In hot markets like Toronto, preconstruction condo purchasers can sometimes find themselves shafted by avaricious developers.
While proof is hard to come by, that very well could be the case with a sold-out Vaughan condo development whose buyers recently found out that their dreams of homeownership will not come to fruition.
Liberty Developments has claimed it’s unable to “secure satisfactory construction financing” for a condo project called Cosmos, which was set to deliver around 1,100 units in three towers.
Claude Boiron, a real estate broker, author, university instructor, and founder of Boiron Group, noted that the vendor—which is listed as a numbered company—blamed by the developer, in fact, shared the latter’s mailing address.
“The vendor has the same mailing address as the developer,” said Boiron. “The developer is pointing a finger going ‘It’s not us, it’s the vendor, so don’t be mad at us,’ yet the mailing address for both entities is the same.”
Lacking tangible proof, Boiron stopped short of accusing Liberty Developments of reneging on its agreements so that it could come back to market and charge higher prices. However, he says that it has happened before.
“It has become a little bit more common in the last few years, especially in the tighter GTA, and there are instances where the developer has done just that,” said Boiron. “They’ll cancel all buyer projects—even in sold-out projects—put out whatever excuse, repackage and rebrand the project and sell it for 20, 40, 50% higher than they sold for the first time around.”
Boiron is spearheading an initiative to help the hapless Cosmos buyers with their next purchases into more expensive preconstruction condo projects. He’s offering 50% of his own commission for any new GTA preconstruction project.
Mark Cruden and his wife bought a unit in one of the Cosmos towers as a way to build equity so that he and his wife could travel.
“You start to get excited because you’ve built a little equity before moving into it,” Cruden told the Toronto Star. “We’re in our fifties. This is obviously not our first home. For us, it’s a huge disappointment but I cannot imagine a young family getting all excited about moving into their first place and now they’ve been potentially priced out of the market.”
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
