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Buyers who backed out of Kelowna home purchase ordered to pay $363K in damages

A trio of buyers who backed out of a deal to purchase a Kelowna home have been ordered to pay the seller over $350,000.

Justice Dennis K. Hori ordered the would-be buyers to pay around $363,000 in damages to make up the difference between what they agreed to pay and what the home eventually sold for after the deal fell through.

Navdeep Singh Mahli, Wai Ming Fong and Xiao Li Liu entered into a contract to purchase the home on Ethel Street in Kelowna from Jeffrey Anton Mandl in the spring of 2022.

The agreed-upon purchase price was $1,115,000 with a completion date of May 31, 2022, but that was twice pushed back to June 15 and July 18 at the defendants’ request.

“Mr. Mahli was advised by the Royal Bank of Canada (Bank) that the Bank’s appraisal of the Property was significantly lower than the purchase price and, accordingly, the Bank would not finance the purchase,” explained the recently-published BC Supreme Court decision.

"I find that the contract was a binding agreement under which the defendants were required to purchase the Property for $1,115,000 on July 18, 2022. When the defendants failed to tender the purchase price on July 18, 2022, they were in breach of the contract.”

<who>Photo Credit: City of Kelowna

Mandl sued for breach of contract, while the defendants counter-sued and claimed the contract should be cancelled because the property disclosure statement contained “fraudulent or negligent misrepresentations.”

They told the court there were several issues with the home and their real-estate agent said an inspection showed the home was uninhabitable, but those claims were not backed up by additional evidence.

Hori said it wouldn’t have mattered if they were, as the contract stated that the buyers were purchasing the property “as-is.”

The judge did, however, accept Mandl’s claim that the market in the Central Okanagan cooled significantly between when the initial agreement was made and when the home was relisted in July 2022.

Mandl relisted the property for $949,000 and eventually reduced the price to $799,000 in late October, while also paying to replace the roof and air conditioning system during that time.

Eventually, it sold for $740,000 in a deal that was officially completed on Jan. 3, 2023.

When determining financial compensation in this case, Hori considered a range of factors on top of the $375,000 in re-sale value lost by Mandl between May 31, 2022, and Jan. 3, 2023.

Legal fees, electricity and gas costs, property taxes, mortgage interest and the aforementioned repairs all increased the amount to $412,920.76.

Since Mahli, Fong and Liu paid two deposits that totalled $50,000 during the spring and summer of 2022, they were ordered by the judge to pay the remaining balance of $362,920.76 to Mandl.

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