Executive Summary: Key Legal and Evidentiary Issues

• Central issue was whether the agreement constituted an “agreement for sale” under section 40 of Alberta's Law of Property Act (LPA), which restricts vendor remedies.

• Defendants conceded liability but argued that section 40 barred Homeowners Now Inc from recovering damages.

• Court clarified the rent payments were not credited toward the purchase price and did not create an equitable interest.

• Summary judgment partially granted: rental arrears were awarded, but the broader damages claim failed due to insufficient evidence.

• The Agreement was interpreted as a deferred purchase contract, not a financing arrangement subject to LPA section 40.

• Homeowners failed to substantiate the majority of its claimed damages with adequate documentation.

Background and facts

Homeowners Now Inc entered into a Deferred Purchase Agreement with defendants Kenneth McCotter and Nicole Bourbonnais in October 2018 for the sale of a residential property in Spruce Grove, Alberta. The arrangement was structured to allow the defendants to occupy the home from December 2018 until a set purchase date of May 31, 2021. Under the agreement, the purchase price was fixed at $540,700 and the defendants paid a $15,000 non-refundable “holding fee,” which would be credited to the purchase price. However, rental payments made during the term were not explicitly credited towards the purchase price, despite language in the recitals referring to a “rent-to-own” program.

The defendants also paid an additional $2,500, which was not formally incorporated into the Agreement. During the occupancy period, weekly rent payments of $736.15 were made. Due to COVID-19, Homeowners temporarily reduced rent to $368.08 per week in April 2020. Defendants continued paying this reduced amount beyond the agreed timeframe, resulting in accumulating arrears. In December 2020, the defendants informed Homeowners that they would neither resume full rent payments nor proceed with the purchase.

As a result, Homeowners filed an action for rental arrears, breach of contract, and possession of the property. A consent order required the defendants to vacate, and Homeowners then sought summary judgment for over $122,000 in damages.

Key agreement terms and legal issues

Several provisions were central to the legal dispute:

• Clause 3.2 and 8.1: Defined the $15,000 holding fee as non-refundable and subject to forfeiture upon default.

• Recitals: Referred to a “rent-to-own” arrangement, suggesting that rent could be credited, but the operative clauses did not support this.

• Section 40 of the LPA: Restricts vendors under an “agreement for sale” from pursuing damages beyond the land itself.

The Applications Judge initially dismissed the summary judgment application, citing the need to determine whether the agreement qualified as an “agreement for sale” under section 40. This would potentially bar Homeowners from seeking monetary damages.

Appeal and outcome

Justice D.A. Labrenz allowed the appeal in part. He ruled that the Agreement was not an “agreement for sale” within the meaning of section 40 of the LPA. He found that:

• Rental payments were not credited toward the purchase price and thus did not create an equitable interest in the property.

• The $15,000 holding fee, while non-refundable and applied to the purchase price, was a common deposit and did not transform the agreement into a financing arrangement.

• Defendants’ possession of the property was through a lease, not indicative of ownership interest under the agreement.

With liability conceded, the Court granted partial summary judgment:

• Rental arrears: Homeowners was awarded $18,433.57 plus interest for arrears accrued after the temporary rent reduction ended in May 2020.

• Breach of contract damages: The Court awarded $4,196.27 for out-of-pocket expenses related to relisting and preparing the property for resale.

• No further damages: Homeowners’ broader claim for damages—including lost rent, mortgage interest, and future carrying costs—was rejected due to insufficient evidence and failure to meet the evidentiary burden.

In conclusion, while Homeowners succeeded in overturning the earlier decision partially, the bulk of its financial claim was denied. The Court emphasized the need for thorough and credible documentation when seeking summary judgment for complex damages.