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B.C. Courts Siding With Pre-Sale Developers

B.C. Courts Siding With Pre-Sale Developers
As we reported a few months ago ... there has been a subtle shift in how courts in B.C. are ruling in cases where buyers of pre-sale condos try to get out of their contract. Previously, judges tended to side with buyers when disputes arose between purchasers and developers about many contractual issues. (In many cases, the buyers simply wanted out because prices had fallen.) Presale buyers wanting out of a contract attempt to use their rescission rights under the Real Estate Development Marketing Act (REDMA) to avoid completing the condo purchase. And up until a year ago, they were mostly successful.
Lately however, says Vancouver litigation lawyer Craig Ferris of Lawson Lundell, courts are making it more difficult for would-be defaulting purchasers. He cites three cases over the past 12 months, including a January ruling in favour of Bosa Developments where a pre-sale buyer tried to break a contract because the original completion date was earlier than expected.
However, in another recent case, the B.C. Court of Appeal found that two condo buyers' purchasers were able to terminate their agreements to purchase because the developer had not met the original construction completion date.
Major Point: Notes Ferris: For developers: "These decisions are a reminder that a developer must strictly comply with its contractual obligations under an agreement to sell a condominium, and "substantial compliance" is not enough to ensure enforceability of that agreement. Ultimately, these cases are cautionary tales for both developers and purchasers alike, highlighting the nature of their obligations both contractually and under REDMA." For buyers of pre-sale condos: Your new contracts are much tighter ... have your lawyer read them over. Understand that the developer expects you to (rightfully) close. If you are in the assignment business ... be very, very careful!

B.C. Courts Siding With Pre-Sale Developers

There has been a definite shift in how BC courts are ruling in cases involving pre-sale condo Buyers who try to get out of their contract. Previously, judges tended to side with Buyers when disputes arose between purchasers and developers about many contractual issues. (In many cases, the buyers simply wanted out because prices had fallen.) Presale buyers wanting out of a contract try to use their rescission rights under the Real Estate Development Marketing Act (REDMA) to avoid completing the condo purchase. And up until a year ago, they were mostly successful.
                                                                                                                                               

Recently courts are making it more difficult for purchasers to default. There have been three cases over the past 12 months, including a January ruling in favour of Bosa Developments where a pre-sale buyer tried to break a contract because the original completion date was earlier than expected.


However, in another recent case, the B.C. Court of Appeal found that two condo buyers' purchasers were able to terminate their agreements to purchase because the developer had not met the original construction completion date.


These decisions are a reminder that a developer must strictly comply with its contractual obligations under an agreement to sell a condominium, and "substantial compliance" is not enough to ensure enforceability of that agreement. Ultimately, these cases are cautionary tales for both developers and purchasers alike, highlighting the nature of their obligations both contractually and under REDMA. For buyers of pre-sale condos: your new contracts are much tighter ... have your lawyer read them over. Understand that the developer expects you to close. If you are in the assignment business ... be very, very careful!

 

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Alexandra Axsen

Owner/Managing Broker

Lake Okanagan Realty

Tel: 250.870.2792

Alex@LakeOkanaganRealty.com

www.LakeOkanaganRealty.com

                                                                                    

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