ELORA – Legal action against Gemini Homes has commenced after the builder announced in January that homebuyer contracts for the South River subdivision in Elora were void.
Fourteen of the 32 purchasers, who signed contracts and paid their deposits over a year ago, have retained John Brennan, a lawyer with Lerners LLP in London, Ontario, to work with the builder and an arbitrator to find a way for these purchasers to keep their homes.
Gemini sent an email to the purchasers on Jan. 18 stating that because hard services – water, sewage, gas and hydro – had not been installed by Jan. 13, the contracts were automatically terminated.
“The completion date and scope for hard services as referenced in the Agreement of Purchase and Sale were established by Gemini Homes and not the township or the developer,” reads a statement from Gemini general manager Brad Crnkovic to the Advertiser back in January.
“When the completion date for hard services was not met, the Agreements of Purchase and Sale were automatically terminated.
“It’s important to note, Gemini did not terminate the agreements unilaterally, but rather the agreements automatically terminated in accordance with their terms.”
Neither Crnkovic nor anyone else at Gemini Homes immediately returned a request for comment on the litigation.
In a phone interview, Brennan said that sadly, this situation is not unique in Ontario.
With a booming housing market, many builders have terminated contracts and are reselling the homes at higher prices. The homes in Elora were originally priced around $800,000 and now are selling at $1.2 million.
“It’s happening all over the province,” Brennan said.
“Each case has a different early termination condition – it could be financing or site plan approval for example. But what doesn’t vary is that (these early termination clauses) were rarely used before the pandemic.”
Brennan noted material costs have increased and housing prices have gone through the roof during the pandemic.
“The bargain they struck (with homebuyers) is not as attractive as it used to be. So they are resorting to this,” he said. “We say this is not valid.”
Brennan litigated on behalf of condo buyers in Tillsonburg last summer, who were told by their builder that their contracts were terminated because of a site plan approval issue but they could buy their condos back for an additional 25 per cent.
That case is still pending, but in the meantime the Superior Court has issued a certificate that means the builder in that situation cannot sell the condos to someone else until there is a final resolution.
A similar case with a builder in Barrie prompted Premier Doug Ford to state there needs to be legislation concerning this issue.
“It does beg a legislative response,” Brennan agreed, “but we won’t see it before the election.”
Brennan said he’s also handling a similar case with buyers in Guelph.
“They are relying on a different condition, but the outcome is the same for the purchasers,” he said.
They sign a contract, pay their deposit and believe they have bought a home.
“It comes as a complete shock that’s not the case,” Brennan said. “The clauses where a purchaser can back out are very prescribed.
“A contract is a contract. You can’t back out because you think you can get more.”
Brennan said he’s hopeful the arbitrator will see it that way too.
“There has to be some protection for the buyer,” he said.
“We hope there will be some resolution. We are not seeing that yet, but we are hopeful.”
