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 O C T O B E R 2 0 1 8 21 ficient protection for the consumer. That could include devel- oping a record of builders who have had problems and perhaps preventing them from building in the future. There are similar insurance programs across the country, including the Alberta New Home Warranty Program and the Atlantic Home Warranty Program. But no such program exists in Quebec, leaving purchasers to search for private insurance for their deposits. Given that consumer protection legislation doesn't apply to real estate purchase and sale transactions, there are limited protec- tions for Quebec condo investors who don't get insurance for their investment, says Jonathan Franklin, a real estate and commercial litigation lawyer with Franklin & Franklin Attorneys in Montreal. The deposit can go to a notary in trust, but purchasers some- times write their cheques directly to the developer to go toward construction costs. "It's not regulated and it should be, like resi- dential leases are regulated," he says. "The real estate brokers have an excellent contract, which everybody uses on offers to purchase a building." Unless the contract specifically states that the deposit will be returned if the development isn't completed within a window of time, investors and their money could be held in limbo or lost if a development is repeatedly delayed or when there is no activity on the project, he says. Franklin sees benefit in the implementation of a common purchase and sale contract like those used by real estate brokers for pre-existing buildings. Vancouver real estate lawyer Kenneth Pazder agrees such an approach would help to level the playing field for purchasers in British Columbia as well. While British Columbia does have protections in place for deposits, there are concerns in that often-hyper-inflated housing market that there are no further protections. A purchaser waiting for a condo after several years has lost the interest they might have achieved elsewhere and perhaps the opportunity to purchase again has vanished because of the ever-increasing housing values. Contracts for purchase and sale of pre-construction condos, Pazder says, are heavily weighted in favour of the developer and shifts the risks to the purchaser. One of those risks is when the builder extends the closing dates when life goes on for the pur- chaser who may, in that period, have lost their job, become sick, divorced or subject to higher interest rates, impacting the viability of the condo purchase. The test for further remedies beyond the return of a deposit has yet to be heard by a court, he says. "The buyers are not united … it's very unlikely one person is going to take the developer to court and challenge this." Developers also generally create a new company for each individual project, and if that project fails, the likelihood is that it has no money with which to pay damages. Pazder thinks standard-form contracts would help to divide the risk more equally between the builder and the purchaser and he's made that suggestion to the last two provincial governments. But it's an idea he feels is unlikely to gain traction given the construc- moreprotection.fct.ca ®Registered Trademark of First American Financial Corporation Choose the provider that can do more for you today. Untitled-7 1 2018-09-12 4:57 PM

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