• Mon. Dec 4th, 2023

Real estate investor ordered to pay close to $1M for backing out of B.C. property deal

A real estate investor who abruptly backed out of a contract to buy a home overlooking the Strait of Georgia and refused to pay a $300,000 deposit is now on the hook for nearly $1 million, with no property to show for it.

Na Cao walked away from the deal she’d signed in November 2016 to buy 917 Pacific Dr. in Tsawwassen, B.C., for $4.45 million, after friends suggested she was overpaying, according to a recent B.C. Supreme Court decision.

She and her husband, Xin Qiang Li, both ignored warnings from their real estate agent and threats from the homeowner that they could be in legal trouble for reneging on the deal, Justice Matthew Kirchner wrote in a judgment on Friday.

“I find Ms. Cao was not entitled to rescind the contract,” he wrote, dismissing her arguments that she had been misled about the property.

“Her refusal to pay the deposit and complete the contract constitutes a breach of the contract.”

Kirchner ordered Cao to pay the property’s owner, Jeffrey Kaltenegger, $970,000 plus legal costs for the difference between the price she’d agreed to pay and the $3.48 million the house eventually sold for in May 2018, after the market had cooled.

The lengthy judgment lays out the history of the abandoned deal and Cao’s failed arguments for why she was justified in her actions.

At the time she made an offer on Kaltenegger’s five-bedroom house atop English Bluff, Cao and Li had already made a number of real estate purchases in the Vancouver area.

In audio messages to realtor Jia (James) Liu in October 2016, Li had said the couple was interested in buying “several houses this time,” the judgment says.

Cao and Li spent just 20 minutes at the Pacific Drive property before they decided to place an offer. During the same visit to the Tsawwassen neighbourhood, they also toured a second home and placed an offer on that as well.

 

In the days before the deposits were due on both properties, the couple spoke with friends about their latest investments.

“All my friends said what you purchased — this price was way too high,” Li testified in court.

Cao’s name was on the contracts, but Li appears to have done most of the talking about what to do next.

The judgment shows that Liu advised Li over WeChat that if the deposits weren’t paid on time “the other party is entitled to start a legal action against us.”

Nonetheless, Li asked him to negotiate a lower price with Kaltenegger, who made it clear he would accept “not a penny less” and told Liu his clients should expect a lawyer’s letter.

Li replied to Liu in an audio message, “Well, forget it, if he is going to handle it this way, that is fine. Let him send the lawyer’s letter. We’ve decided not to buy it.”

Arguments over property line and deposit

In court, Cao argued that she had been misled about the boundaries of the property, believing it stretched to the edge of the bluff. In fact, a strip of brush behind the lawn was owned by the Tsawwassen First Nation.

She claimed that Kaltenegger had misrepresented the property by maintaining and landscaping that brush, making her believe it would be included in the purchase.

Kirchner rejected that argument.

“In my view, the absence of anything indicating a boundary should put a reasonable purchaser — or at least their Realtor — to an inquiry about where the boundary might be located,” he wrote.

Cao also tried to claim that she misunderstood how the deposit worked, believing if she didn’t pay it, the contract would be voided. But as the judge pointed out, she and Li were experienced business people who had previously purchased two properties in Vancouver using similar contracts.

Cao attempted to hold her realtor, Liu, and West Coast Realty responsible, suing them for negligence related to her uncertainty about the property’s boundaries and inadequate research about current market conditions.

Kirchner found that Liu did not meet the standard of care expected of a real estate agent, but said Cao had failed to prove he caused any damages.

Plus, the justice added, “Mr. Liu’s negligence did not entitle Ms. Cao to break her contract with Mr. Kaltenegger.”

Kaltenegger had asked for Cao to cover his bridge financing for purchasing a new home and the costs of maintaining the Pacific Drive property while he searched for a new buyer, but Kirchner rejected those claims, writing that “these losses flowed from Mr. Kaltenegger’s decision to bind himself to the purchase of a new home after Ms. Cao’s breach.”

The owners of the second Tsawwassen property that Cao had contracted to buy did not pursue legal action when she backed out, according to the judgment.

link

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *