Man Loses $745,000 Vancouver Condo Deposit

“A man who put down and then lost a $745,000 condo deposit when he failed to complete the sale can’t get his money back, says a B.C. Court of Appeal ruling.
Afrasiab Amiri agreed in 2005 to pay a 25 per cent deposit of $745,325 for a $2.9-million condo in the Erickson development, located on the oceanfront on False Creek, before construction was completed.
The condo sale was valued at more than $3 million after the developer agreed to install limestone floors, which increased the price by $71,300.
The balance of the purchase price was to be paid on closing, but the purchaser did not secure financing to complete the deal by the contract deadline.
The seller refused further extensions, and relying on the terms of the contract retained the purchaser’s deposit.
Amiri filed legal action, claiming the seller was in breach of the contract. He sought the return of his deposit, contending the contractual terms calling for its forfeiture were invalid.
The trial judge rejected Amiri’s claim, and on Tuesday three judges of the B.C. Court of Appeal upheld the lower court’s ruling.”

– from ‘Man loses $745,000 deposit after $3-million Vancouver condo deal fails: court’, Canadian Press, 9 Apr 2013

It’d be interesting to know why “the purchaser did not secure financing to complete the deal by the contract deadline”.
Was it for reasons specific to the individuals economic situation, or was it because the market value of the property had plunged and no lender would consider making the loan?
– vreaa

36 responses to “Man Loses $745,000 Vancouver Condo Deposit

  1. Might be in the statement of facts.

    Does it really matter who wins? It makes for great entertainment no matter what happens.

    • Judging from this man’s name “Afrasiab Amiri”. He is of Iranian (Persian) descent. Ever since of economic sanctions against Iran over a year ago, Their currency has lost 80 percent of its value and still going down
      Iranian community has been under stress.

  2. You can read the Court of Appeal decision here: http://www.courts.gov.bc.ca/jdb-txt/CA/13/01/2013BCCA0155.htm

    It looks like it was strange circumstances rather than an inability to secure credit.

    • Ralph Cramdown

      Based on the facts, I’d say that the vendor thought he could resell it for more than 75% of the original purchase price, at least. Based on the correspondence between the vendor’s and purchaser’s lawyers (at the same firm!) I’d hazard that the vendor may have been keeping the purchaser warm after the initial closing date while looking for another buyer.

      Once the vendor believed he was in a firm position to terminate the deal and keep the deposit, if he could find a quick buyer at more than 75% of the original price plus the inevitable legal fees, it’d be gravy. Sheer speculation on my part, but there’s hints of it in the vendor’s lawyer’s “[M]y client advised the purchaser is in Default and will not allow any extension. Without Prejudice. If the purchaser is able to close by Thursday, the Vendor may allow the purchaser to close.” [emphasis mine]. Thursday was two days away.

    • It was a strange case. the purchaser was in hospital in a different country after a car accident at the time of completion.

      However what I found interesting is the developer gradually pushing back the completion date from December 2008 to March 2010.

      You would not be able to do that in a regular RE transaction. Now while I understand that new construction cannot be dated accurately and that is why they leave themselves room in the contract to move it around, one and a third years seems excessive.

      I would have thought the judge would have accepted that as reason enough for termination.

      16 months puts unreasonable pressure on a buyer to find an alternative place to live.

      • Ralph Cramdown

        But the purchaser didn’t want to terminate, he wanted to complete. You can’t leave a trail of emails showing that you wanted to close and the vendor was ready to close, but you couldn’t get your shit together, then go to court and claim that the vendor was late and you didn’t want to close anyway.

      • Realtor behavior

        I am Very curious why judges are so sympathetic with RE developers, or the developmental corporations. You can see the developers always have an upper hand no matter how far they change the terms of after signing an agreement, from increasing closing costs to deferring completion date years on end without any backlashes.

        When it comes to the guy who’s gonna lose $745K, I believe a sweet talker might sell him a lawn comes with a lawn-mower for a million!

      • Realtor behavior

        An average joe will believe, after an agreement has been signed, any parties who cannot fulfill their part of the deal should compensate the other parties, seems not so in Canada though.

      • Ralph Cramdown

        Judges sympathetic with developers? This wasn’t a case that called for sympathy or equity. It was a straight contract interpretation case. “Judge, we had a contract, and then this stuff happened. The vendor thinks that according to the terms of the contract, he gets to keep the deposit, while the purchaser thinks it should be returned. Who is right?”

        Since the developer wrote the contract, and ambiguities in the language will generally be decided in favour of the purchaser. Unconscionable contracts won’t be enforced.

        In markets that are going up, developers have the upper hand, because the contracts generally state that if the project goes too late, the purchaser gets his deposit back. Since the developer can now sell the same unit for more money and the purchaser looses what we could loosely call his ‘equity,’ purchasers generally don’t want their money back, and will let developers get away with all kinds of stuff. As markets start to go sideways and down, developers must be very careful to complete on time or to be perfectly onside of the contract and any applicable law in their notices of delays, as purchasers will use any loophole to get out of the deal otherwise — that’s what the Kim Campbell case is about.

    • Hard to say, it seems to have been extended several times and the purchaser kept on asking for extension without any legit reasons. He’s a big boy now, and should have understood the contract before signing anything. No point in dropping $700K on a pre-sale condo and not $1-2K for a lawyer to go through the contract.

      Now I wonder, the result of this appeal will surely have a wide effect on all the pre-sale buyers if they try to weasel out of their commitments when the condos are due for closing. Interested to see how this will affect Kim Campbell’s case now.

  3. Walking away and taking a hit….still could be cheaper than closing. We’ll see more of that, but most will have no cash for legal fees, so they will simply walk away quietly . Not a win for a developers either, they have to put it back on the market, reduce the price and hope to find a sucker to buy it.

  4. In the statistics condo “sales” should always appear in quotes.

  5. Real Estate Tsunami

    Only fools buy a hole in the ground.

  6. I just want to thank VREAA (and the other blogs) for providing me with such heartwarming schadenfreudian news like this each and every day. Keep it coming.

  7. A timely reminder to all….read the damn contract before you sign it!!!!!

  8. small town prairies

    Ouch! For the price of that lost “deposit” you could buy 3 nice houses in my locale. But it isnt BPOE here.

    • You must not be in my neighborhood. Around these parts you could pick up no less than 25 decent liveable (and rentable) homes for that amount of cash. Well…maybe I am exaggerating a bit because during the past year the good cheap ones have all been snapped up…..but still….you get a lot of bang for the buck on the prairies.

      Obviously the object is not simply home ownership.

  9. All of this could have been avoided if the pre-sale speculator (yes, I am going to call this person a speculator) would have simply read the contract and obtain independent legal advice before signing.

    We’re going to see more and more of these going forward.
    It’s easy to walk into a presentation center and sign on a dotted line.
    Takes 5 minutes and a cheque for $5000.
    Even a trained monkey can can do it.

    • “simply read the contract and obtain independent legal advice before signing”

      I am almost certain it wouldn’t have mattered too much. The contracts as written are onerous on the buyer. They get a discount because they are taking risk, and it must be quite upsetting even when the project completes and all specs are met they still lose money when the market drops.

      I think that is occurring now. Markets move like molasses, and I think we’re starting to see some of it ooze into view. To which I say, more, Caesar, more!

    • Yikes! There isn’t a monkey alive, IranianSpaceProgram excepted, who’d buy a presale…

      http://tinyurl.com/cuzl5vq

  10. pffft! … you’d think people would have learned something by now … contagion 2.0 here we go! … vcr re timing it’s roll-over well :)

    • rod, prices on Phoenix are on a tear again, and it looks as if parts of California are as expensive as Vancouver as measured by price-income. The only other animal I know close to this behaviour is the pigeon.

      • rod_jonsson

        dj, there is a lot of money looking for refuge from printing – i suppose it goes wherever it thinks things have bottomed … sooner or later, i think people will be tested to the limit of their convictions on holding anything – cash, gold, bonds, stocks, RE … whatever … most will end up getting whipsawed for all they are worth … and now this … http://tinyurl.com/ceoq5p5

      • UBCghettodweller

        Just wondering which parts of California are those?

        From my limited research, San Diego, depending on where you look, still seems affordable, but the Bay Area is starting to return to stupidly-expensive territory.

      • UBC, parts of BA and LA are arguably as bad as parts of Vancouver (ie not all Vancouver has been doing well in the past five years), even on price-rent or price-income, factoring in non-financing carry costs. Heck parts of London are capping 3.5% for a place requiring high levels of maintenance (given they’re 300 years old).

        I know we all want reasons why Vancouver is insane — and it is in many ways — but it’s not unique, and certainly others with similar cosmopolitan traits have been keeping apace with Vancouver for some time now.

        I can probably count on one hand the times I’ve witnessed true just desserts in real life. Most of the time it’s a hack job.

  11. Just came across this new listing today http://livekitsilano.com/index.html/details-30552224. I wonder if this might be the best solution : You flee this shitty market with tons of cash, and you secure your stay for cheap lol! If they pull this off, I guess there’s some four-leaf clover around kits beach…

  12. “It’d be interesting to know why “the purchaser did not secure financing to complete the deal by the contract deadline”.
    Was it for reasons specific to the individuals economic situation, or was it because the market value of the property had plunged and no lender would consider making the loan?
    – vreaa”

    He got financing in the end, but not soon enough to complete, correct? He (or at least he and his wife) appear credit worthy, and the property appears to have been loan worthy (at least based on the buyer’s evidence).

    He wanted to complete, and kept trying to.

    The seller is within his rights to consider the agreement void when the buyer fails to honour it. As the judge pointed out, the buyer was a sophisticated businessman who presented an unconvincing case (otherwise known as an excuse) for not completing as promised. Although the hour is getting late a contract is still a contract.

    Car accident/busy airline travel/rural Iran….people do business all over the globe every day. This guy fouled up.

    • Ralph Cramdown

      Not void. A void agreement is one that is considered never to have existed; things go back (to the extent possible) to the state before the contract was signed… The purchaser would get his money back.
      Not voidable. That’s like void, but at the option of one of the parties… The purchaser would still get his money back.
      The vendor here was seeking to ENFORCE the contract, specifically the part about who gets to keep the deposit in the event the buyer fails to close.

  13. Yup, Ralph, correct you are. Bad choice of words. It’s really a breach, which allows the contract to be terminated, rather than voided. Good point. Thanks.

  14. That is ridiculous to lose that much of a deposit.

  15. What is really important point here is “Did the realtor get paid his commissions?”

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