Real estate lawyer expects lawsuit spike in wake of foreign buyer tax
Richard Bell says domino effect means thousands of locals will be hit with costs, lost deals
Vancouver real estate lawyer Richard Bell says he expects a large number of real estate contracts to end up in litigation in the wake of the government's sudden announcement of a foreign buyer tax.
The province last week imposed a 15 per cent levy on foreign nationals purchasing real estate in Metro Vancouver, but made no provisions to exempt contracts that were already signed prior to the announcement.
Bell told The Early Edition's Rick Cluff Thursday that a single purchase contract failure can create a "domino effect," hurting Vancouver locals.
"I have a client — little old lady — she entered into a contract to sell her place and she turned around and entered into two contracts to buy condos for her grand kids."
"The buyer is going to back out and she is losing sleep every night," he said.
"Quite frankly it was shocking [that] there was no grandfathering of the existing contracts.
I don't think the government fully understands the financial and emotional impact that they're imposing on tens of thousands of people in this city because it is impacting the buyers and the sellers."
Lose more than the deposit
Bell says buyers who walk away from deals will lose deposits, and may be sued for other losses.
For example if a collapsed deal results in the seller getting a lower price, the buyer who walked away may be forced to pay the difference.
But he admits collecting penalties from a foreign buyer may be a challenge.
Reconsider penalizing newcomers
Bell said he has trouble seeing why the province would impose a tax on people legitimately coming to B.C. to fill a void in the job market.
" I don't think the government fully understands the financial and emotional impact that they're imposing on tens of thousands [of locals].- Richard Bell, real estate lawyer.
"We reach out to the world... for the tech and cancer researchers, senior executives," he said.
"We want these people to come to Canada and build our economies so why are we penalizing them?"
Bell hopes the province will recognize the devastating impact of the tax and tweak the rules, allowing pre-exisitng contracts to be grandfathered.