CONDO BUYERS! HELP FOR DELAYS & OTHER PROBLEMS

Interested in buying a condo? For some attractive-looking condo projects, buyers often sign a purchase contract for a unit well before construction starts. It’s not uncommon, however, for the development to be delayed and for the building not to be ready on the expected date. The purchase contract may anticipate this happening and allow the developer to shift the unit’s completion date to a later date by giving you notice. But does this mean that you – faced with not having a place to move into when planned, as well as with an uncertain condo market – have no  recourse or protection?

 

Not necessarily. Consider this recent BC appeal court decision which looked at REDMA and helped one buyer.

 

REDMA is the Real Estate Development Marketing Act. It is consumer protection legislation for buyers of “development units” such as condo units (and also subdivision lots and timeshares). A developer who wants to market condos well before construction starts has to file a “disclosure statement” with the Superintendent of Real Estate and also give the disclosure statement (and any amendments) to a buyer by a specified time. The information the condo developer must put in a disclosure statement includes the estimated project completion date. If there’s a misrepresentation in the disclosure statement that the developer becomes aware of, the developer has to prepare an amendment or a new disclosure statement, which they also have to file with the Superintendent and give to buyers.

 

In the recent case, the buyer signed a contract for an expensive luxury Vancouver condo unit in August, 2007. The $1,136,000-plus deposit was to be paid in five installments, and she paid the first two installments totalling $284,000. She was given copies of the May, 2006 disclosure statement and the only amendment to it. The developer, however, knew well before the buyer signed the contract that the project wouldn’t actually be finished by the estimated September, 2009 completion date set out in the disclosure statement. But the developer never filed an amended disclosure statement to reflect this change.

 

When she signed, the buyer was informally aware that the development completion date would be somewhat later, about November or December, 2009. But the project’s completion was further delayed. An occupancy permit for her unit was only issued January 25, 2010. (In the meantime, the purchase contract was amended to reflect a later closing date for the unit, which the developer shifted to January 27, 2010 as allowed under the contract.)

 

The buyer refused to go through with the purchase. So the developer sued for the full deposit, while the buyer wanted to get back the $284,000 portion she had already paid.

 

The BC Court of Appeal decided that REDMA spells out what amounts to a misrepresentation and that REDMA required the developer to file an amendment immediately once they knew the disclosure statement was wrong as to a material fact (here, the completion date). Because the developer didn’t do this, it didn’t comply with the consumer protection law, and the purchase contract was unenforceable. The buyer got her deposit back, with interest.

 

Of course, any particular case will depend on its own unique facts. But if you’re faced with problems involving a pending condo (or other development unit) purchase, whether it’s construction delays or other issues, and you want to know your options, consider consulting one of our lawyers.

 

This column has been written by Janice Mucalov LL.B as part of “You And The Law”. It provides information only and must not be relied on for legal advice. Names of the parties in reported cases have been changed or removed to protect their identity. Lawyer Janice Mucalov is an award-winning legal writer.

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