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Greetings!
Continuing with the theme of looking at if, and in what circumstances, you have the right to change your mind, I thought you would find a very recent (June 9, 2010) decision of the British Columbia Court of Appeal to be of interest.
A bit of background is necessary. The Real Estate Development Marketing Act of British Columbia (REDMA) applies to developers of real estate developments, including strata projects. Its primary purpose is to protect consumers. REDMA contains two key requirements:
- a developer must file a document called a "disclosure statement" with the Government of British Columbia before the developer has the right to begin marketing the project, and
- a developer cannot enter into a contract of purchase and sale with a purchaser until the disclosure statement has been provided to the purchaser.
In the case of Chameleon Talent Inc. v. Sandcastle Holdings Ltd. (2010 BCCA 300), Sandcastle had, as required by REDMA, filed a Disclosure Statement for a commercial and residential strata project in Parksville on June 27, 2006. The Disclosure Statement indicated that commencement of construction was estimated to be November, 2006, and completion of construction of the residential tower was estimated to be November, 2008, however, construction would not commence in any event until the date Sandcastle obtained a building permit for the project, which was estimated to be November 30, 2006.
The building permit was not issued by the City of Parksville until April 23, 2007. On May 2, 2007, Sandcastle filed an amendment to the original Disclosure Statement confirming issuance of the building permit on April 23rd. However, the amendment did not make any changes to the estimated dates of commencement and completion of construction of the project set out in the original Disclosure Statement.
In July, 2007, after having received copies of the original Disclosure Statement and the amendment of May 2, 2007 from Sandcastle, Chameleon signed an agreement to purchase a penthouse unit in the project and paid a deposit of $239,980 toward the purchase price.
Prior to completion of construction of the penthouse unit, the principals of Chameleon ran into financial difficulties, which prompted Chameleon to change its mind about wanting to go through with the purchase. When Chameleon learned Sandcastle would not agree to cancel the purchase agreement, Chameleon filed an application in the Supreme Court of BC for a declaration that the purchase agreement was not enforceable, and for an order for return of the deposit. The Supreme Court of BC ruled in favour of Chameleon, and Sandcastle appealed that ruling to the BC Court of Appeal.
The Court of Appeal upheld the ruling of the Supreme Court, and dismissed the appeal by Sandcastle. The Court of Appeal stated that the estimated dates of commencement and completion of construction of the project set out in the original Disclosure Statement were "material facts" under REDMA. As the May 2, 2007 amendment to the original Disclosure Statement did not change those original estimated dates, the amendment did not comply with the requirements of REDMA. Consequently, the purchase agreement was not enforceable against Chameleon, and it was entitled to return of the deposit.
Morgan Rice
Squamish Real Estate REALTOR
mrice@macrealty.com
604-849-2668
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