Most buyers attach great importance to an apartment area/price ratio. Therefore, before signing the deed of sale, take time to carefully measure the area of your unit. Discrepancies between what is shown on the plan provided at the signing of the preliminary contract, versus the actual area shown on the cadastral plan or the certificate of location are frequent. This difference can be explained by many factors listed in the factsheet entitled The Area of the Private Portion.
Deficit in the area of the immovable
Article 1720 of the Civil Code of Québec delineates the rights of a buyer, in the event the difference in the area of an apartment is to his disadvantage. This article stipulates that: "The seller is bound to deliver the area, volume or quantity specified in the contract, whether the sale was made for a price based on measurements or for a flat price, unless it is obvious that the certain and determinate property was sold without regard to such area, volume or quantity." Thus, a deficit in the area constitutes a default of area of the space sold.
In addition, the courts, including the Quebec Court of Appeal, have held that where the measurements of an apartment in divided co‑ownership (provided by the sales office) are not in accordance with reality, the vendor was engaging in a prohibited practice within the meaning of the Consumer Protection Act (CPA). Article 221 of the CPA states that no merchant can falsely attribute a dimension or measure to property.
How to protect oneself from these problems?
It is preferable to determine in advance in the preliminary contract the consequences of a deficit of area. You can either agree on a method of reducing the sales price or indicate a threshold beyond which you will be entitled to withdraw from the purchase without consequences.
Area deficit: what to do?
When a preliminary contract refers to an erroneous area and no settlement agreement has been reached with the developer, the buyer may choose between one of the following two options:
Rights and remedies
Without a clause in the preliminary contract specifying expressly that the area of the apartment mentioned therein is an essential condition for the buyer's commitment, it is in principle to the latter to prove that he would not have entered into the contract. However, Article 253 of the CPA reduces the burden of proof in these matters for any natural person who has entered into a contract with a merchant in the course of his business activities. This provision provides that when a merchant, manufacturer or advertiser engages in a prohibited practice during the sale of an immovable, there is a presumption that if the consumer had been aware of such practice he would not have entered into the contract or would not have paid so high a price. Moreover, insofar as of consumer contracts are concerned, the contract must be interpreted in favor of the consumer.
Recourse in reduction of the sale’s price
Although the differential between the declared gross area and the net area of the unit can be readily determined, determining the indemnity remains a laborious and complex exercise. The three step test or proportional rule has not been retained by the courts as the basis of calculation of the indemnity. If the apartment has 20% less in area, the sales price reduction will not be established according to this percentage. Indemnities awarded by the courts have often been parsimonious. However, an evolution can be noted in recent jurisprudence.
In a judgment rendered in April 2017, the Superior Court ordered a developer to pay an indemnity of $113,000.00 for an area deficit representing 12% of the total area sold, despite a provision in the promise to purchase stipulating that the price would remain the same, notwithstanding a divergence in area compared to that mentioned in the preliminary plans. This judgment suggests that the courts will take a more positive attitude toward the situation of buyers who end up with a smaller unit than the one they thought they had acquired.
Application for resiliation of the preliminary contract
Depending on the circumstances, the sale could in principle be canceled at the buyer's request. However, it will be necessary to prove the default, as well as the fact that the area of the immovable was an essential consideration for the buyer. It should be noted that a default in area does not automatically result in the cancellation of the sale, or even in a reduction of the price, when the area differences are negligible.
WHAT YOU SHOULD KNOW! Article 1458 of the Civil Code of Québec stipulates that every person has the duty to honor his contractual undertakings. Even though a preliminary contract indicates an "approximate" area, it does not exempt a developer (without reservation) from his obligation to deliver the area indicated therein.
WHAT TO KEEP IN MIND: The vendor is required to deliver the area indicated in the contract, unless he proves that the property was sold without regard to the area. The superficial area of the apartment must be indicated in the preliminary contract. The legal obligation of the seller is to deliver an immovable whose superficial area is in conformity with what is stated in the contract.
WARNING! The recourse in reduction of the sales price is not intended to unduly advantage the buyer at the expense of the seller. The indemnity must be reasonable, taking into account the particular circumstances of the case.
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