News & Views

Commercial Loans – Navigating Through the Pitfalls
June 05, 2019

Commercial Loans – Navigating Through the Pitfalls

Written by Gina Putman 

Completing a commercial financing transaction can be a stressful ordeal for borrowers when trying to balance the task of fulfilling their lender’s requirements with the deadline of a looming closing date. Knowing some of the potential “trouble spots” or issues which may cause delays may help to alleviate some of this anxiety and allow for a smoother closing.

1. Third Party Reports: Lenders will often require reports from third party consultants such as Environmental Site Assessments, Building Condition Reports or Appraisals. When scheduling a closing date, consider the time required for the consultants to prepare these reports as well as the additional time for the lender to review their contents.

2. Priority Issues: More often than not, institutional lenders require their security to be in first priority. Obtaining this required position can be achieved through a number of approaches such as estoppel or comfort letters; postponements or subordination agreements or Inter-Creditor Agreements. All of these potential solutions, however, require the assistance and co-operation of third parties over which the borrower typically has little or no control. When committing to a loan agreement or to a particular closing date, be sure to consider what other secured creditors or title registrations may be in place which may impede granting your lender the priority they require.

3. Condition of Corporate Records: When corporate borrowers and/or corporate guarantors are involved, lenders will typically require a solicitor’s letter of opinion, often referred to as an “SLO”, to be delivered by the borrower’s or guarantor’s counsel. An SLO confirms to the lender that the corporate entity has been properly incorporated and organized and that all requisite corporate steps have been taken to authorize the entering into of the security. In order for counsel to provide an SLO, the corporate records of the corporation must be complete and up-to-date. Where corporate records or lost or deficient, additional time delays may ensue.

4. Signing Parties: To the extent possible, ensure all required signing parties are close at hand prior to closing. Signatories, particularly personal guarantors, will need to meet in person with the solicitor completing the transaction or, alternatively, meet with a solicitor where the signatory is located. Making such alternate arrangements may lead to time delays and additional expenses to complete the loan.

5. Insurance: Lenders will require confirmation that the collateral over which they are taking security is properly insured naming the lender as either an additional insured, loss payee or mortgagee. Submitting this request to your insurer as early as possible will help to alleviate unnecessary panic at the last minute. In addition, some lenders may require insurance certificates to be reviewed and approved by an external insurance consultant on their behalf. 

None of the foregoing issues are unsolvable or insurmountable but, faced with an imminent closing date, may cause undue stress for borrowers and their counsel. Planning ahead and anticipating where problems may occur will help to reduce the chaos in the days leading up to closing. 

For more information, please contact Gina Putman directly at [email protected] or at 905 763 3770 x 219. 

*The material provided in this article is for general information purposes only. It is not intended to provide legal advice or opinions of any kind.


About the Author:

Gina Putman focuses on acquisitions and dispositions of commercial real estate properties and portfolios as well as on secured lending transactions. She assists both institutional lenders and corporate borrowers.

Independent Contractor or Employee? A Contract is Not Determinative
May 09, 2019

Independent Contractor or Employee? A Contract is Not Determinative

Written by Amanda Maio

The definition of “employee” under the Employment Standards Act, 2000, S.O. 2000, c. 41, is not particularly helpful when trying to determine if someone is an ‘employee.’ The ESA has long been complemented by the common law, as the Courts and Tribunals continue to provide guidance in this regard. 

The common law has established that “employee” status should be interpreted broadly and liberally to encompass vulnerable workers, since the policy objectives of the ESA and Human Rights Acts are protective and remedial in nature.* Having a contract that classifies a person as an independent contractor is not determinative. Adjudicators may conclude that the individual is an employee, despite a contract stating otherwise, if an examination of the relationship between the parties indicates as such.

When assessing the relationship of the parties, the courts will look at the entirety of the relationship to make a determination. A central question for the courts and adjudicators is whether the person who has been engaged to perform the services is performing them as a person in business on his or her own account.* Although there is not one conclusive test, there are some common factors that courts and adjudicators will consider when evaluating a relationship. Some factors include the following:

1. Control – What was the degree of control exercised by the employer over the individual?

2. Ownership of “Tools” - Did the employer provide their own tools, materials or equipment to complete the work, or were these supplied by the employer? Did the individual invest in equipment that was used to perform their tasks?

3. Chance of Profit - What was the individual’s opportunity for profit in the performance of his or her tasks?

4. Risk of Loss - What was the degree of financial risk taken by the individual?

5. Exclusivity - Was the individual limited exclusively to the service of the employer/principal?*

An adjudicator will look at all of these factors and more. A low level of control may indicate an independent contractor relationship, but if the employer supplies all of the materials, tools and equipment to the worker, this may indicate an employee-employer relationship. Since a broad and general interpretation is applied to the definition of “employee”, in borderline situations, courts and adjudicators normally find in favour of the individual having “employee” status.* This list is not exhaustive and as employment relationships continue to evolve, the relevant factors and considerations will undoubtedly expand as well.

The takeaway: when entering working relationships with others it is beneficial to consider the above noted list of factors in an effort to ensure your relationship would be defined in the way you wish it to be.

For more information, please contact Amanda Maio directly at [email protected] or at 905 763 3770 x 209. 

*The material provided in this article is for general information purposes only. It is not intended to provide legal advice or opinions of any kind.

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*Halsbury’s Laws of Canada (online), Employment (2015 Reissue)

*“Definition of Employee: Statutory and Common law” (III.2.(2)) at HEM-89  “Common Law Tests.”

*671122 Ontario Ltd. v. Sagaz Industries, [2001] S.C.J. No. 61, [2001] 2 S.C.R. 983 (SCC)


About the Author:

Amanda Maio focuses primarily in the area of commercial litigation. Through the continued mentorship and guidance of the experienced litigation lawyers at FIJ, Amanda works with both large financial institutions and individual clients to support their litigation needs.