Estimated reading time: 5 minutes
What happens if you walk away from a presale in today’s uncertain Vancouver market? With many buyers who purchased in 2021 and 2022 now facing completion in a very different economic climate, this question is becoming increasingly common. In this expert-led discussion, Sayed Najibi sits down with real estate lawyer Justin Levine, from Golbey Levine Firm, to unpack the legal realities, financial risks, and strategic options available to buyers considering this difficult decision.
What Is a Presale Contract in BC?
A Legal Commitment, Not Just a Reservation
A presale is not simply a placeholder. It is a legally binding contract to purchase a future property. As Justin Levine explains, buyers are committing to:
- A fixed purchase price
- A structured deposit (often 10% to 20%)
- Completing the purchase at an unknown future date
Unlike resale contracts, presale agreements are drafted by developers and tend to be heavily in their favor.
Key Differences from Resale Purchases
- Contracts can be 15 to 50+ pages long
- Terms vary significantly between developers
- Buyers often rely on disclosure statements instead of tangible property
This creates a scenario where buyers are agreeing to purchase something they cannot fully evaluate at the time of signing.
Why Buyers Consider Walking Away from a Presale
Market Conditions Have Changed
Between 2021 and 2026, the market has shifted dramatically:
- Interest rates increased
- Property values softened in some segments
- Financing became more restrictive
As Sayed highlights, many buyers now face a gap between what they agreed to pay and the current market value.
Common Triggers
- Property appraises below purchase price
- Buyer cannot secure financing
- Assignment market is weak
- Personal financial changes
Can You Walk Away from a Presale?
The Short Answer: Not Freely
Walking away is not a simple decision. It is a breach of contract. The real question is not “Can you walk away?” but rather:
“What will it cost you to walk away?”
What Happens If You Walk Away from a Presale
1. You Will Likely Lose Your Deposit
The deposit is the most immediate and guaranteed loss.
- Typically 10% to 20% of purchase price
- Held in trust but often forfeited upon default
2. You May Owe Additional Damages
If the developer resells the unit for less, you could be responsible for the difference.
Example:
- Original purchase price: $1,000,000
- Resale price: $900,000
- Deposit paid: $200,000
Outcome:
- Developer keeps $200,000
- You may still owe $100,000 difference
This is because the developer must be “made whole” financially.
3. Legal Action Is Possible
Developers may pursue legal action depending on:
- Size of the loss
- Your financial profile
- Their business strategy
However, lawsuits are not always guaranteed. They depend on cost-benefit considerations.
When You Might Recover Part of Your Deposit
There are scenarios where buyers may recover some funds:
- If the unit resells quickly at a similar price
- If losses are minimal
- If a negotiated settlement is reached
In some cases, developers may return excess deposit funds after covering their losses and expenses.
Strategic Options Instead of Walking Away
1. Negotiate a Release
One of the most practical strategies is to negotiate:
- Offer to forfeit deposit
- Request a release from further liability
This turns the situation into a controlled financial outcome rather than an open-ended risk.
2. Assignment Sale
Selling your contract before completion may help reduce losses, though this is more difficult in a slower market.
3. Work with the Developer Early
Timing matters. As Justin advises:
- Communicate early if you cannot complete
- Avoid last-minute defaults
- Maintain good faith
4. Seek Legal Advice Immediately
Early legal guidance can:
- Clarify your exposure
- Identify contract loopholes
- Help structure negotiation strategy
Real Insight from the Podcast Conversation
One of the most powerful takeaways from this discussion is the shift in mindset:
Walking away is not an exit strategy. It is a negotiation starting point.
Buyers are not simply “giving up a deposit.” They are entering a negotiation about total financial impact.
Key Takeaways
- Walking away from a presale is a breach of contract, not a simple option
- Losing your deposit is common, but additional liability is possible
- Early negotiation and legal advice can significantly reduce risk
FAQ Section
Can I just lose my deposit and walk away?
Not necessarily. You may also be liable for additional losses if the developer resells at a lower price.
Will the developer always sue me?
No. It depends on the financial loss and whether pursuing legal action is worthwhile.
Can I get my deposit back?
Possibly, but only if the developer’s losses are lower than your deposit and negotiations are successful.
When should I contact a lawyer?
As soon as you know you may not be able to complete your purchase.
Call-to-Action
If you are facing a presale completion and unsure of your options, you are not alone. The market has shifted, but with the right guidance, you can make informed decisions. Connect with us to explore your next steps with clarity and confidence.
For buyers who are still exploring opportunities or want to better understand upcoming projects, you can also visit Virgin Homes. We feature carefully selected presale developments and educational resources, working only with trusted developers that have been thoroughly evaluated for quality, track record, and long-term value. This ensures you are not just buying early, but buying smart.
Contact details
Sayed Najibi
Personal Real Estate Corporation
Phone: 604-649-6520
Website: www.sngroup.ca