Housing minister on pre-sale protections after BC man lost life savings

Sudip Sehgall (Arash Randjbar/Daily Hive)

BC’s housing minister is weighing in on the story of a Surrey man who lost his $82,000 deposit when he couldn’t close on a pre-sale home.

“When I first heard Mr. [Sudip] Sehgall’s story it broke my heart,” Housing Minister Ravi Kahlon told Daily Hive Urbanized.

Developers have a responsibility to give homebuyers disclosure statements about their rights to cancel a pre-sale contract, and it’s important that prospective buyers carefully consider them, Kahlon added.

It’s why the NDP government introduced the Homebuyer Protection Period last year, creating a mandatory three-business day period where homebuyers have time to secure financing or arrange home inspections — a recommendation from the BC Financial Services Authority to protect consumers amid rising interest rates and high-pressure sales.

You might also like:

Sehgall, a Surrey resident and relatively recent newcomer to Canada, lost his deposit when rule changes in India meant he and his parents couldn’t sell their property there as expected.

@freshdailyvancouver A new immigrant says his Canadian dreams have been shattered after losing an $84K deposit on a townhouse in Metro Vancouver #Vancouver #Surrey #Canada ♬ original sound – Freshdaily Vancouver

Despite a clause in the contract saying Streetside Developments by Qualico wouldn’t unreasonably withhold reassignment, the developer wouldn’t let Sehgall assign his unit to someone else when he learned he wouldn’t have the money as expected to close the deal.

Sudip Seghall/Submitted

Now, Sehgall doesn’t have his townhome in The Boroughs nor the $82,000 deposit he finalized in 2022.

He says he now doesn’t have enough to afford a lawyer to pursue the matter in court.

“I’ve been ruined. Me and my elderly parents in India. Our life savings are gone,” he told Daily Hive Urbanized.

He’s shocked his deposit could be taken with no consideration for reassignment, even though Sehgall found two people willing to assume ownership of the unit.

“We understand that purchasing a home is a significant financial decision and we strive for customer satisfaction and clarity throughout this important journey,” Jonathan Meads, StreetSide Developments’ vice president, told Daily Hive Urbanized.

The developer declined to comment further, only saying that it’s an ongoing and private legal matter. It’s not known if another owner has been found for the home.

Developers often don’t want people reassigning their units before completion if the entire project isn’t sold, Vancouver realtor Jeff Appelbe told Daily Hive. Having unit reassignments on the market at the same time could compete with units being sold by the developer.

“When you’re trying to sell a building you can’t have people who’ve committed to it selling and competing against the developer,” he said.

It may not make sense for the government to step in with rules mandating reassignment, Appelbe said, because it could encourage quick flipping of pre-sale units in the years between deposit and completion.

“A lot of them may have never intended to live in these homes. They just wanted to make a profit.”

He added that pre-sale units can be risky by nature because of the time that elapses between deposit and completion. There are two or three years where policies can change, as was the case with Sehgall’s property in India, or interest rates can fluctuate.

It can mean some people end up over-leveraged and caught in a bind — and it’s something experts say they’re seeing more often this year.

Metro Vancouver mortgage broker Rebecca Casey told Daily Hive last month that cases of developers withholding reassignment are very rare, but she has seen them happen. In most cases, though, she said developers wouldn’t want to risk reputational damage by declining a reassignment for a buyer having trouble.

At the end of the day, Casey advised prospective pre-sale buyers to enter into a contract only if they’re sure they can accommodate the risk.

“No matter how seasoned you think you are, do not enter a pre-construction contract without speaking to a lawyer, a mortgage broker, and a realtor at minimum. Because I think people need to understand the margins of risk, and it’s too easy to walk into a development office and throw down a deposit and think it’s all going to be okay in two years.”

With files from Arash Randjbar