Law Times

Law Times • June 14, 2010 An online resource tool 1.800.263.3269 ntitled-6 1 1/28/10 4:34:45 PM Focus On REAL ESTATE LAW Commercial realty faces significant changes Lawyers briefed on a gamut of new rules from accounting to bylaw amendments BY DARYL-LYNN CARLSON For Law Times provincial levels that will af- fect the way real estate lawyers conduct business to serve their commercial clients. At a recent Ontario Bar As- T sociation continuing educa- tion session hosted in Toronto for real estate practitioners on developments for lawyers who serve commercial clients, Su- san Rosen, a partner at Gowl- ing Lafl eur Henderson LLP, provided participants with an overview of a myriad of chang- es to be aware of. She started out with a sum- mary of how the federally man- dated transition from Gen- erally Accepted Accounting Principles to the International Financial Reporting Standards, which comes into eff ect in Jan- uary, stands to aff ect lawyers advising landlords on property taxes. In an accompanying paper, she wrote: "Landlords that are considered 'publicly traded en- terprise' such as publicly traded real estate corporations, REITs, insurance companies, and pen- sion funds are included in the group of businesses that will be required to move to IFRS." As well, she noted, "Closely held landlord corporations and other corporations will have the option of adopting either IFRS or new private enterprise standards that are similar to the GAAP system for private enterprises." On the topic of the ac- counting standards transition, she concluded that "drafters of leases must give great care and consideration to the manner in which capital expenditures are treated by landlords to ensure that a given lease is not subject to an unfavourable application of contra proferentem." Yet Rosen says the most im- portant change that will aff ect here are several note- worthy developments on both the federal and real estate practitioners dealing with commercial transactions is the City of Toronto's new zoning bylaws. "Th e purpose of this new Toronto zoning bylaw is to harmonize everything," she tells Law Times. "But the by- law is extremely complicated as there are over 900 pages in the legislation." Rosen notes that due to ex- clusions from the new zoning requirements, lawyers will have to familiarize themselves with all of the details when assisting commercial real estate clients. "Th e way they have done it is like taking a square peg and putting it into a round hole, but the round hole is very big," says Rosen. "Lawyers don't have to know everything but they have to know what they don't know." In her accompanying paper at the OBA session, Rosen out- lined the following points that lawyers should be aware of in terms of the new Toronto zon- ing bylaw: • Most retail commercial uses will be prohibited in the heavy employment (indus- trial) zones, and more re- strictions will apply in the other employment zones. • Many uses, such as drive- thru and service stations, will be required to meet more stringent location and performance standards. • Th e categorization of manu- facturing uses is to be based on the North American Industry Classifi cation Sys- tem. • New parking and loading standards are being intro- duced with diff erences based upon proximity to public transit. • New standards will require a 25-metre separation be- tween tall buildings (gen- erally those over 21 metres or seven storeys in height) and limit a mixed-use tall building's fl oor plate to 750 square metres. Other Lawyers need to get up to speed on Toronto's new harmonized zoning bylaw, says Susan Rosen. setbacks are also aff ected. • New requirements for the location, height, and form of buildings in the com- mercial residential zones are introduced with three sets of standards depending on location. • New buildings on main ave- nues in the commercial resi- dential zones will need to be at least three storeys high. • Big-box stores won't be per- mitted except in a specifi c employment zone. • Places of worship and schools will no longer be permitted to locate as-of- right in residential or em- ployment zones. • Residential density, cover- age, height, and building setbacks will be calculated diff erently, resulting in real changes to what can be built or rebuilt. • A landowner may no longer charge for visitor parking. "Th ese are important for lawyers to know," Rosen says. Jeff rey Schwartz of Schwartz and Schwartz Professional Corp., who's also chairman of the OBA's real property sec- tion, says he was enthused with the turnout at the commercial property-focused educational session. "But the good thing is that within the profession, there is a lot more collabora- tion going on, and lawyers in diff erent areas are talking to each other a lot more than they used to to share informa- tion that will aff ect each other's practice." Lawyers are collaborating primarily to fi nd ways to keep up on case law developments in order to avoid complexi- ties that will cost them time and money that they won't be able to justifi ably bill their clients for, Schwartz notes. "It is always a question of, 'How much will this cost me or my clients,' but we want to do the best job." LT PAGE 9 e Editor-in-Chief Harvey M. Haber, Q.C., LSM and numerous leading experts as contributors Covers commercial leasing issues with specific emphasis on shopping centre leases in one text Shopping Centre Leases has been considered the definitive text on the subject since its inception in 1976. Revised and updated, by leading commercial leasing practitioners from across Canada, this Second Edition includes a vast collection of articles and precedents on various topics of current interest. For example: • Technology and Telecommunications Concerns • Pandemic Preparedness for Building Owners and Managers • Insurance for Shopping Centres • Leasing Aspects of the Franchise Relationship • Transfers of Lease, Assigning, Subletting and Change of Control • Operating Costs and other Additional Rents in a Commercial Lease from a Landlord's and Tenant's Perspective For a 30-day, no-risk evaluation call: 1.800.565.6967 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. LT0614 www.lawtimesnews.com Visit and save 20% • Agreements to Lease, Letters of Intent and Term Sheets Carefully prepared, this resource includes a number of precedent documents, a table of cases and relevant articles under each of these sections: • The Lease • Financial Considerations • Statutory Considerations • Rent and Expense of Operation • Operation of Business • Maintenance and Operation of Centre • Default • Precedents Order your copy today! Hardbound • 1,108 pp. 2008 • $185 P/C 0279010002 • ISBN 978-0-88804-477-8 a V i r s i t o t u r b w s i e f o

• Cover
• Escalating Claims
• Bylaw Reform
• Focus On Real Estate Law