Legal Blog

HUDAC ONHWP

Your client informs you that she wants out of a purchase of a new condominium unit or house from a developer. What do you do first?

If you have read Beer v. Townsgate I Limited (1995), 25 O.R. (3d) 785 (O.C.G.D.), the first thing you do is check to see if the developer registered the property under HUDAC before your client entered into the agreement to purchase the property from  the developer.

Madam Justice Chapnik stated in that case that the HUDAC registration, subsequent to the contract, rendered the contract illegal and, therefore, void.

The same situation arose in Skyrise Developments Ltd. v. Abrahams, an 1996 unreported decision of the Ontario Court (General Division). Mr. Justice Davidson declined to follow the Beer decision. He preferred the decision of Madam Justice Gotlib in Puri v. Sharynton-Homes Ltd (1994),48 R.P.R.(2d) 8 (O.C.G.D.). Justice Davidson held that since the HUDAC registration was made prior to closing, the contract was capable of being performed legally at the time of its creation and was not void.

Accordingly, it seems that you will have no good news for your client, on the registration front, until the date of closing.