In central toronto real estate, buyers in several insolvent Urbancorp projects have lost their bitter fight to convince a court to let them complete the purchase of their homes.
On Thursday, an Ontario Superior Court judge approved the sale of six Urbancorp development sites in the Greater Toronto Area to five different buyers – including Mattamy Homes and Fernbrook Homes. The developments are among several Urbancorp companies that filed for bankruptcy protection earlier this year.
Urbancorp’s court-appointed monitor, KSV Advisory, said it had received “hundreds of inquiries” and 76 formal bids from developers for the six sites, most of them low-rise sites of former schools in desirable residential neighbourhoods in Toronto.
However, the monitor said none of the developers that bid on the sites were willing to honour the original purchase agreements that Urbancorp had signed with more than 180 buyers, many dating back several years.
For toronto condo buyer, the purchase price for properties was not disclosed, although KSV said it expects “substantial recoveries” from the sales, likely enough to fully refund the roughly $23-million in buyer deposits that Urbancorp collected on the projects and later spent. The defunct developer collectively paid about $31-million for the six sites between 2012 and 2014.
The news that their deposits would likely be returned was cold comfort for the dozens of buyers who had gone to court in hopes of negotiating a compromise that would allow them to complete the purchase of their homes.
“We lost the race,” said Alex Oren, who paid a $75,000 deposit toward a $750,000 townhouse in Urbancorp’s Ravines on Lawrence project, which is being sold to Fernbrook Homes. “We gave it a fight. Unfortunately with the current laws in Canada, we were not a priority.”
In toronto real estate, Dickinson Wright, the law firm approved by the court to represent buyers in several of the projects, was in the process of formalizing those arrangements when monitor KSV went to court to get permission to sell properties, arguing that it had to adhere to deadlines set with the winning bidders or risk having the sales fall through.
For toronto new condo investment, both the home buyers and Tarion Warranty Corp., which backstops new home builder warranties in Ontario, unsuccessfully argued that the monitor should delay the sales to give the buyers time to negotiate a compromise.
“This is not the outcome Tarion or the homeowners were hoping for,” said the agency’s spokesperson, Laurie Stephens.
Tarion has no way to overrule the court’s decision, she said, although if buyers are not able to fully recover their deposits from the insolvency proceedings, they still can file a claim with Tarion for the shortfall, up to $40,000. “With respect to losing the home, this is unfortunately a risk when it comes to insolvency laws.”
Still, there is a silver lining for the buyers, said their lawyer, Lisa Corne. Beyond getting deposits repaid in full, they may also be able to launch a claim for any money left over from the sale of the development sites after Urbancorp’s other creditors have been repaid as compensation for having lost ground in Toronto’s overheated real estate market.
They could also try to negotiate a special arrangement with a new developer for units in future projects on the sites, something Ms. Corne is doing on behalf of purchasers in a separate insolvent Urbancorp development in Toronto’s Leslieville neighbourhood.
But there is no requirement for the new developers to negotiate with Urbancorp’s home buyers. “There would be no particular leverage at this point other than a desire to do the right thing,” she said.
Three years after he signed a contract with Urbancorp, Mr. Oren says he has accepted the reality that he will never get his home.
“I am not intending to waste any more of my deposit fighting,” he said. “As purchasers we subsidized this company twice, once with our deposits that we originally gave them … and now we’re subsidizing the company a second time with our rights to our homes.”
Read the full post in Globe And Mail
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