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Must the Word “Rescind” be Used to Rescind a New Condominium Purchase?

In a brief but important decision called Yim v. Talon, the legal issue was simple: In order to rescind a new construction condo purchase, do you have to actually use the word “rescind”?

The buyers had agreed to purchase a condo unit in the Trump Tower in downtown Toronto. For various reasons, they wanted to cancel the deal and have their deposits returned; among their concerns was the fact that a “Hotel Unit Maintenance Agreement” – which they had been given at the last-minute – contained substantially different terms than had been contained in the Disclosure document. Most notably, it had called for much higher fees than they expected.

In support of their right to rescind, they relied on the provisions of the Ontario Condominium Act, 1998, which states that in the face of a material change to the Disclosure Statement, a buyer is entitled to rescind the agreement by giving “written notice of rescission” to the vendor within a 10 days of the material change.

Intending to avail themselves of this statutory provision, the buyers promptly provided the developer with a letter expressing their desire to end the deal. It was written by their lawyer, and indicated the buyers’ intention to “terminate” the transaction, and requested the immediate return of the deposits.

The vendor argued that the buyers had legal counsel, that the aforementioned letter makes no mention of “rescission” and that it must be assumed that the buyers’ lawyer, would know the difference between “rescission” and “termination”. Further, that the buyers specifically chose one remedy over the other and the court cannot now read into the notice anything more than is stated on its face.

Nevertheless, in confirming the legal validity of this intended rescission, the court said:

“All that [the Act] requires is that the notice of rescission be in writing and delivered to the declarant or its solicitor. It can also be inferred … that the notice must contain a ground of material change upon which the rescission is based. Beyond that, there are no requirements as to form. Particularly, it does not explicitly require the parties to use the term rescission.”

The court added that in view of the Act’s clear consumer-protection focus, there was no benefit to imputing a requirement that the term “rescission” must actually be included in the buyers’ notice to the developer. All the Act required was for the buyers to make clear their intention to undo or unmake the contract, and to restore themselves and the developer to their original status quo, which would involve the return of the deposit as well. See Yim v. Talon, 2016 (ONSC).