contracts Archives

A little while ago, we began a discussion about early planning agreements. In the kind of response we love to see here at the LRC, a reader, Yakov A., provided a great deal of further information on the topic (see his comments on arguments that might result in the return of the deposit).
In a nutshell, Yakov informed us that, for various reasons, these contracts (also sometimes called “Reservation Agreements”) may not be “enforceable” by the developer, but they may be enforceable by the purchaser. So what does that mean? Well, it means that, should a developer go to court to say “I demand what I think I am entitled to under this contract”, the developer might not get it. On the other hand, and for various other possible reasons, the person buying the house might have better luck. And, once again, the answer provided by the law will be: it depends. One of the things upon which it depends is the arguments made by the people presenting the case.
What should we take away from this? Well:

if you are already in this situation, don’t let the arguably as-of-yet-not-totally-clear law on this topic deter you from trying to get your deposit back – it might work;

if you do try to get your deposit back, consider hiring a lawyer. As you can see from Yakov’s insightful comments, lawyers who specialize in a particular field are truly a wealth of information and can really be helpful in reaching your goals; and

if you are buying a condo and/or entering into one of these agreements, do your homework, protect yourself, and make sure you understand what you are doing.After all, even if you can go to court to get all or some of your money back, or reach a settlement before going to court, these process are long, emotionally draining and do cost money in and of themselves (not to mention arguably the last thing you need as you search for another property)!

Thanks again Yakov!

Anyone who has ever bought, or looked into buying, a condominium, knows that owning a condo is really very different from owning a house. First, there is the condo corporation. Then, there are matters such as the condo board, the condo fees, common areas, the reserve fund, and the by-laws. Now, for potential buyers of incomplete condos, we can add “early planning agreements” to the list of things they really need to learn about.
An early planning agreement is a contract which authorizes the developer to design a condominium according to the buyer’s specifications and gives the buyer the option to sign a purchase agreement later at an agreed upon price. Although this sounds like a great idea (a condo made just for me!!), it has led to some problems, and those problems have started to wind their way through the courts.
The issue? Early planning agreements are not covered by the Condominium Property Act, which otherwise gives buyers the right to cancel a contract within 10 days of signing a purchase agreement with a developer, as well as the right to a full refund within 10 days of the developer receiving notice to cancel. In early planning agreements, on the other hand, there may be no right to refund of the deposit at all. What you are entitled to depends on what you signed, and each contract is different. That being the case, court results have varied, depending on the specifics of each situation.
So, as always, be sure to read you contract very carefully before you sign it. Ensure that any cancellation and deposit refund rights are clearly spelled out and that you understand them. Consider getting independent legal advice.
For more information on early planning agreements, see Service Alberta’s news release.
For more information on condo-buying in general, see Service Alberta’s tipsheet about buying and owning a condo.

Condos & Early Planning Agreements – Part 2

Condos & Early Planning Agreements

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