An Ontario court judge has ruled that buyers of a pre-construction condo unit could close their purchase transaction despite the builder terminating the deal.
Instead of moving in, the Lucases allowed a friend, Renato Duarte, to move in rent-free “until he got back on his feet.”
In September, 2018, an employee of the builder advised the Lucases they were in breach of the purchase agreement, which prohibited renting the unit during interim occupancy.
During the following year, a dispute developed over damage to the bathtub — which Tarion Warranty Corporation determined was the responsibility of the builder. When the Lucases refused to waive their claim to replace the bathtub, the builder formally terminated the purchase agreement on the grounds the buyers had breached the agreement by renting out their unit.
By the time the agreement was terminated, the buyers had paid deposits and occupancy fees totaling more than $93,500. These funds were seized by the builder.
Shortly after terminating the agreement, the builder resold the unit to two of Francisco Ribeiro’s children with a deposit of just $5,000. Before the resale closed, the Lucases registered a caution on title to prevent the sale from closing.
As of April, 2019, the unit which the Lucases had bought for $369,000 had increased in value to about $595,000.
Late last year, the Lucases applied to Superior Court to reverse the builder’s termination of the contract, and force it to close the original deal.
Deciding in favour of the Lucases, Justice Paul Schabas ruled that the prohibition on leasing in the purchase agreement “does not prevent owners … from allowing friends or guests, and those who they may describe as ‘tenants,’ from staying in their units.”
In a 9,000-word judgment, Justice Schabas ruled that the builder’s resale to family members was void, and that it was required to sell the property to the Lucases at the original price, after crediting them with all deposit money and occupancy feestthey had paid.
The transaction has since closed.