Litigation Brief

Real estate developer's appeal dismissed for insufficient disclosure to condo purchasers

The Court of Appeal has dismissed an appeal by a real estate developer found to be non-compliant with the Real Estate Development Marketing Act, S.B.C. 2004, c. 41 (“REDMA”).  In Chameleon Talent Inc. v. Sandcastle Holdings Ltd., 2010 BCCA 300, it affirmed a lower court decision holding that the dates of construction and completion of a condominium project were material facts required to be disclosed in a real estate disclosure statement, a failure of which rendered an agreement for the purchase of a condominium project unenforceable.

Court rules completion and construction dates in condominium projects are material

The Court of Appeal for British Columbia released a key decision today addressing the materiality of disclosures for condominium projects. In Chameleon Talent Inc. v. Sandcastle Holdings Ltd., the Court of Appeal considered the issue of whether the lower court erred in law by holding that the dates of construction and completion of a condominium project were material facts required be disclosed in a real estate disclosure statement, a failure of which rendered an agreement for the purchase of a condominium project unenforceable.

Developer ordered to return real estate deposit to buyers over inconsistent contract terms

The Supreme Court of British Columbia today ordered Lake Country (Sitara) Developments Ltd., a BC real estate developer in Kelowna, to return a $56,000 deposit paid by two purchasers for the sale of two strata lots that did not complete. The deposits were returned to the purchasers because of inconsistent contract terms that resulted in the developer and purchasers not having agreed to an essential contract term, despite believing that they had done so. 

On March 26, 2006, the purchasers made an offer for two strata lots under development and executed standard-form real estate agreements prepared by the developer and separate written amendment agreements which permitted the purchasers to assign the standard-form agreements. On April 12, 2006, the developer accepted the offers by the purchasers and signed the standard-form agreements but failed to execute the amendment agreements. 

Strata owner who engaged in "guerrilla warfare" ordered to pay special costs

The Supreme Court of British Columbia ordered two strata lot owners who engaged in what the court called "guerrilla warfare" against their strata corporation to pay special costs to the strata corporation. Over the course of about a year, Wendy Harvey and Douglas Edgar, owners of a strata lot at 5555 Yew Street in Vancouver, removed brick pavers and concrete toppings from a neighbour's patio, altered the building's landscaping and disrupted a water test being conducted on the building by consultants. The strata corporation sought and obtained an order from the British Columbia Supreme Court enjoining them from undertaking any further work on the common property. 

Real estate agents run a risk when they act as "dual agent" for the sale of their own property

In a decision that should be of interest to realtors, the Court of Appeal has affirmed a lower court's decision to award damages where an agent had contracted to sell real estate he owned to the Respondent.

The parties agreed that the realtor would serve as “dual agent” to both the buyer and seller, even though he himself was the seller. The purchase price was nearly double what the realtor had paid for the property 5 months earlier, and more than $100,000 more than the fair market value. The purchaser subsequently sued and the trial court awarded her the amount of money over fair market value that the agent received from the purchase.

In DeJesus v. Sharif, 2010 BCCA 121, the Court of Appeal affirmed the trial court’s ruling, reasoning that in agreeing to act as agent for the purchaser, the agent took on a fiduciary obligation to disclose to her all material facts that may have influenced her decision to purchase the property.

To read the full decision of the Court of Appeal, click here.

Developers' projections were reasonable, rules Court of Appeal

Investors in a real estate development brought an action against, among others, the developers of the project for breach of the Real Estate Act, (since repealed by the Real Estate Services Act, S.B.C. 2004, c. 42) and the Securities Act, R.B.C. c. 418.  The investors claimed that the developers negligently misrepresented the projected occupancy rate for the development.  In Strata Plan LMS 3851 v. Homer Street Development, 2009 BCCA 395, the Court of Appeal rejected that claim, holding that the concept of “reasonableness” when applied to projections “of future performance of a to-be-built hotel, subsumes a range of reasonable outcomes, not a pinpoint conclusion.”

To read the full decision, click here.