In Culos Development (1996) Inc. v Baytalan (“Culos”), 2025 BCCA 265, the BC Court of Appeal clarified when specific performance remains available in real estate development disputes, even where a property is acquired as an investment.

For parties engaged in the sale of development properties, the decision is significant. It confirms that significant site-specific pre-development work, including due diligence, rezoning efforts, and planning progress, can render a property sufficiently “unique” to justify specific performance, rather than limiting the purchaser to an award of damages.

This decision has meaningful implications for risk allocation and enforcement strategy in rising or volatile real estate markets.

What led to the Culos dispute?

The case arose from an option to purchase granted to a developer in respect of property located in Kelowna, British Columbia. After the purchaser exercised the option, the seller refused to complete the sale. At trial, the court found that the seller had breached the agreement but declined to grant specific performance, instead awarding damages.

The Court of Appeal reversed that decision and ordered specific performance.

What is specific performance?

Specific performance is an equitable remedy that requires a breaching party to perform its contractual obligations.

Historically, specific performance was the default remedy for breaches of real estate contracts because land was presumed to be unique. Over time, however, Canadian law—including the Supreme Court of Canada’s decisions in Semelhago v. Paramadevan and Southcott Estates Inc. v. Toronto Catholic District School Board —clarified that real property is not automatically unique, particularly when it is purchased for investment purposes and to generate profit.

The central question is whether damages would adequately compensate the purchaser. If an equivalent property is readily obtainable, specific performance will generally not be granted.

How Culos shifts the analysis in the context of development properties

In Culos, the Court of Appeal emphasized that there is no presumption that development‑oriented properties are replaceable simply because they were purchased to generate profit. The uniqueness analysis must be contextual and tied to the circumstances at the time of the breach.

Critically, the Court recognized that uniqueness can arise not only from the physical characteristics of the land but also from the development work already tied to that specific site, including investigations, planning, design, and rezoning progress.

Where a purchaser has meaningfully advanced a site‑specific project, the property may cease to be interchangeable with other development opportunities and may become “unique.”

In Culos, the Court of Appeal found that the trial judge failed to consider the site-specific work that was already well into the planning stages at the time the option to purchase was exercised, as well as the desirable location of the property. The Court also rejected the trial judge’s treatment of the property as an investment property that was presumptively replaceable. Instead, the Court ordered specific performance, finding that the pre-development work contributed to the uniqueness of the property such that a substitute would be difficult to readily obtain.

What are the key takeaways for purchasers and sellers of development properties?

The Culos decision highlights several takeaways for parties involved in real estate development transactions.

For purchasers (developers & investors)

  1. Document pre-development efforts thoroughly: Keep detailed records of all steps taken before closing or exercising an option, including but not limited to consultant reports, preliminary designs, rezoning applications, feasibility studies, and communications with municipal staff. These materials can later demonstrate “uniqueness” if enforcement becomes necessary.
  2. Move diligently once an agreement is signed: Progressing planning, design, and regulatory steps early strengthens the argument that the property has become uniquely suited to the purchaser’s project. In contrast, slow movement or unexplained delays may undermine a later claim for specific performance.
  3. Monitor market conditions and seller conduct closely: In rising markets, sellers may look for excuses to walk away. Purchasers should watch for signs of hesitation, delay, or attempts to renegotiate. Early detection allows the purchaser to take proactive steps—legal or commercial—to protect their rights.
  4. Seek legal advice promptly following a breach: Timely legal advice can be essential in preserving the ability to pursue specific performance. Counsel can assist in preserving ongoing development efforts, assessing whether mitigation is required, and determining what interim steps—such as filing a CPL or issuing a demand to close—are necessary to protect the purchaser’s position and avoid prejudicing the claim.

For sellers

  1. Understand that “investment property” does not mean “replaceable”: Following Culos, courts will look past a purchaser’s profit motive. If the purchaser has begun site‑specific planning, design work, or regulatory engagement, the property may be treated as unique notwithstanding that it is intended for redevelopment. Sellers should understand that a breach may expose them to specific performance, not just damages.
  2. Exercise caution with option agreements: Option holders often undertake significant pre‑development work prior to exercising the option. Once that work is underway, the property becomes increasingly tied to the purchaser’s project. Sellers considering terminating or resisting performance under an option agreement face a heightened risk that a court will order specific performance, particularly in a rising market.
  3. Seek legal advice before walking away: Indications of seller’s remorse, attempts to renegotiate, or pressure from competing buyers can trigger serious legal consequences if they lead to a refusal to complete the transaction. Early legal advice can help assess exposure, clarify obligations, and determine whether the seller can lawfully rely on conditions precedent or other contractual mechanisms. Acting without guidance increases the risk of adverse findings, including an order compelling the sale and an award of costs.

What does Culos mean for development transactions going forward?

Culos reinforces that in real estate development transactions, specific performance remains a viable remedy where site‑specific work has meaningfully advanced a proposed project. For both purchasers and sellers, the decision highlights the importance of proactive planning, thoughtful contract drafting, and prompt action when issues arise. In a volatile or rising market, these steps can be decisive in shaping both strategy and outcome.

If you have questions about managing risk in development transactions, responding to threatened breaches, or enforcing contractual rights following Culos, a member of Miller Thomson’s Commercial Litigation Group would be pleased to assist.