Court Enforces Exculpatory Clause Dismissing Condominium Class Action

• Published date: 06 July 2020
• Law Firm: Aird & Berlis LLP
• Author: Mr Steve J. Tenai, Brian Chung and Martin Henderson

Pre-construction condominium developments are subject to the risk that the development may be cancelled. Over the last several years, we have seen the cancellation of several significant developments.

This has prompted the introduction by Tarion, for projects going to market after January 1, 2020, of the requirement that agreements of purchase and sale include an information sheet at the front of the purchase agreement that outlines some of the key potential risks of buying a residential condominium unit in a pre-construction standard or phased condo project. These may include potential early termination conditions within the purchase agreement, such as reaching a minimum sales threshold for the project to proceed, the developer securing necessary financing for construction and completion of the project, and obtaining the required approvals from the municipality.

But what if a purchaser does not accept that a project has been terminated on valid grounds under the purchase agreement. Can that purchaser sue for loss of bargain in a rising market?

Most pre-construction condominium agreements of purchase and sale include terms limiting recovery on the termination of a purchase agreement to deposits plus interest as required under regulations. Clauses excluding damages and costs, including loss of bargain and loss of profit, are common terms in such agreements. But are they enforceable?

That was...