Luke Giffen
Danny McMullen

Legal Bites – Cottage Country Due Diligence

Lawyer Beware! Be sure to keep track of the many unique areas of due diligence for clients buying cottage property in Ontario


When a client is purchasing a cottage property in Ontario, a lawyer should conduct a comprehensive review of a variety of due diligence areas to ensure a smooth transaction and to protect the client’s interests. In many ways, dealing with cottage property requires the lawyer to be much more precise and investigative than if their client was purchasing a property in Toronto.

Important to note that while title insurance can protect a client from various title defects with their newly purchased property, it is no substitute to diligent investigative work by the lawyer. Specifically, problems with functionality or quality of the property, environmental issues, underground fuel tanks, fire retrofit issues, and vendor misrepresentations are all things that title insurance cannot cover. With that in mind, here are specific areas that a lawyer should check:


  1. Title Search: Reviewing the property’s title and conducting a thorough search to ensure the seller has a valid and marketable title, checking for any liens, encumbrances, or easements on the property. This is always step number one for any lawyer dealing with property.


  1. Survey or Property Boundary: Obtain and review a current survey of the property to confirm the boundaries and identify any encroachments or potential issues. If a survey is available from the vendor, this will be helpful in identifying potential issues.


  1. Zoning and Land Use: Confirm the property’s zoning designation and verify compliance with local zoning bylaws and regulations. This will allow you to determine if the property is designated for residential or recreational use for future development purposes.


  1. Building Permits and Compliance: Following up from tip number 3, check if all structures on the property have been properly permitted and meet building code requirements. Verify the existence of any open permits or outstanding work orders. New buildings like boat houses, bunkies, and other readily seen cottage buildings all need proper permits and compliance.


  1. Waterfront Regulations: If the property is located on a waterfront, assess any regulations specific to waterfront properties, such as shoreline setbacks, water usage rights, or restrictions related to development near water bodies. Identifying applicable regulations will ensure your client is appraised of any legal restrictions on their new property.


  1. Septic System and Environmental Concerns: Review the septic system to ensure compliance with applicable regulations. Consider any environmental concerns that may impact the property, such as protected areas or hazardous materials.


  1. Access and Easements: Confirm the legal right of access to the property, particularly if there are shared roads, private lanes, or easements. Review any applicable agreements or maintenance obligations that the previous owner may have entered into.


  1. Utilities and Services: Verify the availability and functionality of utilities, including water, electricity, heating, and waste disposal systems. Assess any associated costs or responsibilities.


  1. Insurance Coverage: Advise the client on appropriate insurance coverage, including property insurance, liability coverage, and flood insurance if applicable.


These areas provide a starting point for a lawyer’s due diligence when a client is purchasing a cottage property. Dealing with rural cottage properties is an intricate tool in a real estate lawyer’s toolbelt. Because of the evolving nature of many of the due diligence aspects, it’s important to keep up to date on the latest legal developments. Stay tuned for more!

If you are planning on purchasing or selling a cottage property, reach out to our team of experts at Northview Law for help guiding you through the process!