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Unconscionability In Real Estate Transactions Post-Uber – Real Estate and Construction – Canada – Mondaq News Alerts

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Unconscionability In Real Estate Transactions Post-Uber

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In Forest Hill Homes (Cornell Rouge) Limited v. Wei,
2020 ONSC 5060 (CanLII)
, Justice F.L. Myers applied the Supreme
Court of Canada’s recent review of the doctrine of
unconscionability in Uber Technologies Inc. v. Heller,
2020 SCC 16 (CanLII)
to a residential real estate purchase
transaction.

The Defendant, Wei, had agreed to purchase a home in a
subdivision from the Plaintiff, Forest Hill Homes (Cornell Rouge)
Limited (“Forest Hill”). The transaction was aborted
because Wei was not able to obtain sufficient financing to close
the sale and the Plaintiff refused to decrease the purchase price.
Forest Hill sold the home to another buyer for a lower amount and
sued Wei for the difference.

Wei defended Forest Hill’s claim for damages on the basis
that she had not been advised that the offer was irrevocable for 10
days. Wei took the position that the irrevocability clause was
unconscionable.

As noted by Myers J., irrevocability clauses are an anomaly in
contract law since, despite the use of the word
“irrevocable,” an offer that has not yet been accepted
to form a binding contract is in fact “revocable.”
Accordingly, for an offer to purchase to be truly
“irrevocable” there must be some other independent
agreement made between the seller and the buyer.

In the circumstances, Forest Hill took the property off the
market as soon as Wei made the offer and it declined to seek
competing offers or to try to create an auction. Accordingly, it
took a step to its own detriment which was sufficient in law to
create a mutually binding agreement.

As to whether the irrevocability clause was unconscionable,
Justice Myers reviewed the two-step test outlined by the Supreme
Court of Canada in the Uber decision:

First, the judge should consider whether there was an inequality
of bargaining power between the parties. If so, the judge will then
consider whether that inequality resulted in an improvident
bargain. An improvident contract entered into between parties of
unequal bargaining power will be found to be unconscionable and
will not be enforced.

Justice Myers had no difficulty agreeing that there was an
inequality of bargaining power between Wei and Forest Hill.
Although nobody had forced Wei to make an offer to buy the house,
and there were plenty of other houses on the market, Forest Hill as
the builder had the ability to dictate its terms. This was
manifestly evident in Forest Hill’s use of a standard form
contract with schedule upon schedule of fine print.

Conversely, other than a 20% interest charge buried in the fine
print (which Forest Hill conceded was unenforceable), Myers J.
found that there was nothing improvident or unusually onerous about
agreeing to a period of irrevocability in a residential real estate
transaction. In the case at hand, Forest Hill had specifically
agreed not to look for competing offers during the irrevocability
period. Further, there was no evidence that when Wei signed the
offer, she had any reasonable expectation that there would be any
type of “cooling off” period. In Justice Myers’
words: “Considering the surrounding circumstances at the
time, the price, and the commercial setting, there is nothing
improvident in the bargain. It was a standard purchase of the type
that happens every day all over the province.”

In the result, Wei was liable to Forest Hill for the sum of
almost $180,000 resulting from her failure to complete the purchase
of the property.

Originally published by Gardiner Roberts, August
2020

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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From what I have read, the demand for cottage properties has soared during COVID. City folk are eager to get out of the city for a change of scenery, especially since many people are still working from home.

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Montreal startup uses AI to set real-estate prices – Montreal Gazette

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The pandemic has been devastating for so many businesses, but it has also provided opportunities for other entrepreneurs. Take the case of Montreal brothers Mark and Jordan Owen. Both saw their lives significantly altered by the COVID-19 crisis.

Mark, 28, was working for a local real-estate development firm and business had ground to a halt in the spring. Jordan, 26, was in a master’s program in real-estate development and city planning at the Massachusetts Institute of Technology (MIT) and had come back to Montreal in March because all in-person classes had been cancelled.

That’s when they had the idea of starting up a company to produce reusable masks. They founded Bien Aller, named in honour of the Quebec COVID catchphrase “Ça va bien aller.” They created the firm with a friend, Sean Tassé, who had been laid off from his job at a construction-management firm because of the pandemic.

Six months later, they’ve sold about 300,000 masks and they’re still producing them at facilities in Montreal and South Korea. Then the Owen brothers, Tassé and another friend, Benoit Thibeault, had a notion for a more unusual startup. The Owens’ background in Montreal real estate had them thinking that what developers and brokers could really use is a more reliable way to set prices for houses and condos that are going on the sales or rental markets.

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Real Estate Investments in Greater Vancouver Offer Most Attractive Investment Yield

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Is there an investment asset that can produce a 366 percent return in a three-decade span? Yes, it is the housing property in Canada. Is there an investment asset that can beat this performance? Yes, it is the property in Greater Vancouver in British Columbia, Canada. Indeed, Greater Vancouver has proven to be one of the real estate investment hotspots, given its appeal as an investment market that boasts natural beauty, strong economic and demographic fundamentals, and financial stability, which ensures optimal yield for a low level of investment risk.

Property prices in Greater Vancouver, BC, have risen by some 473.7 percent in the period between 1980 and 2009, yielding, on average, a spectacular 17 percent per annum over the noted period. In other words, according to the Canadian Real Estate Association (CREA) and RE/MAX Canada, the average price of residential property in Greater Vancouver in 1980 was slightly over $100,000. Today, that same property is worth, on average, somewhat more than $574,000.

The noted return on investment looks incredibly attractive, given the low risk associated with residential property investments. Investments in residential real estate in Greater Vancouver have been characterized by exceptional stability. The average price of a house in Greater Vancouver dipped seven times in the past 30 years. Most of the dips occurred in the late 1990s. However, all declines in average prices of homes in Greater Vancouver have been exceptionally mild, with the largest annual decreases not exceeding 3.5 percent.

This performance of real estate investments in Greater Vancouver looks remarkable compared to the implementation of property investments in the Canadian housing market as a whole or performance of investments in most other regional real estate markets in Canada. As noted earlier, the average price of a property in Canada has risen by 366 percent between 1980 and 2009. This translates into an average annual return of 13 percent in the same period. Only Victoria, Regina, Toronto, and Ottawa have recorded returns higher than this average for Canada as a whole. Victoria, located in British Columbia, has the second-highest return on residential real estate investments in the Canadian property market. An investment in Victoria’s housing property has returned 448.5 percent in total return, or 16 percent on average each year between 1980 and 2009. This makes British Columbia the best performing regional property market in Canada.

On the other hand, taking an international investment perspective, even less robust, would have been investment returns on U.S. real estate. Based on the average values of homes in the United States between 1980 and 2009 (using the Freddie Mac Conventional Home Price Index), an investment of $100,000 in residential properties in the United States in 1980 would be worth $382,576 today. This would represent a total return, measured by the increase in home prices, of 283 percent over the noted period. In other words, an investment in the real estate market in the United States would have produced an average nominal yield of 10 percent per annum, which is much lower than that earned on the property investment in Greater Vancouver.

Investments in residential real estate in the Greater Vancouver area look exceptionally appealing, given their outstanding performance relative to property investments in other regions of Canada and the U.S. real estate market. Therefore, investing in Greater Vancouver’s property market can represent an investment choice that promises high yield for a low level of investment risk.

 

 

 

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Vancouver real estate: early September numbers show steep drop in sales from August highs – The Georgia Straight

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Home sales in the city of Vancouver are dropping big time.

This is based on tracking by real-estate site fisherly.com as of late morning Friday (September 25).

Compared to record highs in August, early numbers for September show a steep decline in transactions.

In August, a total of 490 condo units sold in Vancouver.

As of this posting September 25, fisherly.com recorded 202 condo sales so far this month.

Last month, 212 detached homes changed owners.

September sales so far show 114 freestanding houses sold in the city.

As for townhouses, 99 sold in August.

As of September 25, only 49 townhouses have been purchased.

Vancouver home sales peaked in August, following a steady recovery that started in May.

Transactions crashed in April during the height of the COVID-19 lockdowns.

RBC Economics previously issued a report noting that pent-up demand for homes drove real estate sales in the country this summer.

However, according to the bank’s report, this demand is largely spent, and that the market’s momentum is expected to decelerate in the fall.

The Canadian Real Estate Association has forecast that after its highs and lows, 2020 may likely end up as a “fairly middling year overall”.

It remains to be seen whether the Vancouver market will stage a late September rally to boost numbers.

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