Selling a Condo? Make Sure Your Disclosure is in Order

The Condominium Property Act ("Act") contains strict rules about the information that must be disclosed by the seller when a condominium unit is sold. 

The rules are particularly strict when it comes to developers selling units before construction is complete. These disclosure requirements must be taken seriously, as failure to comply can make the purchase contract unenforceable.

Background

In 2018, the Act was amended to broaden the disclosure obligations required of developers selling pre-construction condominium units and units created by a condominium conversion of existing property. 

The broadened disclosure requirements are primarily contained within section 12 of the Act and require that a developer deliver various documents to the purchaser. Notably, this section also requires the developer to provide an occupancy date (this can be a range of dates or fixed), which must be identified in a separate statement. Failing to provide such a statement can render the purchase agreement unenforceable. Likewise, if a developer fails to make the unit available for occupancy within 30 days after the occupancy date identified in the statement, the purchaser may withdraw from the purchase agreement.

The Act also requires that the developer include a statement regarding a purchaser's right to rescind the contract. The statement is required to identify that the purchaser may rescind the purchase agreement within ten days of the latter of the date the purchaser receives all of the required disclosure and the date the agreement is signed. As a result, if a developer fails to provide any of the required disclosure materials, a purchaser can rescind the purchase agreement at any time. If a purchaser rescinds a purchase agreement, a full refund must be provided within fifteen days of the purchaser delivering a written Notice of Rescission to the developer.

Case Summary 

The severe consequences stemming from the occupancy date requirement in the Act were recently explored in Avli BCR Developments Inc v Ulsifer. A relatively minor breach of the requirements of the Act allowed the purchaser to rescind the purchase agreement and claim a refund of all deposits paid. 

In this case, the purchaser, Ulsifer, sought to rescind her purchase agreement and demanded the return of the deposits paid to date in the amount of $727,853. She argued that the purchase agreement was unenforceable because she was not provided with a separate "occupancy date statement" as required by the Act. Alvi argued that although the occupancy date was not identified in a separate statement, it was included in the purchase agreement. 

The Court found that the failure to provide a separate "occupancy date statement" was grounds for Ulsifer to rescind. In doing so, the Court noted that having an occupancy date in the purchase contract was not sufficient because the provisions of the Act requiring a separate statement are "directive and mandatory." 

The Court also concluded that the developer failed to deliver occupancy within thirty days of the occupancy date specified in the purchase agreement.

Takeaway

The disclosure requirements in the Act are strict and unforgiving. Any person selling a condominium unit should seek legal advice to ensure compliance with the Act's requirements. This is especially the case for developers selling unfinished units. Something as small as putting the occupancy date in the purchase agreement instead of a separate statement may be enough to make the agreement unenforceable.

If you are dealing with a dispute under the Condominium Property Act, contact Matthew Turzansky or Abbey Bartel in Edmonton or any member of Field Law's Litigation Group. 

Link to decision: Avli BCR Developments Inc v Ulsifer, 2022 ABQB 81