription, we’ll get to that in a bit, and that would constitute a break in the chain of title. Notaries and lawyers, we do it, can prepare title opinions where they’re going to examine that chain, because frankly it’s a little complicated to do at night on your own computer. If there is an issue, a title opinion will describe it. I always say is that a title opinion will tell you the state of title, warts-and-all, it won’t tell you it’s good, it’ll tell you: “this is what it is and here are the problems you may encounter”. Something
that’s become more and more popular in recent years and is very very popular in the United States is title insurance. There are a few title insurance companies that are very active in Canada and for a relatively low price they can ensure the quality of your title, which in most cases actually is cheaper than going all the way the 1800s looking at your title chain for a law firm to do and in most cases is actually better because, as I say the title opinion will tell you what the state of title is. Great. But you know if there is some gray area unless that gray area is fixed with a judgement or going back and finding the error of that long deceased spouse to sign a deed of transfer, you still have the issue. Whereas with title insurance, it’s actually insuring you against losses that may result from those breaks. It’s something we’re seeing more and more, and it’s often something that we encourage depending on the circumstances. The other thing that you’ve probably seen in the context of your house, if you’ve ever bought one, is certificates of location. A certificate of location is a survey plan to which a surveyor has attached a certificate and it includes all sorts of really useful information. It’ll tell you whether the building was constructed within the boundaries of the lot, obviously important because otherwise it’s encroaching on the neighbour. It’ll tell you whether it respects the necessary setbacks from the streets and from the lot lines. It’ll tell you whether the number of storeys is higher or lower than what’s currently permitted by the bylaws and it’s something that if you’re dealing with real estate, again not just in the context of buying real estate, but maybe you’re looking at a company that happens to own real estate, take a good look at that certificate of location because it’s gonna have a lot of information that’s going to help you decide whether the building and the property in question is in conformity
with various applicable laws. It’ll also identify things like those statutory
pre-emptive rights and other things you might be able get from
the Index, but they might be even clearer on a certificate. Notably what it’ll tell you is if there’s a servitude, which is like a right of passage let’s say, it’ll show you on the plan where that servitude runs. So when I look at the Index of immovables and I pull up a servitude, all I know is that someone, usually a neighbour, has a right over a portion of the lot that I’m concerned with, usually described by metes and bounds. By metes and bounds, it means a portion of the lot described as being however many meters from the lot lines to the east and however many meters to the north. Impossible to read, impossible to visualize and it’s not really clear what portion of the property is subject to the servitude. If for instance it’s a servitude for Hydro-Quebec, for an electricity
line and it runs along the outside of the lot and there’s nothing built there, you know you’re fine. But I’ve seen in the past, when looking at certificates of location, servitudes of passage running right through the middle of shopping centres. You know, you can imagine that’s a problem. Now, no one has actually exercised that, but it is something that, without the certificate of location you might not have noticed. It’s also important you know, you
look at that index and like I said it tells you all of the registered
encumbrances, but there are certain liens, certain legal hypothecs and priorities, which don’t necessarily either don’t need to be registered at all or don’t need to be registered right away. So you also have to ask the right questions when you’re dealing with either a vendor of property or a target, you need to ask in particular whether there’s been any recent construction or renovation work, because in Quebec, construction liens, which we
call legal hypothecs in favour of persons who have been involved in construction or renovation, subsist for 30 days after the end of the work without registration. So for the whole duration of the construction project, that legal hypothec exists, even though it doesn’t show up on title, and for 30 days after the end of the work. And a lot of litigation hinges on when has the work ended. So you really do need to start inquiring
whether in your purchase and sale agreement there’s usually a standard representation, certainly in our model there is, where you’re going to be asking you know to disclose any such work that may give rise to a legal hypothec. Then, we also send off letters to various governmental or quasi-governmental authorities, asking them what information they have in their files, and the reason why we, or the way we pick those entities to send things to, those are the entities that are entitled to liens on the property if for instance they are not paid. So Gaz Métro, Hydro-Quebec.
Under their legislation, if you don’t pay them CNESST, if you don’t pay those claims, they actually have a legal claim on the real estate owned by the debtor in order to secure payment of those claims. So that’s why you see what we call off-title search letters and we often ask the vendor to give us permission, because of course it’s a disclosure of information issue, to make those inquiries and get the answers back. Squatters: the Supreme Court, in the case of Ostiguy v. Allie, shocked all real estate lawyers, it was quite a stirrer, when they determined that, and I’ll back up and give the facts. Two owners of a property, one had been parking on the other’s land for a period of over ten years, openly as if she owned the parking lot, but nothing was registered on title. The Supreme Court decided that, even though nothing was registered on title and no steps had been taken by the party who was parking the car to have that right legally recognized, the mere passage of time, the mere passage of ten years of continued, open, unequivocal possession, was enough to make that person the owner of the said portion of the parking lot. And that surprised us all, because under the Civil Code of Lower Canada acquisitive prescription, which is what that is, when you acquire through possession, took thirty years. You used to always see in title reports that after thirty years you could safely assume that it was owned by the mere passage of time. Fantastic. But thirty years is a long time. When thirty years got reduced to ten, in the Civil Code of Quebec, they introduced additional wording and said you can acquire after 10 years of open, peaceful and unequivocal possession, after having received a judgment. Basically, what it says in the article. And the Supreme Court said, you know forget it, you don’t even need the judgment. Which flies in the face of the wording of that article, but it’s something to be aware of. So again asking the right questions, one of the things you’ll see in our model purchase agreements is, or any agreement that we would prepare for you, is a declaration that the target or the owner has been in sole possession of
that property throughout the duration of their ownership. Because if the neighbour has been possessing a portion of it for ten years,
and those criteria that the Supreme Court set out, then they may have already become
the owner even though they’ve done nothing with it. It’s actually really an
unfortunate judgement because it creates all sorts of disputes now between neighbours. Now people are very anxious to make sure that fences are in the right spot and that they’re not generously allowing their neighbour to park on their land, because it could end up having quite serious consequences. Transfer duties. Welcome tax. If you ever bought a house you know you get a lovely bill about three months after acquiring it, for a tax on the transfer of real estate. It’s a tax that starts off at 0.5% of the first fifty thousand of basis, which is the higher of what you paid and municipal assessment, and it goes as high as 2.5% in Montreal for the portion of the assessment that’s in excess of a million dollars. But in some
places, you know shockingly Sherbrooke, it’s 3% on the highest chunk of assessment. So it’s actually quite a significant tax and it’s triggered by transfers of real estate or by leases, if the term of that lease inclusive renewals is 40 years or more. There are exemptions, so transfers
between affiliates where you have 90 % of voting control are exempt from transfers, from transfer tax rather but the condition of the exemption i.e. in that case, being affiliates with 90% common ownership has to now be maintained for two years. And if it isn’t, then you trigger a 150% of the tax you would have paid unless you declare it within nine months of having lost that exemption. That’s relevant in transactions other than real estate, and again one of the things we ask and we put in our representations and warranties now is, have there been any transfers where there was an exemption
claimed, so let’s say an affiliate transfer, within two years. Because if there have been, then we have to be very careful not to change the corporate
structure such that exemption no longer applies until the
two-year period is up. So if you don’t track that, you could inadvertently trigger a 150% of the tax that you should have paid in the
first place had you not claimed the exemption. That’s you know, it’s one thing when you’ve done it, but it’s quite another when you’re buying a company and you have no visibility on it, so it’s something that you’ll see in most purchase and sale agreements now, but it is something to keep in mind. If you do declare that you lost the exemption within that 90-day period, you just pay the tax you would have paid in the first place. But if you miss it, then you’re paying the penalty. Wind-ups. The typical wind-up agreement, if ever you’ve wound up a company into its parent, says, “I’m now transferring all of my assets and liabilities up to parent”. Really it’s one or two pages, there isn’t really much of a description to it. There’s a problem with that, because that’s not registerable on title, and so if the subsidiary in this case, that’s being wound up into its parent, owned real estate, the real estate is now still in the name of the subsidiary that no longer exists. You will have a very hard time transferring it in the future. We used to fix this by getting a notary to do a summary of the wind-up agreements and add the lot number, which technically you should be able to do under article 3005 of the Civil Code because it actually specifically provides for it. But there’s a line of case law now, that says that the notary, when they’re making their summary, must be able to make that summary without referring to outside sources. So in that respect there has to be at least a loose description of the real estate that was transferred off. It can be by civic address, it can be you know described not necessarily by a lot number because the notary can complete those details, but if it’s just a general universality of assets, you’re not gonna be able to fix it like that. We’ve actually had to go to court now twice, it’s easy to do, the judges always give it, but to get a judge to confirm that the transfer of that property occurred juridically by way of that wind-up agreement, such that we could register the transfer and proceed with the property. So something to be aware if you put a mention of the real estate in your wind-up agreement, you’re O.K. If you don’t, you’re gonna have extra fees. Lease registration. There’s a very good reason to register a lease if you are the tenant. One, the landlord can’t prevent you from doing it, because it’s a right of public order. And two, is that registering your lease will prevent, will remove a cancellation right that otherwise a subsequent acquire would have in respect to the lease. So article 1887 of the Civil Code of Quebec says that a person who acquires title to a property that has a lease, or that is leased, may cancel that lease on no more than twelve-months notice, it depends on the duration it could be shorter, unless that lease is registered. So you don’t have to register the whole lease, you register a notice of it, which contains some of the basic terms and conditions, and you register it at the land registry office. The advantage of registering now is that no matter who purchases, whether it’s further to the landlord defaulting on its hypothec and someone buying in that context, or an arm’s-length transfer, they are going to have to respect the lease as if they had originally signed it, even though you have no other agreements with the acquirer or with the mortgage creditor that became the owner. And because of that, you can ignore one of the most annoying request that comes
through to owners or to lessees of real estate, which is the subordination, attornment and non-disturbance agreement. I have to back up a little bit understand why it’s asked for, but in Quebec, leases are personal rights. In common-law provinces, leases create
interests in land: they’re real rights. So in the common law provinces, the order in which you sign your lease relative to let’s say the owner/landlord granting a mortgage is relevant as to whether or not the lease survives a transfer of ownership further to the realization on security. So the logic being that, in the common law provinces, if the lease was entered into
before the mortgage, then the mortgage creditor gets the property subject to the lease because part of the rights associated to the lease have been carved out at that point, and so he must respect the lease. If however the lease is entered after the mortgage creditor took a mortgage on the
property, then the mortgage creditor shockingly, again, is not obliged to respect that lease. So you could have gone like we did and spent a bunch of money on leasehold improvements and the property changes hands because the landlord failed to make a payment, and in a common law province, if the mortgage predated the lease, the mortgage creditor could just cancel the lease and you could lose your millions of dollars of leasehold improvements, you could be
out on the street looking for other premises. And that was, but it
actually cuts both ways because the Goodyear case, in the common law provinces, it’s actually an Ontario case that made people really
aware of this issue, interestingly was the inverse, so because in the context where the lease is entered after the mortgage, the tenant wasn’t bound, rather the creditor wasn’t bound to respect the
tenant, the court declared that the tenant wasn’t bound to respect the lender either. And when the creditor took over the property, the tenant said
“Yeah, I’ve been paying too much rent and I’m not happy anyway, I’m leaving” and could just walk away from the lease. That freaked everybody out, and so then they wanted to get contractual agreements of tenants to attorn to the creditor, should they ever take possession, and they wanted subordination, that the creditor would want their mortgage to be in priority to the lease. None of that is relevant in Quebec, because in Quebec, we’ve got a system where leases are personal rights so we’re not talking about carving out rights at the point where you’re granting mortgages, and the simple act of registration is going to protect you in every single circumstance from a cancellation by subsequent acquire or creditor. Again, it costs 120 dollars to do, you can do it by right and if you do, you can ignore all these requests and you can rest assured that you’re protected no matter what
happens in terms of the ownership of the property. Still on leases, something that people don’t realize, again we’re talking in Quebec now, is that when you acquire a property that is subject to a lease, the courts have declared that when you become the owner you actually, by law, assume all of the obligations of the landlord, all of them. Not just the obligations going forward, because of course a lease is a contract of successive performance, but all the
obligations. So just like the purchaser can go after the tenant for back rent from the period prior to when it acquired, the tenant can go to the new landlord for all of the things that the former landlord didn’t actually complete. That includes things like tenant inducements. So if you got a leasehold allowance of a million dollars to build out your premises and it was due last year as a tenant, and the property changes hands, you now have a direct right as a tenant to seek that million dollars from the new owner. It’s relevant because when you’re acquiring property of course and you priced it as such that there’s no defaulting obligations, you’re really going to want to be very clear that the lease is current in respect of not only the tenant paying rent, but the landlord doing what it has to do. And so for that you generally get what’s called an estoppel certificate, you have the target or the vendor send a note to its tenants saying “Please confirm that I don’t owe you anything, that the lease is in good standing and everything’s fine”, and it’s an address to you, the purchaser or the share purchaser, so essentially you can rely on it. And at that point, the tenant is estopped from claiming those things against you. If, and this is relevant not only for buying and selling but also for financing of course because if you end up acquiring the property for the realization of hypothecary rights, you’re also in that situation where you have an absolute assignment. Employees. If the employees are employed by the owner of the property in connection with its operation or management, then they follow the property by law. And so you may think you’re buying real estate, but if you have a superintendent or someone who’s hired in connection with operation and maintenance of that building, then they will flow and because you can’t fire at will of course in Quebec, you’re gonna want to deal with that in your purchase agreement and make sure that the current owner reassigns that employee to another property before you acquire it or you get a release from the employee and you work out that issue. Agricultural land. You may think that the agricultural land is really just in regions that you consider to be farming regions, but it’s really not the
case. The green zone of Quebec is huge, it covers not very much on the island ofMontreal but an awful lot of Laval, and a lot of land, once you get out of the urban cores, is going to be in what’s called the agricultural zone. There are two laws in Quebec that govern the agricultural land. One is the “Act respecting the preservation of agriculture and agricultural activities”, which I’ll call the “Agricultural Act”, and the other is called the “Act respecting the acquisition of farmland by non-residents”. The latter is actually really important because, and it comes up all the time in our M&A transactions, where you have a corporation, a legal person that, even if it’s constituted in Quebec and it has a registered office in Quebec and it even
has you know officers and directors who are domiciled in Quebec, but it’s ultimately controlled, let’s say by a French company or an American company, it is considered a non-resident for the purpose of that second Act I mentioned the “Act respecting the acquisition of farmland by non-residents”, and that has
a consequence in that, you cannot acquire the property, any portion of property in an agricultural zone, even if it’s just a tiny corner of a property that happens to be in that zone, without the consent of the Agricultural Commission called the CPTAQ, the “Commission de la Protection du Territoire Agricole du Québec”. Now normally, that wouldn’t be a problem because you just make an application and you’d get your judgment within a reasonable delay, but what happened just before the Quebec election in 2013, when there was a little bit of debate as to whether foreign interests were buying up all our productive farmland, is that they amended the non-residents Act in order to put a quantitative limit on the number of hectares of land that could be approved for acquisition by non-residents, in any given calendar year. It’s a thousand hectares. It seems like a lot of land, but actually we acted for a client, and I filed the application for over a thousand hectares in one year, and so I actually became persona non grata everywhere because I’d clogged up the system for a whole year. No one else got approved until my decision got heard and that meant, even if you were a farmer, and I have another client who is one so he was particularly angry, even if you’re a farmer and that’s your business and you intend to farm that land, but you were let’s say domiciled in British Columbia, you can’t even get your application heard until the thousand hectares renews again the next following
year. And it’s all in sequence from when you’ve applied. We face this regularly in transactions that involve businesses that have owned real estate outside of urban cores, and we’ve had to come up with stopgap measures to deal with it. It’s called the “Act respecting the acquisition of farmland by non-residents”, not the “Act respecting the leasing of farmland by non-residents”, and so we found a way to sort of bridge the gap with a lease, and having an option to purchase once the decision eventually comes, because if you qualify based on the legislation, you can be relatively certain that it will go your way eventually, but it does end up being a structural thing that we have to deal with more and more, because that queue is not getting shorter, it’s getting longer. And so it could take 18 months before you get or two years before you get a judgment. The other Act, the Agricultural Act that I mentioned earlier, also limits you from subdividing land in the agricultural zone, so if for instance you’re buying only a portion of the vendor’s property, and they retain property that is contiguous to it and also in the zone, you need permission from the CPTAQ to acquire the part, even if it’s separated by a road. You need permission to subdivide or to sell that portion separate from the other portion, unless both the sold portion and the portion retained are each 100 hectares, which is a hell of a big parcel of land, so that comes up a lot as well. Thankfully, the consent for subdivision, if you don’t have a non-resident issue, is something that happens in normal course and you can get the judgment within a month and a half or two months. The final one. Excluding legal warranty. So, legal warranty, as I’m sure many of you know, there are two legal warranties provided for in the Civil Code with respect to real estate acquisitions. One is the legal warranty as to title, so the legal warranty as against eviction essentially, and the other is the legal warranty as to quality, which is also called the legal warranty against latent defects. Legal warranty as to title is totally fine and reasonable to ask in pretty much all circumstances, you know if you’re buying something for someone they should be able to tell you they’re the owner and you can either get that conventionally, by someone saying “I’m the owner of this property by a good and valid title”, or you can rely on the legal warranty that’s provided in the Civil Code that effectively says the same thing. Legal warranty of quality however, and against latent defects, is suited to residential sales and even then, people are getting pretty litigious and claiming against latent defects when you
sell your homes these days, but in a commercial context it’s a very blunt tool, because it’s very broad. What’s a latent defect? So a latent defect is something that you couldn’t see without the aid of an expert. If you walk through the property and you can’t see there’s a problem and there is a problem, that problem is a latent defect. That would include things like environmental condition because it’s underground, you can’t tell unless you get an expert there to take a borehole sample and analyze it. And as you’ve seen if you’ve ever done a transaction where there was a real estate component, you know the environmental representations and warranties are quite long and they’re qualified, and it’s reasonable to qualify them. You’re basically going to tell people what you know about the property and if you’re the seller, and if they want to purchase it, they should probably do their own tests and hire their own experts and make sure that they’re comfortable with it. If you allow the legal warranty to continue, it will cover all of those things and you could end up in a situation where you’re being sued after the sale for a variety of situations you had no idea yourselves existed. Because that’s the other thing, a latent defect is not defined as something you knew about, and it wasn’t apparent, it’s something that exists and wasn’t apparent. So you are warranting against the unknown in many circumstances. Now you can exclude legal warranty but you have to do so expressly. The default in the Civil Code is that legal warranty applies to all real estate transactions and so you can exclude it when you say “this property is being purchased without legal warranty”, and you really do have to say “at the purchaser’s own risk”. And because this is the last topic, if you permit me, I will entertain you with a quote from the decision of the Superior Court in Sultan v. Gitman. It’s because you’ll enjoy it, because it’s sort of a lawyer joke. The facts were as follows: Gitman was selling to Sultan, he was selling a house and they had a heating oil tank in the basement, and the heating oil tank had leaked. And rather than dig up the contaminated concrete and soil, before the sale Gitman went and got himself a little bit of concrete, put a nice fresh coat over it and sold it as is where is, without legal warranty, that was what its clause said. And so the court says: “Gitman, the author of the without warranty clause, is a member of the Bar since 1974. During his testimony, he expressed his pride concerning his experience, talent, and success in both legal and real estate matters. He testified that he owns and administers numerous commercial and residential properties. He stated his legal skills in the area of reading and negotiating commercial leases have been instrumental in helping him create capital value in the past. In spite of all this, he got the clause wrong. He omitted the words “at his own risk”. So you know, you don’t want to be that guy, right? That’s really unfortunate. So make sure, when you’re excluding legal warranty, you do it expressly, you include the words “at the purchaser’s own risk” and if you do so, then you will be fine, you’ve excluded it and you can negotiate your conventional representations and warranties to your heart’s content. One thing I would suggest is that you do it early on, so because it’s imported by operation of law, it’s very difficult to negotiate the exclusion in the purchase and sale agreement, if it was preceded by a letter of intent or an offer that didn’t mention it, right? Because, the purchaser can quite convincingly say “well, look I offered to pay X dollars on the basis of legal warranty because you didn’t exclude it and you know you just didn’t think about it, I mean it wasn’t something any party actually thought about, but you’re in a very difficult situation or you’re putting me in a difficult situation if I have to try negotiate that for you afterwards. So in the pre-contract, that’s the time to do it, and make sure that you do it with those magic words, so as to make it effective. So take aways. Always check the Index. Easy to do and wealth of information. Ask the right questions, we talked about squatters, the off-title transfers which include exemptions for transfer tax, you don’t want to get that a 150% tax. And of those claims that can give rise to liens for parties that aren’t paid. Register your lease, because it’s so simple and it’ll protect you if you actually rent premises from cancellation. Declare transfer duties. One thing we didn’t go into any detail on is that off-title transfers are now taxed the same way as registered transfers, so if you’ve transferred something off-title and never even registered it in the land register, you should declare it nonetheless, because otherwise if you fail to do so you can get hit with that punitive tax. Verify whether your property, or any part of it, is in the agricultural zone. And exclude legal warranty. Thank you.

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