Jason Paris, a television production manager living in Toronto, wishes he’d done more research before putting down a deposit on the 10-storey Museum FLTS condominium, which was abruptly cancelled by its developer, Castlepoint Numa.
Paris was one of the hundreds of aspiring homeowners who had their deposits refunded and dreams dashed. Buyers were especially frustrated because this means they’ll be thrown back into Toronto’s increasingly expensive and competitive condo market.
The developer cited lengthy delays obtaining the necessary approvals, building permits, and financing for the project’s cancellation.
“If I had the knowledge I have now, then, I definitely would have researched Castlepoint further,” Paris said. To his chagrin, he discovered that the company had done the same thing to aspiring pre-sale condo buyers a few years ago when one of its projects fell through.
While Castlepoint Numa said it will give the original Museum FLTS buyers the first opportunity and a discount on the next residential phase of its greater Lower Junction neighbourhood project, Paris points out that some buyers have been burned twice by the same developer.
Before committing, it pays to do research
While some developers are great at dazzling pre-sale condo buyers with glitzy marketing materials and showrooms, experts say the best line of defense is to research developers before signing any contracts.
Unfortunately, there’s not much that can be done to protect Paris and others like him who’ve been left in the lurch following the cancellation of pre-sale condo projects, said Richard Bell, a real estate lawyer from Bell Alliance.
“It does happen in various scenarios, particularly if there’s a significant downturn in a market over a short period of time. So really, people are at risk,” Bell told The Canadian Press.
These risks make it all the more imperative for aspiring condo buyers to do their homework. “Who is the developer? What have they built previously? A new developer entering the market place is going to greater risk in a situation for a buyer than having a very experienced developer in the market place,” Bell said.
According to Mark Weisleder, a Toronto-based real estate attorney, there are numerous advantages to going with a seasoned and established developer.
“I have heard of situations where the builders have cancelled the deal and then turned around and then resold units at a $100,000 more each, and there’s virtually nothing that the original owners could do because there were lots of clauses in the contracts that allowed builders to cancel,” Weisleder said.
“But you will find that reputable people, people who have been around a long time, they don’t do that. When they plan a development and plan units, they’re expected to complete. They price accordingly and they complete.”