Derrick Penner
Sun
A recent court decision that allowed a Richmond couple to walk away from their contract to buy a pre-sale condominium gives ammunition to dozens of buyers being sued by developers for failing to complete their purchases, say the lawyers representing some of them.
B.C. Supreme Court Judge Lynn Smith, in a judgment released Wednesday, ruled that Timothy and Teresa Dwane had the right to rescind their agreement to buy a $3.5-million condominium in a development called Coast at the University of B.C.
The Dwanes sued the developer, Bastion Coast Homes and Coast Development Partnerships, when they discovered they hadn’t been informed of significant changes in plans for the unit and the building, as is required under the Real Estate Development and Marketing Act.
While this was a case of the buyer suing the developer, lawyers representing buyers being sued by developers for failing to complete their purchases say Smith’s decision helps their cases.
“A big issue is disclosure,” according to lawyer Bryan Baynham, “whether or not it was made, whether or not it was full disclosure, whether or not the changes made were material changes.”
Baynham represents nine buyers being sued by the Onni Group of companies for breaching their contracts to buy apartments in a Port Moody development.
Onni Group earlier this year filed suit against dozens of buyers in a several projects for the same reason.
Metro Vancouver‘s real estate markets had turned and the value of the apartments in question had dropped below the purchase prices contained in the buyers’ contracts.
Onni sought to cancel the buyers’ contracts, keep their deposits, and collect further damages representing the difference between the pre-sale purchase prices and the value on the open market at the time of closing, as well as other costs.
Baynham said his clients have cases to make in defence.
They vary from case to case, but he said most involve issues with Onni’s compliance with its requirement to disclose material changes in the projects to buyers.
Baynham said developers benefited from B.C.’s condo marketing legislation, because it allowed them to sell apartments before they were built and use the buyers’ deposits to help secure financing for their construction.
“It only makes sense to do this in an upward market,” Baynham said, because buyers wouldn’t put money into a purchase if they thought there was a risk it would lose value.
“Now the tide is turned, property values have dropped, and they’re trying to require people to make up the shortfall,” Baynham said.
Ken Pazder, another real estate lawyer, said Smith’s judgment was important because it helps clarify the Real Estate Development and Marketing Act’s role as consumer protection legislation at a time that law is being seriously tested because of the downturn.
“This is definitely a pro-buyer case,” he said.
A number of other cases are winding their way through court, ranging from suits launched by developers against buyers, to developments such as the high-profile Jameson House project in downtown Vancouver, which sought court protection from bankruptcy after the collapse of its financing last fall.
One aspect of the developer’s plan to emerge from bankruptcy involves enforcing the pre-sale contracts of 75 buyers in the building over the protests of a significant number who have argued that changes to the project should allow them to rescind those contracts.
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