What are the rights of a buyer of a new condo when the actual square footage is less that what is shown in the plans?
In a recent decision of the Quebec Superior Court, a lawyer promised to purchase a condo on January 14, 2010 to be delivered in September 2011 for the price of $1,350,000. According to the plans provided by the promoter, the condo was to comprise an area of 2904 square feet. When delivered, the purchaser hired a surveyor to measure it and found that it was only 2558 square feet, a shortfall of 346 square feet or 12 %. Put another way, the shortfall was equivalent to a good size room (20 x 17).
The purchaser proceeded with the sale and took possession of the condo under reserve of
The purchaser claimed a reduction of the purchase price in the amount of $113,000 to compensate him for the shortfall. He argued that the size of the condo was an essential condition for him and the shortfall was substantial.
The promoter argued that he never promised to deliver a condo with 2904 square feet of living space and that he had explained to the purchaser the difference between gross measurements (including the thickness of walls and windows) and net, which is measured from interior surfaces. In addition, the promoter invoked the following exculpatory provision of the Promise to Purchase:
Dans l’éventualité de toute divergence entre les Plans et les Spécifications incluses aux Annexes jointes à la Promesse, le plan de l’arpenteur prévaudra et l’Acheteur accepte que le Prix d’Achat demeurera le même nonobstant toute divergence de superficie par rapport à la superficie mentionnée dans les plans préliminaires.
The key legislative provisions are the following articles of the Quebec Civil Code:
1720. The seller is bound to deliver the area, volume or quantity specified in the contract, whether the sale was made for a price based on measurements or for a flat price, unless it is obvious that the certain and determinate property was sold without regard to such area, volume or quantity.
1991, c. 64, a. 1720; I.N. 2014-05-01.
1737. Where the seller is bound to deliver the area, volume or quantity specified in the contract and is unable to do so, the buyer may obtain a reduction of the price or, if the difference causes him serious injury, resolution of the sale.
However, where the area, volume or quantity exceeds that specified in the contract, the buyer is bound to pay for the excess or to restore it to the seller.
1991, c. 64, a. 1737; I.N. 2014-05-01.
The Court accepted the purchaser’s testimony that at no time did the promoter ever discuss with him the distinction between gross and net measurements.
Article 1720 stipulates that the seller must warrant that the size of the area stipulated in the Promise to Purchase is accurate. The Court found that the promoter could not exculpate himself from the warranty with a clause that states that the size of the area stipulated in the Promise to Purchase is only approximate. Moreover, the legal warranty is independent of the good or bad faith of the promoter.
The exception to the warranty included in Article 1720 has generally been interpreted restrictively, and the burden of proof is on the seller to establish that it applies to a given set of facts. In the present case, the promoter was unable to do so, particularly given the size of the shortfall.
Having determined that the promoter breached the legal warranty, what then is the compensation that is appropriate in the circumstances?
The jurisprudence does not support a rule of thumb approach i.e. a reduction in price proportionate to the size of the shortfall. Trial judges are accorded significant discretion to quantify damages and price reductions, but must not do so arbitrarily or enrich the purchaser.
In the present case, the purchaser hired an expert evaluator to undertake a comparative review of similar properties, and arrived at a value of $500 per square foot. From this he subtracted the cost of two garage spaces and a storage locker that were included in the price, leaving the amount of $327 per square foot. The expert concluded that if 2904 square feet at $327 gives $949,608, then 2558 square feet would give $836,466, a difference of $113,142 (tax included) which rounded off to $113,000, is the amount that the Court granted.