Condominiums Presold – Minor or Substantial Changes to Preconstruction Plans #290

By Gerry Neely
B.A., LL.B.

One of the decisions referred to in Column #269 discussed whether changes made during the course of construction to the plans of condominiums, which had been presold before construction started, were substantial enough to enable buyers to rescind the contracts. The changes, including the elimination of five windows in each suite, were held to be sufficiently substantial to entitle the buyers to the return of their deposits.

This issue was also discussed in a recent case where changes were made to the washer/dryer facilities and to a bathtub/shower combination during construction. The buyer refused to complete and sued for the return of deposit monies of approximately $84,000 which the developer, who lost approximately $76,000 on the resale of the unit, had declared forfeited.

The floor plans for the proposed units included a designated storage area for each suite of no less than 200 cubic feet, in which the washer/dryer would be located. Since the developer, by designating this area as storage, had received a credit toward an increased floor space ratio, the municipality rejected the plans.

As an interim measure, the plans were modified to provide for a partition wall at one end of the storage area. This formed a closet with a separate door where the washer and dryer were located, which was acceptable to the municipality.

The licensees, who were preselling the units, were only given the original floor plans to be delivered as part of their sales presentations to prospective buyers. During construction, the washer/dryer was moved from the storage area into a hallway location where it reduced the amount of the ensuite bathroom space.

The buyer objected and threatened to rescind, but withdrew that threat upon the developer’s offer to install the washer/dryer without charge. Another charge, which the buyer only discovered upon a final suite inspection, was that the contour tub/shower combination shown on the plan had been replaced by a shower stall.

The buyer inspected the suite in the process of "signing off" and made no complaint to the washer/dryer or the tub changes. However, he was not satisfied and, following an inspection of the records at the municipal hall where he discovered the municipality’s rejection of the initial plan, he concluded that he had been mislead for over a year and refused to complete.

The contract between the parties allowed the contractor to make minor modifications considered desirable and reasonable by the project architect. At the trial it was acknowledged that there was neither an industry nor architectural standard defining the term "minor" and that whether a change is minor or not will depend upon the circumstances and point of view of the buyer.

The test the judge applied was the standard of a reasonable person, taking into account the importance of the facts a buyer would have considered when deciding whether to purchase the unit. The judge went on to say that the details of what is represented to a buyer are extremely important because the buyer’s commitment is made before there is anything that the buyer can see.

He considered the change to the ensuite bathroom from the contour tub/shower combination to only a shower to be a minor change, a conclusion based in part upon the buyer’s failure to protest the change when he first discovered it.

He also concluded that the change from the first to the second plan, which resulted in the washer/dryer being partitioned off from the storage area, was a minor change. However, the relocation to the hall was a substantial change because it reduced the size of the bathroom, created an inconvenient location and might lead to more noise and confusion than would otherwise be the case.

Despite this favourable ruling, the buyer failed to recover the deposit. The reason was the buyer’s failure, upon learning of the change, to decide without delay to give notice of his intention to repudiate the contract and never vary from that decision.

Here the buyer, after learning of the relocation of the washer/dryer, accepted the developer’s offer of a free washer and dryer, made a further deposit, arranged mortgage financing and signed off the suite after inspecting it, without making any further complaint.¹

1.

Bragg v. Noel Developments Ltd. and SPF Properties Inc., SCBC Vancouver Registry, Reasons for Judgment, June 22, 1998.

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