Condos & claims: Understand your purchase agreement

There have been a number of incidents in recent years involving displeased condo buyers taking legal action against their developer. These stories share a common thread: Upon the completion of the building, condo buyers feel they were misled by the glossy renderings of the condo's common areas and units, and all the promises made by the builder never materialized. Regardless of whether these lawsuits hold any merit, these stories reinforce the importance for prospective buyers to divert their attention from the strategic marketing materials and focus on the document that really matters: the purchase agreement, or the contract outlining the terms and conditions of the deal.

One of the most recent examples is the $6.5 million lawsuit against Freed Developments for their condo development, Six50 King. The key feature marketed was the builder's collaboration with award-winning design firm Munge Leung, who was enlisted to add luxurious interior touches. Located within the Fashion District, Six50's high-end style was bound to fit into the neighbourhood perfectly. When the time came to move in, however, some buyers alleged that the Munge Leung design didn't actually materialize. Now the owners are suing Freed Developments for misrepresentations, breach of contract, construction deficiencies, unjust enrichment, and more.

This case is just one of many. Another high-profile lawsuit was launched against a North York condo developer for their project, Emerald City Condominiums. The buillder promised that the 36-storey condominium would have "easy underground access" to the Sheppard subway line near Fairview Mall. When the buyers moved in, they realized that there was no underground tunnel to the subway. Having direct access to the subway was a huge selling feature and owners had to pay a premium for it.

Developers put their condo units for sale years before the construction has finished, or even begun. As a result, buyers are typically selecting a unit based solely on floor plans and renderings. The risk buyers face is that the final result may be different than the plan, or simply what they had envisioned.

Condominiums, especially those in the preconstruction phase, are subject to change. A recent story in New Condo Guide summarizes the problem and ultimate solution:"Homebuyers often commit to any finishes and upgrades one to three years prior to taking possession, so it’s a good idea to specify the products, brands and manufacturers – or the equivalent – in the contract. 'Memories fade and perceptions change over time, so use the contract to get what you paid for,' " says Brad J. Lamb, president, Brad J. Lamb Realty in Toronto, the seller of more than 15,000 condos and Lamb Development Corp., which has projects completed and under development in Toronto, Ottawa, Montreal, Calgary and Edmonton.