Loophole means buyer deposits with insolvent builder unprotected
As the insolvency and bankruptcy process of Ontario builder StateView Homes stretches into its sixth month a class-action lawsuit is calling into question a loophole in Ontario law that leaves some new home purchase deposits unprotected.
Currently, if you sign a preconstruction contract to buy a freehold home in Ontario any cash deposits made as part of that deal are not required to be protected by a legal trust and can be spent at will by the developer. But if you buy a preconstruction condominium, those same kinds of deposits are held in trust and cannot be spent.
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