Part 32 published on 01/11/10
Builder not permitted to assign purchase agreements
Purchasers entered into agreements with a vendor/builder, for the purchase of units in a proposed condominium. The vendor/builder went into receivership. Under Court order, the project was sold to a new developer, and the purchasers were told that their purchase contracts had been assumed by the new developer. The agreements were silent as to the vendor’s right of assignment. The Court said:
I agree with the Applicant’s position that contracts of the nature of those at issue in this case are entered into by purchasers who rely upon the skill, reputation and the ability of the builder to deliver a suitable product. The case law is clear that these contracts are not assignable without the purchaser’s consent.
Furthermore, this is not a case where one party to the contract is delegating performance of the contract to someone else and remaining liable to the purchaser. Here, the builder has gone into receivership and no longer has any possession or control over the project. In no meaningful way is it in a position to either ensure performance or be responsible for performance of its obligations.
The Court declared that the contracts were at an end and ordered the return of the purchasers’ deposits (with interest).