In Dicenzo (Linden Park) Holdings Inc. v. Sadeghyar, the Ontario Superior Court delivered an important reminder to condominium developers and real estate professionals:
- strict compliance with the disclosure requirements of the Condominium Act, 1998 is essential.
The case involved a failed pre-construction condominium transaction in Hamilton and turned on one critical issue, whether the builder had properly delivered the mandatory Condominium Buyers’ Guide.
Background
The purchaser agreed in March 2022 to buy a newly constructed condominium unit for approximately $1 million. The transaction was completed electronically, and the purchaser paid deposits totaling more than $121,000.
The agreement included an acknowledgment signed electronically by the purchaser stating that the Condominium Buyers’ Guide had been received.
The deal later collapsed when the purchaser was unable to obtain financing and failed to close the transaction in February 2024.
The builder subsequently resold the unit at a significant loss and sued the purchaser seeking:
- forfeiture of the deposit,
- damages for the difference in resale price, and
- carrying costs.
The purchaser responded by arguing that the agreement was never binding because the builder had failed to provide the Condominium Buyers’ Guide required under section 72 of the Condominium Act.
Legal Issue
Section 72(1)(b) of the Condominium Act requires a declarant (builder) to deliver:
- the disclosure statement, and
- the Condominium Buyers’ Guide
to every purchaser.
Section 72(2) further provides that the agreement is “not binding” on the purchaser until those documents are delivered.
The builder argued that:
- the purchaser had acknowledged receipt of the guide,
- the purchaser was a sophisticated real estate professional,
- the purchaser affirmed the contract by paying deposits and signing amendments, and
- the purchaser only raised the issue after financing failed.
The Court’s Findings
Justice Bordin found that the builder failed to prove that the Condominium Buyers’ Guide had actually been delivered.
The acknowledgment document itself created problems for the builder because it referred to documents that had not yet been sent when the acknowledgment was signed. In addition, although the transaction was conducted electronically, the builder had no electronic record showing delivery of the guide.
The Court concluded that:
“the builder has not established, anywhere near a balance of probabilities, that the Guide was provided to the purchaser.”
As a result, the Court held that the agreement was never binding on the purchaser.
Significance
The Court emphasized that the Condominium Act is consumer protection legislation and must be interpreted accordingly.
Importantly:
- the sophistication of the purchaser did not matter,
- the purchaser’s financing difficulties did not matter, and
- the purchaser’s conduct after signing did not cure the builder’s failure to comply with the statute.
The Court rejected arguments based on estoppel and affirmation of contract, finding that parties cannot contract out of statutory consumer protections.
The Court also confirmed that if the Condominium Buyers’Guide is never delivered:
- the purchaser’s 10-day rescission period never begins to run
- purchaser may rescind the agreement at any time before taking title.
Result
The Court:
- dismissed the builder’s claim for damages,
- declared the agreement non-binding,
- ordered the return of the purchaser’s $121,098 deposit with interest, and
- awarded the purchaser $31,000 in costs.
Considerations
This case is a significant warning to builders and developers involved in pre-construction condominium sales.
A signed acknowledgment alone may not be enough to prove delivery of mandatory disclosure documents. Builders should maintain clear and verifiable records confirming that all statutory documents particularly the Condominium Buyers’ Guide were actually delivered.
For purchasers, the decision confirms the strong consumer protection provisions contained in Ontario’s Condominium Act and demonstrates that Courts may strictly enforce those protections even where the purchaser is experienced in real estate transactions.
Real estate agents acting for Buyers should be aware of this case!
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com