Dozens of pre-construction buyers are in limbo after finding out their developer transferred the Richmond Hill, Ont., project’s land to another company last summer and the new owner is refusing to honour their existing purchase agreements.
Anna Pires needed something to look forward to after losing her job, her marriage and her house five years ago.
The prospect of moving into her dream home fit the bill.
Pires bought a pre-construction condo unit in Richmond Hill, Ont., north of Toronto, on an assignment sale in September 2016 after coming across the sold-out development online.
An employee of the developer, Ideal Developments, sold Pires his own purchase-of-sale agreement for $80,000 plus the $20,000 deposit he’d already put down on the unit.
Now, after years of delays, the Modern Manors townhouses still aren’t built — and Pires recently found out that her purchase agreement is in jeopardy.
“I have all my life savings in this project,” said Pires. “To think that I may not ever get to see the home that I waited for, for five years, breaks my heart.”
Dozens of pre-construction buyers are in limbo just like her after they received a letter from Ideal’s lawyer last month informing them that Ideal transferred the land at the corner of Yonge Street and Jefferson Side Road to another company last summer.
The new developer has started marketing the units they already bought years ago at much higher prices.
“When I got the letter in February I was torn to pieces,” Pires told CBC News. “I can’t afford to lose my life savings … It’s not just our homes, it’s the equity in our homes.”
Ideal filed an application in Ontario Superior Court in January to get an order forcing the new developer, Grand Grace Developments, to take on more than 70 existing purchase agreements and not resell the units.
Ideal argues new owner must honour agreements
In its application, Ideal argues that a condition of the property transfer was that Grand Grace assume all of the existing purchase-of-sale agreements.
Grand Grace did not respond to requests for comment. But in a February letter to an Ideal purchaser reviewed by CBC News, a lawyer for Grand Grace denied “any obligation whatsoever to assume purchase agreements entered into by Ideal.”
A hearing for the case is scheduled for March 30. If it’s determined that the new developer doesn’t have to honour the existing purchase agreements, Pires doesn’t know what she’ll do.
“This is my Plan A,” she said. “There is no other plan. I have all my money tied up here.”
The Modern Manors development was supposed to include 96 residential units, including 60 stacked townhouses, 12 back-to-back and 24 regular townhouses, according to the notice of application filed by Ideal Developments.
As of May 2020, Ideal had entered into purchase agreements for 36 condo townhomes and 36 freehold townhouses, according to the court filing.
Ideal’s lawyer Bill Friedman told CBC News the developer’s intention is to resolve all of the purchase agreements within the next month or so, but he couldn’t provide details because the matter is before the courts.
“As far as the condominium buyers, their deposits are in trust and they will be returned to them,” said Friedman. “They’ve never been dispersed from trust.”
In a statement, Ideal Developments said it is “extremely empathetic to purchasers” of units in the project and is “committed to a resolution so that arrangements may be made at least for the return of the deposit as as soon as possible.”
Deposits aren’t enough for some buyers
But a returned deposit is of little comfort to condo buyers like Sam Esaad. The Whitby man says real estate prices in Richmond Hill have soared since he signed a purchase agreement six years ago. It could mean he’s priced out of the market.
“I’m not taking my deposit back,” said Esaad. “I’m going to get my deposit and I’m going to get my unit.”
He and his daughter both purchased stacked townhouse condo units.
“This destroyed my dream for me and my daughter,” he told CBC News. “I feel so sorry because I pushed her to go for this.”
Marjan Asmani also bought one of the condo units back in 2015. But unlike Pires and Esaad, she discovered the townhouses were being marketed again before getting word from Ideal’s lawyer.
The real estate agent was searching for listings for a client in late January when she came across a Grand Grace ad for her townhouse development.
“I was angry,” said Asmani. “I wouldn’t believe that this could happen in Canada.”
She says she reported the issue to one of the brokerages that was advertising the sales but was told to take the issue up with Ideal.
“How would you feel if I advertised your home that you’re living in for sale?’ Asmani told the brokerage manager.
Friedman says Ideal has obtained a court order prohibiting Grand Grace from dealing in the property — including selling units — until the Ideal application has been dealt with in court. CBC News has not seen a copy of the court order.
Pires and Esaad say Ideal never told them about a no-dealing order.
Not a common problem says lawyer
Toronto real estate lawyer Lisa Laredo told CBC News she doesn’t hear about cases like this very often, but stressed that Condominium Act safeguards will at least protect the condo buyers’ deposits.
Overall, she still recommends buying pre-construction units.
“Even if there are projects that don’t work out, I think in the long run, buying a new project to get yourself settled in the market is still a good thing,” Laredo said.
Although, when it comes to assignment sales like Pires’s case, Laredo says buyers might want to avoid them unless something’s already been built and is close to occupancy.
“If you are a purchaser and you’re going to buy a new construction, then why not try to shop around and buy directly from the builder as opposed to an assignment?” said Laredo.
Since Pires got her condo purchase agreement through assignment, her $20,000 deposit is protected, but the $80,000 she paid just to take over the contract may not be.
“Our fate lies in the hands of the court,” said Pires.
“I just have to wait and pray that I will get my dream home.”