We were retained by the owner of some land in Toronto to conduct the legal work necessary for developing the land as a commercial condominium project. Our client’s plans included the construction of five commercial retail buildings and one office building on the property. Our client’s marketing and pre-sale results and arranged financing would permit him to construct the first five buildings, but the sales projections and financing for the office building were not yet available, delaying construction of the office building. No condominium application had been submitted to the municipality, although a site plan application had been started. Our client’s realtor had already collected deposits from purchasers for some of the units proposed for the first five buildings and had these purchasers sign standard resale form Agreements of Purchase and Sale. When a buyer purchases a new condominium unit from a developer, the Condominium Act requires the developer to give the buyer a Disclosure Statement describing the most important features of the condominium project, including the proposed declaration, bylaws and rules, budget, common expense amounts, proportionate shares upon which common expenses are calculated, condominium plans, property management agreements, and any insurance trust agreements. The Act provides a 10-day cooling off period for buyers to review and be satisfied with these documents, after which time the buyer is bound by the terms of the contract. All deposits must be held by a “prescribed trustee,” which in our client’s case meant his lawyers. Our client came to us for help when its lender correctly required a Disclosure Statement before advancing construction funds. Pursuant to the provisions of the Condominium Act, our client should not have entered into resale forms of Agreement of Purchase and Sale with buyers or collected deposits held by the realtor.
We prepared the required Disclosure Statement and Agreement of Purchase and Sale contemplating a “Phased Condominium Corporation,” so that the first five buildings could be constructed and closed with purchasers and the sixth building could be constructed as a second phase at a later date, ultimately merging with the first phase of development. We signed new Agreements of Purchase and Sale with the existing purchasers and held the deposits in our trust account as the prescribed trustee under the Condominium Act. We prepared and submitted the condominium application to the municipality and processed the necessary planning approvals for registration of the Condominium Corporation and its phases. We completed the occupancy and final unit closings, organized the Condominium Corporation and its bylaws, and completed the final turnover meeting.
Our client’s project moved through the municipal planning approvals with all units ultimately closing in two phases of construction. This helped our client optimize the sales of all of the units in the project, both commercial and office, while meeting its cash flow and financing requirements.