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Recently, the pre-sale condo market has seen a rise in the number of pre-sale purchasers seeking to avoid completing the purchase of their pre-sale condos. In what circumstances might deficiencies in the construction of a strata lot allow a purchaser to terminate their contract? The BC Supreme Court’s decision in Rhythm Living Ltd. v. Pereira, 2026 BCSC 555 (“Rhythm Living”), provides useful guidance on when deficiencies will, and will not, allow a purchaser to refuse to complete a pre-sale purchase.
The Dispute
Jacinto Araujo Alves Pereira and Evelyn Ann Pereira (the “Pereiras”) entered a pre-sale contract (the “Contract”) with Rhythm Living Ltd. (“Rhythm”) to purchase a newly constructed residential strata unit (the “Unit”) for $799,000 with a $75,000 deposit. The Contract contemplated that the Unit being purchased would include a pergola, patio extension, a TV, and parking which included an EV charger.
Two days before completion, the Pereiras conducted a walkthrough and observed moisture in the Unit. They also noted that the pergola and patio extension were incomplete and the EV charger and TV had not been installed.
The Pereiras refused to complete, arguing that the outstanding work and moisture issues amounted to a fundamental breach of the Contract and that the moisture rendered the Unit unlivable. The Court rejected both arguments, and in addition to forfeiture of their $75,000 deposit, the Court ordered the Pereiras to pay Rhythm over $140,000 in damages for its market loss on the resale of the Unit.
Terms vs Conditions
Not every breach of a pre-sale contract gives a purchaser the right to terminate. The key distinction is between contractual terms, and contractual conditions. While breach of a term generally gives rise to a claim for damages, breach of a condition may permit the innocent party to terminate the contract.
The distinction turns on the significance of the obligation. In assessing whether a breach justifies termination, courts consider whether the breach substantially deprives a purchaser of the benefit they expected to receive under the contract.
In Rhythm Living, the outstanding items did not meet that threshold. They could be remedied for a fraction of the purchase price and did not substantially deprive the Pereiras of the benefit of the Contract. Their remedy would therefore be limited to pursuing damages, and not a right to refuse to complete the transaction.
The Standard of “Unlivability”
Serious deficiencies may also justify a refusal to complete if they render the property unlivable, but the threshold is high. The test is practical: could an individual of ordinary sensitivity reasonably live in the property despite the issue or while repairs are being completed? The moisture concerns in Rhythm Living did not make the Unit unlivable. The Court distinguished cases involving substantially more serious conditions and health risks.
Implications for Developers
Rhythm Living is a helpful reminder that the standard for completion of a pre-sale unit is not perfection. Minor deficiencies, unfinished work or remediable damage does not by itself give a purchaser a basis to walk away from the transaction.
Whether a particular deficiency affects a purchaser’s obligation to complete will depend on the contract and the seriousness of the issue, highlighting the importance of careful drafting. Pre-sale contracts should clearly address how deficiencies and incomplete work will be handled at closing and, where appropriate, identify obligations that are intended to affect completion. Doing so can strengthen a developer’s position if a purchaser later attempts to rely on outstanding work as a basis for refusing to close.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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