Icona Developments has recently cancelled its ICONA Condominiums project in Vaughan. The following information can assist purchasers with understanding their rights.
Termination of Purchase Agreements
Icona has advised that it will not be able to complete the project because it was unable to secure satisfactory construction financing.
In a purchase agreement for a new home, the vendor and purchaser may include conditions that, if not satisfied, may result in early termination of the purchase agreement. Common conditions include securing the financing or minimum sales for the home or project to proceed. Early termination conditions are contractual and must be agreed to by both parties to the purchase agreement (the vendor and the purchaser) and they must be clearly set out in the Addendum to the purchase agreement so that consumers are made aware of the risks relating to the conditions when they enter the agreement.
The Addendum to the purchase agreement requires the vendor to take all commercially reasonable steps within its power to satisfy the early termination conditions. If circumstances are such that the conditions agreed to in the Addendum have not been satisfied, the vendor is permitted under the Addendum to terminate the purchase agreement and must return to the purchaser all of their deposits.
Under the Condominium Act, any monies received by the vendor of a condominium project must be held in trust. This includes deposit amounts and any other payments made under the purchase agreement, such as for upgrades and extras.
If a project is terminated because an early termination condition was not satisfied, the vendor is obliged under the Addendum to refund all monies paid by the purchaser, plus interest calculated in accordance with the Condominium Act.
If monies are not refunded by the vendor, then purchasers may make a deposit refund claim to Tarion under the Ontario New Home Warranties Plan Act. Deposits and other payments made by a purchaser of a condominium unit are protected by Tarion up to a maximum of $20,000. Questions about deposit protection can be directed to Marianne MacLeod at 416-229-3861 or by email to firstname.lastname@example.org.
Tarion administers the warranties and protections in the Ontario New Home Warranties Plan Act. Most of the warranties in the Act cover construction defects and conditions in homes that have been completed. Other than deposit protection, there is no warranty or protection under the Act that covers losses that may be incurred by a purchaser when a purchase agreement is terminated under the Addendum, such as loss of profit due to changes in market prices.
Review by Tarion
Tarion licences and regulates new home vendors and builders in accordance with the Ontario New Home Warranties Plan Act. Tarion’s powers and discretion are set out in the Act. The Act does not give Tarion the authority to compel a vendor to waive conditions agreed to in an Addendum or to complete a project.
Tarion may review the circumstances around a cancellation to ensure that the vendor is in compliance with the Addendum – for example to ensure the conditions were set out clearly as required, and that the vendor’s position was not arbitrary.
In this case, Tarion has requested information from Icona and will review the circumstances surrounding the termination of the purchase agreements to determine whether Icona is in compliance with its obligations as a registered vendor/builder. Should the review result in a sanction against the vendor, involving a notice of proposal to refuse or revoke a registration, Tarion will communicate this information to the public.
It is also worth noting that the Condominium Act includes certain consumer protection measures for home buyers that could apply in this situation. For example, under the Condominium Act, purchasers may apply to court for an order requiring a vendor to comply with its obligation under the Condominium Act to take all reasonable steps to provide a purchaser with a deed to the unit without delay, and for an order requiring a vendor to pay monetary damages incurred by the purchaser as a result of the vendor’s non-compliance. If purchasers wish to challenge the cancellation of this project they should seek independent legal advice.