was reminded again last week that buying cottage country real estate is
completely different from buying city property, and that purchasers and
their legal advisers may have to accept risks they would be unwilling to
tolerate in an urban context.
Two clients of mine were interested in buying a waterfront cottage in
Tay Township on Georgian Bay. They did not have their own real estate
agent, and asked the listing agent to prepare an offer for them at a price
that had already been agreed upon by the parties. The agent worked for the
local office of a large national franchise.
My clients faxed the draft offer to me and asked for my comments. The
document called for payment of the balance of the purchase price by cash
or certified cheque on closing. It was conditional on financing, and
stated that the agent did not represent the purchasers but owed them a
duty of honesty and fairness.
The rest of the offer was the printed form there were no other typed
After a quick read-through of the offer, I sent the agent a two-page
list of additional clauses that I wanted to be inserted into the offer.
The changes I wanted made to the document were:
Delete the clause allowing the option of
paying the purchase price in cash. The sellers could be forced to accept a
satchel full of $100 bills, which they would not be able to deposit into
their bank due to money-laundering legislation.
Insert a warranty that the deck and dock were
owned by the sellers and not sitting on land or the lake bed owned by the
Provide documentation that the dock was built
with appropriate government approval.
Provide proof that road access to the cottage
was by way of a public roadway.
Provide a survey showing exactly what was
Confirm that there was no government-owned,
66-foot shore road allowance along the waterfront.
Allow purchasers access for inspection
Provide proof that the septic system had all
necessary permits and was operating properly.
When my list came back to me from the real estate agent, virtually all
the suggested clauses, including the right to pre-closing inspection, had
I called the agent, but knew I was in trouble right away when he
refused to delete the purchasers' right to pay the purchase price in cash.
We all use that clause up here, he told me.
The conversation went downhill after that, so I gave up and contacted
the sellers' lawyer.
I had somewhat more success with him, but his answers gave my clients
very little comfort.
I was told that I had an unrealistic view of what municipal records are
likely to exist. I learned that there was apparently no evidence that the
cottage, deck, docks or septic system had been built with the appropriate
permits, so the purchasers would have to take their chances.
It turned out that the vendor never checked the legal status of the
septic system when he purchased the property, and had no idea whether a
permit had been issued or not.
In cottage country, I found out, this is a common occurrence, and
buyers often close cottage deals on being assured only that the septic
system works rather than on getting proof that it was legally and properly
installed. An illegal system, of course, can work perfectly, even if it
contaminates the nearby lake or ground water.
Fortunately, the cottage was on a municipal water supply, so it was not
necessary to obtain proof of water quality through a laboratory analysis,
or water quantity by way of a well-drillers certificate.
I was assured by my colleague, who acted for the vendor, that there are
no 66-foot government shore road allowances in Tay Township or Simcoe
County and the purchasers would own right up to the shoreline.
But when I finally got the survey four days later I discovered that a
66-foot deep swath of the front lawn was actually owned by Canadian
National as part of an unused railway right of way, and the cottage owners
had no rights to buy the land.
The undisclosed railway line was the final straw, and my clients backed
out of the deal. A title insurance policy could hardly compensate them for
the lack of a survey in this case, or their inability to own 66 feet of
the lawn between the cottage and the lake.
The lesson of the story is that in dealing with cottage country real
estate, buyers will typically want more warranties and documentation than
sellers are willing or able to give. And for fear of raising questions
which are too uncomfortable to answer, some agents may not discuss
questions of water quality and quantity, road access, septic permits,
building permits, surveys, docks, boathouses and shore road allowances
with their purchasers.
All of this underlines the importance of both sides of a cottage
transaction having legal advice before any documents are signed, not to
mention how important it is for real estate agents to be candid with
potential purchasers about what they are and are not selling.