Is the Canadian Dream No Longer Achievable?

Is the CANADIAN DREAM

No Longer Achievable?

The American dream is commonly described as a happy life built by working hard and consisting of a good job, a house with a yard, and disposable income. While popular culture refers to this ideal as the American dream, Canadians share these ideals with our American neighbours. Some call this the Canadian Dream. Owning and living in a home custom built to your needs is perhaps the pinnacle of the Canadian Dream.

However, the rising cost of land and construction has made the Canadian Dream unattainable for many, especially in B.C. The Covid-19

pandemic has made it even worse. One of the factors contributing to the current housing crisis is the disruption to the global supply chain, which has caused rapid upward fluctuation in the cost of construction materials. In some cases, the cost of materials has doubled or tripled since the Covid-19 pandemic began. While the larger forces at play determine the cost of housing in Canada, certain factors in your control can help protect against some of the risks associated with rising housing costs.

One of those things is properly negotiating and documenting the terms of an agreement. Let’s use a new home construction or renovation as an example. Picture this, you recently decided to renovate your kitchen or are in the process of building a new house that needs a kitchen. You hire a contractor and explain to them exactly what you envision for your space. They get on board with your ideas, and you have a brief conversation about the price, the start date of the renovations, and your expectations. However, unbeknownst to you or the contractor, the supplier of the materials increases the price of the cabinets you chose. Who pays for the increased cost as a result of the increase in the cost of the materials: you or the contractor? The seeds for a potential dispute have been sown.

While clearly negotiated and documented agreements are generally helpful, they are especially helpful in today’s volatile real estate industry. Some of the benefits of a clear and documented agreement are:

1. Clarity of terms: the parties to the agreement know who is responsible for what. In the above example, if there was a documented fixed price agreement, the cost of the increased materials would likely be borne by the contractor. If, on the other hand, the agreement was a cost, plus one, the cost would likely be borne by the homeowner.

2. Scope of work: the process of documenting an agreement is likely to lead you to turn your mind to matters that you may not think about if you’re just having an oral discussion. To keep using the example from above, when writing down the agreement with the kitchen contractor, you would likely turn your mind to the details, such as the accessories you want and if any of them are going to be an extra cost.

3. Dispute resolution: while a clearly documented agreement cannot eliminate the potential for a dispute entirely, it will serve as a definitive guiding document from which a decision-maker can decide who is responsible for what. A written agreement also significantly increases the chances of the early resolution of a dispute because no or little oral evidence is needed regarding the terms of the agreement.

A written agreement does not necessarily have to be complicated. While it is beneficial to have everything consolidated into one single document, if that is impractical for you, consider confirming the terms of the agreement in an email or a text message. If terms of a contract are being negotiated or changed over time, use the same method, i.e. text or email, to document a new term or change to an existing term. Arora Zbar LLP advises clients both during contract negotiation/drafting and dispute resolution. We can be reached by email at hello@arorazbar.com or by phone at 604-260-6890. To learn more about our firm, please visit www.arorazbar.com