Premier slams Ontario developer that raised condo prices by $100K after cancelling sales deals
Pace Developments cancelled on contracts with 70 buyers in Barrie, Ont., citing price increases
Premier Doug Ford on Monday criticized an Ontario developer that cancelled dozens of years-old sales deals with buyers of under-construction condo units — unless they agreed to pay more.
"Nothing burns me up more than that — some developer just trying to make extra money off the backs of hard-working people. Unacceptable," Ford said when asked at a news conference in Orillia, Ont., about the actions of Pace Developments, based in Richmond Hill.
"You signed a contract. You better … build that damn house."
After CBC's intial coverage of the story, Pace said its decision to cancel the agreements was entirely legal. Some 70 buyers have been affected by the price hike for walk-up condos at Pace's Mapleview Developments, known as Urban North Townhomes, in Barrie, about 100 kilometres north of Toronto.
The buyers, who signed agreements between 2018 and 2020, were given the same two options in a letter sent by the developer — walk away with their deposits or buy back in for an additional $100,000. Some of the units are scheduled to be finished as early as April.
The company defended the move by pointing to the inflated costs of raw materials and labour related to the COVID-19 pandemic.
Earlier this year, a lumber shortage sent prices skyrocketing — adding to the cost of building homes — and although prices have recently come back down, many retailers and developers had already purchased lumber at the higher cost.
Ford said developers should bear the cost of price increases if they have already signed contracts and agreed to a final price.
"If [buyers] signed a contract and it's no fault of their own, but the prices have gone up in lumber ... that's the cost of doing business for the developer," Ford said.
He pledged to put an end to the practice "because it's totally unfair." Pace Developments didn't respond to a request for comment.
Independent review necessary, expert says
Most pre-construction contracts allow developers to cancel sales agreements, require more money and delay projects if there are "unavoidable" reasons, like a pandemic, according to experts CBC News spoke with.
Audrey Loeb, a condo law expert with the firm Shibley Righton, said developers shouldn't have the power to unilaterally cancel contracts, and more regulations are needed to protect buyers.
"The notion ... that a developer should have the sole determinant of right to terminate an agreement — I have a little bit of difficulty with that," said Loeb. "I would like an independent agency to confirm the developer's position."
Loeb said Tarion, a non-profit agency that governs builders on behalf of the provincial government, should have the power to conduct independent reviews to determine if a developer is justified in unilaterally backing out of a contract.
In the 2018 election campaign, Ford's Progressive Conservatives promised measures to make housing more affordable. Three and a half years into its term, the government's actions have focused almost exclusively on measures to increase the supply of new housing — to the benefit of developers.
The government's housing plan focuses on speeding up housing approvals, reducing red tape and controlling development charges funnelled to municipalities. On multiple occasions, it has made use of controversial ministerial zoning orders, which allow it to immediately authorize developments regardless of local rules for land-use planning.
Meanwhile, home sale prices in the province are in the midst of a second straight year of double-digit annual increases, even beyond the Greater Toronto Area.
In Barrie, the average price was $502,755 when Pace first started selling the units in 2017. That's increased to $876,018 as of this past October, according to the Canadian Real Estate Association.
Real estate lawyer Bob Aaron said the government should amend provincial law so that developers have to buy back the units that they're cancelling at fair market value.
"That would make up for the fact that those people's money is just sitting in their hands," said Aaron. "The builders should be prevented from getting more money because they're greedy."
Aaron said the government knows how to put an end to the practice, and all it needs is the political will.
"When it comes to this government, I'll believe it when I see it," Aaron said.
With files from Mike Crawley