Sale of Property - Deposit - 1801 Eglinton Avenue West,

Former City of York (York Eglinton - Ward 28)

The Corporate Services Committee recommends the adoption of the following report (December 21, 1998) from the City Solicitor:

Purpose:

To obtain Council authority for the execution of an indemnification Agreement in favour of CBRichard Ellis Limited (formerly known as CB Commercial Real Estate Group Canada Inc.), so as to provide for the payment of a real estate deposit to the City.

Funding Sources, Financial Implications and Impact Statement:

Not Applicable.

Recommendation:

It is recommended that authority be granted to execute the Indemnification Agreement attached to this Report as Schedule "A".

Council Reference/Background/History:

The Corporation of the City of York acquired title to 1801 Eglinton Avenue West on May 31, 1996 pursuant to the Municipal Tax Sales Act. The property is a three-storey office building with some retail on the ground floor. The leaseable area of the building is approximately 42,138 square feet. There is underground parking for 16 motor vehicles. The property vested in the City as a result of no acceptable bids being received in the tax sale process.

In 1997, the City of York retained CB Commercial Real Estate Group Canada Inc. ("CBCommercial") to list three City-owned properties for sale, including the property at 1801Eglinton Avenue West. All three properties have been sold. The sale of 1801 Eglinton Avenue East to Alzor Investments Inc. for $650,000.00 was completed on November 2, 1998.

In a previous attempt to sell 1801 Eglinton Avenue West, the City of York on December 12, 1997, entered into an Agreement of Purchase and Sale with "Marion Cass, (In Trust) on behalf of a company to be incorporated and without personal liability" for the amount of $475,000.00. A deposit of $47,500.00 was submitted by the Purchaser to CB Commercial, in trust, at the time the Agreement was executed. The transaction was scheduled to close on December 30, 1997. The Purchaser refused to close. The solicitor for the Purchaser alleged that a reference in the legal description to an encroachment constituted a matter going to the root of title. He also argued that the Agreement of Purchase and Sale had not been duly accepted by the City. The City took the position that the Agreement had been accepted and that the Purchaser's requisition with respect to title was not proper. Consequently, the City tendered the closing documents on the Purchaser and put the Purchaser on notice that she was in default under the Agreement and had forfeited the deposit.

CB Commercial has recently changed its name to CB Richard Ellis Limited ("CB Richard Ellis").

Comments and/or Discussion and/or Justification:

The City has requested payment of the $47,500.00 deposit from CB Richard Ellis. The Purchaser has refused to sign a Mutual Release authorizing CB Richard Ellis to pay the deposit to the City. However, CB Richard Ellis has agreed to release the deposit to the City provided that the City indemnifies CB Richard Ellis with respect to the consequences of CB Richard Ellis paying those monies to the City. The Indemnification Agreement is attached as Schedule "A" hereto. Since the dispute as to why the transaction did not close is between the City and the Purchaser (i.e., and does not involve the agent), the request by CB Richard Ellis for indemnification with respect to the paying out of the deposit is not unreasonable.

Conclusions:

The most expeditious means for the City to obtain the deposit monies is to provide the requested indemnification to CB Richard Ellis.

Contact Name:

Brian W. Haley, Solicitor

Legal Division

Planning and Administrative Tribunal Law

Tel. No. (416) 392-6757

Fax No. (416) 392-0024

________

SCHEDULE "A"

THIS INDEMNIFICATION AGREEMENT made this day of , 1998.

B E T W E E N:

CB RICHARD ELLIS LIMITED, (formerly known as

CB COMMERCIAL REAL ESTATE GROUP CANADA INC.)

- and -

CITY OF TORONTO

WHEREAS Marion Cass in Trust, on behalf of a corporation to be incorporated and without personal liability, (hereinafter "Cass"), entered into an Agreement of Purchase and Sale with The Corporation of the City of York (hereinafter "York") on December 9, 1997, for the purchase of real property located in the former City of York, municipally known as 1801 Eglinton Ave. West (hereinafter the "Agreement");

AND WHEREAS the Agreement was entered into through CB Commercial Real Estate Group Canada Inc., now known as CB Richard Ellis Limited (hereinafter collectively known as "CB");

AND WHEREAS by Section 28 of the City of Toronto Act, 1997, The Corporation of the City of York was dissolved on January 1, 1998;

AND WHEREAS by Section 2 of the City of Toronto Act, 1997, there was established a body corporate under the name of "City of Toronto" on January 1, 1998;

AND WHEREAS the City of Toronto stands in the place of The Corporation of the City of York for all purposes including but not limited to all rights, interests, approvals, status, registrations, entitlements and contractual benefits and obligations;

AND WHEREAS deposit monies in the amount of Forty Seven Thousand Five Hundred (47,500.00) Dollars were paid by Cass to CB, in trust (hereinafter the "Deposit");

AND WHEREAS the Agreement of Purchase and Sale has not been completed and there is a dispute with respect to the reasons why the Agreement has not been completed; and whereas Cass and the City of Toronto are in dispute as to which one of them is entitled to the Deposit;

AND WHEREAS the City of Toronto has instructed CB to pay to it the Deposit presently held by CB in trust;

AND WHEREAS CB has advised the City of Toronto that it is prepared to pay the Deposit to the City of Toronto on the condition that the City of Toronto provide to CB unconditional indemnification with respect to the consequences of CB paying these monies to the City of Toronto;

NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency whereof is hereby acknowledged by each of the parties hereto, the parties hereto agree as follows:

(1)The recitals set out above are true and correct in all respects.

(2)(a)This Indemnification Agreement shall apply to all claims made against CB and its officers and directors, arising from, or relating to, its payment of the Deposit, currently held by CB in trust, to the City of Toronto.

(b)The City of Toronto hereby undertakes and agrees to indemnify and save harmless CB and its present and former officers and directors from all liabilities, claims, assessments, fines, penalties, interest and costs, including all legal fees and disbursements, which CB may incur as a result of its payment of the Deposit to the City of Toronto, or arising from any claims made by any party as set out in section2(a) above.

(3)This Agreement contains the entire contract of the parties with respect to the subject matter hereof and supersedes all other agreements and understandings between the parties concerning the subject matter hereof.

(4)This Agreement may not be amended orally, but only by an agreement in writing, executed by each of the parties hereto.

(5)The undersigned representatives of the City of Toronto hereby represent and warrant that the City of Toronto has been properly and legally described herein.

(6)This Agreement shall enure to the benefit of, and be binding upon, each of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns.

(7)This Agreement has been executed and delivered in the Province of Ontario, and it interpretation, validity and performance shall be construed and enforced in accordance with the laws of such province.

IN WITNESS WHEREOF the parties have signed and delivered this Agreement on the date first written above.

CB RICHARD ELLIS LIMITED, formerly known as

CB COMMERCIAL REAL ESTATE GROUP

CANADA INC.

Per: _____________________________

Per: _____________________________

I/We have authority to bind the Corporation

CITY OF TORONTO

Per: _____________________________

Per: _____________________________

I\We have the authority to bind the Corporation.