Verbier Information

Verbier Information

SUBJECT: Fulfillment of a Resolutory Condition (4.10 c) Schedule A of the Preliminary Contract

 

 

This communication is intended for all purchasers of properties 7, 8 and 9

Questions regarding the application of Article 4.10 of the Preliminary Contract:

Here is the reproduction of article 4.10 of the preliminary contract: (for the English version, refer to your contract)

4.10 Conditions à la construction et au maintien du Contrat Préliminaire

Le Vendeur déclare et l’Acheteur reconnaît que le Contrat préliminaire est conditionnel à la
réalisation des événements suivants :

a) la réception de tous les permis et autorisations requis pour la réalisation complète du Projet de la présente phase et du Projet Global, devant être émis par une autorité gouvernementale, publique ou administrative;

b) la réception par le Vendeur d’un financement assorti de conditions acceptables et raisonnables pour un emprunteur prudent et diligent, et l’accomplissement de ces conditions;

c) la faisabilité économique du projet de la présente phase du Projet et du Projet Global, telle qu’elle peut être notamment établie suivant des critères objectifs de rentabilité fondés sur des données telles que le coût brut de construction et/ou de rénovation par opposition aux prix de vente anticipés des unités (suivant une évaluation rigoureuse) eu égard à la vigueur du marché immobilier;

d) la prévente d’au moins 75% des résidences de la présente phase du Projet.

Si le Vendeur informe par écrit l’Acheteur que l’une quelconque des conditions ci-dessus n’a pas été remplie, sans que le Vendeur y ait renoncé, pour quelque raison que ce soit, alors, nonobstant toutes dispositions contraires contenues au Contrat préliminaire, celui-ci deviendra nul et non avenu et cessera de s’appliquer. Dans cette éventualité, les dépôts de l’Acheteur lui seront restitués, dans les dix (10) jours suivant la date de réception du susdit avis écrit, sans possibilité de recours d’une partie contre l’autre.

You will note that paragraph c) presents the application criteria that govern Verbier’s approach.

Clause 4.10: A resolutory condition

According to our analysis, this clause represents a resolutory condition within the meaning of article 1497 C.c.Q.

From this exercise, and more specifically, from the identification of the characteristics that distinguish it from the resolutory clause, it appears that the fulfillment of this condition entails the automatic resolution of the preliminary contract and, consequently, the restitution of the payments received.

The purpose of this condition, which is to anticipate a risk that the parties do not fully control, is to protect the parties against any situation that could prevent them from achieving the desired result and thus render the contract meaningless for one of them(Read this paper : Pierre Pratte p. 339). Still according to this author, the mechanics that follow the realization of such a condition is synthesized as follows:

(i) termination is automatic without the need for a court order once the condition has been fulfilled, the court merely noting that it has been fulfilled in the event of a dispute by one of the parties

(ii) the court has no power of appreciation of the appropriateness of the condition being fulfilled, nor can it grant a delay.

(iii) the resolution does not have to be preceded by a formal notice or any other notice, at least in theory.

iv) it is possible to invoke the resolutory condition, even if the occurrence of the future and uncertain event affects only part of the property sold.

v) once the condition has been fulfilled, the agreement of both parties is required to set aside the effects of the resolution, since the resolutory condition is stipulated in the interest of both parties, unless it appears that the condition was written in the interest of only one party, in which case that party could waive it alone.

vi) the resolution is absolute and may be invoked by any interested person (art. 1506 C.C.Q.).

vii) if the condition is fulfilled, the contract is resolved even if the event subsequently disappears or appears, depending on whether the condition is drafted positively or negatively, because of the automaticity of the resolution.

viii) the termination of the contract is not accompanied by damages, unless the parties have agreed to the possibility of obtaining them, since the fulfilment of the condition operates outside the scope of contractual liability.

(ix) there is no time limit beyond which the resolutory condition would become ineffective, unless the parties have stipulated otherwise.

(x) a subsequent agreement would not normally render the original sale conditional, if it was not conditional.

xi) the right of resolution must be exercised in good faith (art. 1375 C.C.Q.).
(Loose translation)

An offer necessary to avoid cancellation of the preliminary contract:

In order to avoid the cancellation of the preliminary contract, Verbier considered it respectful to offer its buyers the opportunity to formalize the reconduction of this contract, in consideration of the adjustment of the purchase price.

In support of this assertion, we recall that the mechanics of this resolutory condition (i.e., cancellation due to the occurrence of the uncertain event) require the seller, who wishes to maintain his contractual relationship with his co-contractor, to opt for such a measure. Indeed, it appears that this contract does not specifically provide for the possibility for the parties to adjust the sale price in the event of an increase in construction costs. It only allows for the cancellation of the contract. Hence the need for such an offer.

Therefore, Verbier recalls that there is no legal or contractual obligation to submit such an offer. In view of the foregoing, Verbier reiterates its desire to maintain its contractual relationship with you.

Furthermore, Verbier wishes to point out that this situation is not one that affects only its site. Indeed, all players in the construction industry must deal with this reality. Moreover, it is important to note that the increase in the cost of materials (although significant) is not the only event that leads to the realization of this condition. Increased costs, coupled with labour shortages, borrowing costs and other costs associated with delays by government authorities and others in issuing permits and certifications necessary to commence construction, also contribute to the condition.

For more information, please see the report produced by Statistique Canada.

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Programme Accordia Construction – Verbier – 2022

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