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Court ruling shows risk of pre-sale contracts as unsuspecting buyers lose homes

By Glen Korstrom for Business Vancouver

Buyers of 40 homes in Langley learned the hard way earlier this month that buying a pre-sale contract for a home in B.C. comes with the risk that a court will break the pre-sale contracts if the developer goes into receivership.

Some also told Business in Vancouver that their experience is evidence that the B.C. government needs to step in with strict guidelines for developers conducting pre-sales and to issue fines when developers break rules and sell units multiple times and pocket deposits without putting them in trust.

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BC Supreme Court Justice Shelley Fitzpatrick ruled April 4 that receiver Bowra Group Inc. should sell the 40 homes at Langley’s Murrayville House at market value to raise additional capital to pay lenders that lost money by financing insolvent developer 0981478 B.C. Ltd.

Original buyers of pre-sale contracts will have first right of refusal to buy the homes, which have each risen in price by an estimated 46%, or more than $136,525, since the pre-sales were signed two years ago, according to the judgment.

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