Canadian Lawyer

20 O C T O B E R 2 0 1 8 w w w . c a n a d i a n l a w y e r m a g . c o m A series of condo cancellations and failures across the country have pre-construction investors crying foul. And while there are some protections in the ever-evolving condominium legislation, the rules vary from province to province and they don't always apply to the principle investment and any lost interest or opportunities. The number of condo buyers continues to increase, resulting in more Canadians living in condos — 13.3 per cent of households live in a condominium unit, accord- ing to Statistics Canada's 2016 census figures. With the increased interest and con- struction of condo projects, there is concern that purchase and sale agreements for units not yet built place a great deal of risk upon the purchaser. It is a lament Toronto condo lawyer Denise Lash has heard repeatedly. In Ontario, the principal is protected and returned to the purchaser in the event of a failure, but there are no other remedies. "That is the concern that I've had expressed by many people. And people have come to me for advice and I say: 'Sorry, there's nothing you can do.' And they say: 'Now to get into the market, it's a whole other thing. I've lost the appreciation in value.' And that's where they're at a loss. And I don't think that's going to change." While the condo investor waits for their condo to be built, the market can con- tinue to climb beyond the price the purchasers had secured. Even with the deposit returned, they've lost any appreciation or interest the money used for the deposit PROTECTING CONDO BUYERS Condo legislation varies across the country, but purchasers are often left unprotected By Marg. Bruineman R E A L E S T A T E might have gleaned had it been invested else- where when the project doesn't materialize. It's been enough of a concern for Ontario's Condo Owners Association to argue for the establish- ment of an insurance program for appreciation lost when a condo project fails or is cancelled. The purchase and sale agreement of a condo unit in Ontario typically includes a condition that the development achieves a certain threshold of sales within a certain period. Failure to reach those goals gives the developer the right to pull out of the project, says Barrie, Ont. real estate lawyer Andrew Ain of Ain Whitehead LLP, who represents both developers and purchasers. But developers are required to register under Tarion, Ontario's new home warranty corpora- tion, which has a protection plan for deposits. And the deposits the builder receives must go to an escrow agent or the builder's lawyer to be put into trusts, which the builder can only access when they satisfy the Tarion requirements. While there are levels of protection in place for the purchaser of a pre-construction condo in Ontario, only a deposit of up to $20,000 is protected — although Ain anticipates that will increase. Tarion went under the microscope last year, resulting in 37 recommendations presented by Douglas Cunningham, former associate chief justice of the Ontario Superior Court of Jus- tice. Among the recommendations is increased regulation for developers and builders and suf- JEANNIE PHAN

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