Condo Pre-Sale Litigation: Questions & Answers

March 23, 2009

Question #1: Why are pre-sale purchasers being sued by developers?

Developers and receivers are trying to enforce contracts of purchase and sale. They are suing pre-sale contract owners for:

• forfeiture of their deposits (they are trying to keep the deposits given to them by people who are unable to complete purchases).
• alleged losses incurred when the condo must be sold to others for less than it was originally valued at.

Some people being sued could be out-of-pocket by double the amount of their original deposit (or more). For most buyers, this would be a serious financial setback, particularly in the current economic climate.

Question #2: What are my options?

If you are sued, you have several choices. You need to choose one of the following options whether you wish to or not:

1. Do nothing. This could result in the developer obtaining a default judgment against you for the amount of your deposit plus the alleged losses they have incurred over and above your deposit.

2. Defend yourself in court.

3. Hire a lawyer to defend you as an individual.

4. Hire a lawyer to defend your interest in concert with others who are in the same situation. This may reduce your legal expenses and give you increased bargaining power if any type of settlement is reached.

Question #3: How does the group defence work?

There are several things you should know about litigation:

1. It is very expensive. A relatively straightforward one- or two-day trial in BC Supreme Court can easily exceed $60,000 in legal expenses.

2. Being involved in any type of litigation can be a very stressful and protracted process, especially if your financial future is at stake.

3. There are no "guarantees" that you will win.

4. If you lose, you may be responsible for the court costs incurred by the person or entity that is suing you. You will also still be responsible for paying your own legal fees.

By pooling your resources with others being sued by the same developer, you can save money on legal fees and increase your negotiating power by retaining a group of lawyers who are experienced in reducing risk in this type of situation.