The owners of a luxury home overlooking Port Moody's inlet have won their claim to keep five per cent of the $3.25-million purchase price after a BC Supreme Court judge ruled they needed the money to make repairs.
The holdback funds, totalling $176,250, had been kept in a trust since the Ioco Road custom home was purchased in April 2021.
The builders, meanwhile, said the buyers breached a contract they signed and that keeping the holdback would be "unfair" and "oppressive" given many of the deficiencies had been fixed and those that remained would cost up to $40,000.
Pedram Hakimishokati and Azam Rafiei Moein also argued the terms of the contract were "contradictory" because it called for the deficiencies to be fixed and the home to also be "unchanged."
However, in a May 16 decision, Justice Elizabeth McDonald agreed with the buyers the contract clearly spelled out the sellers' responsibility to fix all deficiencies within 14 days.
Buyer wanted 'very best finishings'
Justice McDonald acknowledged the builder and buyer disagreed on the number of issues and the cost to repair.
However, she noted if the builder had not agreed to the contract, they shouldn't have signed it.
"After reviewing all of the evidence, I accept that as of 14 days after the completion date, there were a number of items on the deficiency list that remained outstanding as set out in the home inspector’s supplemental report dated May 15, 2021," Justice McDonald stated in the ruling.
"By Mr. Hakimishokati’s own evidence, he merely whittled down the list of deficiencies and there were still some items that remained outstanding."
The judge noted the buyers intended to purchase a "luxurious, newly constructed property, that contained the very best finishings" and the sale contract stipulated a hold back if there were deficiencies.
An inspection of the home after the contract was signed found 60 deficiencies, laid out in 100 pages, but even after the sale closed two months later, another inspection found 10 items outstanding from the deficiency list, including marks on the marble kitchen counter top, warped closet doors and gaps in baseboards that required caulking.
Holdback funds kept in trust to fix construction deficiencies
The new homeowners were also concerned about settlement cracks in various locations inside the home, which the builders denied.
Evidence provided in an email also showed the builders dropped the sale price of the home by $25,000, in an addendum to the contract, after deficiencies were pointed out.
Among the deficiencies noted at the time were a lack of safety rails around the pool deck and certain areas of basement ceiling heights that were under eight feet, which limited the couples' plans for the basement for an open plan design.
However, the judged noted the owners were keen on ensuring the new home met expectations and backed it up with a contract.
For the builders, losing the holdback funds is difficult, the judge acknowledged.
"There is some evidence that the plaintiffs made efforts to fix some items on the deficiency list. There is also some evidence, which is disputed, about the cost to fix the remaining deficiencies which is far less than the Holdback."
"However, I cannot find that the Holdback is of a sum that is 'extravagant and unconscionable,'" the judge further wrote.
"Given the outstanding deficiency items, the defendants have been placed in the unenviable situation of having to either live with the deficiencies or to undertake the remediation work themselves. This is the potential scenario that the Deficiency Provisions provided for and because of that, it is difficult to see why the parties should not be held to their bargain."
She ordered the holdback funds to be released to the buyers, and suggested court costs could be dealt with at a later date.