Law Times

Law Times • June 15, 2009 NEW An online resource tool 1.800.263.3269 Bestcase earlug.indd 1 3/26/08 11:52:01 AM Focus On REAL ESTATE LAW Province considering feedback on proposed amendments ly-evolving environmental legislation impacting the sale of land. The provincial government is cur- Ontario tightening land remediation rules R BY DARYL-LYNN CARLSON For Law Times eal estate practitioners are in- creasingly required to make efforts to keep up with quick- rently considering feedback it received to a suite of proposed amendments to its Ontario Regulation 153/04 - Brown- fields Records of Site Condition, which will require stepped-up due diligence by lawyers, owners, and consultants to ful- fil land sale transactions. The amendments were posted on the province's Environmental Registry last fall and the deadline for submissions was in February. The amendments in- clude enhanced soil and groundwater standards that reflect scientific advances and changes to the process for submit- ting Records of Site Condition, means in which to properly conduct phase I and II Environmental Site Assessments, and diminished liability protections for landowners regarding contaminants. As well, the Environment ministry has introduced a Modified Generic Risk Assessment model that will be available on its web site that is intended to enable applicants to streamline their risk assess- ments and clean up a site without com- pleting a full MOE risk assessment. "What is driving this in large mea- sure is science," says Barry Wein- traub, chairman of the Ontario Bar Association's environ- mental law section and a partner at Rueter Scargall Bennett LLP. "There's been a re- alization that the old standards that were in place in some circum- stances may expose peo- ple to risks that weren't previously known. So there's a need to put in place standards that are more stringent but the problems it creates is what to do with old clean ups that were done based on stan- dards that were in place at the time?" Weintraub was one 'What is driving this in large measure is science,' says Barry Weintraub. of three speakers at an OBA Lawyers Edge program hosted in April for the real estate and business law bars en- titled Dirty Deals — Addressing En- vironmental Issues in the Purchase and Sale Transaction. Aaron Atcheson, a partner at Mill- er Thomson LLP, and Vico Paloschi, vice president of environmental due diligence and remediation at Pinchin Environmental Ltd., also spoke at the session hosted at Miller Thomson's London office. Weintraub says the fast-moving pace of environmental legislation changes means real estate and business law practitioners have no choice but to keep up to speed. "It's not title infor- mation, so if lawyers just restrict themselves to just looking at title, it's not going to show up," he says of the en- vironmental condition of a registered piece of land. "But if you're advising clients on pur- chasing land or a busi- ness and want them to know the risks in- volved, it's something you have to look into." He notes that un- der the changes, land owners are not able to submit a record of site condition more than one year following the commission of a soil sample so "some of these sites that were remediated two or three years ago under the current regulations may not even comply with an RSC now." As well, he says while a record of a site condition provides for some limited immunity from further clean up orders, "if you have a site that's been cleaned up under the old standards, the question is will they meet the new standards?" Paloschi says he expects upwards of 50 to 75 per cent of site conditions records will be deemed to be contami- nated following the changes. "Basically there are a lot of proper- ties out there that are clean and meet the current standards, but when the ministry implements these new stan- dards, they will be deemed contami- nated properties," he says. At the very least, lawyers will have to advise their clients to do entirely new reports to ensure they comply, he says. Paloschi also discussed resources available for lawyers, the technologies used in remediation, and generally how lawyers can ensure they cover all the bases in facilitating transactions for clients. His firm works regularly with lawyers across the country assisting with environmental issues. He notes that lenders are also paying more attention to environmental crite- ria when considering financing. "The lending climate at the moment is leading to a lot more conservatism when it comes to environmental is- sues," he says. Therefore, even if an ap- plicant meets the new standards, "will the lenders view a previously cleaned- up property as the same as meeting the current requirement?" Paloschi sums up developments as both progressive and tough, although not necessarily onerous. "Environmen- tal due diligence in general is becom- ing more stringent for every transac- tion," he says. "But the understanding of issues now is so much better than it was five or 10 years ago." Atcheson says the changes will likely affect all properties to some degree or another, so it is imperative lawyers be See Changes, page 13 Powers of sale, foreclosures expected to rise BY DARYL-LYNN CARLSON For Law Times like it has in the United States, lawyers are no less faced with as- sisting clients whose businesses are struggling. Much of that is now involving the restructuring of debt pertaining to mortgages and assets, along with other out- standing balances for costs in- curred running a business. While there has been a rise W in mortgage enforcement, pow- ers of sale, and foreclosures, hile Canada's real estate market hasn't bottomed out quite "it's not been a tidal wave," says Steven Pearlstein, a certified specialist at Minden Gross LLP whose practice is focused on commercial real estate, bank- ing, and insolvency law. "I think most people are pleas- antly surprised it's not as much as they thought it would be to date," says Pearlstein, adding that the full impact of the economic downturn is not necessarily over. Pearlstein, past chairman of Association's the Ontario Bar real property section, initiated a program hosted by the OBA to bring attendees up to date on developments behind restruc- turing distressed real estate. The half-day session includ- ed six speakers covering topics from lender responses to gov- ernment obligations, and was followed by a luncheon and the annual election of the OBA's real property section executive. Pearlstein says the session was designed to empower law- yers to be proactive and resolve their client's financial distress before a lender takes action. As well, some landlords who hold property as investments are dealing with an escalating level of fraud and even marijua- na grow ops as cash-strapped tenants undertake illegitimate means to earn income. He notes that lenders don't want to operate real estate or assets and would prefer to resolve any financial distress through nego- tiations, provided business owners are upfront about difficulties. "Otherwise lenders looking at spending money for receivers and enforcement measures may get a lot less out of the property," says Pearlstein. "So we're sort of say- ing instead of the ostrich thing and burying your head in the sand, sometimes it's just better to be upfront because the sooner you do that and they start trust- ing you, the better. They're not anxious to take the property be- cause that's not their business." But one barrier lawyers face is encouraging clients to come for- ward with problems before they become protracted and complex. "It's human nature to think 'debt or denial. We're about to turn the corner there's no real problem,'" says Timothy Dunn, a partner at Minden Gross's in- solvency law section who also spoke at the session. Dunn's practice is focused primarily in the areas of insolvency law, debt- or and creditor rights, financial reorganization and debtor re- structuring, secured financing transactions, Personal Property Security Act matters and the See More, page 13 WHICH DIRECTION IS BEST FOR YOU? RainMaker Group 110 Yonge Street, Suite 1101 Toronto, Ontario M5C 1T4 Untitled-7 1 Tel: 416-863-9543 Fax: 416-863-9757 www.rainmakergroup.ca www.lawtimesnews.com 5/29/08 1:05:49 PM PAGE 9

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