Law Times

Law Times • June 11, 2012 Case changes game for new-home sales FOCUS BY KENNETH JACKSON For Law Times W was aware it'd be a while before he d could move in. He probably didn't think he' never move in. But that' the builder "acted in bad faith" by not building his home and then selling it to another person. For his troubles, a judge ordered the builder last November to pay Jongazma a pile of cash. The story begins in August s what happened when hen Ahmad Jongazma bought a home yet to be built in 2001, he the time that the [agreement] was entered into, "As a result of this fact and the builder's conduct thereafter, " says Solomon. it was found that the builder purposely misled the purchaser as to the timing that the home would be completed. case said Primont "acted in bad faith" in failing to disclose its resubmission and then trying to blame delays on the Town of Richmond Hill, Ont. "I have found the defendants, The judge presiding over the " 2001 when Jongazma agreed to buy a home for $295,000. The home was to be part of Phase 1 of a housing development by Primont Homes Inc. He was under the understand- ing the home would be ready by May the following year. The agreement came with clauses allowing Primont to extend the closing date by up to 240 days with notice. Primont could also terminate the agreement if it didn't build the home after the extension period. Two months before closing, Jongazma learned the move-in date would now be September. The problem for Jongazma wasn't necessarily the extension of the move-in date but rather that he needed to sell his house. He then contacted Primont. No one told him to hold off on selling his home. Then a second letter came in Jongazma and his wife to come in to pick the finishes for their home. They did so in September and sold their home. All the while, there was a catch. Primont didn't have approval company advised to build Phase 1 as now planned. It did have approval for Phase 1 until it changed it to include adjacent land it purchased that, to save costs, it wanted to devel- op at the same time. As a result, it needed additional approval from the municipality. The company submitted a proposal a month before Jongazma entered into his agreement. The company then held off July 2002. Primont needed six more months. The move-in date would now be January 2003. The having already elected to advance its own interests by resubmitting the plan in July of 2001, failed to make proper disclosure of fore- seeable delays that that election would cause that were beyond those upon which the contract terms were predicated, Justice Mary Sanderson. Solomon notes that what " said makes this case interesting is Sanderson' builder's obligation to set realistic timelines for completion before s emphasis on the marketing and selling the homes. "This case stresses the obliga- tion of the builder to act reason- ably, fairly, and in good faith in not only meeting the timelines for completion set out in the [agreement] but to be forthright with purchasers and keep them informed of likely delays and the causes for same, Jongazma led him to believe that his home would be ready on time and acted in bad faith. Sanderson agreed with an claimed Primont " he says. expert witness that Primont could have finished the home on time after receiving the initial draft plans. She also found it troubling Primont didn't warn Jongazma not to sell his house. "In March 2002, knowing it could not deliver the house in September, it did not warn the plaintiff not to sell his house, said. "When it finally was able to get the permissions needed and was in a position to deliver the home, it was not prepared to " she honour the terms of the contract. . . . It persisted in misleading the plaintiff over a lengthy period of time. It concealed its conduct." Sanderson suggested that by for new homes, there is specif- ic language that states that any oral reselling the unit, the company attempted to profit from its misconduct. "This case sends a stern warn- salespeople are not binding. The court' ing to the new-home industry that when it enters into an [agree- ment], it better contain realistic timelines and once those time- lines have been established, all reasonable steps better be taken to complete construction without delay, ble. Also, if a delay is foresee- able, disclosure should be made and purchasers ought to be kept informed. "Otherwise, you may be lia- " says Solomon. that the court gave weight to a conversation between Jongazma and a representative could have an unprecedented effect on future cases. "Ordinarily, in [agreements] In Solomon's view, the fact " could set a very dangerous prec- edent and is something that all new-home builders should be aware of as this could open the door for builders to be held vicar- iously liable for verbal communi- cations between their sales agents and new homebuyers. representations made by s finding in this respect on July 1, 2008, there were sig- nificant changes to the Ontario New Home Warranties Plan Act regarding delayed closing. Under the new rules, the builder no longer has the right to terminate the transaction if closing hasn't occurred after 240 days from the initial closing date. Instead, if the closing hasn't Solomon also points out that " occurred by the outside date, the purchaser will have right to terminate the transac- tion during the ensuing 30-day period. the LT PAGE 9 The title insurer that puts you front row, centre on building and didn't receive approval for the new plan until late 2002. By this time, the extension period had elapsed and Primont sold Jongazma' for $90,000 more. The him a chance to buy his home again. Jongazma, in turn, sued the company. The judge ultimately sided company didn't offer s home — this time Putting the legal community front and centre has made us the #1 choice with Canadian lawyers for over a decade. While other title insurers go head to head with you for your business, Stewart Title does not support programs that reduce or eliminate the lawyer's role in real estate transactions. Instead, we focus on what matters to you: • unsurpassed policy coverage • competitive pricing • underwriting expertise At Stewart Title, we keep real estate transactions where they belong – in your office! with him, notes Toronto real estate lawyer Ryan Solomon of Baker Schneider Ruggiero LLP. "In this case, the court found 1-888-667-5151 or www.stewart.ca that the builder knew or ought to have known that delays were foreseeable and unavoidable at Untitled-3 1 ON www.lawtimesnews.com 6/3/11 11:24:18 AM

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