Since their peak in 2022, home prices in the GTA have declined by more than 24% coupled with the lowest volume of home sales in years. The decline has led to builders being unable to obtain project financing causing years-long construction delays, and home buyers receiving a home value appraisal before closing that leaves them with a mortgage shortfall. For purchases of pre-construction homes, home buyers and sellers are now facing a real risk that their purchase and sale of a home will not close, raising the threat of a legal dispute. Navigating a party’s potential early exit from a purchase and sale agreement of a pre-construction condo or house can be a challenging and stressful financial event. Common scenarios that lead to a party considering an early exit include: appraisal or re-appraisal of the property value delayed construction by the builder buyer shortfall in mortgage financing changes to the … Read More
Rescission May Be Available Even If Innocent Third Parties Adversely Affected
In the recent Court of Appeal decision of Urban Mechanical Contracting Ltd. v. Zurich Insurance Company Ltd., 2022 ONCA 589, the Court of Appeal considered whether rescission is ever available as a matter of law when the rights of innocent third parties intervene and restitutio in integrum (putting the parties back to their original position) is impossible. The court answered in the affirmative. In the case the appellants brought two applications seeking a determination of whether, as a matter of law, a bond issuer can rescind a bond agreement on the basis of fraudulent misrepresentations and collusion when doing so would affect the rights of innocent parties. Background The case dealt with a public-private redevelopment project with infrastructure Ontario to build a new 17-storey patient care tower (the Project). The construction was to be financed and carried out by the private sector. The Project was subject to Ontario’s procurement process … Read More