Woo v. Onni: B.C. Court of Appeal Rejects Post-Closing Rescission
In Woo v. Onni (Woo), released on March 4, 2014, the B.C. Court of Appeal rejected the argument that a developer’s failure to deliver an amendment to a disclosure statement entitled purchasers to rescind their purchase contracts almost 1.5 years after they closed on their strata lots. This closely-watched case involved the first attempt by a purchaser to rely on s. 21(3) of the Real Estate Development Marketing Act (REDMA) and rescind a contract post-closing. Although s. 21(3) allows a purchaser to rescind a contract due to non-delivery of a disclosure statement (or an amendment) even after closing, until Woo, no claim to rescind post-closing had gone to court since REDMA came into force in January 2005.
British Columbia’s Real Estate Development Marketing Act Revisited
For at least 10 years prior to the market correction in 2008, strata lot prices in British Columbia were on a decidedly upward trend. Not surprisingly, the market attracted not just homebuyers but also speculators who signed purchase agreements with a view to making a profit by either assigning their contracts or selling their strata lots. In the wake of the correction, litigation under the Real Estate Development Marketing Act (British Columbia) (REDMA) proliferated as homebuyers and speculators alike, realizing that they had agreed to pay more than current market value, sought to avoid their obligations by identifying technical deficiencies in the disclosure made by developers, as required by REDMA. Many of the ensuing court decisions, mindful of REDMA’s consumer-protection objectives, strictly applied the legislation in favour of the purchaser, regardless of his or her motive in seeking to avoid a purchase agreement. Consequently, real estate industry participants called for changes to REDMA to achieve a better balance between the goal of consumer protection and the practical realities of the development industry.