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Toronto Targets AirBnB Hosts

Just a few weeks after my post “AirBNB Hosts Beware” published on April 21, 2017, more action has been announced to address the AirBnB situation.

Devout Torontonians who consider Toronto their home first and investment second have been putting pressure on politicians across the city. From condominium dwellers to community neighbourhoods, residents have had enough. They have accused investors of snapping up multiple properties and running them like “ghost hotels”.

Through services, such as AirBnB, these “ghost hotels” create a double whammy. Firstly, they bring tourists and individuals that are strangers into the neighbourhood with no regulation or preparedness in case of unexpected incidences or emergencies, possibly leading to devaluation of condo units in the building or homes in the neighbourhood. At the same time, they use greater utilities and infrastructure, from which the city receives no additional revenue, and therefore, average owners have to pay more of the share for.

Licensing and Standards Proposals

The City of Toronto’s municipal licensing and standards division released a series of proposals today, after months of consultation. Among the recommendations are:

  • Licensing companies like Airbnb and others.
  • Banning people from listing units where they don’t live.
  • Amending zoning bylaws to create a separate category called “short-term rental.”
  • Starting a registry of anyone operating a short-term rental unit.

AirBnB Claims

AirBnb has argued that it provides a valuable service which allows homeowners to earn a little extra income to make mortgage payments. Over the last year, there have been many, many articles about tenants who have rented multiple homes or units and then sublet them through AirBnB. These individuals are not grannies or struggling families, but rather opportunistic entrepreneurs looking to make a profit at the expense of unknowing homeowners or landlords.

More To Consider

The reaction to AirBnB is far from over. We have yet to hear from neighbours claiming loss of property values, response by police for crimes resulting from AirBnB guests, and insurance companies refusing to pay claims because properties were used other than their original intention. Then there are other issues like bed bugs, fire deaths, and crimes commitment by guests on owners and other guests. How do the police deal with that?

I will not be surprised to see more rules and regulations coming. Furthermore, I will not be surprised if extra taxes or tax rates are passed to deal with the AirBnB situation.





Ontario Court Rules Against Lender in Mortgage Fraud

I’m not a lawyer or legal professional and am writing strictly from a lay person’s perspective. Seth Zuk of Torkin Manes Barristers and Solicitors forwarded me his article “Ontario Divisional Court Reviews Priorities Among Mortgagees that were Victims of Mortgage Fraud’. The article discusses a legal case in Ontario in which the CIBC was defrauded out of its first position mortgage. To my surprise, the Divisional Court judge ruled that the CIBC are the fwas not entitled to its first mortgage position.

The Facts According to Zuk

  • In 2006 Dhanraj Lowtan and Sumatie Lowtan purchased a property in Ontario. Two years later, in 2008, they borrowed $280,801 from Computershare, granting Computershare a first priority mortgage on the property.
  • In 2009, a year after granting first priority to Computershare, the Lowtan’s fraudulently registered a discharge of Computershare’s mortgage.
  • Since the Lowtan’s continued making monthly payments to Computershare, the lender remained unaware that its mortgage had been discharged.
  •  In 2011, the Lowtans granted a mortgage in the amount of $252,800 to CIBC and in 2012, they granted a mortgage of $32,000 to Secure Capital Mic Inc.
  • Both CIBC and Secure Capital, believed that they had, respectively, first and second priority mortgages.
  • In early 2013, the Lowtans defaulted on all three mortgages and Computershare discovered that its mortgage had been fraudulently discharged.
  • “The Lowtans vacated the property, made assignments into bankruptcy, and the property was sold by CIBC with the consent of Computershare and Secure Capital. When the proceeds of the sale were insufficient to satisfy all three debts, Computershare, CIBC, and Secure Capital all commenced applications in the Superior Court for a determination of priorities as between the three mortgages”

Application Judges Decision

In Short, Zuk states that “In CIBC Mortgage Inc. v Computershare Trust Co. of Canada (2015 ONSC 543), the application judge held that Computershare’s mortgage would be reinstated in first priority and that the CIBC and Secure Capital mortgages ranked second and third, respectively.”

Divisional Court’s Decision

Zuk goes on to explain, “The Divisional Court disagreed with the application judge’s findings and concluded that CIBC held the first priority mortgage. Accordingly, CIBC was entitled to the first proceeds distributed from the sale of the property. ”

For a lay person, the outstanding point is, as explained by Zuk – that while the Divisional Court acknowledged that the Lowtans perpetrated a fraud on CIBC and Secure Capital by concealing the existence of the Computershare mortgage, this did not make the Lowtans “fraudulent persons”.

That’s where I got a bit confused. Am I understanding this correctly, someone who conceals information that puts a lender at financial loss are not “fraudulent persons”? I must be misunderstanding this. Can someone please clarify this isn’t the case. Otherwise, wouldn’t it be open season on all lenders?

Furthermore, why wasn’t the onus put on the CIBC or Secure Capital to verify with Computershare that in fact the mortgage had been discarged, especially after such a short period? I’d like to hear your comments about this.

Confused? Zuk does a great job at explaining the decisions in his article “Ontario Divisional Court Reviews Priorities Among Mortgagees that were Victims of Mortgage Fraud”

Disclaimer: I’m not a lawyer, legal professional or consider myself competent in law. Please read the original article yourself and consult a lawyer for guidance in dealing with matters such as these. Any understanding I have from reading the article is as a lay person and only reflects my own opinions, thoughts (or questions) and no one else’s.