Owners and pre-sale buyers of high-profile, high-priced condominiums in Vancouver are going to court in an attempt to wriggle out of deals amid expectations of falling prices.
The trend underscores the importance for developers to scrupulously follow the Real Estate Development Marketing Act (REDMA), because failure to do so can render sales contracts unenforceable and enable buyers to get their deposits back.
"People wouldn't be looking for the return of their deposits if the units were worth more than or as much as they purchased them for," said Harper Grey LLP partner Bryan Baynham.
Sixty-eight owners who bought condos at the landmark Village at False Creek are suing the developer, alleging that they weren't sold the world-class luxury they were promised. Prices in the controversial project topped $1,000 per square foot.
The most recent string of lawsuits involves the Georgia Properties Partnership (GPP) Residences at Hotel Georgia project, which is set to be complete in December - one year later than the developer promised buyers. Most condo units here sell in the $1 million-plus range.
Baynham had filed six lawsuits from buyers of units at the Residences at Hotel Georgia as of October 24. He expects to file more.
The project has 156 units. As of September, 96 were sold.
"The developer in this case knew obviously that the project wasn't going to be complete by December 2011," Baynham said. "Yet, in the disclosure statement, it says specifically that the completion is estimated to be December 2011."
GPP issued a statement saying that no one at the company would comment because the matter is before the courts.
There are Vancouver precedents where buyers have successfully sued to get deposits back after a developer failed to disclose material information. The BC Court of Appeal ruled this summer that when a developer breaches REDMA and does not disclose material facts, sales contracts are rendered "unenforceable."
That case involved a buyer who successfully sued for the return of a deposit after she bought a unit at the Residences at the Fairmont Pacific Rim. She won her case because the developer similarly failed to notify the buyers when it knew that its September 2009 completion date could not be.
- Glen Korstrom/BIV
from Western Investor December 2012
