The Ups and Downs of Elevator Due Diligence

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You’ve got a commercial or multi-residential property closing coming up, congratulations! Quick question, though, are there elevators or escalators on the property? Have you started the due diligence on them yet? The work involved is a little more involved than pressing all the buttons, so pay attention!

Double check to see whether your commercial title insurer will cover any related issues that could come up here. Double and triple check, because the insurer may offer coverage on a lender’s policy, not on an owner’s policy. Be careful!

If the property does have elevating devices, you’ll need to make sure that they’re all licenced and that the licences are in good standing with the Technical Standards and Safety Authority (TSSA). Whether or not they are may not directly affect title to the property, sure, but it will certainly affect use of the property.

Remember that once the real estate transaction has closed, the new owner will still need to transfer the elevating device licences issued by the TSSA from the previous owner to themselves. According to the following snippet from the TSSA’s regulations on elevating devices, this won’t be possible if there are any outstanding issues relating to the licences:

The director may refuse to transfer the licence of an elevating device,

(a) while the licence is under suspension; or

(b) where there is any outstanding fee or charge set by the designated administrative authority owing with respect to the elevating device.  O. Reg. 209/01, s. 29 (6).

s.29(6), O. Reg. 209/01: Elevating Devices, under Technical Standards and Safety Act, 2000, S.O. 2000, c. 16

So, essentially, if there are any work orders or other issues relating to an elevating device, the new owner will be stuck with an elevator or an escalator that they won’t be licenced to use, at least not without resolving the outstanding issues which will be at an undetermined cost and at an undetermined timeline. This can and will throw a huge wrench into the development plans the new owner may have, so it’s important that this is dealt with as early on in the transaction as possible.

Currently, the turnaround for these searches is roughly six weeks, so make sure you ask whether a property has an elevating device that needs to be licenced. Do it early, and do it every single time!

If you have any questions or need advice on an upcoming real estate transaction, contact Zeeshan today.

This article does not constitute legal or other professional advice or an opinion of any kind.

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