Oct 15, 2026
If you’re shopping for a home or looking for an investment property chances are you’ve come across a pre-sale opportunity. This is a chance to buy a home before it’s built, using a presale contract (or assignment sale contract). But when you sign a presale contract, you’re betting on a building that doesn’t exist yet and on a developer whose finances you can’t see.
For many Metro Vancouver buyers who signed a presale contract near the market peak, this gamble ended in an unpleasant surprise. The units they committed to buy are now worth less than their contract prices. Buyers who refuse to close on their presale commitment can’t just walk away — and, increasingly, are ending up in court as developers try to get their funds.
Advertisement
A recent British Columbia Supreme Court decision shows the legal fight doesn’t only run one way.
Thanks for subscribing!
The best of Money.ca delivered weekly.
By signing up, you accept Money.ca Terms of Use, Subscription Agreement, and Privacy Policy.
In August, a judge ruled that 39 buyers of a Burnaby, B.C. condo tower can’t be forced to complete their pre-sale purchases. The reason: The developer failed to tell them about serious trouble with the project.
While buyers can’t walk away just because property prices fall, it is possible to walk away if a developer broke disclosure law.
Why are developers suing presale buyers?
Metro Vancouver developers have filed dozens of lawsuits in recent months against individual presale purchasers, according to a review of court filings by The Globe and Mail. And the pattern is consistent: A buyer signed a few years ago, paid a deposit and didn’t close. The developer resold the unit for less and is now suing the original buyer for the difference.
As a buyer, you need to know that your deposit — typically 10% to 20% of the purchase price — isn’t a cap on your losses. If you breach the contract, a developer can pursue you for the resale shortfall plus additional expenses including carrying costs and remarketing expenses.
What went wrong at Burnaby’s Lumina Eclipse tower?
Lumina Eclipse is a 329-unit tower in Burnaby, B.C. Between 2021 and 2023, buyers signed presale agreements with deposits ranging from about $35,000 to $205,000. If these buyers chose to walk away, due to lower property values, they’d still be on the hook for their contracted purchase price. However, according to the Aug. 25, 2026 court ruling, the developer didn’t notify the buyers about three problems:
- A $12 million Canada Revenue Agency (CRA) judgment against the developer in June 2023
- A suspension of new-home warranty coverage in October 2024
- A building permit suspension the November 2024 that halted construction
In January 2025, the project’s senior lender, KingSett Mortgage Corporation, pushed the developer debt into creditor protection. KingSett was owed more than $225 million at the time.
According to court documents, none of these problems appeared in an amended disclosure statement until November 2025. Justice D.M. Masuhara found the omissions were material. As a result, he declared the 39 contracts, worth about $30.5 million combined, unenforceable against the buyers.
Must Read
- A single line on your car insurance policy could be inflating your premium by up to 30% — here's what to change
- Here are 5 'must-haves' that Canadians constantly overpay for. How many of these are sabotaging your budget every single month?
- Here are the 5 biggest differences between rich and poor Canadians — which side do you fall on?
Join 20,000+ readers and get Money.ca’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Can a developer’s silence after you sign get you out of a contract?
In the Burnaby condo case, the developer’s silence did provide buyers an opportunity to walk away from the presale purchase contracts. Under the Real Estate Development Marketing Act (REDMA) a provincial law governing presale marketing, a developer must file an amendment to its disclosure statement when a material fact has been omitted, changed or misrepresented. The developer must also give a copy to every buyer who hasn’t closed, according to the BC Financial Services Authority (BCFSA), the Crown agency that regulates real estate developers in B.C. And the duty to comply to these regulations doesn’t end when a contract is signed.
As the court determined, the developer’s subsequent failure to disclose can make a contract unenforceable under section 23 of REDMA. Legal analysis by Borden Ladner Gervais (BLG), a national law firm, notes the court also found that finishing the building, or entering creditor protection, doesn’t erase an earlier disclosure breach.
Does this mean any buyer can walk away from an underwater presale?
Can buyers back out of an underwater presale contract? No.
Advertisement
The Lumina Eclipse buyers in B.C. won because of what the developer kept from them, not because prices dropped.
In a separate case, earlier this year, the same court found that buyers couldn’t refuse to close over unfinished extras and a leak discovered shortly before completion — as these did not constitute a breach of contract by the developer.
Plus, a ruling of ‘unenforceable’ isn’t the same as cancelled. The court hasn’t decided whether the roughly $3.6 million in deposits must be returned, and much of that money was already released to fund construction. That question goes to a separate hearing. BLG also notes the decision may be appealed.
What can presale buyers and home shoppers do now?
If you’re worried about closing on a presale:
- Get your paperwork in order: Gather every disclosure statement and amendment you’ve received and compare them with what you know about the project
- Watch for red flags: Examine construction stoppages, permit or warranty problems, major delays and tax judgments against the developer
- Get legal guidance: Talk to a real estate lawyer before your completion date — not after you’ve missed it
- Sort out your funds: Ask your lender early whether the unit is likely to appraise at your contract price
- Keep the conversation going: Respond to any claim a developer files, since ignoring it can lead to a default judgment
If you’re still shopping, use REDMA’s seven-day rescission period to have a lawyer review the disclosure statement before you’re locked in.
The Lumina Eclipse ruling doesn’t give buyers an escape hatch from a soft market. It does put developers on notice that disclosure rules still apply when a project runs into trouble. As Masuhara wrote, the provision “is a statutory shield, not a sword.”
You May Also Like
- This 7-step plan from Dave Ramsey is designed to help you ditch debt, save more and build wealth — here’s how it works
- Prioritize these 4 critical investments and watch your net worth skyrocket
- Here are 8 solid money moves that could free up real cash every month — here's where to start
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
The most expensive financial mistakes are often the ones you don't see coming. Join 19,000+ Canadians who get the money moves, risks and opportunities shaping their finances — delivered free each week. Subscribe now.
Romana King, Senior Editor at Money.ca, also writes for various North American publications and the RKHomeowner blog. Her book, House Poor No More, is an Amazon bestseller and five-time award winner, including the 2022 New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award.
