Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m A U G U S T 2 0 1 8 19 $30,000 deposit and the Ontario Supe- rior Court of Justice ordered they pay the sellers $470,000 in the lost value of their would-be dream home after they backed out. Knowing that the threat is more than just the loss of the sometimes sub- stantial deposit has helped others avoid court, says Sidlofsky. When advised of their rights and obligations and the possible costs of a challenging action, a defaulting buyer may be motivated to negotiate and settle instead. Ali Sodagar saw similar pressures during the 2007-08 economic crisis when buyers of a development didn't want to complete their purchase and the developer remarketed the properties, selling them at a shortfall. "At that point, everyone was look- ing to see whether there was a mate- rial misrepresentation in the disclo- sure statements that were filed with the superintendent of real estate and anywhere from the exact square footage to completion date to the developers' financing requirements," says Sodagar, principal of Sodagar & Company Law Corporation in Vancouver. A misrepresentation is one of the few ways a buyer might be able to pull out of a home purchase agreement, but in today's re-sale market, the days of obvious misrepresentations — such as a seller pulling the carpet over a hole in the floor — are long gone. And $10,000 of flood damage in the basement of a $2-million deal might provide the opportunity for discussions on hold- back provisions, but they won't get the buyer out of the deal. A failure or misrepresentation only allows a way out of the transaction if it is considered fundamental to the transac- tion or a significant part of the essence of the property. But a problem with the warranties alone won't be enough, says Irvin Schein, a senior partner and chairman in Minden Gross LLP's litiga- tion group. A problem with a warranty — something that isn't material and not considered to be a significant shortcom- ing such as basement flooding — does not offer a buyer a way out. "There is going to be a fine line WE WERE GETTING CALLS FROM PEOPLE WHO WERE EITHER LOOKING TO GET OUT OF THEIR AGREEMENTS OF PURCHASE AND SALE OR SELLERS WHO WERE ASKING ABOUT THEIR RIGHTS AND TERMS OF ENFORCING THEM. GREGORY SIDLOFSKY, Wagner Sidlofsky LLP Untitled-2 1 2018-02-07 2:05 PM

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