Anybody know if this is Legal?

[ERTW]

I put a $500 deposit down early last year for a Pointe of View Condo,
at the time they were guaging interest. The point was that once they had sold enough units, I would have the option of purchasing it for a pre-agreed upon price.
Finally this April, I recieved the letter saying they were going to go ahead with the construction, so I put the 5% deposit down, signed the papers,
secured a mortgage, went to the design center and the whole bit.

Now, 5 months later, I recieve another letter, saying that in accordance with Clause 10 of the papers you signed:
"Vendor may at its option cancel and terminate this agreement in the event Vendor fails to sell enough units so as to obtain an agreement from any construction mortgage lender as may be financing the Project from time to time provide partial discharge of its mortgage on transfer to purchaser(s). The Purchaser(s) will recieve a full refund from Vendor for all monies paid, should vendor terminate this agreement"

It says in the letter even though they sold out the units, they can't secure a mortgage lender at the price they're selling them, therefore they have to hike up the price by $35K.

Does anybody know if this is legal, and if I can do anything about it?

BTW, I'm definitely going to speak to a lawyer, but just wanted to get some opinions, and see if this has happened/happening to anyone else.

Thanks in Advance.

[geewizjohn]

hmmm...

no idea why my name showed up as ERTW?

[jdmakkord]

Welcome to buying a condo in a hot market. This has happened plenty of times before, its a clause in the contract, and they will use it to profit more.

[geewizjohn]

The clause they're using says that if they don't sell enough units to secure a mortgage, then they can cancel the project.
But in this case they sold out, so the clause doesn't apply to them.
Is their a bend around this that they are using that makes it legal?

[Xtrema]

If in doubt, get a bunch of buyers with the same letter and send a lawyer after them.

But yeah, that's just the way it is in a hot market.

[yellowsnow]

It happens quite a lot. And the clause is suppose to be used in extreme situations. The builders are just abusing that clause to get more money.

I have a friend who was shafted the same way. He put a down payment on a condo prior to the house market exploding... then a few months later they told him to fuck off and returned his money... but in reality my friend just lost $30,000 because the value of the condo sky rocketed during those months.

Damn condo builders... i think they were called "Streetside Development"

[pinoyhero]

Man that is harsh gives new reason to reading the fine print, I would think though that you might have a case in court but a lawyer would be your best bet. Let us know how this goes:

[The Cosworth]

been in the news a lot latley, and although it blows, its legal if done properly

[TrevorK]

It happened here in Edmonton, went on the news and everything but they couldn't do anything (Other than give bad publicity).

[Altezza]

Very common these days...it's not exclusive to condos either. Home builders are using similar tactics as well. You are really leaving money on the table. In most circumstances, the best you'll get is first right of refusal on the new price.

[Watcher]

This is just wishful thinking, but is there any chance that a group of buyers can threaten litigation?

Perhaps lititation could be done in a fashion that it threatens to hold up their condo project/schedule?

For example: My builder was going to pour concrete on my driveway after my possesion date, but when I made it clear to them that I have instructed my mortgage lawyer to hold final payment until the driveway was paved, the concrete guys showed up on time.

[sputnik]

VERY COMMON these days.

Typical catch 22. Since the bannk wont finance the construction company at current sale rates so they have to increase prices. Either way you dont get your condo unless you pay up.

Quite a few banks are starting to refuse financing on ANY condo that does pre-sales. A number of banks now require 60% completion before sales of units are allowed.

[rockym20]

This isn't just the builder ripping you off though. Construction costs have increased tremendously over the past year. This is everything from raw materials to labour. Its likely that the price when the condos were presold is now not even enough to cover their costs, much less earn them a profit. Thus they cancel the contract and increase prices to stop from going bankrupt.

[yellowsnow]

^^ although that is true, a condo developer is out to get as much money as they can. so they can make a LOT more if they just cancel existing contracts, and sell them again at a higher price.

[Watcher]

I don't get it.

Rising prices is something that every developer wants to have. Why the big hard-on to screw their customers?

[Weapon_R]

Originally posted by Watcher
I don't get it.

Rising prices is something that every developer wants to have. Why the big hard-on to screw their customers?

Simple. Condos purchased 'early last year' have probably increased by 40-50% in value. People who locked in last year are being given the shaft because the builder has likely realized that he can re-sell them at this new increase (and in all likelihood, his costs have only increased marginally since last year).

In todays market, a builder doesn't really care if the buyers are happy or not. He knows that if anyone passes on the deal, the unit will be sold within minutes to the next guy in line.

[TrevorK]

I think the biggest problem is that the Condo developers need the presales, because the quicker they sell their units the sooner they will raise their prices.

Then, they go and cancel all the first 10-20% of presales, and raise the price.

So now, a building that started at the 125K-180K range can jump to 160K - 200K, all because they built off of the interest generated by low prices and large amount of presales.



It wouldn't be so bad if it was just "rising costs"; but that's not the reason. The reason is because the interest has gone up (Because of the large amount of presales) that they are able to significantly raise the rates of their units.

[Watcher]

Moral of story: don't buy presales unless it has stronger contract language?

[Nitron88]

tip: purchase condos only from solid builders who have had high past customer ratings and awards. The smaller and lesser known companys tend to rub you off and leave you empty handed

[nonsane]

I recently purchased a pointe of view condo and I was assured by their sales representitive that their company does not do this.....


Liars.....

It's a mixed blessing though, with the amount of problems i've had with them i'll never buy nor recommend nor support pointe of view ever.