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 property grounds or unit originally purchased
- assignment of the sale to a new purchaser who cannot close
There are three types of legal issues that typically arise in a disputed early exit from a pre-construction purchase and sale agreement:
- breach of a precondition to the purchase and sale agreement
- failure to disclose key information and updates at the time of purchase or subsequently as construction plans change
- material change or material misrepresentation about the characteristics of the final property
A key consideration is that the breach, non-disclosure, or material change would be enough to have changed the buyer’s mind about proceeding with the purchase if they had known at the time of the original agreement.
The lawyers at Gilbertson Davis are experienced with representing both buyers and sellers in negotiating and litigating exits from pre-construction purchase and sale agreements. To help ensure you have an effective initial consultation, be sure to have ready:
- your purchase and sale agreement
- all amendments and schedules to the purchase agreement
- material disclosure documents from the builder
- any inspection reports of the property grounds and building
- information about the buyer, seller, builder, broker, agents, and other parties involved
If there is a legal basis for a party to exit the original purchase agreement, the next steps are generally to negotiate to resolve the matter or bring an application to the Superior Court for a judgment on the interpretation of the contract and other legal issues. The timeline for resolution varies depending on the availability for hearing dates with the Superior Court.
How Can We Assist you?
Our lawyers have expertise and experience in real estate litigation matters and can assist you in resolving your legal issues in a timely and cost-effective manner. Please contact us for an initial consultation through our Request Consultation Form, email to info@gilbertsondavis.com, or by telephone (416) 979-2020.
For more information, see our areas of practice at Real Estate Litigation and Condo Litigation to find examples that match your legal issues.
Brief informational summaries about insurance litigation, commercial litigation and family law litigation matters in the courts of Ontario and Canada are periodically published on our website. Please note that our website content is for informational purposes only, and should not be construed or relied upon to provide legal advice. If you require legal advice, please request an initial consultation with Gilbertson Davis using the Request Consultation Form on this webpage or by contacting our Intake Coordinator on (416) 979-2020, ext. 233 (both subject to the Terms of Use described on our Contact page).
Comments & Opinions by Gilbertson Davis lawyers and staff on its Blog, or in media interviews, appearances or publications, or in professional publications, are personal to them, and do not necessarily represent the opinions of the Firm or anyone at the Firm other than the individual expressing those comments or opinions.
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