Condo developers cancel sales deals

https://www.cbc.ca/news/canada/toronto/ontario-condo-developer-buyers-1.6251278

Click the link above to check out the full article. The article describes several examples early stage buyers who purchased and put down most of the deposit for a home receiving a letter a year after their agreement, informing them that agreement has been cancelled. In one example, unless the buyer agreed to pay $100,000, or 20% more more than the original purchase price, she was out. The developer in this case is blaming the pandemic for increased costs and delays that forced their hand.

Very interesting article, whether you are a first-time homebuyer, or in the market for another property. With many new development properties increasing in value before owners even take ownership, some developers seem to be trying to take advantage of increased prices. The unfortunate part is that a lot of people are stretching to buy these homes in the first place, so they cannot afford the increased prices, and as you will read, some cannot afford lawyers to fight for them.

This quote in particular was one we wanted to highlight.

It's still the responsibility of buyers to know what they're getting into when it comes to buying pre-construction homes, he warned.

Be wary, make sure to read what you are signing and ask questions, make notes.

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See below for more quotes from the article.

The foundation has been poured for Soraya Palma's first home and she's paid most of the deposit. But the 29-year-old says she now has no choice but to walk away from the Barrie, Ont., development. Last Wednesday, she received a letter that left her speechless. Pace Developments informed her it's cancelling their agreement from March 7, 2020, and returning Palma's deposit even as construction on the walk-up condos continues. That is, unless she agrees to pay an additional $100,000 on top of the original $512,000 purchase price. Experts that CBC News spoke to say what Pace is doing is most likely legal, although they caution that they haven't seen the contracts.

"They're taking advantage of the housing market," said Margaret Geniole, 75. "I don't think it's right. They expect us to honour our contract. We expect them to honour theirs."

The couple said they feel like they have no choice but to buy back in and hope the developer doesn't raise the price again. "To get a lawyer to fight it is going to cost us money that we can't really afford," Geniole said.

Even if buyers were to take legal action, the case would be tied up for years, said broker David Fleming. In his 18-year career, he said he never sold pre-construction properties to clients because of high risks and low rewards.

"The developers' lawyers have spent a lot of time and a lot of effort to make these contracts ironclad," Fleming said.

The article linked and mentioned above was last updated November 20, 2021 and written by Samantha Beattie at CBC News https://www.cbc.ca/news.