A developer has agreements to buy three adjoining properties on a Toronto commercial corridor. A fourth owner is willing to talk but has made no commitment. On the concept plan, that fourth property is where trucks enter the site and turn into the loading area. The three signed deals may look like progress, but if the developer becomes obligated to close before the access question is resolved, it could end up buying land for a project it cannot build as designed.
Land assembly brings several properties together for a single real estate development. The “last parcel” problem arises when the feasibility of the whole project depends on a property that remains outside the buyer’s control. In Toronto and across the Greater Toronto Area (GTA), the issue can shape everything from the price of an individual parcel to the timing of financing and closing.
What Does the Last Parcel Actually Do?
A parcel’s importance often comes from its location within the site. A narrow strip may provide frontage, space for a servicing connection, or the only workable route to a loading area. Another parcel may give the project enough room to accommodate setbacks or keep the proposed building footprint intact. Toronto’s site plan review process examines details such as access, servicing, parking, and loading.
The same parcel can be essential to one design and optional in another. In the loading-area example, shifting the building or negotiating an easement could preserve access, depending on the site and municipal requirements. Comparing the two layouts makes the trade-off concrete. The cost of redesign, the potential loss of floor area, and the time needed for approvals all affect how much the final parcel is worth to the project.
Options and Conditional Offers Give Buyers Different Rights
A purchase option gives the buyer a right to buy on agreed terms within a set period. In a land assembly, that period can give the developer time to negotiate with other owners or test the site’s feasibility. The option terms can address the fee, how the purchase price is set, when and how notice must be given, and what access the buyer has for surveys or environmental testing. If the option expires before the buyer exercises it, the buyer can lose the right to purchase the property.
A conditional agreement of purchase and sale commits the parties subject to the terms of the agreement. A land assembly condition can tie the buyer’s obligation to completing other acquisitions, securing signed agreements for specified parcels, or obtaining a particular access right.
A signed agreement on the fourth property may satisfy one condition even though that purchase remains subject to its own financing or due diligence conditions. The wording also governs who can waive the condition and what happens to the deposit if the transaction ends.
Coordinating Closings Across Multiple Sellers
Setting the same closing date in several commercial real estate purchase agreements leaves each agreement governed by its own terms. If one seller cannot close, the buyer may still be required to complete the others. Where the project depends on all the parcels, the agreements can make one closing conditional on the others or provide for extensions if a related purchase is delayed.
Staggered closings can also serve a purpose. A parcel with an income-producing tenant or a viable standalone use may be worth acquiring early. The trade-off is that deposits, financing costs, property taxes, and other carrying costs can accumulate while negotiations continue. Where several investors are funding the assembly through a project company, their shareholders’ agreement can address who authorizes extensions, funds additional deposits, or decides whether to proceed with a smaller site.
Ontario Subdivision Control Can Affect Future Flexibility
Section 50 of Ontario’s Planning Act restricts certain dealings with land, including some transfers and mortgages where the same owner retains an interest in abutting land. The section contains exceptions, and how it applies can depend on the legal descriptions and the history of the parcels, including prior consents. Separate street addresses or property identification numbers do not, on their own, establish that each property can be sold separately after the assembly.
That distinction matters if the project plan assumes the developer can later sell off an unneeded parcel or finance one portion separately. If the proposed transaction involves acquiring only a strip of the last property or securing a right-of-way, Toronto’s consent process may also be relevant. An alternative to purchasing the whole property can therefore introduce its own approval timeline.
A Signed Deal Can Still Leave an Access or Occupancy Problem
A title review and survey can uncover rights and physical constraints that affect the combined site. For example, a registered utility easement may run through the proposed building footprint, or an apparent driveway may cross another owner’s property without a documented access right. The acquisition agreement can allocate responsibility for resolving those issues and set out what happens if a boundary or access issue becomes a property dispute before closing.
Existing commercial leases can also determine when a parcel is available for redevelopment. A tenant may have renewal rights, exclusive use of a loading area, or a right of first refusal if the owner decides to sell. Where demolition or construction requires vacant possession, the purchase agreement can specify who is responsible for obtaining it and whether it is a condition of closing.
What Happens If the Final Owner Does Not Sell?
The fallback depends on what the missing parcel provides. Where a redesign or an access easement keeps the project viable, the buyer may be able to proceed with a smaller site, subject to any required approvals. If the other parcels have little value to the buyer on their own, the termination provisions in each agreement determine whether the buyer can walk away and how deposits are handled.
For the developer waiting on the fourth property, the outcome turns on more than the final owner’s asking price. A workable fallback design, the ability to extend a closing, and the right to recover deposits can all change how much risk the developer takes on while the assembly is still incomplete.
Contact Baker & Company to Speak With Toronto Commercial Real Estate Lawyers About Land Assembly Issues
The Toronto commercial real estate lawyers at Baker & Company assist developers, builders, and property investors with land assembly and development transactions in Toronto and across the Greater Toronto Area. Services include site acquisitions, purchase options, conditional purchase agreements, title and easement reviews, commercial leases, project financing, and coordinated closings for multi-parcel development sites.
Call 416-777-0100 or contact us online to arrange a consultation about your Toronto or GTA real estate development project.
