Six months before move-in date, condo developer backs away from Edmonton tower project
Condo buyer says he just found out he won't get the unit he thought would be completed in December
Six months before Eric Chung expected his new condo would be move-in ready, he learned the developer will not complete the building and is selling off the entire project.
As a result, Chung will not get the unit he paid a $35,000 deposit for last year.
"To be notified, when it's almost done, that they sold it — that's just unacceptable," he said.
"The most frustrating part is there's no legislation to make the developer pay a penalty for things like this."
Chung said he has been promised his deposit will be returned.
The project has three towers, and Chung bought into the last one. In its advertising, Westrich Pacific Corp. promised the buildings would be "more than just concrete and steel," thanks to the company's "dedication to distinction."
Chung said he drives by the site regularly, and the exterior of the building appears to be nearly complete.
He said he spoke to a Westrich representative last year when he picked out the finishing features for his unit. He only heard news about the ownership change two weeks ago, when he called to ask how work was progressing.
To be notified, when it's almost done, that they sold it — that's just unacceptable.- Eric Chung
Scott Penrice, sales manager for Westrich, confirmed his company is backing out.
"The building is in the process of being sold," he said, adding the new owner will likely turn it into rental units.
The first two towers in the project were completed and owners moved in, Penrice said. But a "squeeze in the suburbs" caused slow sales on the third tower.
Deposits paid by Chung and other buyers have been kept in trust, Penrice said, and "100 per cent will be returned."
Refunds will take time
But it's not clear when that will happen.
Chung said he was told he should get his money back by the end of the year. He wants the funds to be returned with interest.
"That is also unacceptable," he said, about the possible six-month wait.
"It should be very clear that in situations like this, that as soon as we sell it, we close, we'll give you your money back. But I feel they should give it with interest."
Chung hopes other people who paid deposits will come forward, to work together to ensure full refunds.
He also questions why, with the building so close to completion, the tower couldn't have been sold to a different developer, who could in turn complete the project.
Deposit money kept in trust
Real estate lawyer Robert Noce said it's not entirely unusual for condominium projects to be cancelled before completion, due to slow sales.
"If you're not getting the sales, if you're at the point of no return, you build the building and you sell it to a pension fund or someone else, who rents it out and makes a return on it," he said.
On Jan. 1, Alberta amended the Condominium Property Act to make it clear that deposit money is to be kept in trust.
"Trust money is separate from day-to-day operating bank accounts," Noce said.
"So if the builder doesn't proceed or goes bankrupt, trust money does not form part of the bankruptcy estate. Assuming these developers did everything in compliance with the law, these purchasers will get their money back. But it will take some time."
Noce suggested purchasers acquire legal advice to ensure they get the promised refunds.
Chung knows he's lucky, because he never planned to live in the condo himself. He purchased the unit as a possible place for his in-laws to live, and as an investment.
But he thinks about people who may not be in the same situation.
"If I get my money back, I'll purchase another investment. But I know there will be people who are devastated — especially people who are moving to Edmonton or who are maybe buying a condo for the first time."