Flipper fails to have pre-sale contract ruled invalid. Ordered to pay $750,000.

 

Last night CBC-TV ran a story which shows the danger of condo pre-sales when they profiled the story of a man who signed a pre-sale contract for a luxury condo in Vancouver and has now lost almost three quarters of a million dollars after he failed to complete the final sale on the unit.

Lawrence Austin signed a deal to buy the condo at 1499 West Pender in the spring of 2008, just months before the global financial crash.

Austin agreed to pay Reliance Properties $2.71 million for the 25th floor Coal Harbour condo, and put down a 10% deposit of $271,000.

But within a few months the global real estate market had crashed and Austin began looking at his options to get out of the deal.

Initially, he argued that at the time of the sale he had made an oral agreement to be able to assign the pre-sale agreement to another buyer, regardless of price.

But the developer told him his pre-sale agreement restricted him from assigning it to another buyer for less than the purchase price.

Austin then tried to get out of the contract by arguing that the developer failed to give him a copy of the original disclosure statement before he signed the contract, as required by law.

The developer disagreed on both points, and in the winter of 2011 when the building was completed, Austin didn't pay the balance of the purchase price.

Six months later, the developer sold the unit for just over $2.05 million and sued Austin for the difference in price, minus his deposit.

In her ruling issued last week, Justice Catherine Bruce dismissed Austin's claims that he had not received the disclosure statement, noting he had signed a statement saying he had received it at the time he inked the deal.

She also found nothing substantial to support Austin's claims that he had an oral agreement with the developer permitting him to assign the pre-sale agreement without the developer's agreement.

The Court ordered Austin to pay the developer nearly $500,000 to cover the difference between the pre-sale and final sale price, minus his deposit.

Austin was also ordered to pay the maintenance fees and property taxes for the six months it took the developer to sell the condo.

Meanwhile it seems the industry is fighting hard to prevent future buyers from trying to escape their contract based on changes to the disclosure statement.

CBC reports developers, through the Urban Development Institute (UDI), are lobbying the Province to change the act because buyers are using it as a loophole.  The UDI says buyers simply want out of contracts signed before the market had fallen.  "To allow them to do so leads to uncertainty and... slows down the industry and the economy as well as impacting housing supply and prices."

(hat tip Kabloona on VCI)

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'Pre-sale' buyer plans to fight Onni lawsuit

On February 5th, we profiled how Onni is suing 20 pre-sale buyers who are trying to walk away from their commitments in the Aria 2 development. This follows similar legal action by Amacon Developments.

Lou and Donna Skoda were 'pre-sale' buyers in Onni’s Aria 2 development in Port Moody and are among the 'pre-sale' defaulter's who are bing sued to hold them to their September 2007 committment.

Skoda says they always wanted to complete the purchase, but the downturn in Vancouver’s real estate market got in the way of their plans. They approached Onni to renegotiate their deal, but the developer wouldn't budge.

Skoda says they got caught in a squeeze between selling their current property and promising to buy into Onni. When they failed to sell their existing apartment, they were unable to pay the $456,000 they had committed to with Onni.

Without being able to sell thier current apartment, the Skoda's are unable to secure a mortgage to buy they Aria 2 apartment.

The Skoda's are 79, retired and live on fixed income.

Skoda claims Onni amended Aria 2’s initial project disclosure statement twice, but never delivered copies to the couple, a requirement under real estate development marketing rules.

The couple stands to lose the $68,350 deposit they put down on the property, plus additional damages that Onni is seeking in its suit against them, starting with lost property value.

Onni has put the apartment the Skoda's committed to up for resale at a price 25 per cent less than their contract price as part of the “liquidation” of 375 unsold units Onni announced two weeks ago.

If sold at that price, Onni could seek at least an additional $45,000 over and above the $68,350 deposit from the Skodas.

We will check back on this as it progresses to see how it works out.

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