DBM Real Estate Law Blog

Are you thinking about purchasing a pre-sale condo?

Have you recently purchased a pre-sale condo and has the developer amended the original contract of sale and purchase?

Has the completion date of your pre-sale condo been accelerated or delayed?

The law overseeing pre-sale condo buildings is the Real Estate Development Marketing Act (“REDMA”). When purchasing pre-sale condos, potential buyers must consider a number of factors prior to placing a deposit down and moving forward with the sale. For example, potential buyers most often consider the price, location, and size of a unit. At that point, the developer has no legal obligations to the buyer.

Prior to purchasing a pre-sale condo, it is important for the buyer to review Disclosure Statements relating to the pre-sale condo. The law requires developers to file Disclosure Statements concerning the pre-sale condo to the Superintendent of Real Estate (s. 14(1)(b), REDMA) containing all material facts and without any misrepresentations (s. 14(2) (b), REDMA), as well as providing the Disclosure Statements to purchasers or prospective purchasers prior to entering into a Contract of Purchase and Sale (the “CPS”) with the developer (s. 15, REDMA).

Once the potential buyer places a deposit down and signs the CPS, legal obligations are bestowed on both parties: the buyer and developer. Issues arise between the parties when the developer must amend the CPS and modify terms. Often, the change can be related to the completion of the pre-sale condo or the development property in whole.

If or when this occurs, it important to know that the law requires developers to notify the Superintendent of Real Estate (s. 16(1)(a), REDMA) and all purchasers (s. 16(1)(b), REDMA) of any amendments to material facts of the original Disclosure Statement and/or of any new Disclosure Statements containing material facts; if the developers fails to do so, the purchaser’s rescission rights are triggered and the purchaser may rescind the CPS by serving written notice of the rescission (s. 21(3), REDMA).

One may believe that certain modifications, such as dates of pre-sale condos being accelerated or delayed, will ensure the buyer has legal recourse against the developer to the point where he may invoke his recession rights. This however, is not always the case; a recent 2014 decision has provided clarity about when a buyer of a pre-sale condo may rescind his CPS.

The test laid out in Woo v. Onni Ioco Road Five Development Limited Partnership, 2014 BCCA 76 (“Woo”), states that the term being modified or as the legislation prefers, the “material fact” being changed must “adversely affect, or could reasonably be expected adversely to affect, the value, price or use of the development unit or development property” (para. 71). In short, the BC Court of Appeal stated that potential buyers may rescind the CPS should the amendments to the CPS affect the value, price or use of the pre-sale condo negatively; should the change benefit the buyer, there would be no recourse.

If you’re considering purchasing a pre-sale condo or have purchased one and are continuing to encounter issues with the developer, please feel free to call our office and meet with our general litigation lawyers.

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