188 homebuyers left waiting as courts untangle abandoned construction projects
'It was a dream — it was our dream home,' say homebuyers about abandoned Urbancorp development project
The website is still online, promising "mature trees and stylish family homes lin[ing] quiet side streets, creating an incredible community atmosphere that you simply will not find anywhere else."
But it's a shattered promise for homebuyers who decided to purchase homes in a new Urbancorp project at St. Clair Avenue West and Lansdowne Avenue, which is now mired in legal proceedings after the developer filed for bankruptcy protection in May.
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"We were really excited because we're a family of four — we have two small children — and the space we live in is very challenging right now … It's our life savings that we put in to our deposit to buying this home," said Loraine Adal-Salmon, sitting at her kitchen table with husband Anthony.
They made that down payment in January 2014; demolition at the site began two years later. The family would go every night to watch the work progress, Adal-Salmon says. Now, the site of their much-anticipated new home is abandoned, surrounded by locked fences and covered in tarps.
'It was a brand new home, so it was a dream'
The family saved for years to put together a down payment that would let them buy a family-sized home in Toronto's difficult housing market, and when they were given brochures for this development, Adal-Salmon says, "it fit within our financial budget … and it was a brand new home, so it was a dream — it was our dream home."
After Urbancorp filed for bankruptcy protection a court-appointed monitor called KSV took over. It is charged with figuring out how to turn Urbancorp's holdings into cash, so it can pay back their creditors — now including the homebuyers who put down deposits.
At the end of June KSV issued a statement addressing homebuyers' concerns, in which it explained it is developing a plan to sell assets in order to generate funds to make those payments.
"Based on value estimates received by KSV from several realtors," the statement reads, "creditors may have a significant recovery of their claims, including home buyers. KSV is aiming to complete the sale process by the end of September 2016."
That's nearly three years since Adal-Salmon's family put down their deposit, however, and may just be the next step in a long process. If KSV cannot make good on the deposits legal proceedings may follow.
A waiting game
That, it seems, isn't in the cards.
"At the end of the day I think the best scenario is that they're going to get the consolation prize, which is hopefully all of their deposit back," says Howard Bogach, president and CEO of Tarion, a non-profit that provides certain protections for Ontario homebuyers.
Those protections include warranties to cover deposits up to a certain amount: if KSV cannot return the homebuyers' deposits in full, then Tarion kicks in and will top up the payments by up to $40,000.
Neither Urbancorp nor KSV responded to CBC's requests for comment.
In the meantime, many of Urbancorp's purchasers are locked out of the real estate market — without access to the money they used for their down payments they can't go looking for other homes, and the housing market only continues to get more expensive as they wait.
Tarion says 188 would-be homebuyers have been affected by Urbancorp's situation. "This is a rising real estate market," said Bogach, "and they've been left out of that real estate market; there is a lot of unfairness in this."
He also says that while this situation is clearly upsetting and unfair to the homebuyers involved, it is very unusual: "Certainly in the eight years that I've been president we haven't had a situation like this."
But in light of this case, he said, Tarion will be looking at whether additional protections for homebuyers, such as increased deposit warranties, should be implemented.
Back at her kitchen table, Adal-Salmon continues to wait.
"You come here knowing that if you work you can succeed, and you can establish and build a life for you and your children, and do it in a very honourable way, and when you see what has happened now and how those dreams are taken away and why they're taken away it's really gross, really disgusting."