When condo construction hits delays, can purchasers back out?
'We don’t pay out purchasers who are unhappy. Absolutely not,' says developers
Condo purchasers in central Edmonton who feel stuck after building construction delays are calling for legislation to hold developers accountable.
"I think there should be some sort of legislation moving forward," said 25-year-old Brennan Belliveau, who in late 2014 put a $60,000 down payment on a unit in a downtown highrise that has not yet been built.
"There should be some sort of opt-out date where if the project isn't done by that date, then you should have the ability to opt out of that contract. It needs to be a fair agreement."
Belliveau had hoped to live in the proposed Jasper House development on 106th Street, just north of Jasper Avenue.
He had been living in his parents' basement but wanted to be part of Edmonton's downtown revitalization. Enticing advertisements and artist's drawings attracted him to Jasper House, a project of Lamb Development Corp. of Toronto.
"The whole downtown arena project, I thought it was a great opportunity to get into the city," Belliveau said.
But nearly two years after putting down his money, he's frustrated.
Construction hasn't started and all that exists is a sales building and an old parking lot.
"I've tried to be as optimistic as possible and hopeful that things will go through, but I think I'm going to have a little bit of regret later on."
Brad Lamb, the founder of Lamb Development, said the city's slowing economy has been one factor in the delay.
But a larger issue has been the need for the land to be rezoned by the city. The rezoning permitting a highrise development has recently been approved, he said.
"Admittedly the pace of getting the building approved was slower, and I don't believe it any fault of ours," Lamb said. "The city might say it's our fault, but nonetheless it's completed."
Lamb now expects to break ground in the summer of 2017, and for construction to take 30 months, meaning the building would be complete by 2020.
Belliveau doesn't plan to wait until 2020 to live in a downtown condo. He wants out of Jasper House now.
He said he couldn't get a completion date added to his purchase agreement, and wishes an opt-out clause based on completion was included.
Lamb said an opt-out clause is reasonable if a building is taking an unreasonable amount of time to be completed, but construction taking a year longer than expected isn't unique.
"We don't pay out purchasers who are unhappy," he said. "Absolutely not."
Are buyers protected against delays?
Last week, CBC News reported the stalled construction of Infiniti on 105, a project located near Oliver Square. Two years after the purchase, condo buyers who had planned to move into the units are frustrated with the lack of progress, and a shortage of information about plans to restart construction.
They are deemed to have understood and agreed to the terms of that contract.- Robert Noce, real estate lawyer
Robert Noce, a lawyer with Miller Thomson, practices in real estate development and condominium matters. He said getting out of purchase agreement all depends on the contract. If it states that the developer is not responsible for delays, there is no recourse.
"They are deemed to have understood and agreed to the terms of that contract," Noce said.
Challenging the contract through the courts could take years, which may even last longer than the delayed construction project, he said.
When it comes to protecting purchasers of new condo developments, Noce cites Bill 13, which was introduced by Alberta's PC government in 2013.
In section 13.1 it stated: Subject to the regulations, if a delay in occupancy of a unit is more than 90 days beyond the occupancy date set out in the purchase agreement, the purchaser may exercise any remedies provided under the regulations.
"I thought that was a very aggressive on the part of the government, especially to provide consumer protection for buyers," Noce said.
However, in 2014 the bill was reintroduced as Bill 9 and the section protecting purchasers from delays was not included.
Noce said the section would have been a concern for the development industry because it relies on buyers for financing before construction starts.
He said if Alberta's NDP government plans to make any changes to condo legislation, it will have the challenge of balance the interests of developers and consumers.