Looks like we’re at that point in the housing cycle again…
Pre-sales buyers (including former PM Kim Campbell) are suing a developer to get out of their pre-sales contract now that the condos they bought are worth less than they agreed to pay.
And of course the developer is suing them right back to enforce the contract.
Campbell put down a $368,000 deposit in October 2007 for her unit, valued at purchase at about $1.8 million, Baynham said. The unit was promised for completion in December 2011, he said, but only completed in mid-January 2013.
The lawsuits come as housing sales in B.C. have dropped by 24 per cent in February 2013 from a year earlier, the B.C. Real Estate Association said last week, while prices have dropped eight per cent.
The downtown Vancouver highrise condo market seems to have been particularly hard hit. According to the blog Vancouver Condo Report, February MLS figures show highrise prices downtown have dropped by about 18 per cent over the past 12 months.
“Nobody would get out of any real-estate transaction if the value of the unit, albeit delivered late, is more than the purchase price,” Baynham said.
“The perception of my clients, and I don’t know if it’s true or not, is that they can’t sell these units for what they purchased them for, and therefore they want their money back.”
Of course, the justification for escaping the contract isn’t that the value of the property has gone down – the buyers claim is that the completion date was delayed without proper notification. The Developer disagrees:
However, the developer’s lawyer, Ken McEwan, said there was no late completion, no failure of disclosure, and Campbell and others have “simply overlooked” terms in the original contract.
“People are perfectly happy in 2007 to sign a contract in the belief that the market will keep going up and they will make money,” McEwan said Saturday in an interview.
“And we say, there was no failure of disclosure, and we are relying on the contract that everyone entered into back then, and allocated the risks.”
McEwan added that the developer is counter-suing Campbell to enforce her purchase deal.
Read the full article in the Province.