written by: HARRY HERSKOWITZ

Pursuant to the provisions of the New Condominium Act, a purchaser may terminate the agreement of purchase and sale before accepting a deed or transfer of title to the unit, by way of the purchaser or his/her solicitor giving written notice of the desired rescission to the declarant or the declarant's solicitor, within 10 days of the later of:

• the date that the purchaser receives the disclosure statement; and
• the date that the purchaser receives a copy of the agreement of purchase and sale duly executed by the declarant and the purchaser.

The New Condominium Act therefore starts the rescission clock ticking 10 days after the later of the purchaser's receipt of the disclosure statement, and the purchaser's receipt of the executed agreement of purchase and sale. Unfortunately, an evidentiary problem may arise as to when the rescission period has actually commenced, in those circumstances where the purchaser is unable or unwilling to acknowledge receipt of the executed agreement of purchase and sale, and simply refuses to re-attend at the sales site to receive the executed agreement. A "deemed receipt" clause in the contract may not be effective or operative, since the New Condominium Act "applies despite any agreement to the contrary", particularly if the purchaser is prepared to deny having received the disclosure statement. One alternative is to have a designated sales person accept the offer at the sales site (so that the executed agreement can be given to the purchaser contemporaneously with the disclosure statement, and the purchaser's receipt of both documents being duly acknowledged and witnessed at the same time), but making the completion of the transaction conditional upon the vendor's head office approval of the contract within "x" days of acceptance. Another alternative is to make the agreement of purchase and sale terminable at the vendor's option, within a specified number of days following the date of acceptance, unless the purchaser has executed and delivered an acknowledgment of receipt of the executed contract prior to such stipulated time. The foregoing alternatives are intended to alleviate the hardship which the declarant may endure (particularly in a "hot market") as a result of a unit purchaser attempting to unduly prolong the rescission period, thereby keeping the unit off the marketplace indefinitely.

The New Condominium Act also provides that if a change, or series of changes, occurs to the condominium project or to any of the information set forth in the disclosure statement, then the purchaser has a right to rescind the contract within 10 days of the later of:

• the date on which the purchaser received a revised disclosure statement reflecting a material change, or notice from the declarant confirming a material change has occurred; and
• the date on which the purchaser became aware of the material change.

Upon receiving notice of rescission from the unit purchaser, the declarant is obliged to promptly refund all money received from the purchaser and credited towards the purchase price, together with interest thereon calculated at the prescribed rate, accruing from the date such monies were received, to and until the date that the declarant has refunded same. (Note: The prescribed rate of interest is 2% below the Bank of Canada prime rate, adjusted on March 31st and September 30th in each year).

"Amaterial change" is now expressly defined in the New Condominium Act as a change, or a series of changes, that a reasonable purchaser, on an objective basis, would collectively regard as sufficiently important to the decision to acquire the unit, that it is likely that such purchaser would not have entered into the contract, or would have exercised the right to rescind same, if the disclosure statement had originally contained said change or series of changes.

A positive obligation is now imposed upon the declarant to give notice to a purchaser of a material change, rather than simply allowing the contract to be voidable at the instance of the purchaser until final closing. A material change may be provided to a purchaser by way of a revised disclosure statement, or simply by way of a notice. All changes to the information contained (or required to be contained) in the disclosure statement that the declarant reasonably believes may be material, must now be clearly identified in a revised disclosure statement or notice, and the particulars of same must be summarized.

The revised disclosure statement or notice of the material change(s) must be delivered to the purchaser by the declarant within a reasonable time after the material change(s) occurs, but in no event later than 10 days before the delivery of the deed.

Each of the following is deemed not to constitute a material change:

• a change in the budget for the current fiscal year, if more than 1 year has elapsed since registration of the condominium;
• any substantial addition, alteration or improvement made to the common elements by the condominium corporation, after the turnover meeting;
• a change in the portion of units or proposed units that the declarant intends to lease;
• a change in the schedule of commencement and completion dates for those amenities which had not been completed as of the date on which the disclosure statement was made; and
• for vacant land condominiums, a change in the information contained in the statement of services to be provided by the municipality or Ministry of Municipal Affairs and Housing.

If the declarant provides the unit purchaser with a revised disclosure statement that purports to provide the purchaser with new or updated information that is not considered material in the opinion of the declarant, then the purchaser may nevertheless apply to the Superior Court of Justice within 10 days after receiving the revised disclosure statement, for a determination as to whether the revised disclosure statement does, in fact, give rise to a material change, and thus triggers a new 10 day rescission period.

If a declarant wishes to challenge a purchaser's notice of rescission based on information (or changed information) which has been provided to the purchaser, then the declarant may likewise make a court application to have this issue of Amaterial changeA judicially determined, within 10 days after receiving the notice of rescission from the purchaser.

The purchaser of a condominium unit (irrespective of the type, nature or intended use of the unit) may therefore rescind the agreement of purchase and sale (before accepting a deed) within 10 days of the later of:

• the date on which the purchaser receives the revised disclosure statement or notice;
• the date on which the purchaser becomes aware of a material change, in the absence of receiving a revised disclosure statement or notice; and
• the date on which the court has made a determination that a material change has occurred, pursuant to an application brought by the purchaser or the declarant.

Upon receiving notice of rescission consequent upon a material change, the declarant is obliged to promptly refund all money received from the purchaser and credited towards the purchase price, together with interest thereon calculated at the prescribed rate, computed from the date such monies were received, to and until the date said monies have been fully refunded.

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