Condo developer demands 15% more money from buyers after New Westminster project hits delays
'I do not have the money,' says one buyer who was asked to pay an additional $40,000
A group of prospective homeowners in New Westminster, B.C., are crying foul after being told they need to pay tens of thousands dollars more for their presale condominiums or risk losing their future homes — despite signing a contract nearly two years ago.
Earlier this month, Jago Development notified buyers of the Westbourne Residences project at 5th Avenue and 13th Street that the purchase price of their homes would be increasing by 15 per cent to cover unforeseen cost overruns caused by major delays.
It was gut-wrenching news for Laurie Macleod, 55, who had poured his life savings into his dream one-bedroom condominium after renting his whole life.
"If I do not live here in this development, I will never be able to buy a home again. I won't be able to afford a down payment," he said holding back tears.
The cost increase means another $40,000 out of his pocket — money he doesn't have.
The 55-unit project was sold in 2016 at about $475 per square foot, according to the developer.
Prices in nearby developments are now closer to $600 and as much as $700 per square foot depending on proximity to the Fraser River.
Westbourne Residences was expected to be complete in the spring or summer of 2017. That date has been pushed back until this summer.
In a statement, Jago Development vice-president Jennifer Tung wrote she was "deeply troubled" by the turn of events and that the company was doing all it could to complete the project while keeping the best interests of its clients in mind.
It blames factors beyond its control for the delays, including the discovery of an underground stream, the icy winter of 2016/17 and a labour shortage.
'I don't want to lose my unit'
All are circumstances that Macleod says an experienced developer like Jago should have had contingency plans for.
He and other homeowners are now mobilizing in hopes of finding an alternative solution. Some have even posted signs on nearby posts to round up others like them.
"I don't want to lose my unit," he said.
Buyers have until Feb. 28 to agree to pay the extra money.
For those who give up their purchase, the developer is offering options that promise some return on investment in recognition of the "sacrifice" buyers made.
Buyers can choose to take back their deposit and receive an additional 50 per cent.
Or, if they are willing to wait until the units are sold to new homeowners at a higher price, they can get 40 per cent of the difference between the new and original sale price, minus administrative costs such as taxes, legal fees and commissions.
Lack of transparency, buyer says
While the second option could yield a higher return, first time buyer Claudia Qin says she has lost faith in the developer, calling the whole process "unbelievable."
She bought a unit hoping her family of six could move out of their current cramped two-bedroom rental suite nearby.
She says there's been a lack of transparency, adding that it's been a struggle just to get anyone to respond to her questions.
That's led her to question the revised pricing structure and what costs will be rolled into the administrative fees.
Jago says it will not profit from any of the options offered.
The circumstances faced by this group of homebuyers is unfortunate but reveals the risks of buying pre-sale, says Vancouver real estate lawyer Richard Bell.
"It does happen but very seldom," he said. "Significant delays usually mean a significant increase in costs."
His advice is to research developers before buying.