Buyer Who Walks Is On Hook For Price Drop

Posted in: Real Estate- Apr 19, 2018 Comments Off on Buyer Who Walks Is On Hook For Price Drop

You think you’ve sold your house. You have a signed agreement (and a deposit). But then the market turns, the value of your home starts to drop, and the buyer doesn’t go through with the purchase. What compensation can you get? That’s the question the sellers brought to court in a recent case.

The buyer had agreed to pay $1,260,000 for a rancher on a large property in Surrey. The purchase contract was signed in May, 2016 (near the height of the Lower Mainland real estate frenzy), likely on the standard form normally used for such residential transactions.
There were no subject conditions in the contract, and the buyer put up a $60,000 deposit. The sale was scheduled to be completed on September 1, 2016. But the buyer simply walked away and did not complete the transaction.

The sellers had bought a replacement property to move into. They sued the buyer for breach of contract and, when the defendant buyer didn’t respond, they got default judgment in their favour. They were awarded the deposit, and additional damages (compensation due to them) to be assessed later. So this court hearing dealt with the full amount of compensation due to the sellers.

The purchase contract effectively said that if the buyer defaulted and didn’t go through with the purchase, the sellers could get the deposit toward compensation and could also look to the buyer for any additional losses they suffered over and above that.

The court heard evidence that, after the contract was signed and especially when the B.C. 15% foreign buyer’s tax came into effect in August, 2016, the real estate market changed and softened. In order to try and mitigate (reduce) their loss, the sellers proactively re-listed their house for sale in mid-September, 2016 at $1,149,000. This was the reduced price recommended by their agent, who actively marketed the property on MLS and otherwise from then on. But it took some five months and several more price reductions before the property was finally resold in February, 2017 for $910,000.

The guiding rule as to the amount of compensation for such a breach of contract is to put the sellers in the same position they would have been in if the contract had been carried out, said the court. So here, walking away from the deal without a valid excuse meant the buyer was on the hook for some $350,000 for the drop in market value from $1,260,000 to $910,000. In addition, the sellers were awarded consequential damages (reimbursement for extra costs they had to pay until the house was resold), such as mortgage interest, property taxes, insurance, gas and hydro for the house, which came to over $10,000.

Bottom line: If a buyer doesn’t go through with a binding house purchase contract in a falling market, they may well be on the hook for the drop in value (when the seller afterwards resells for less) plus other expenses the seller incurred because of the breach.

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.

Doctor Shoppping By ICBC Not Allowed

Posted in: ICBC / INJURY- Apr 19, 2018 Comments Off on Doctor Shoppping By ICBC Not Allowed

If you’re hurt in a car crash, you should see your doctor. And if you can prove the accident wasn’t your fault, you’ll likely be able to get compensation for your injuries from the person at fault or their insurer, usually ICBC.

How much compensation? That depends on how badly you were hurt. The opinions of medical experts on the nature of the injuries and your future prospects of recovery are crucial in helping the court decide on what compensation it should award for loss of life enjoyment (and any other losses like costs of future care). They’re also important in helping your lawyers trying to settle your case for fair compensation.

Under the terms of your policy, ICBC has the right to get your brief doctor’s report – despite any doctor-patient confidentiality and even if you don’t consent. If you’ve gone to court for compensation, ICBC also has the right to have you submit to one or more “independent” medical examinations by physicians of its choice (where the defendant in your lawsuit is insured and defended in court by ICBC, as is usually the case).

That’s because in your lawsuit, you will normally present your doctor’s medical opinion(s) as evidence of the diagnosis of your injuries and the prognosis for your recovery. To “level the playing field” and counter any perceived favourable bias, ICBC is allowed to have its own medical examination(s) conducted for those purposes too.

Doctors and medical professionals for both sides are supposed to be impartial. They’re supposed to offer expert opinions that help the court. And they’re not supposed to be advocates for “their” side. Still, the amounts at stake in accident injury cases may be huge – and when one side oversteps the aims of the rules, the court will step in to prevent unfairness.

Here’s one recent example. A car crash victim who was badly hurt and suffered various injuries including a traumatic brain injury underwent two “independent” medical examinations by ICBC-selected medical experts, including a psychiatrist. ICBC then wanted a neurologist to do a third “independent”exam, without giving the victim the reports from the first two examinations. When the victim’s lawyers said “no,” ICBC applied for a court order requiring this third examination.

The accident victim’s lawyers argued in court that another report for ICBC was excessive. They pointed out that ICBC hadn’t handed over the reports from the first two independent medical exams and suggested that ICBC was “doctor-shopping” for a more favourable medical expert opinion. ICBC’s court application was rejected, and ICBC wasn’t allowed the third medical exam.

What medical exams are appropriate – and what can be demanded and what can be refused – isn’t straightforward. If you’ve been injured in a car accident, make sure you get legal help early on from an experienced personal injury lawyer who can make sure your legal rights are protected.

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.

Oops! Don’t Let Tenants Put Your House Deal At Risk

Posted in: Real Estate- Apr 18, 2018 Comments Off on Oops! Don’t Let Tenants Put Your House Deal At Risk

If the house you are selling (or buying) has tenants, make sure the purchase contract clearly spells out what happens with those tenants when your deal closes. BC has detailed residential tenancy rules about ending a tenant’s lease. If your contract isn’t clear on whether the tenants are to stay or have to be out when the house deal closes, you could end up with a big problem, an expensive court fight and a failed deal. A recent BC Supreme Court case serves as a warning.

The Martins (all names changed) were looking for a large house for several generations of family members. In 2014, after losing out on buying several other properties, they struck a deal to buy a house from the Prestons in Richmond for just over $2 million. It had over 8,000 square feet of space and a separate coach house. There were also two tenants on the property, one living in the main house and the other in the coach house.

The Prestons told the real estate agent, who represented both parties under a dual agency agreement, that they would deal directly with the Martins about the tenants. In the purchase contract, the agent didn’t record anything about that, or about any existing tenancies. However, the Prestons didn’t talk to the Martins about these tenancies in the two months before the closing, nor did they take any steps to terminate the tenancies.

The Martins’ lawyer prepared the closing paperwork on the basis the Martins would get vacant possession, as specified in the standard form purchase contract prepared by the real estate agent.

Early on the day the deal was to complete, the Martins went to the house. When they found out the tenants were still around, they insisted on getting vacant possession per the contract and refused to close the purchase. The Prestons tried to persuade them to keep the tenants on and, when that failed, tried to end the tenancies and have the tenants move out that day.

Over the next few days, the Martins and Prestons negotiated toward reworking the house deal. But nothing got finalized. In the end, the Martins sued the Prestons for “breaching” (i.e., breaking) the purchase contract. The Prestons counter-sued, blaming the Martins for the deal not closing.

The BC Supreme Court decided the contract called for the Prestons to deliver vacant possession to the Martins on closing. Since the way they had tried to end the tenancies wasn’t in line with the residential tenancy rules, the Prestons had breached the purchase contract. So the Martins were entitled to get their $100,000 deposit back. Expert evidence showed the house value at the time of the breach was pretty much what they’d bargained for, though, so the Martins got no additional compensation for the significant house value increase since then.

Tricky issues with your house deal? Make your purchase contract is subject to review and approval by your lawyer.

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.