Half-finished homes and lots of questions after Alberta homebuilder goes into receivership
Provincially required warranties will cushion financial fallout for some, but gaps remain
A neighbourhood in Chestermere sits half finished as the snow falls, it blankets construction materials which haven't been touched in weeks. Those who have money sunk into houses are left to wonder what will happen to their future homes and their investments as the homebuilder goes under.
ReidBuilt Homes is one of Alberta's largest homebuilders and on Thursday it lost its court battle to restructure its debt and fell into receivership after the Royal Bank of Canada sought to collect more than $64.6 million.
'What's going to happen?'
Colin Gill is one of the home buyers who already took possession of his new house in the Chestermere neighbourhood of Westmere Estates, but seven months into ownership, he's still coming across defects the builder said it would address.
Now it appears that won't be happening despite all the reassurances he received over the past few months.
"I think a lot of the concern when you walk around here is just: what's going to happen?" he said.
Gill said he had a list of about 15 or 16 items that needed to be repaired by contractors, including things like a cracked driveway.
"I think the major thing for people who have taken over possession is it's little things that add up. I spent close to $1 million on my home, and to get all this stuff not to the standard that we want, now we don't know what's going to happen," he said.
"There's nowhere to turn."
Gill counts himself as one of the fortunate ones in the area, having gained possession of the house in April. So while he has concerns, they pale in comparison to his would-be neighbours whose houses are half-finished and who don't know what will come of their deposits and investment.
Still others have had contractors place liens on their properties, Gill said, after ReidBuilt was unable to cover its bills.
"The biggest concerns they have is: they don't know. There's no communication. They're hearing from a third party, they're hearing from the media, nobody has reached out. Everyone's kind of going, 'Okay, should I get a lawyer?'"
ReidBuilt Homes was selling homes in 25 neighbourhoods across the province before going into receivership.
New home warranty
A spokesperson with Alberta Municipal Affairs said the status of a company does not impact the new home buyers warranty mandated on new builds in the province.
"The New Home Warranty Program protects homeowners once they've taken possession through mandatory warranty coverage of their new home," the spokesperson said in a statement to CBC News.
Gill said he has reached out to the insurance company which holds the claim on his house and they haven't met his expectations. For one, he said, they're only agreeing to cover defects within the house. His driveway is not included.
The other concern is there might not be the same standards applied — what ReidBuilt might have considered a defect, the insurance company might not.
Deposits and other investments
Many questions won't be answered until after ReidBuilt Homes has its assets sold off, said Calgary real estate lawyer Jeff Kahane.
"My understanding is in this case, they're looking to sell the assets of the company and potential contracts would be part of, in theory, the asset base that's being sold," he said.
Deposits will be a big concern for many.
"Unfortunately, home warranty does not protect homeowners' deposits or guard against liens being placed on homes by contractors who are not being paid by the builder during the construction phase," said the Alberta Government spokesperson.
Individual home buyers would need to look at their contracts to know what kind of situation they're dealing with, Kahane said.
While deposits aren't required to be covered under provincial warranties, they could be. There could be other cases where a third-party real estate agent held the deposits in trust, in which case it's not connected to ReidBuilt's assets.
There's also the possibility payments were made as work was done on a home, in which case the buyer might hold equity in the completed work and would need to hire a builder to complete the job.
Many circumstances are possible and the paperwork is important, said Kahane.
"I would always recommend people take a real estate agent in with them when they go in to buy a new home, because people go to the sales person sitting in the show home or show room. That person is an employee of the company, they don't owe any fiduciary duty to the person who's buying," he said.