George Lee Law | Family Law · Immigration · Civil Litigation | Vancouver, BC
Serving the Lower Mainland in English, Cantonese, and Mandarin
Vancouver’s real estate market has undergone a dramatic correction. Pre-construction condos purchased at peak prices in 2020–2022 are now completing at valuations far below what buyers agreed to pay. Thousands of purchasers across the Lower Mainland — in Burnaby, Surrey, Coquitlam, and beyond — are asking the same urgent question: Can I walk away from this deal?
The short answer is: you can walk away, but you cannot walk away clean. Backing out of a signed, subject-free Contract of Purchase and Sale (CPS) is a breach of contract, and the legal and financial consequences in British Columbia are severe, immediate, and largely unavoidable.
This article explains what happens when you breach your pre-construction purchase contract, what remedies the developer or seller has against you, and why most of the defences buyers hope to raise simply do not work at law.
1. How a Pre-Construction Contract Becomes Binding
When you purchase a pre-construction condo in BC, you sign a Contract of Purchase and Sale prepared by the developer. This contract is typically conditional on several subject clauses — financing, review of the disclosure statement, home inspection, and others.
The contract becomes fully and irrevocably binding on you when two things happen:
- You pay the deposit (or deposits, in stages, as is common in pre-construction deals); and
- You remove all subject clauses — signing a Subject Removal form that confirms you are proceeding unconditionally.
Under REDMA, a pre-construction buyer has a statutory 7-day rescission right, but this window is tied to the timing of receiving the developer’s disclosure statement — it runs early in the process, well before subject removal. Once that window has closed and subjects are subsequently removed, the buyer is generally bound without further right of withdrawal.
The Home Buyer Rescission Period (HBRP) under Property Law Act, s. 42 — which provides a 3-business-day rescission right — does not apply to pre-construction presales. Section 42(2) of the Property Law Act expressly carves out contracts to which s. 21 of REDMA applies. Pre-construction presales are governed by REDMA’s own rescission regime, not the HBRP. The HBRP applies primarily to resale residential transactions.
| ⚠ KEY LEGAL PRINCIPLE A subject-free Contract of Purchase and Sale, supported by a deposit, is a binding contract enforceable in the BC Supreme Court. The developer does not need your agreement to enforce it — the courts will enforce it for them. |
2. What Happens When You Refuse to Complete the Purchase
When a pre-construction condo completes (i.e., when the developer registers the strata plan and is ready to transfer title), you are required to appear with your lawyer, pay the balance of the purchase price, and take possession. If you fail to complete, you are in breach of contract — sometimes called a ‘repudiatory breach,’ because you are refusing to honour a fundamental contractual obligation.
The developer, upon your breach, has a choice of remedies under BC contract law and equity. A developer must generally elect between affirming the contract and pursuing specific performance on the one hand, or accepting the repudiation, terminating the contract, and claiming damages on the other. Once it elects to terminate, it can pursue both deposit forfeiture and damages for the shortfall — these are typically available together where the contract so provides.
2.1 Accept the Breach and Terminate the Contract
The developer may elect to accept your breach and treat the contract as terminated. This does not let you off the hook — it simply releases the developer from its own obligation to sell you the unit while preserving all of its rights to damages.
2.2 Forfeit Your Deposit
Pre-construction contracts in BC uniformly contain a deposit forfeiture clause. When you breach, the developer is entitled to keep every dollar of deposit paid. On a $1,000,000 purchase, deposits of $150,000 or more are common.
The leading BC authority on deposit forfeiture is Tang v. Zhang, 2013 BCCA 52, a five-judge division of the BC Court of Appeal, which confirmed that a true deposit is forfeited upon purchaser default without any requirement on the vendor to prove actual damages — the forfeiture is a contractual entitlement that stands on its own.
2.3 Duty to Mitigate: Re-List and Sell the Property
The developer has a duty at law to mitigate its loss — it must take reasonable steps to resell the property rather than simply sitting on it and letting damages accumulate. In a declining market, this means re-listing the unit, reducing the price as necessary to achieve a sale, and accepting the market price.
Here is where the financial devastation for the breaching buyer crystallizes: the developer sells at a loss, and you are liable for that loss.
2.4 Sue You for the Full Measure of Damages
The developer’s damages claim against you is measured by the difference principle — the developer is entitled to be put in the financial position it would have been in had you completed the purchase. This means:
- The difference between your contract price and the resale price achieved;
- Carrying costs incurred between your breach date and the resale completion (strata fees, property taxes, mortgage interest if applicable, insurance, utilities);
- Marketing and advertising costs of the resale;
- Legal costs — in BC Supreme Court, costs are typically awarded on a partial indemnity basis unless the contract contains an express indemnity clause; some pre-construction contracts do include such clauses, so review your agreement carefully; and
- Pre-judgment interest under the Court Order Interest Act, RSBC 1996, c. 79.
These claims are brought in the BC Supreme Court. Where the quantum is under $35,000, a claim may proceed in BC Provincial Court (Small Claims), but developer claims against defaulting buyers almost invariably exceed that threshold.
3. A Concrete Example: The Numbers Don’t Lie
This scenario reflects conditions currently playing out across the Lower Mainland.
| Scenario: Burnaby Pre-Construction Condo — Buyer Default Contract Price: $1,000,000 | Deposit Paid: $150,000 | Resale Price After Default: $750,000 |
| Item | Amount | Notes |
| Deposit Forfeited | $150,000 | Already paid — gone |
| Price Difference | $250,000 | $1M contract – $750K resale |
| Marketing & Carrying Costs | $30,000 – $50,000+ | Ads, strata fees, carrying costs |
| Developer’s Legal Fees | $15,000 – $30,000+ | Subject to contract & court award |
| TOTAL EXPOSURE | $445,000 – $480,000+ | Before pre-judgment interest |
Note: These figures are illustrative. Actual exposure depends on specific contract terms, carrying period, resale timeline, and applicable legal costs. Obtain legal advice to assess your individual situation.
The buyer in this example paid $150,000 in deposits hoping to gain a profit on a rising market. Instead, they face a judgment of nearly half a million dollars — after losing their deposit entirely. This is not a hypothetical. This is the legal reality for buyers defaulting on pre-construction contracts in BC today.
4. The Defences That Will Not Save You
Buyers in distress often look to potential defences. It is important to be clear-eyed about what the law does and does not permit.
4.1 ‘I Lost My Job / I Can’t Get Financing’
Financial hardship is not a legal defence to breach of contract in BC. The contract does not contain an implied term that excuses performance if your financial circumstances change. If you removed your financing subject, you accepted the risk that your financing situation might change. The courts will not relieve you of a freely-negotiated contractual obligation because your circumstances have become more difficult.
4.2 ‘It Was COVID — Force Majeure’
Force majeure clauses excuse performance when an extraordinary, unforeseen event makes performance impossible or illegal — not merely more expensive or financially difficult. While COVID-19 was genuinely disruptive, market downturns, job losses, and financing difficulties caused by the pandemic are widely understood in Canadian contract law not to constitute force majeure events excusing a buyer from completing a real estate purchase. These events affect a buyer’s means, not the legal possibility of performing. Without a verified, on-point BC authority specifically addressing COVID force majeure in pre-construction closings, the prudent course is to note that the outcome depends heavily on the precise wording of the force majeure clause in your contract — if there even is one. Most standard pre-construction contracts in BC do not contain a broad force majeure clause that would assist a buyer.
4.3 ‘The Market Value Fell — That’s the Developer’s Risk’
Market risk runs both ways. When the market rose, buyers were happy to speculate on pre-construction. When it falls, buyers cannot retroactively transfer that market risk to the developer. You contracted to buy at $1,000,000. The fact that the market now says the unit is worth $750,000 does not render your contract unconscionable, frustrated, or unenforceable.
4.4 ‘The Developer Should Have Sold Higher to Mitigate’
The developer must act reasonably in mitigating — but the standard is reasonableness in a real market, not perfection. If the developer lists the property at market, accepts a market offer, and completes a bona fide arm’s-length sale, it has discharged its duty to mitigate. You cannot escape liability by arguing the developer should have waited longer or priced higher in a declining market.
4.5 ‘I Can’t Pay the Judgment Anyway’
This is not a legal defence — it is a practical reality. A judgment creditor has various enforcement mechanisms available, including registering the judgment against your real property (which clouds title), garnishing wages and bank accounts, and enforcing against other assets. A judgment also bears interest. Your current inability to pay does not extinguish the debt.
| ⚠ CRITICAL WARNING There is no statutory escape hatch, no COVID defence, and no general ‘hardship’ doctrine that will relieve you of liability for breaching a subject-free Contract of Purchase and Sale in British Columbia. Before walking away from your deal, you must speak to a lawyer. |
5. What Options Do You Actually Have?
If you are facing completion on a pre-construction purchase you cannot or do not want to complete, there are limited but real options — none of which involve simply walking away:
5.1 Negotiate with the Developer
Developers do not want the expense and delay of litigation any more than buyers do. In some cases, particularly where a buyer has a sympathetic factual situation and the developer is a sophisticated party interested in a commercial resolution, there is room for negotiation. This might include extending the completion date, accepting a partial deposit release, or agreeing to a discounted payout. This is not guaranteed, but it is worth pursuing through legal counsel.
5.2 Assign the Contract
Many pre-construction contracts permit assignment to a third party, subject to developer consent. If you can find an assignee willing to step into your shoes (at a price you can live with), you may be able to exit the contract legitimately. In a declining market, you may need to pay an assignee to take on the contract — but this cost may be far less than the damages exposure from breach. Check your contract carefully for assignment restrictions and consent requirements.
5.3 Complete the Purchase and Sell
If you can arrange financing — even expensive financing — completing the purchase and immediately listing the unit for sale may be preferable to the certain losses of a breach. You crystallize a real estate loss rather than a contractual damages claim. The tax treatment may also differ, and the overall financial outcome may be better.
5.4 Seek Legal Advice Immediately
The worst thing you can do is ignore the completion date and hope the developer won’t pursue you. They will. Construction lenders and investors in pre-construction projects require developers to enforce their contracts. Obtain legal advice well before the completion date so you understand your options and can negotiate from a position of knowledge.
6. Applicable Law: Key Legal Framework
The following legislative and regulatory framework governs pre-construction purchase contracts in British Columbia:
- Law and Equity Act, RSBC 1996, c. 253 — General equitable principles applicable to contract enforcement and deposit forfeiture;
- Real Estate Development Marketing Act, SBC 2004, c. 41 (REDMA) — Governs disclosure obligations for developers and the statutory rescission rights of pre-construction purchasers before subjects are removed;
- Property Law Act, RSBC 1996, c. 377 — Applicable to interests in land and conveyancing; s. 42(2) expressly excludes contracts to which REDMA s. 21 applies from the Home Buyer Rescission Period under s. 42(1);
- Court Order Interest Act, RSBC 1996, c. 79 — Pre-judgment and post-judgment interest on damage awards;
- BC Supreme Court Civil Rules, BC Reg 168/2009 — Procedural rules governing civil litigation in BC Supreme Court.
Key cases applicable to buyer-default scenarios in BC include: Tang v. Zhang, 2013 BCCA 52 (BC Court of Appeal, five-judge division — deposit forfeiture on purchaser default; no proof of damages required).
7. Special Considerations for Vancouver’s Chinese-Speaking Community
A significant proportion of pre-construction purchasers in Vancouver’s Lower Mainland are members of the Chinese-speaking community. Language barriers can create additional risks in this situation:
- Purchasers may not fully appreciate that removing subjects creates an irrevocable legal obligation;
- Advice received through informal channels — social media, community groups, friends — may be legally incorrect;
- Delay in seeking legal advice is common, and it substantially narrows your options;
- Judgment enforcement can affect assets in Canada, and in some circumstances cross-border enforcement mechanisms may apply.
If you received advice about your purchase contract in Cantonese or Mandarin, or if you are uncertain about the legal effect of documents you signed, it is essential that you obtain advice from a lawyer who can advise you in the language you are most comfortable in and who understands the BC legal framework governing your contract.
LEGAL DISCLAIMER
This article is provided for general educational and informational purposes only. It does not constitute legal advice and does not create a solicitor-client relationship. The law applicable to your specific situation depends on the terms of your contract, the facts of your case, and applicable legislation and case law. Real estate and contract law is fact-specific. You should not rely on this article as a substitute for advice from a qualified BC lawyer who has reviewed your documents and understands your particular circumstances. If you are facing a pre-construction default situation, time is critical — seek legal advice immediately.
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