A woman who argued she should not have had to go through with a real estate deal after the foreign buyers’ tax added $400,000 to her costs has had her case rejected in B.C. Supreme Court.
Justice Lisa Warren ruled that although the new 15 per cent foreign buyers’ tax created a hardship for Kyeonga Jeong in purchasing a $2.7 million home in North Vancouver, it did not fundamentally change the nature of the contract between the buyer and seller of the home.
After Jeong walked away from the deal, the seller of the house, Sharon Wilke, was entitled to keep the $180,000 deposit, Warren ruled.
The legal case stemmed from a real estate deal signed by both parties on June 16, 2016. The sale of the house was scheduled to close on Oct. 17, 2016.
But on Aug. 2, 2016, the provincial government’s new foreign buyers’ tax came into effect, increasing the amount of property transfer tax Jeong would have to pay by over $400,000 – from $58,000 to over $458,000 – according to the judge’s decision.
Jeong later backed out of the deal, saying the contract had been substantially changed by the imposition of the new tax.
Wilke sued, seeking damages and payment of the deposit, being held in a trust account.
In court, Jeong argued the new tax was “unforeseen and it so fundamentally altered the amount of money required to close the transaction that it made it impossible for her to do so,” according to the decision.
Jeong told the judge she was unable to increase the $1.44 million in financing she had been approved for by the Bank of Montreal, “and she was unable to borrow the additional money from friends and family.”
Warren said she reluctantly accepted that, although Jeong had not mentioned trying to borrow from other financial institutions or provided any details of her financial situation, including her assets.
The judge noted that while the new tax made fulfilling the contract terms “more onerous than (Jeong) expected,” it didn’t invalidate the contract itself.
“While a lack of money effects a party’s ability to perform an obligation, it does not normally alter the nature or purpose of the obligation itself,” wrote the judge.
Calling the $180,000 deposit “reasonable and well within the normal range for residential real estate sales,” she ordered that Jeong’s deposit be paid to Wilke.
