There has been quite a debate around the "St. John's real estate water cooler" in recent weeks. Towards the end of 2007 some local builders and subdivisions in St. John's implemented a new "Economic Clause" to their contracts. Buyers have been noted to shy away from certain subdivisions and proceed to others that do not insert this clause. The debate is over whether this clause protects the buyer or the builder. Does it protect the buyer from an increase in purchase price of the house? Does it allow the builder the option to raise the price of the house prior to starting construction?
The clause states:
"This Agreement of Purchase and Sale is subject to the Vendor confirming to the Purchaser or the Purchaser's Agent in writing the final sale price on or before the expiry of 14 days prior to excavation of the dwelling. If no written confirmation of the final sale price is issued by the Vendor on or before the expiry of 14 days prior to excavation of the dwelling the Purchase Price referenced herein before shall be deemed to be the final sale price. If written notification of an increase in the final sale price is issued with which the Purchaser is not satisfied then this Agreement of Purchase and Sale shall be void and of no effect. Upon receipt of the written notice of the increased final sale price from the Vendor the Purchaser must acknowledge in writing within 72 hours their agreement with the increase in price, and failure to do so renders this Agreement of Purchase and Sale void and of no effect with the Vendor returning the Purchasers Deposit or down payment."
What are your thoughts on this clause? Are you in favor of the builder being protected or the buyer?
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