PROBLEMS WITH UNDERGROUND OIL STORAGE TANKS

 Many homes in the Greater Vancouver area built before 1957 were originally heated with
furnace oil. When natural gas became available, the oil storage tanks, which were
normally located underground in backyards, were filled with sand or capped. However, as
these unused tanks start to corrode and rust, the remaining oil can leak out and flow onto
the rest of the owner’s property, the neighbour’s property, storm sumps and waterways,
resulting in contamination of soil and water. Apart from the negative financial impact on
the market value of the property, the owner can face substantial legal liability under
various statutes and bylaws for such contamination.

The BC Fire Code and by-laws of twelve municipalities (including the City of
Vancouver) all essentially require that out of service underground oil storage tanks
(“UST”) be removed and that all contaminated soil must be removed and replaced with
clean fill.

A very limited exception may be granted by the fire authority where the removal of the
UST is impractical because it is located under a permanent structure or its removal would
endanger the structural integrity of nearby buildings. In that case, the owner would still
have to render the UST “inert” in accordance with “good engineering practices” which
would include arranging, at their own expense, for the remaining oil to be pumped out,
for the tank to be filled with sand and all piping to be capped as well as arrange for the
removal of contaminated soil and replacing it with clean fill. In addition, written
verification of such work must be provided by a licenced contractor to the fire authority.

The responsibility for the removal of the UST and remediating any contamination falls on
the current property owner. The costs of such removal can be expensive depending on
how much remediation work is involved. However, if the UST is ignored and not dealt
with promptly and correctly, the costs can be exponentially more. In one case that was
reported in 2008, an owner of a West Vancouver home, who bought the home in 2000 not
apparently aware that there was a buried UST, had to spend close to $160,000 to remove
5,000 liters of contaminated fuel from a leaky home-heating UST that had not been used
in 25 years! Such cases are rare but it does highlight the need to conduct due diligence
when buying a home that may have an unused UST.

In addition to the BC Fire Code and municipal by-law requirements, the owner may also
be subject to the Environmental Management Act of BC if the concentration of the
contaminants present in the soil or groundwater exceeds the allowable limits prescribed
for residential properties and therefore meets the definition of a “contaminated site”. In
that event, the owner can be ordered to undertake remediation of the property and
neighbouring properties if the contamination has spread. It may be possible for the owner
to recover some of the costs incurred from more culpable previous owners through a
“cost recovery action” pursuant to the Environmental Management Act but only if they
can be found and have the resources to pay. An owner or former owner may also be
found liable under common law nuisance for failing to take steps to prevent seepage of
oil to neighbouring properties.

What are the Seller’s obligations?

The Seller normally will provide a prospective buyer with the Property Disclosure
Statement (“PDS”) that requires disclosure of a number of potential defects, including the
presence of an UST. If the Seller declares that the property does not to their knowledge
contain an UST and/or is not contaminated, which later proves incorrect, the Seller can be
liable for negligent misstatement. Moreover, if the PDS is expressly stated to form part of
the Contract and there is an unqualified statement that there is no UST then this becomes
an actual warranty so that if an UST is discovered on the property the Seller will be liable
for breach of contract. Similarly, if the Seller states expressly in the Contract that there is
no contamination at the property, the Seller will be contractually liable to the Buyer if
contamination is discovered. As well the courts have held that Sellers have a duty to
disclose a latent defect that could be dangerous or a hazard to human health and failure to
do so may well make them liable to the Buyer for damages sustained as a result of their
failure to warn.

In summary, if there is an UST, then the Seller should be advised to disclose this fact to
the Buyer and ensure their representations are accurate. The Seller can then go ahead and
arrange for a qualified tank removal contractor to remove the UST and clean up any
contamination in accordance with all permits and applicable statutes, bylaws and BC Fire
Code and provide sufficient written proof to the Buyer prior to completion. Alternatively,
if the Seller does not have the money to do this, they could try and negotiate a price
reduction in exchange for a release and indemnity from the Buyer with respect to the
UST and remediation of any contamination. However, the Seller can still remain liable
under the EMA and the Buyer may not be able to agree to this because of the
requirements of their insurer and lender, who will want the UST and any resultant
contamination issues dealt with prior to completion before funds are committed.

What can Buyers do to protect themselves?

If there is a suspicion that there may be an UST and the Seller will not or can not confirm
either way, the Buyer should be advised to make the offer subject to a satisfactory
inspection that satisfies the Buyer there is no UST and that the property is not a
contaminated site. It would be prudent to engage the services of a specialized UST
inspector to conduct a magnetic survey to detect an UST and then, if located, the integrity
of the tank can be examined and surrounding oil can be checked for the presence of
contaminants. The Buyer should also put in another condition precedent into the
Contract that, if there is an UST, the offer is subject to the Seller arranging, at their own
expense, for the UST to be drained and removed and for the soil and groundwater to be
assessed for contamination and, if so contaminated, the Seller will ensure the soil and
groundwater is fully remediated in compliance with all applicable statute, bylaw and BC
Fire Code requirements. The contract should also provide that it is a fundamental term of
the contract that all the work will be done by a qualified tank removal contractor and that
the Seller shall provide to the Buyer on or before the completion date all necessary
written certificates and reports from the tank removal contractor and the fire authority
that all work was completed in compliance with the applicable statutes, bylaws and BC
Fire Code.

A Buyer should be strongly advised, even in the face of competing offers for a property,
to not remove any conditions without the UST and remediation work having been
completed properly by the Seller. Similarly, the Buyer should not agree to take on the
responsibility of the removal of the UST and the remediation of any contamination in
exchange for a price reduction without fully realizing the potential liability that would
ensue upon becoming the new owner.
 
 

The information you obtain at this site is not, nor is it intended to be, legal advice. You
should consult a lawyer for individual advice regarding your own situation.
Copyright © 2011 by Spagnuolo & Company Real Estate Lawyers. All rights reserved.
You may reproduce materials available at this site for your own personal use and for noncommercial
distribution. All copies must include this copyright statement.
 
Read full post

USING A POWER OF ATTORNEY TO BUY, SELL OR 

REFINANCE REAL ESTATE


October 19, 2011

It is not uncommon for clients to be away at the time they are closing a real estate
transaction. In this situation there are a few options to ensure the transaction closes on
time, one of them being the use of a Power of Attorney.

Legislation relating to the use of Power of Attorney’s was passed effective September 1,
2011. The changes were mostly to the form of the Power of Attorney, and do not
substantially change the use of a Power of Attorney for real estate. Below is a discussion
on how to use a Power of Attorney to sell, refinance or purchase a property.
In all of these situations we are assuming there are no trust issues between the person
giving the Power of Attorney (the "Adult") and the person who is allowed to sign
pursuant to the Power of Attorney (the "Attorney"), and all parties are acting in a
professional manner. Giving a Power of Attorney to an untrustworthy person will result
in serious difficulties.

GENERAL INFORMATION ON POWER OF ATTORNEY’S

A Power of Attorney is a document which authorizes one person, an “Attorney”, to make
decisions or perform tasks on behalf of another person, the “Adult”. A Power of
Attorney can only authorize an Attorney to make legal and financial decisions on behalf
of the Adult and not personal care or health care decisions.
Although the Power of Attorney Act was substantially revised effective September 1,
2011, Powers of Attorney executed before September 1, 2011 will continue to be valid.
An enduring Power of Attorney has no expiration date, and is not commonly used for
estate planning purposes. These are broad in nature, and will remain valid when the Adult
becomes incapable of looking after her own affairs.
A Non-Enduring Power of Attorney is usually limited to a specific task such as to sell the
Adult’s property while she is away, or may have an expiry date.
While a Power of Attorney is not self-expiring unless specified, s. 56 of the Land Title
Act provides that a Power of Attorney is not valid for land title purposes 3 years after the
date of execution unless it is an enduring Power of Attorney or the Power of Attorney
expressly excludes the effect of s. 56.
An Adult cannot appoint an individual who is compensated for providing personal care
and health care to the Adult or an employee of a facility providing personal care or health
care services to the Adult (unless the individual is also the Adult’s child, parent or
spouse). While these are the only legal restrictions, the Adult should obviously trust an
individual’s honesty and judgment before appointing her as an Attorney.
So long as the Adult is capable, a Power of Attorney can be revoked at any time. There
are also certain circumstances when the Power of Attorney terminates, such as upon the
death of the Adult or court order.
An Attorney must act honestly and use reasonable care and diligence. The Attorney’s
authority must be exercised in the best interests of the Adult. It should be noted that a
Power of Attorney cannot be used to transfer land to the Attorney unless the Power of
Attorney specifically permits.

USING A POWER OF ATTORNEY TO SELL PROPERTY

So long as the Power of Attorney is property drafted, there are very few issues with using
a Power of Attorney to sell property. The Power of Attorney should be limited in terms of
how long the Power of Attorney is valid, and to what purpose it is to be used. A general
example is:

"To sell real estate legally described as (legal description of property) and any interest
therein, in such manner as my attorney may think fit, and execute and deliver all
documents and other instruments required for such purpose as my attorney may think fit.
This Power of Attorney shall expire on (insert date)."

USING A POWER OF ATTORNEY TO PURCHASE OR REFINANCE PROPERTY

A Power of Attorney can be used to purchase or refinance real estate, but you must check
with the lender to confirm their willingness or requirements about using a Power of
Attorney. Each lender has different rules regarding the use of a Power of Attorney.
At the time of writing this page, Scotiabank will allow a Power of Attorney but they
require that the lawyer preparing the mortgage be the lawyer that prepares AND
witnesses the Adult’s signature on the Power of Attorney. Our office recently completed
a file where we prepared the Power of Attorney but the Adult was already in the UK so
her signature was witnessed there. Scotiabank made an exception on this file to allow it to
fund, but they advised that for future deals, the Adult either has to fly to B.C. to sign the
Power of Attorney or Scotia will not do the deal. Obviously if the Adult has to fly to B.C.
they could sign the documents on their own, and a Power of Attorney is not required.
RBC will allow a Power of Attorney to be used but RBC will insist on a title insurance
policy, which has a minimum cost of $250.00.
TD will also allow a Power of Attorney except for equity takeouts, but have extensive
requirements. They will require at least two days notice, information on the relationship
between the Adult and Attorney, circumstances as to why a Power of Attorney is
required, banking relationships, and knowledge of the Adult to the financing request.
Even if all this information is provided and they approve of the Power of Attorney, title
insurance will be required.
Rather than review all of the other lenders requirements, we suggest you (the client)
contact the lender at the time of making the application. Lender requirements constantly
change and even the above may change frequently.
If a transfer of the property to the Attorney is required as a part of the refinancing
transaction, keep in mind that there must be specific wording in the Power of Attorney to
permit this.
SUMMARY

Our goal is to remind you that a Power of Attorney can be used for out of town clients,
but consideration should be given to the lender requirements for a refinance or purchase
of property.





The information you obtain at this site is not, nor is it intended to be, legal advice. You
should consult a lawyer for individual advice regarding your own situation.
Copyright © 2011 by Spagnuolo & Company Real Estate Lawyers. All rights reserved.
You may reproduce materials available at this site for your own personal use and for noncommercial
distribution. All copies must include this copyright statement.

 

Read full post

 

TITLE INSURANCE - AN EXPLANATION

 

Title Insurance is a form of insurance policy that protects purchasers from a number of potential risks.

These risks are usually matters which are not covered by a traditional lawyer's due diligence.  Briefly summarized, these added protections include the following:

  1. Defects that would be revealed by a new Survey.  In the absence of an existing survey, Title Insurance may be ordered in lieu of a new survey.  Please note that this assumes that a new survey must be ordered.  If the vendor is able to provide an older survey or if the applicable City Hall has a survey certificate, these may usually be utilized.  Title Insurance also insures a defect that would be revealed by an existing survey such as an encroachment of a neighbour's building onto the adjacent property.  The most famous example is a swimming pool located on a residential property in Calgary which has 14 Easements, Rights-of-Ways or Covenants some of which affected the pool.  The Lender was able to provide financing based on the strength of the Title Insurance Policy.
     
  2. Fraud, Forgery or False Impersonation.  A Title Insurance Policy is not qualified by "the authenticity of the title documents obtained."  What this means is that if an innocent person acquires an interest in a property from someone who is acting in a fraudulent manner (for example a false vendor), they can be compensated.  The lender is also insured in the event of lawyer or third party fraud.
     
  3. Errors in Public Records.  While this is not as relevant in British Columbia given our Torrens System, Title Insurance does cover errors in public records, including incorrect information on Tax Certificates.

For answers to any questions on Title Insurance, please call 604-527-4242 or email.

Please remember that Title Insurance may frequently change along with the coverages and while we try to keep our website up to date as much as possible, please do not rely upon the information without talking to one of our lawyers.

 

 

 

The information you obtain at this site is not, nor is it intended to be, legal advice.  You should consult a lawyer for individual advice regarding your own situation.

Copyright © 2005 by The Spagnuolo Group of Real Estate Law Firms.  All rights reserved.  You may reproduce materials available at this site for your own personal use and for non-commercial distribution.  All copies must include this copyright statement. 

 

Read full post

Search Listings Now!

Ready To Sell?

Insider Access