Couple ordered to pay developer's $144,000 resale loss on B.C. condo after failing to close

A retired couple who failed to close on an $800,000 Vancouver Island condo they had bought because they were worried about a water leak have been ordered to pay the developer $144,000. PNimg

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A retired couple who failed to close on an $800,000 Vancouver Island condo they had bought because they were worried about a water leak have been ordered to pay the developer $144,000.

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Jacinto and Evelyn Pereira agreed to buy the new unit in Sidney about two years ago, before the downturn in the B.C. condo market, and paid $25,000 down under a presale contract, according to a judgment in B.C. Supreme Court.

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They argued they were entitled to void the contract because the developer, Rhythm Living, failed to build and install a promised patio extension with pergola and large screen TV, and because of a leak in the wall that was discovered two days before they agreed for a second time to close, wrote Justice Gareth Morley.

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“The Pereiras depose that the pergola and patio extension were of great importance to them, and that they would not have entered into the contract if these items had not been included,” he said, regarding the first time they failed to close.

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But months later, they agreed to complete if those were installed, along with an EV charger, and a new closing date was set for July 2025, about 13 months after they first agreed to buy the unit, according to the judgment.

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Two days before that completion date, a cleaner discovered moisture on the exterior wall and holes cut in the drywall in the bathroom and bedroom, it said. The Pereiras arrived for their final walk-through to find the holes, the leaks and what they say looked like mould, Morley wrote.

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When the Pereiras returned the next day — the day before they were to close the sale — they discovered bigger sections of the drywall had been removed, as well as the toilet, sink and vanity in one of the bathrooms, wrote Morley. The developer was investigating the leak and promised to repair it, but the couple refused to close because of the uncertainty about the leak.

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They argued the unit was “substantially unlivable” because of water leaks and what they believed was mould, he said. They argued Rhythm couldn’t complete the transaction by delivering them a livable unit, which gave them the option of voiding the contract.

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But Morley ruled neither deficit gave the buyers grounds to walk away.

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If a developer fails to include all promised features, like the patio extension, pergola and TV in this case, a judge instead would normally award “expectation damages,” he said. In this case, he would have reduced the selling price by $5,800 to compensate the Pereiras for the amount it would cost them to install the features themselves.

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“The law does not allow parties to exit contracts altogether just because the other party fails to deliver every aspect of what they promised,” Morley ruled.

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And he further ruled repairs, in this case for the water leak, don’t allow a buyer to refuse to complete, because they could continue to live in the unit while they were being done.

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He said there is a high standard to prove a residence is unlivable.

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He awarded damages to the developer amounting to the difference the Pereiras would have paid and what the unit ended up selling for.

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Rhythm said it traced the wall leak to a planter and replaced the wall membrane, spraying the area for mould.

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