Sooner or later it was bound to come around.
Developers suing buyers for non performance on their pre-sale contracts. We have all seen the big full page ads in the local papers, advertising liquidation of hundreds of condos by a local developer.
Some probably are die to buyers not proceeding with their purchases and some are distress, left over inventory that has to be sold.
We haven't had this situation before, to this extent. Developer suing for non performance. So what happened?
Well, while the market was climbing everyone started to feel invincible and buyers were lining up in droves to purchase condos who seemingly just kept going up.
No one stopped to think about what would happen if the developer didn't get it built, if the market stopped climbing, or any of those things.
Everyone was running to get the next deal.
No one thought what it would take to sell it once it was completed.As an example if you bought in pre-sale for $400,000, you would have to pay the GST at 5% as an investor. If you actually moved in and lived there for a year,you can get a 36% discount on the GST. If you are a first time buyer there will be no property purchase tax. However if you are not, the PPT would be an extra $5000.
Let's assume that you were buying for investment and using your first time exemption. The unit would cost you $400,000 plus %% GST, plus closing cost, all total around $422,000.
You would have to sell the unit for $440,000, after paying your selling costs to break even.
How many buyers did that calculation?
And now back to the Vancouver Sun article in yesterdays issue . The developers lawsuit is based on the SChedukle "A" that was attached to the buyers contracts. (More on that in the next blog).
How many buyers have read it? Did they read the Disclosure Statement?
What that thick document that was handed out when I signed the contract? Most of the buyers don't even knw where it is. For most, reading ot was as exciting as reading your auto manual. So who cares. Everybody get's one of those.
Now, when the chips are down, the developer is not showing any mercy.
Read on....
If you are looking to Buy or to Sell real estate in Vancouver area, give me a call. My consultations are FREE. The benefits to You, may be worth a lot of money.
Call Jeff Stark at 604-506-8481 or email me at jeff@jeffreystark.net
