Legal Encyclopedia
Plain-English definitions of corporate, real estate, and franchise law terms — with Ontario-specific context.
63 terms
An agreement of purchase and sale (APS) is the legally binding contract between a buyer and seller of real property in Ontario that sets out all terms of the transaction — price, deposit, conditions, inclusions, closing date, and representations. Once all conditions are satisfied or waived, the APS becomes firm and both parties are legally obligated to complete the transaction.
Read definitionCanadian intellectual property law — copyright, patents, and trade secrets — was designed for human creators and inventors. AI-generated content and AI-assisted inventions challenge these frameworks: copyright may not subsist in purely AI-generated works, AI cannot be named as an inventor on Canadian patents, and trade secrets remain the most practical protection for proprietary AI models.
Read definitionOperating an AI-powered business in Ontario raises legal questions across multiple areas: who owns AI-generated intellectual property, who is liable when AI makes a harmful decision, how privacy laws apply to AI training and inference data, what the federal Artificial Intelligence and Data Act (AIDA) will require, and how contracts should address AI-specific risks.
Read definitionArticles of incorporation are the foundational legal document filed with the government to create a corporation in Ontario. They establish the corporation's name, share structure, and restrictions on business activity, and form the basis of the corporation's legal existence under the Ontario Business Corporations Act.
Read definitionWhen buying or selling an Ontario business, the transaction can be structured as an asset purchase (acquiring specific assets of the business) or a share purchase (acquiring the shares of the corporation that owns the business) — a choice with major tax, liability, and commercial consequences for both parties.
Read definitionA blockchain land registry is a system that uses distributed ledger technology to record, verify, or transfer real property ownership. In Ontario, the authoritative land registry is the government-administered POLARIS system operated through Teranet under the Land Titles Act — there is no blockchain land registry in Ontario and any such change would require provincial legislation.
Read definitionBridge financing is a short-term loan used by home buyers in Ontario when the closing date of their new home purchase occurs before the closing date of their existing home sale — creating a gap during which they temporarily own two properties and need to fund the down payment before receiving their sale proceeds.
Read definitionA Business Number (BN) is a 9-digit identifier issued by the Canada Revenue Agency (CRA) that serves as a unique account number for a business's dealings with the federal government. It is the root number to which specific program accounts — including HST/GST, corporate income tax, payroll, and import/export — are attached. Most Ontario businesses require a BN before they can remit taxes, hire employees, or import goods.
Read definitionOntario business owners can deduct the business-use portion of vehicle expenses — including fuel, insurance, repairs, and lease payments or Capital Cost Allowance — subject to CRA limits on the deductible cost of a vehicle ($37,000 Class 10.1 cap for 2025), monthly lease limits ($950/month), and mandatory logbook record-keeping. Employers providing vehicles to employees trigger standby charge and operating cost benefit rules.
Read definitionA buy-sell agreement is a legally binding arrangement — often contained within a shareholder agreement — that establishes the process and pricing mechanism by which a departing, deceased, or disabled shareholder's shares are purchased by the remaining shareholders or by the corporation itself.
Read definitionClosing costs are the fees and expenses paid at the completion of a real estate transaction in Ontario — over and above the purchase price. For buyers, they typically include land transfer tax, legal fees, title insurance, and adjustments. Total closing costs for an Ontario buyer typically range from 1.5% to 4% of the purchase price.
Read definitionCorporate bylaws are the internal administrative rules that govern how an Ontario corporation is managed on a day-to-day basis — covering meetings, voting, officer roles, banking arrangements, and related procedures. Bylaws are adopted by the directors and confirmed by shareholders, and they operate alongside the articles of incorporation and any shareholder agreement.
Read definitionA corporate minute book is the official records repository for an Ontario corporation — containing the articles of incorporation, by-laws, shareholder and director resolutions, share register, and other records that the Ontario Business Corporations Act mandates be maintained throughout the corporation's existence.
Read definitionOntario corporations pay a combined federal and provincial corporate income tax. The effective rate ranges from 12.2% (for Canadian-Controlled Private Corporations eligible for the small business deduction on active income up to $500,000) to 26.5% (for larger corporations or passive investment income), compared to personal marginal rates of up to 53.53% in Ontario.
Read definitionA corporation is a separate legal entity incorporated under statute that can own property, enter contracts, and incur liabilities in its own name. Shareholders enjoy limited liability, meaning personal assets are generally shielded from corporate debts. In Ontario, corporations are governed by the Ontario Business Corporations Act (OBCA) or the Canada Business Corporations Act (CBCA).
Read definitionCryptocurrency is legal in Canada and recognized by the CRA as a commodity, not legal tender. Businesses accepting crypto as payment, holding digital assets, or operating crypto-related services face distinct tax reporting obligations, securities law considerations, and FINTRAC registration requirements.
Read definitionThe CRA taxes cryptocurrency as a commodity (property), not currency. Gains may be taxed as capital gains (50% inclusion) or fully as business income depending on the nature of activity. Mining, staking, DeFi, and other crypto activities each have distinct tax treatments requiring careful record-keeping under the Income Tax Act.
Read definitionOntario businesses that collect personal information from customers, employees, or website visitors must comply with federal PIPEDA (for commercial activities) and Ontario's PHIPA (for health information), while preparing for the forthcoming Consumer Privacy Protection Act. Key obligations include obtaining meaningful consent, protecting data, notifying affected individuals of breaches, and maintaining transparent privacy policies.
Read definitionDirectors of Ontario corporations can be held personally liable for certain corporate obligations — including unpaid employee wages, unremitted payroll deductions, and HST — even though the corporation is a separate legal entity. Understanding directors' liability is essential for anyone serving on or considering joining a corporate board in Ontario.
Read definitionDue diligence is the structured process of investigation and verification that a buyer, investor, or lender conducts before completing a business acquisition, investment, or financing — to confirm what they are getting and to identify undisclosed risks before they become legally committed.
Read definitionAn easement is a legal right that allows one property owner to use part of another person's land for a specific purpose — such as access, drainage, utilities, or parking. In Ontario, easements run with the land, meaning they bind future owners and are registered on title in the Ontario land registry.
Read definitionExtra-provincial registration is the process by which a corporation incorporated in one Canadian jurisdiction — whether federal (CBCA) or another province — registers to carry on business in Ontario under Part XV of the Ontario Business Corporations Act (OBCA). A corporation that carries on business in Ontario without registering when required is subject to penalties and cannot maintain court proceedings in Ontario.
Read definitionOntario businesses can incorporate either provincially under the Ontario Business Corporations Act or federally under the Canada Business Corporations Act — a choice that affects name rights across Canada, director residency requirements, registered office obligations, and which government regulates the corporation.
Read definitionFractional real estate ownership is a structure where multiple parties each hold a proportionate share of a property or investment vehicle rather than a single party holding full ownership. In Ontario, common structures include tenancy in common, co-ownership syndications, limited partnerships, and tokenized platforms — each carrying distinct legal, tax, and securities law implications.
Read definitionA holding company is a corporation that does not carry on an active business itself, but instead holds shares in one or more operating companies, investment portfolios, real estate, or other assets. In Ontario, holding companies are typically used to achieve tax advantages, protect assets from business creditors, facilitate estate planning, and support inter-generational wealth transfer.
Read definitionOntario businesses with revenues exceeding $30,000 in any 12-month period must register for HST and collect 13% on taxable supplies made in Ontario. HST registration also allows businesses to claim Input Tax Credits (ITCs) on HST paid on purchases used in commercial activities, which can benefit even businesses below the $30,000 threshold.
Read definitionIncorporating a crypto or Web3 business in Ontario follows the same OBCA or CBCA framework as any other corporation, but requires additional planning around OSC registration, FINTRAC compliance, corporate structure for DAO-related activities, and the tax consequences of holding digital assets inside a corporation versus personally.
Read definitionFor Ontario business owners, the choice between operating as a sole proprietor and incorporating a corporation has significant tax implications. Corporations offer lower rates on retained earnings and flexibility to split income, but come with administrative costs. Incorporation typically makes tax sense when annual retained earnings consistently exceed $50,000–$100,000.
Read definitionAn indemnification clause is a contractual provision in which one party agrees to compensate the other for losses, liabilities, damages, and expenses arising from specified events — most commonly a breach of representations and warranties in a business acquisition, or third-party claims in a commercial services agreement. Indemnification clauses define the practical risk allocation in Ontario commercial contracts.
Read definitionAn independent contractor earning consulting or service income can operate as a sole proprietor or through a corporation. Incorporating provides income deferral through lower corporate tax rates, broader expense deductions, and dividend payment flexibility — but the CRA's Personal Services Business (PSB) rules can eliminate these advantages if the incorporated contractor is really just a 'deemed employee.'
Read definitionJoint tenancy and tenancy in common are two ways for two or more people to co-own real property in Ontario. Joint tenants hold the property equally with a right of survivorship (the deceased's share passes automatically to the surviving owners). Tenants in common hold specified shares that pass through their estate on death and can be transferred independently.
Read definitionA joint venture (JV) is a contractual or structural arrangement in which two or more parties combine resources, expertise, or capital to undertake a specific project or business activity while remaining independent entities. In Ontario, a joint venture is not a distinct legal structure — it can be organized as a contractual co-ownership, a general partnership, a limited partnership, or through a jointly owned corporation, depending on the parties' commercial and tax objectives.
Read definitionOntario land transfer tax (LTT) is a provincial tax payable by the buyer on every purchase of land or an interest in land in Ontario. The tax is calculated as a percentage of the purchase price on a graduated scale. Toronto buyers also pay a separate municipal land transfer tax. First-time buyers may qualify for a provincial refund of up to $4,000.
Read definitionA letter of intent (LOI) is a preliminary document signed before a binding purchase agreement in a business transaction, setting out the agreed-upon key commercial terms and the framework for due diligence and final documentation — with a deliberate mixture of binding and non-binding provisions.
Read definitionA limited partnership (LP) in Ontario is a special form of partnership with at least one general partner who bears unlimited liability and manages the business, and one or more limited partners whose liability is capped at the amount of their capital contribution. Ontario limited partnerships are formed and governed under the Limited Partnerships Act, RSO 1990, c L.16.
Read definitionA mortgage discharge is the legal process by which a paid-off mortgage is formally removed from title to real property in Ontario. Until a discharge is registered in the land registry, the mortgage continues to appear on title and can prevent the property from being sold or refinanced. Discharges are handled by the seller's lawyer at or after closing.
Read definitionWhen incorporating in Ontario, businesses choose between a named corporation (e.g., Acme Consulting Inc.) and a numbered corporation (e.g., 1234567 Ontario Inc.). The choice affects branding, name protection, and initial cost, though both structures have identical legal rights, obligations, and tax treatment under the Ontario Business Corporations Act.
Read definitionNon-fungible tokens (NFTs) are unique blockchain-based digital assets. For Ontario businesses and creators, NFTs raise distinct questions about intellectual property ownership, CRA tax treatment, business structuring, and consumer protection obligations that differ from other digital assets.
Read definitionAn NFT real estate deed is a non-fungible token intended to represent ownership of a specific property or parcel of land on a blockchain. In Ontario, NFTs cannot replace registered title under the Land Titles Act — legal ownership requires registration through Teranet's POLARIS system, and no blockchain record constitutes a valid title transfer under current Ontario law.
Read definitionA non-compete agreement (or non-competition covenant) is a contractual restriction preventing a party — typically a departing employee, a selling business owner, or a former shareholder — from competing with a business in a defined geographic area for a defined period of time following the end of their relationship.
Read definitionA not-for-profit corporation (NFP) is a corporation incorporated for purposes other than generating profit for its members. In Ontario, provincial NFPs are governed by the Ontario Not-for-Profit Corporations Act, 2010 (ONCA), which was fully proclaimed into force on October 19, 2021. NFPs may be non-charitable (clubs, associations) or charitable (registered charities with CRA), with different governance and regulatory obligations applying to each.
Read definitionA general partnership in Ontario is a business relationship in which two or more persons carry on business together with a view to profit. Partners share management, profits, and losses, and each partner is jointly and severally liable for all debts and obligations incurred by the partnership. Ontario general partnerships are governed by the Partnerships Act, RSO 1990, c P.5.
Read definitionThe CRA allows deductions for business expenses that are incurred to earn income, provided they are reasonable in the circumstances. Mixing personal and business spending — on vehicles, meals, home offices, travel, or equipment — requires careful tracking. Misclassifying personal expenses as business deductions attracts reassessments, penalties, and interest.
Read definitionPower of sale and foreclosure are the two remedies available to mortgage lenders in Ontario when a borrower defaults on their mortgage. Power of sale — by far the more common remedy — allows the lender to sell the property without court proceedings. Foreclosure extinguishes the borrower's equity but requires a court order and is rarely used in Ontario.
Read definitionA professional corporation (PC) is a special type of Ontario corporation permitted under the Ontario Business Corporations Act and the governing legislation of a regulated profession — such as law, medicine, dentistry, or accounting — that allows licensed professionals to carry on their practice through a corporate vehicle. Unlike regular corporations, ownership and directorship of a professional corporation are restricted to members of the regulated profession.
Read definitionPropTech (property technology) refers to digital platforms, software, and data tools applied to real estate transactions, management, and investment. In Ontario, PropTech companies must navigate a layered legal environment including electronic commerce law, real estate regulation, securities law, privacy law, human rights obligations, and professional licensing rules depending on their specific product or service.
Read definitionReal estate crowdfunding is a method of pooling capital from multiple investors through an online platform to collectively invest in real property. In Canada, these platforms operate under provincial securities law and must rely on statutory exemptions — most commonly the accredited investor or offering memorandum exemptions — or register as investment dealers.
Read definitionRepresentations and warranties are statements of fact made by one party to another in a commercial contract — particularly in business acquisition agreements — that serve as the primary disclosure mechanism and as the foundation for indemnification claims if they prove to be false or misleading.
Read definitionThe requisition date in an Ontario agreement of purchase and sale is the contractual deadline by which the buyer's lawyer must submit written title objections (requisitions) to the seller's lawyer. After this date, the buyer generally cannot raise new title issues as a basis for not completing the transaction — making the requisition date one of the most critical deadlines in an Ontario real estate closing.
Read definitionA restrictive covenant is a limitation on how land can be used, registered against title to real property in Ontario. Common examples include restrictions on building height, commercial use, or architectural style. Restrictive covenants run with the land and bind future owners — though older covenants are often unenforceable due to changes in neighbourhood character or statute.
Read definitionSoftware-as-a-Service (SaaS) companies in Ontario require careful legal structuring: incorporating for liability protection and tax deferral, drafting robust Terms of Service and Privacy Policies, negotiating subscription agreements and SLAs with enterprise clients, ensuring IP assignment from developers, and complying with PIPEDA's data handling obligations.
Read definitionOwner-operators of Canadian corporations must decide how to draw personal income: as salary (deductible by the corporation, creates RRSP room and CPP contributions, taxed as employment income) or as dividends (paid from after-tax corporate earnings, no RRSP room or CPP, taxed at lower personal rates with the dividend tax credit). The optimal mix depends on the individual's needs and the corporation's tax situation.
Read definitionA shareholder agreement is a legally binding contract among the shareholders of a corporation that outlines their rights, obligations, and the governance structure of the company. In Ontario, these agreements are governed by the Ontario Business Corporations Act (OBCA).
Read definitionSmart contracts are self-executing programs stored on a blockchain that automatically perform contractual obligations when predetermined conditions are met. In Ontario, smart contracts can be legally enforceable agreements under the Electronic Commerce Act, 2000 and general contract law principles, provided they satisfy the essential elements of a valid contract.
Read definitionA sole proprietorship is the simplest form of business ownership in Ontario, where an individual carries on business in their own name or under a registered business name. There is no legal separation between the owner and the business — the owner bears unlimited personal liability for all business debts and obligations, and reports business income on their personal tax return.
Read definitionA status certificate is a document issued by a condominium corporation in Ontario that discloses the financial and legal health of the corporation to prospective buyers of a condo unit. Under the Condominium Act, 1998, a buyer has 10 days to review the certificate after receiving it, and can terminate the purchase if it reveals serious issues.
Read definitionThe small business deduction (SBD) reduces the federal corporate income tax rate from 15% to 9% on the first $500,000 of active business income earned by a Canadian-Controlled Private Corporation (CCPC). Combined with Ontario's 3.2% small business rate, the effective combined rate is 12.2% — a significant advantage for incorporated Ontario small businesses.
Read definitionTitle insurance is a policy that protects property buyers and mortgage lenders against losses arising from defects in the title to real property — including survey irregularities, title fraud, zoning non-compliance, and other risks that may not appear in a standard title search. In Ontario, title insurance has largely replaced the traditional survey and is a standard part of residential real estate closings.
Read definitionA title search is the process by which a buyer's lawyer examines the historical record of ownership and encumbrances on a property in the Ontario land registry system to verify that the seller has good and marketable title and to identify any liens, easements, restrictions, or other claims that could affect the buyer's ownership.
Read definitionTokenized real estate refers to the process of representing ownership interests in a real property as digital tokens on a blockchain. In Canada, these tokens are generally treated as securities, subject to provincial securities law oversight, and do not replace traditional land title registration under Ontario's Land Titles Act.
Read definitionA transfer of title is the legal process by which ownership of real property in Ontario is formally changed from one party to another. It is completed by registering a Transfer document in the Ontario land registry (Teraview), and the transfer takes effect when it is electronically registered on the closing date.
Read definitionA unanimous shareholder agreement (USA) is a special type of shareholder agreement, signed by all shareholders of an Ontario corporation, that restricts or transfers the powers of the directors to the shareholders. Under Section 108 of the Ontario Business Corporations Act, a USA has unique legal status that distinguishes it from an ordinary shareholder agreement.
Read definitionA vendor take-back mortgage (VTB) is a financing arrangement in which the seller of a property acts as the lender, providing some or all of the mortgage financing to the buyer. Rather than receiving full cash proceeds at closing, the seller accepts a mortgage secured against the property being sold. VTBs are used in Ontario when conventional bank financing is unavailable or insufficient.
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