A BC Supreme Court judge has concluded a buyer who backed out of a deal to buy a $6.5 million mansion in West Vancouver was entitled to do so because a British Pacific Properties restrictive covenant significantly impacted potential uses.
According to court documents, homemaker Qi Li signed a deal to buy the house at 727 Biddesden Place from JBP Developments Ltd. in October 2016 and paid a $300,000 deposit. Among the terms of the contract, the title of the house was to be 鈥渇ree and clear of all encumbrances鈥� except for 鈥渞estrictive covenants and rights of way in favour of utilities and public authorities.鈥�
The sale was to complete on Jan. 9, 2017.
But Li backed out of the deal, objecting to a British Pacific Properties restrictive covenant dating back to 1953 that remained on the property. The covenant gives the developer the right to approve exterior house colours, landscaping plans and any building plans, including fences and additions. It restricts the use of the property to one family and one home per property, forbids display of signs and many home-based businesses, and sets a maximum of 25 feet for the height of trees.
When Li refused to go through with the real estate deal, JBP Developments Ltd. sued for the deposit, which was being held in trust.
Li鈥檚 lawyer argued that forcing her to go ahead with the deal in spite of the restrictions in the covenant would force her to accept an amended contract she didn鈥檛 agree to, according to court documents.
The restrictions were 鈥渘ot minor or insubstantial鈥� but quite onerous, Li鈥檚 lawyer told the judge.
JBP鈥檚 lawyer argued Li was aware of the British Pacific Properties covenant when she signed the deal, adding that the restrictions were 鈥渃omparatively trifling鈥� according to court documents. The company said Li鈥檚 鈥渆ffort to avoid the contract at the eleventh hour was simply evidence of buyer鈥檚 remorse.鈥�
But the judge didn鈥檛 agree.
In a recent decision, Justice Trevor Armstrong wrote that the restrictions could 鈥渕aterially affect many aspects of an owner鈥檚 use of the land.鈥� The seller knew about the restrictions because the company had recently built a new house on the property, wrote the judge.
He added Li鈥檚 prior knowledge that the restrictive covenant existed 鈥渄oes not excuse the sellers鈥� obligation to provide clear title.鈥�
He ordered JBP to return Li鈥檚 $300,000 deposit.
According to BC Assessment, the six-bedroom, eight-bathroom home built in 2014 sold in March 2017 for $6.05 million. The assessed value as of July 1, 2017 was $5.7 million.
