Purchase and Sale of Properties
in the Cedar Springs Community
Not all members and their real estate agents may be aware that any transfer of property in the Community is subject to a three party agreement (a “General Building Scheme”) with the Cedar Springs Community Club (“Club”), a private not for profit corporation. The additional requirements are as follows:
30-Day Notice
Under Section 7.02 of By-law 15, any member who had decided to offer their Lot for sale agrees to notify, in writing, the President and the Chairman of the Membership Committee of their intention to sell (the date that the selling member advised the President being the Notification Date). The Chair of the Membership Committee will then forthwith mail a copy of that notice to all the Members of the Club. The selling member may accept an offer for the purchase of the said Lot from another existing member within thirty (30) days from the Notification Date. It is only after the thirty (30) day period that the selling member has the right to offer the said Lot to a third party. Member is defined in the Definitions section at the beginning of By-law 15.
Purchasers Must be Acceptable as Club Members
Only members of the Club may purchase a property in the Community. In order for any property to be transferred, the proposed purchaser must first be accepted by the Board of Directors as a member of the Club. If a potential purchaser is not accepted as a member, the purchase cannot proceed. Membership in the Club is not an ancillary benefit to buying and owning a cottage. Rather, only following the granting of membership can a person be permitted to buy a cottage. And only the Club can grant membership; memberships are not for sale by selling cottage owners. The requirement for membership also means a Cedar Springs cottage cannot be held by a corporation or a family trust. If two or more persons are to be the owners, they must own as joint tenants and cannot own as tenants in common. Other restrictions on joint owners may apply. All subsequent transfers of ownership are subject to Club approval. The Agreement of Purchase and Sale (“APS”) should contain a condition that the purchasers be accepted as Club members.
Process for Membership Approval
Consent for Vendor to Transfer Property
The Board of Directors must also approve the sale of the property by the vendor. This requirement should also be a condition in the APS. Such approval may be withheld until the vendor has paid all unpaid dues and fees (including related interest charges).
For the transfer to be valid, the President of the Club is required to sign the Club’s consent on a schedule attached to the transfer document registered on title. The Club’s legal counsel provides the wording of the Schedule and the wording of the other documents signed by the purchasers that are attached to it or otherwise registered on title. The Club’s legal counsel is Bryan Hackett, 229-730 Yonge St, Toronto, M4Y 2B7; 416 924-6220, Fax 416 924-6162, email bryandhackett@mac.com. He should be contacted and sent a copy of the APS immediately upon its execution.
Because of the unusual legal structure and lengthy approval process, Cedar Springs’ properties take four to six weeks to close. It is important to know the date of the next Board meeting at which membership can be considered so that a closing date can be set after that date.
Condition for Agreement of Purchase and Sale
Reproduced below is sample wording of a Condition acceptable to the Club for any Agreement of Purchase and Sale:
This offer is conditional upon the consent of the Board of Directors of the Cedar Springs Community Club under paragraphs 5 and 9 of the General Building Scheme Agreement dated July 9, 1932, registered on title as Instrument Number 15681 and under Restrictive Covenants which run with the land, namely:
Septic Undertaking
The Club also requires a certificate of a working septic system from a certified inspector, failing which, the purchaser will be required as a condition of being granted membership in the Club to sign an undertaking to the Club prior to closing to repair or replace any faulty septic system. Failure to do within one year will result in the Board declaring the member not in good standing and the denial of privileges of membership, including use of Club facilities. It is therefore also advisable to include a condition for the benefit of the purchaser to obtain such a certificate before going firm on the property sale price.
For Sale Signs
The Club has its own green real estate For Sale signs and does not permit the use of any other signs on the member’s property on Club roads. Signs on Cedar Springs Road inviting the public onto Club roads is also prohibited. The Club superintendent will put your contact phone number on one of these signs and erect it on the member’s property. For safety and security reasons, open houses are discouraged unless they are by controlled invitation.
Restrictive Covenants
As a result of the Springs properties having been transferred from the Registry system to Land Titles, the Club is requiring, as a condition of approving any Purchaser(s) as members and as a condition of consenting to any transfers or other registrations, that a schedule of the Restrictive Covenants be registered on title, pursuant to section 119 of the Land Titles Act. See Restrictive Covenants.
Mortgages
Not all mortgage companies will provide a mortgage for a Cedar Springs property. Potential purchasers should check with their mortgage lender before making an offer. In order maintain and confirm the Club’s control over the approval of any new Member, the Mortgage Consent confirms that any Mortgage Foreclosure is prohibited (i.e. the mortgage lender cannot take over ownership of the property if the borrower defaults but must sell under the mortgage to recover the monies loaned) and that any Purchaser under a Power of Sale (i.e. the person buying from the mortgage lender where the borrower fails to make good on the mortgage) requires prior Board Approval, satisfaction of any Membership Approval conditions imposed by the Board and the payment of the then current Entrance Fee. Paragraph 5 of the General Building Scheme indicates that any mortgage, for which Club approval has not been received, “shall be absolutely null and void and of no effect whatsoever”.
What if I Want to Transfer the Cottage to Someone in the Family?
When you bought your cottage at Cedar Springs you agreed through documents on title to your property that you will not transfer ownership unless and until the Board of the Club approves the new owner. This approval is required every time even if you intend to transfer ownership to another member, including a child or spouse. This includes a transfer from the estate of a deceased owner to another family member. There are no exceptions and any transfer done without Board approval is null and void. Under Bylaw 15, Section 7.03 should at any time a member transfer ownership without first obtaining the written approval of the Board, the owner and new purchaser shall each immediately become a Member Not in Good Standing and forfeit the Privileges of Membership.
A member may apply on the Application Form for a waiver of the Entrance Fee under Article 7 of By-law 15 (i.e. between Members and Immediate Family, including inter-generational transfers, transfers between spouses and for transfers to and from estates of deceased Members). This waiver only applies to the sale of the family cottage from one family member to another. It does not apply to, say, a child of a member buying another cottage in the Community.
Other pitfalls to avoid arise from the fact that the Club can only approve a new owner of a cottage who is an individual person who has been accepted by the Board as a voting Member of the Club. Purchase of a property does not provide a right to belong to this community. It is important to understand that voting membership in the Club is the pre-requisite to owning a cottage lot and not the other way around.
The requirement for membership also means a cottage cannot be held by a corporation or a family trust. If two or more persons are to be the owners, they must own as joint tenants and cannot own as tenants in common. Even then, the two persons must be married or members of the same immediate family as defined by the Club. Immediate family is defined in our bylaws means a person, their spouse, children, step children, and grandchildren. You'll notice that brothers and sisters of the person are excluded and so this means they are not allowed to own a cottage together. Only one of your children can become the owner the cottage and your other children will cease to have membership privileges. The Board will approve a transfer to one child who is accepted by the Board through the normal membership process and allow you and your spouse to remain on title with a life interest in the cottage.
What if I Want to Sell My Cottage and Buy another Cottage?
The same process as every other transfer applies. Under the by-laws an Entrance Fee is payable by members buying from other members who are not Immediate Family (as defined in By-law 15). However, the Board does have the discretion to waive the fee if the purchasing member applies for a waiver. The Board has done this in the past only for purchasing members who agree to sell their existing cottage, subject to the continuing good faith effort by purchasing member to effect the sale of their existing cottage property and, further provided, that the Board of Directors may, acting reasonably, determine that good faith efforts are not being made to effect a sale of the Property in which case the Entrance Fee will become due and payable immediately. The purpose of this is to create an economic sanction that effectively prevents a member from continuing to own two cottages.
Copies of Forms and Real Estate Documents
30-Day Notice
Under Section 7.02 of By-law 15, any member who had decided to offer their Lot for sale agrees to notify, in writing, the President and the Chairman of the Membership Committee of their intention to sell (the date that the selling member advised the President being the Notification Date). The Chair of the Membership Committee will then forthwith mail a copy of that notice to all the Members of the Club. The selling member may accept an offer for the purchase of the said Lot from another existing member within thirty (30) days from the Notification Date. It is only after the thirty (30) day period that the selling member has the right to offer the said Lot to a third party. Member is defined in the Definitions section at the beginning of By-law 15.
Purchasers Must be Acceptable as Club Members
Only members of the Club may purchase a property in the Community. In order for any property to be transferred, the proposed purchaser must first be accepted by the Board of Directors as a member of the Club. If a potential purchaser is not accepted as a member, the purchase cannot proceed. Membership in the Club is not an ancillary benefit to buying and owning a cottage. Rather, only following the granting of membership can a person be permitted to buy a cottage. And only the Club can grant membership; memberships are not for sale by selling cottage owners. The requirement for membership also means a Cedar Springs cottage cannot be held by a corporation or a family trust. If two or more persons are to be the owners, they must own as joint tenants and cannot own as tenants in common. Other restrictions on joint owners may apply. All subsequent transfers of ownership are subject to Club approval. The Agreement of Purchase and Sale (“APS”) should contain a condition that the purchasers be accepted as Club members.
Process for Membership Approval
- Potential purchasers complete an application form (download PDF of form below) and forward it to the Club together with a cheque for the Entrance Fee (to be returned in full without interest should the purchase not proceed). The Entrance Fee is $20,000 (plus HST). A potential purchaser may elect to pay the Entrance Fee in four equal instalments. Twenty-five per cent (25%) of the Entrance Fee is due on the date the agreement of purchase and sale is executed and on each of the first, second and third anniversary dates of the closing date of the purchase. (If any instalment is not paid on its due date, the entire unpaid balance of the Entrance Fee shall become due and payable and bear interest at an annual rate of prime plus 5%. In the event that a member is selling his or her property before the third anniversary of the closing date of their purchase, any unpaid balance of the Entrance Fee shall be due and payable on the closing of the sale to the new purchaser.) In consideration of the Club granting membership and/or consent of transfer of a property, the applicant agrees to pay annual membership and other fees and to abide by and be bound by the General Building Scheme Agreement, Club by-laws approved by Club members and rules, regulations and directions established from time to time by the Club Board. The applicant also agrees to pay the Club's legal fees and disbursements in respect of this membership application and any transfer of the property. For 2012, the Club’s lawyer charges a fee of $675 if there is not a mortgage and $1,150 is there is a mortgage, plus disbursements and H.S.T.
- Potential purchasers will be given a Club Members’ Manual (or access to the website) to review and are then interviewed by the Club’s Membership Committee.
- Should they be found acceptable as members, the Committee recommends to the Board of Directors of the Club that a motion be passed by the Board to accept the potential purchasers as members of the Club, subject to receipt of a certificate of a working septic system and signature of closing documents (including any mortgage) in a form acceptable to the Club.
Consent for Vendor to Transfer Property
The Board of Directors must also approve the sale of the property by the vendor. This requirement should also be a condition in the APS. Such approval may be withheld until the vendor has paid all unpaid dues and fees (including related interest charges).
For the transfer to be valid, the President of the Club is required to sign the Club’s consent on a schedule attached to the transfer document registered on title. The Club’s legal counsel provides the wording of the Schedule and the wording of the other documents signed by the purchasers that are attached to it or otherwise registered on title. The Club’s legal counsel is Bryan Hackett, 229-730 Yonge St, Toronto, M4Y 2B7; 416 924-6220, Fax 416 924-6162, email bryandhackett@mac.com. He should be contacted and sent a copy of the APS immediately upon its execution.
Because of the unusual legal structure and lengthy approval process, Cedar Springs’ properties take four to six weeks to close. It is important to know the date of the next Board meeting at which membership can be considered so that a closing date can be set after that date.
Condition for Agreement of Purchase and Sale
Reproduced below is sample wording of a Condition acceptable to the Club for any Agreement of Purchase and Sale:
This offer is conditional upon the consent of the Board of Directors of the Cedar Springs Community Club under paragraphs 5 and 9 of the General Building Scheme Agreement dated July 9, 1932, registered on title as Instrument Number 15681 and under Restrictive Covenants which run with the land, namely:
- Club approval of the transfer of the property by the Vendor;
- Club approval of the Purchaser as a member of the Cedar Springs Community Club;
- payment to the Cedar Springs Community Club by the Purchaser of (I) a one-time Entrance Fee plus applicable taxes ($20,000, plus H.S.T.); and (II) the Club’s legal fees and disbursements; and
- payment to the Cedar Springs Community Club by the Vendor of any and all outstanding dues and other payables and obligations to the Club.
Septic Undertaking
The Club also requires a certificate of a working septic system from a certified inspector, failing which, the purchaser will be required as a condition of being granted membership in the Club to sign an undertaking to the Club prior to closing to repair or replace any faulty septic system. Failure to do within one year will result in the Board declaring the member not in good standing and the denial of privileges of membership, including use of Club facilities. It is therefore also advisable to include a condition for the benefit of the purchaser to obtain such a certificate before going firm on the property sale price.
For Sale Signs
The Club has its own green real estate For Sale signs and does not permit the use of any other signs on the member’s property on Club roads. Signs on Cedar Springs Road inviting the public onto Club roads is also prohibited. The Club superintendent will put your contact phone number on one of these signs and erect it on the member’s property. For safety and security reasons, open houses are discouraged unless they are by controlled invitation.
Restrictive Covenants
As a result of the Springs properties having been transferred from the Registry system to Land Titles, the Club is requiring, as a condition of approving any Purchaser(s) as members and as a condition of consenting to any transfers or other registrations, that a schedule of the Restrictive Covenants be registered on title, pursuant to section 119 of the Land Titles Act. See Restrictive Covenants.
Mortgages
Not all mortgage companies will provide a mortgage for a Cedar Springs property. Potential purchasers should check with their mortgage lender before making an offer. In order maintain and confirm the Club’s control over the approval of any new Member, the Mortgage Consent confirms that any Mortgage Foreclosure is prohibited (i.e. the mortgage lender cannot take over ownership of the property if the borrower defaults but must sell under the mortgage to recover the monies loaned) and that any Purchaser under a Power of Sale (i.e. the person buying from the mortgage lender where the borrower fails to make good on the mortgage) requires prior Board Approval, satisfaction of any Membership Approval conditions imposed by the Board and the payment of the then current Entrance Fee. Paragraph 5 of the General Building Scheme indicates that any mortgage, for which Club approval has not been received, “shall be absolutely null and void and of no effect whatsoever”.
What if I Want to Transfer the Cottage to Someone in the Family?
When you bought your cottage at Cedar Springs you agreed through documents on title to your property that you will not transfer ownership unless and until the Board of the Club approves the new owner. This approval is required every time even if you intend to transfer ownership to another member, including a child or spouse. This includes a transfer from the estate of a deceased owner to another family member. There are no exceptions and any transfer done without Board approval is null and void. Under Bylaw 15, Section 7.03 should at any time a member transfer ownership without first obtaining the written approval of the Board, the owner and new purchaser shall each immediately become a Member Not in Good Standing and forfeit the Privileges of Membership.
A member may apply on the Application Form for a waiver of the Entrance Fee under Article 7 of By-law 15 (i.e. between Members and Immediate Family, including inter-generational transfers, transfers between spouses and for transfers to and from estates of deceased Members). This waiver only applies to the sale of the family cottage from one family member to another. It does not apply to, say, a child of a member buying another cottage in the Community.
Other pitfalls to avoid arise from the fact that the Club can only approve a new owner of a cottage who is an individual person who has been accepted by the Board as a voting Member of the Club. Purchase of a property does not provide a right to belong to this community. It is important to understand that voting membership in the Club is the pre-requisite to owning a cottage lot and not the other way around.
The requirement for membership also means a cottage cannot be held by a corporation or a family trust. If two or more persons are to be the owners, they must own as joint tenants and cannot own as tenants in common. Even then, the two persons must be married or members of the same immediate family as defined by the Club. Immediate family is defined in our bylaws means a person, their spouse, children, step children, and grandchildren. You'll notice that brothers and sisters of the person are excluded and so this means they are not allowed to own a cottage together. Only one of your children can become the owner the cottage and your other children will cease to have membership privileges. The Board will approve a transfer to one child who is accepted by the Board through the normal membership process and allow you and your spouse to remain on title with a life interest in the cottage.
What if I Want to Sell My Cottage and Buy another Cottage?
The same process as every other transfer applies. Under the by-laws an Entrance Fee is payable by members buying from other members who are not Immediate Family (as defined in By-law 15). However, the Board does have the discretion to waive the fee if the purchasing member applies for a waiver. The Board has done this in the past only for purchasing members who agree to sell their existing cottage, subject to the continuing good faith effort by purchasing member to effect the sale of their existing cottage property and, further provided, that the Board of Directors may, acting reasonably, determine that good faith efforts are not being made to effect a sale of the Property in which case the Entrance Fee will become due and payable immediately. The purpose of this is to create an economic sanction that effectively prevents a member from continuing to own two cottages.
Copies of Forms and Real Estate Documents
| applicationformmembership_2010.pdf |
| 2008_septicundertaking.pdf |
| initial_letter_to_solicitors_2008.pdf |
| detailed_letter_to_solicitors_2008.pdf |
| letter_re_mortgage_details_2008.pdf |
| 2008_consent_to_charge_and_schedule_of_amendment_to_charge.pdf |
| 2008_joint_consent_to_conveyance.pdf |