Buyer who moved into B.C. home before sale was complete ordered to pay $408K

The Blundell Road property is seen in this 2016 photo from BC Assessment. (BC Assessment)

A one-page contract for the purchase of a B.C. home that was handwritten in Chinese has been deemed valid in the province's Supreme Court, leaving the would-be buyer on the hook for more than $400,000.

The contract dealt with Xue Yun Li's intention to buy a home on Blundell Road in Richmond that was owned by Hong Yang and Yuzhang Wang for a total price of $2,888,000.

A translation of the agreement is reproduced, in full, in Justice Steven Wilson's decision in the case, which was issued and posted online earlier this week. 

What the contract said

The unusual terms of the deal allowed Li to move into the property – a two-storey home with five bedrooms and six bathrooms across more than 3,400 square feet of living space, according to BC Assessment – after paying a $100,000 deposit.

She did so in May 2017, moving in with her son and his family.

The contract required her to make three further payments toward the purchase price: A $100,000 installment in July 2017, an $800,000 installment in December 2017 and the remaining balance once a home she owned on West 20th Avenue in Vancouver had sold.

Li was also obligated to pay property taxes and other expenses related to the property while she lived there, but the title remained under Yang and Wang's names, and would not be transferred until the full purchase price had been paid.

According to the court decision, Li made the July installment payment and paid home-related expenses through September. Her Vancouver home sold in November 2017 for $3,390,000 and she received proceeds of $1,261,039.30 from the sale, but she did not make the December installment payment or pay the balance of the purchase price for the Blundell Road home.

Instead, the decision indicates, she told Yang and Wang that she had been unable to obtain a mortgage that would allow her to complete the purchase.

Li continued to tell the sellers about efforts to obtain financing, but they ultimately became concerned about her ability to pay, and ordered her to vacate the property in April 2018, which she did.

Yang and Wang ultimately sold the Blundell property for $2,480,000. They sued Li for breach of contract, seeking damages equal to the $408,000 difference between what Li had agreed to pay for the property and what it ultimately sold for, as well as real estate commissions, unpaid expenses from Li's time living in the home, and interest.

Contract was not uncertain

In her defence, Li argued that the Chinese contract was "uncertain" and therefore unenforceable.

Specifically, she argued that – because the contract referenced interest, but did not set a specific rate – the purchase price was unknown. She also argued that the closing date was unspecified.

Wilson was unpersuaded by these arguments, noting that Li paid the interest she was asked to pay alongside the other expenses related to the home, and that the calculation of the interest was included in a spreadsheet provided to her by Yang and Wang.

"Ms. Li’s evidence was that she did not bother to read the spreadsheet," the decision reads. "That may be true; however, it was readily apparent on the face of the spreadsheet that she received as to how the interest was calculated and she made the payment."

"In the circumstances, I conclude that the intentions of the parties were made sufficiently clear by the wording of the interest clause, and the conduct of the parties suggests they agreed to it."

Similarly, the judge found the lack of a specific closing date was not "fatal" to the contract.

"A closing date is not considered to be an essential term of a contract of purchase and sale," the decision reads. "Absent a specific date, the closing must be within a reasonable time, having regard to all of the surrounding circumstances. In this case, I am satisfied that the closing date was to be shortly after Ms. Li sold West 20th Avenue."

Defendant's other arguments rejected

Li also argued that the contract was not valid because only Yang's name appeared on it, while both Yang and Wang were listed as owners on the property's title.

Wilson agreed that this was an issue, but again found it was not one that would render the contract invalid. The judge concluded there was clear evidence that Wang was aware of the negotiations to sell the property, even though his wife was leading them.

Indeed, he prepared the contract and agreed to Li taking possession of the property and deposited Li's cheque for the July installment into an account he held jointly with Yang.

"In all of the circumstances, I find that Mr. Wang was fully aware of the Chinese contract, ratified it, and that he was subsequently bound by it," the decision reads. "It follows that Ms. Li would also have been able to compel Mr. Wang to convey title to her had the plaintiffs refused to complete."

Wilson also rejected Li's argument that the contract was subject to her obtaining a mortgage, and therefore unenforceable because she couldn't get one.

Although there is a reference to the sellers assisting the buyer with applying for bank loans in the contract, the judge found the plaintiffs' interpretation of that clause more convincing than the defendant's.

He also concluded that the question of whether or not there was a condition requiring mortgage financing in the Chinese contract was "largely irrelevant," given the circumstances.

"Ms. Li did not provide evidence of any mortgage applications regarding the Blundell property, and therefore no evidence that she was unsuccessful in obtaining a mortgage," Wilson's decision reads.

"A party who makes an offer that is subject to financing must make (an) effort to satisfy the condition. Ms. Li's own evidence is that she made no effort after December 2017, even though she allowed Ms. Yang to believe that efforts were being made. While I do accept that Ms. Li may have believed that her son Mr. Zhan was making some efforts on her behalf – or even perhaps on his own behalf – the contractual obligation was nonetheless Ms. Li's and hers alone."

Buyer purchased 2 other properties

Having found that the Chinese contract was valid, Wilson considered whether Li's breach of it entitled the plaintiffs to a court-ordered remedy or – as the defendant argued – whether the plaintiffs themselves had also breached the contract.

Li made two arguments in support of her position. First, she alleged that the plaintiffs were not ready, willing and able to complete the sale on the date that she sold her Vancouver home, because they had not prepared the documents that would transfer the title to her by that time.

Wilson rejected this assertion, finding that the plaintiffs did not prepare the documents because Li had advised them that she wouldn't be able to complete the purchase. They remained ready, willing and able to complete the sale if and when Li advised otherwise, he concluded.

Second, Li argued that by the time Yang and Wang asked her to vacate the Blundell Road property in April 2018, too much time had elapsed since her initial breach of the contract in November 2017, and it was no longer an option for them to rely on her failure to complete the sale as a reason to terminate the contract.

Again, Wilson disagreed. He noted that Li had not actually made serious efforts to secure financing for the property in 2018, despite leading Yang and Wang to believe that she had done so.

"The plaintiffs were in a position to terminate the contract when the defendant was unable to close on November 20, 2017," the decision reads. "However, because Ms. Li advised the plaintiffs that she was continuing to seek a mortgage, the plaintiffs did not terminate. If the plaintiffs had known that Ms. Li was not going to seek a mortgage, their decision would undoubtedly have been different. I can see no unfairness in allowing the plaintiffs to rely on the earlier breach in the circumstances."

Further, the judge concluded that Li had no intention to purchase the Blundell property in 2018, a conclusion he reached because at the same time she was professing to be unable to get a mortgage for the home, she bought two other properties in Richmond, acquiring a mortgage in both cases.

First, in January, she purchased a three-bedroom, two-bathroom condo in a building on Granville Avenue for $699,000. Later, in April, as she prepared to move out of the Blundell property, she purchased a five-bedroom, five-bathroom house on Camsell Crescent for $2,720,000.

"This evidence suggests she was capable of securing mortgage financing on her own accord and could have made the same efforts regarding the Blundell property," the decision reads.

Wilson ordered Li to pay the plaintiffs $408,000, representing the difference between her offer for the Blundell property and what they eventually sold it for, plus the real estate commissions they paid on that sale. He also awarded the plaintiffs interest under the Chinese contract at the rate Li had previously paid.

The amount Li owes will be reduced by the $200,000 she paid under the contract, plus the interest she has already paid. Wilson also awarded the plaintiffs court costs.