Police investigating pre-sale development; condo buyers out hundreds of thousands
Published Friday, August 3, 2018 6:42PM PDT
Last Updated Friday, August 3, 2018 7:33PM PDT
A Langley, B.C. condominium complex was supposed to be home for dozens of pre-sale buyers, but instead, the development is sitting empty.
"It's left us lost really," said Karen Janzen, one of the pre-sale buyers for Murrayville House.
Back in 2016, the Janzens signed an agreement and put down a deposit to buy a condo in the 92-unit development near the Langley Memorial Hospital. They expected to move in a few months after signing the paperwork.
The family knew there was a chance construction wouldn't be completed by that time, but didn't think they'd have to start over.
Last year, the project went into court-ordered receivership, meaning a court-appointed individual was given responsibility over the property which serves as collateral for a loan. In court reports, the receiver for Murrayville said they'd found some of the units were pre-sold more than once – and as many as four times in some cases.
Mounties confirmed there's an investigation relating to the project.
Then this spring, a Supreme Court justice ruled the pre-sale agreements signed by would-be owners must be effectively cancelled so the units can be marketed again.
Previous buyers get the first right of refusal, but have to pay current market value rather than what their units were worth when they first signed their agreements.
"It was up 71 per cent… We don't have the funds to do that," Janzen said.
"It's so shocking to me that this can actually get to this point," said Nolan Killeen, another of the dozens of pre-sale buyers affected.
Killeen was also given the option to pay current market value on the condo he'd agreed to purchase previously.
"It's just not financially a reasonable amount, to pay an extra $100,000 in less than a year, so it's not something that we can do," he said.
CTV News reached out to the developer to ask about the discrepancy between the number of units and pre-sale contracts.
"That's a distinction that needs to be made. There were investor relationships beyond the retail purchasers," said JP Dhaliwal, chief financial officer of the Chandler Group of Companies.
Killeen said with legal fees and market growth, he estimates he's lost more than $150,000. Janzen's deposit was refunded, but like many others, she isn't getting her home back.
"I just want to warn everybody because it's like, that this can happen to anybody," she said.
How risky is buying a pre-sale condo?
Future homebuyers considering a pre-sale property might be surprised to find out what's in the fine print.
They're drawn in by glitzy showrooms that allow them to choose their unit and finishes, and many sign contracts without really understanding them.
"People don't read the last 10-15 pages. They just look at the first page, the price, how many parking spaces I get, is there GST on it? And that's it," said real estate lawyer Kenneth Pazder.
If they did read the whole contract, they'd learn many things they thought were guaranteed – such as what floor the unit is on, the view, square footage and finishes – can actually be changed by the developer.
For example, Pazder said, the kitchen might be in a different location, or the unit might be facing a different way.
"But why people haven't complained is because in the last 10 years or so, by the time your condo has closed, it's gone up by $50,000 to $100,000, so I'm buying it anyway, regardless of what's going on," he said.
"But you can't bank on that. You can't always say, 'It will be worth more by the time I close.' So that's another risk."
His advice is to only consider buying pre-sale from large, established developers with good reputations. Buyers should always use their own realtor, not the one who works for the building, he said.
Buyers have a week to back out. He recommends using that time to have a lawyer look over the contract and explain it thoroughly.
If there are any red flags, walk away.
Buyers should also be aware that construction may not be completed on time, and projects can be cancelled. The closing date is a moving target and the developer decides when the owner can actually move in.
With reports from CTV Vancouver's Maria Weisgarber and Shannon Paterson