No help for buyers of failed condo
http://www.ottawacitizen.com/help+bu...333/story.html
Out tens of thousands for trendy, energy-saving units
By Dave Rogers, The Ottawa CitizenOctober 9, 2009 10:29 PM
OTTAWA — Some buyers of the financially troubled EcoCité condominiums in the Glebe will lose tens of thousands of dollars they paid for upgrades because their investments aren’t covered by Ontario consumer protection law.
After waiting five years for the trendy energy-saving units to be completed, the purchasers of the Bank Street condos learned this week that they will have to pay up to $200,000, or 45 to 60 per cent, more than the original selling price if they want to move in.
The mortgage lender, Romspen Investment Corp., has taken over the project from EcoCité Developments under a power-of-sale agreement and is trying to sell the units to recover its investment.
The 18 original buyers will get their deposits back, but most have abandoned their dreams of owning a condo near the Rideau Canal because of additional costs.
Jonathan Browne said he lost more than $40,000, including deposits of $28,000 for cabinets and $3,500 for flooring.
“I purchased a whole ton of fixtures and marble out of my own pocket that they had agreed to install,” Browne said. “I am trying to retrieve stuff from my unit and I am not getting any response from Romspen or EcoCité.
“During the last year I have received almost 30 notices telling me the building was financially healthy and would soon be ready. I was living in a hotel for a year and am now staying with a friend. Most of my stuff is still in storage.”
Browne said condominium law leaves too many loopholes and doesn’t protect buyers adequately. He plans to sue the developer and the mortgage lender in small claims court to recover his losses.
Karin Fuller, one of the partners in Kaleidoscope Kids’ Books, said the store has lost about $75,000 because of legal expenses and four moves.
However, she said Kaleidoscope will move into the building because it has invested so much money in design and fittings.
The store is now in rented space at 1095 Bank St. Fuller said the partners won’t have to pay extra to move into the building, but the new store will be about 300 square feet smaller than the unit they purchased.
“Children’s books is not a lucrative profession,” Fuller said. “We have been open for 31⁄2 years and haven’t paid ourselves yet.
“It has been very challenging for us because you don’t look like a legitimate business if you have to move every six to nine months.”
Beth Maiden, a lawyer representing several buyers, said the developer defaulted on mortgages that had interest rates of up to 18 per cent.
“Unfortunately, the only thing these purchasers can do is to sue the developer, who is insolvent on this project,” Maiden said. “I don’t think Ontario law protects new home buyers in this type of situation. The law should be changed so that people can get back their deposits plus the money they have spent for upgrades.”
Romspen partner Blake Cassidy said the company took over the 26-unit, $15-million building because EcoCité failed to meet mortgage payments.
“We are out of pocket on this entire project because of the default of the developer,” he said. “All of us are victims of a developer who has failed to meet his obligations to the purchasers and financiers of the project.”
Christopher Sweetnam-Holmes, principal and founder of EcoCité Developments, said the real reason for the financial difficulties is that the units can’t be sold for what it cost to complete the building.
He denied that EcoCité had failed to meet its payments. He said Romspen cancelled the contracts with the original purchasers because EcoCité would be unable to recover the construction costs from the sale of the condos due to cost overruns.
Robert Mitchell, a spokesman for Tarion Warranty Corp., the regulator of new home building industry in Ontario, said condo buyers are covered for deposits of up to $20,000, but upgrades aren’t protected.
Stephen Puddister, a spokesman for the Ministry of Consumer Services, said Tarion does not get involved in contracts between condo buyers and vendors that provide upgrades because they are the responsibility of consumers and their lawyers.
Councillor Peter Hume, whose ward includes EcoCité, said there should be more transparency in condominium sales so purchasers understand the risks.
“It is clear that the risks were greater than the developer, mortgage holder and purchasers realized,” Hume said. “Should Ontario consumer protection laws be strengthened to make the risks of buying a condominium clear to purchasers? That is clearly a question for the province to answer.”
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