Real estate lawyer expects lawsuit spike in wake of foreign buyer tax

Vancouver real estate lawyer Richard Bell says he expects a large number of real estate contracts to end up in litigation in the wake of the government's sudden announcement of a foreign buyer tax.

The province last week imposed a 15 per cent levy on foreign nationals purchasing real estate in Metro Vancouver, but made no provisions to exempt contracts that were already signed prior to the announcement.

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Bell told The Early Edition's Rick Cluff Thursday that a single purchase contract failure can create a"domino effect," hurting Vancouver locals.

"I have a client little old lady she entered into a contract to sell her place and sheturned around and entered into two contracts to buy condos for her grandkids."

"The buyer is going to back out and she is losing sleep every night," he said.

"Quite frankly it was shocking [that] there was no grandfathering of the existing contracts.

I don't think the government fully understands the financial and emotional impact that they're imposing on tens of thousands of people in this city because it is impacting the buyers and the sellers."

Lose more than the deposit

Bell says buyers who walk away from deals will lose deposits, and may be sued for other losses.

For example if a collapsed deal results in the seller getting a lower price, the buyer who walked away may be forced to pay the difference.

But he admits collecting penalties froma foreign buyer may be a challenge.

Reconsiderpenalizing newcomers

Bell said he has trouble seeing why the province would impose a tax on people legitimately coming to B.C. to fill a void in the job market.

" I don't think the government fully understands the financial and emotional impact that they're imposing on tens of thousands [of locals].- Richard Bell, real estate lawyer.

"We reach out to the world... for the tech and cancer researchers, senior executives," he said.

"We want these people to come to Canada and build our economies so why are we penalizing them?"

Bell hopes theprovince will recognize the devastating impact of thetax and tweak the rules, allowing pre-exisitng contracts to be grandfathered.