Two years after a couple agrees to buy condo, the builder added a floor, writes Bob Aaron. Despite a judge ruling it a ‘material change’ to the contract, the Ontario Condominium Act was of no help.

Imagine buying a pre-construction penthouse only to find out that the builder decided to add another floor on top of the building, and you are now getting a sub-penthouse.

That’s what happened to Chirag and Priyankaben Trivedi when they agreed to purchase a condominium to be built on Kalar Rd., in Niagara Falls, Ont.

Around the time they signed the purchase agreement in 2022, the builder — a numbered company operating as Urbane Communities — provided the Trivedis with a disclosure statement as required under the Condominium Act.

The plans showed the unit, suite 316, on the third floor, which was the top floor of the building.

Just shy of two years later, Urbane delivered a revised disclosure statement to the Trivedis by email.

Among other things, the statement informed the buyers that the development would now include a fourth floor. The letter accompanying the statement informed the buyers that the change would not affect the location of their unit.

When the Trivedis requested clarification from Urbane, its lawyers confirmed that their unit would still be on the third floor and there would be a fourth floor on top of them. The lawyers for the buyers and the builder exchanged emails over the next couple of months.

Almost three months after getting the builder’s notice, the Trivedis applied to court requesting a declaration that the addition of a fourth floor constituted a material change to the contract, entitling the buyers to rescind the agreement under the terms of the Condominium Act.

Under the Act, a buyer has a ten-day cancellation (rescission) period after being notified of a material change to a contract.

The matter was argued before Justice Joseph R. Henderson in November, 2024 and his decision was released last January.

The issue the court had to deal with was whether the addition of a fourth floor constituted a material change entitling the buyer to terminate within the meaning of the Act.

The test, according to the judge, was whether a reasonable purchaser would regard the change as sufficiently important to their purchase decision that, had the change been in place at the time of the initial agreement, it is likely that the purchaser would not have entered the agreement or would have rescinded it within the law’s 10-day cooling-off period.

After reviewing the evidence, the judge decided that the addition of a penthouse floor was objectively material to the Trivedis, and it is likely that they would not have purchased the unit if they knew it would be on the floor below the penthouse.

The judge wrote, “For these reasons, I find that the addition of a fourth floor to the condominium development, in this case, is a material change.”

This conclusion meant that the buyers only had 10 days after receiving the revised disclosure statement to either terminate the agreement or apply to a judge for a determination. The negotiations between the lawyers did not extend the buyer’s 10-day window.

Since the Trivedis failed to exercise their right to terminate the contract within the 10-day period, the contract was still binding and they were not entitled to terminate it.

The Trivedis were ordered to pay the builder’s costs of $25,000.

The case highlights a fatal flaw in the Condominium Act. In my view, any builder providing buyers with notice of a change in a pre-construction project should be required to:

• state, in advance, whether the proposed change is or is not material, and,
• inform the buyers whether or not they have a 10-day period in which to terminate the agreement.

If the Ontario government was serious about consumer protection, it would amend the Condominium Act or regulations to require these changes.

Buyers should not have to clog up the Ontario courts to get a judge to rule on whether a change is material, or to take a risk in terminating a deal when the change is not material.