Thread: When Pre-Sold Condos Go Bankrupt

This keeps happening here on the westcoast of Canada, little whirlpools fed by the housing boom and intensified by desperate home seekers and sky-high construction costs.

Vancouver condominium development in receivership

Published: Saturday, February 23, 2008

VANCOUVER -- Another condominium development has gone into receivership leaving owners facing potentially higher price tags for units they bought almost two years ago.

The future of the Sophia, a condominium and townhouse project at Sophia Street and East 11th Avenue in Mount Pleasant, has now been placed in the hands of Vancouver receiver, the Bowra Group.

Peter Simpson, CEO of the Greater Vancouver Home Builders Association said news like this taints the whole industry.

"I'm not very happy about this and other developers aren't because it casts a pall on the whole industry again, " Simpson said.

By "again", Simpson was referring to the Riverbend project in Coquitlam which ran out of money last spring just before being completed, leaving owners facing increased prices for units they expected to be moving into shortly.

Last fall, the developer of the Sophia, the Eden Group of Companies, cancelled two other condominium projects - the 119-unit Elyse at East 7th Avenue and Scotia Street and the $30-million, 31-unit Montgomery Estates townhouse project at Oak Street and 43rd Avenue - citing rising construction costs that would have created huge losses if they were to proceed.
But unlike the Sophia, which is 85 per cent complete, building had not started at the other two projects.

In September Bill Eden, president of the Eden Group, said his company was losing about $300,000 a month on the Sophia because of the Vancouver civic strike, as the project needed the city to install water and sewer services.

Vancouver condominium development in receivership

Riverbend developer put in receivership - deposits returned, lender puts complex in Foreclosure

Lender for Coquitlam complex pulls plug after pre-sale contracts cancelled

Friday, June, 01, 2007

The mortgage lender for the Riverbend condominium complex in Coquitlam is foreclosing on the project and putting its developer into receivership.

In a controversial move that made headlines in early May, CB Development 2000 Ltd., cancelled 32 pre-sale contracts that buyers had signed to purchase strata-titled detached homes in Riverbend. The company blamed rising construction costs and a lender that wouldn't release its loan unless the units were resold at current market rates.

In the midst of a flurry of legal actions against CB Development, the construction lender, CareVest Capital Inc., has won a B.C. Supreme Court order putting the developer into receivership, and has begun foreclosure proceedings.

Alan Baumann, president of Calgary-based CareVest, said in an interview that his company stepped in because it had learned that the Riverbend project's property insurance was about to be cancelled.

This week, CareVest sought and received a court order appointing David Bowra of the Bowra Group as receiver. Baumann said Bowra now has control of the Riverbend project and will determine "what's the best course of action on a go-forward basis."

Shane Coblin, a lawyer representing six of 17 Riverbend buyers who are suing CB Development to have their contracts honoured, said CareVest's action gives them a glimmer of hope.
"The way they've chosen to do it was to at least try and see if there's a way they can complete these contracts," Coblin said.

Bowra, in an interview, said he is preparing a report for the court on the project's viability and is meeting with pre-sale purchasers to discuss their options.

However, after meeting with the developer and contractors, Bowra said he has determined it will take an additional $2.6 million to finish building the 32 homes.

"It is not economic to complete the project at current costs based on the contract [prices]," Bowra said.

Baumann was also cautious not to raise hopes. He said that any future course would be up to the receiver.

"The project is a casualty of the hot B.C. economy," Baumann said.

CB Development pre-sold the 32 units two years ago, which Baumann said "effectively capped their revenue," then faced runaway cost increases and difficulty keeping trades workers.

Mortgage lenders typically allow for loan advances to a project "on a cost-to-complete" basis, as long as there is enough equity in the project to be completed. Riverbend, he added, no longer had enough equity to finish it.

"When lenders are being asked for $4 only to get $3 back, they usually say, 'I think it's time you look at it a different way.' "

On May 14, the provincial superintendent of real estate issued a stop-marketing order on the Riverbend project barring resale of the units in part because the lawsuits against CB Development impaired the company's ability to pass clear title on to new owners.

CB Development did not return Vancouver Sun phone calls Thursday. In previous interviews, the company has said the 128-unit Riverbend project was plagued by inflation of construction costs that outstripped sale prices.

Riverbend developer put in receivership - deposits returned, lender puts complex in Foreclosure - Les Twarog News Articles

Hope it don't happen in bangkok as my mate has just sunk a large amount of money into a top floor unit in bangkok, all off the plan.

Paid 2 wedges already and the last is due in a few months.

Bangkok is OK innit as I hav'nt heard of any problems with condo developments going under.?

Originally Posted by terry57

Hope it don't happen in bangkok as my mate has just sunk a large amount of money into a top floor unit in bangkok, all off the plan.

Paid 2 wedges already and the last is due in a few months.

Bangkok is OK innit as I hav'nt heard of any problems with condo developments going under.?

Potholes on the road to luxury Thai living - International Herald Tribune Read this.

Originally Posted by terry57

Bangkok is OK innit as I hav'nt heard of any problems with condo developments going under.?

There are still many rusting, half-finished developments in Bkk with exposed concrete and rebar 10 years after the last economic collapse.

Originally Posted by Hootad Binky

Originally Posted by terry57

Bangkok is OK innit as I hav'nt heard of any problems with condo developments going under.?

There are still many rusting, half-finished developments in Bkk with exposed concrete and rebar 10 years after the last economic collapse.

But it is nice to have one of these, at least it is more than just air.

Just have to cross his fingers and hope

Originally Posted by DrAndy

Just have to cross his fingers and hope

No thanks - I'm not one for gambling that kind of money.

Good luck to your mate Terry but personally I wouldn't buy any condo in Thailand until construction is complete. I think it's far too risky to do it the other way.

^ Me neither. I'd never pay for something sight unseen.

I'm amazed at the trust people exhibit when they buy homes and $50K cars on the e-bay without ever seeing them.

A smallish deposit, perhaps, but paid in full, nevah.

a mate of mine just got hit with this on a place in Ekkamai
paid off the plan, due to the credit crunch the b uilder cant get a loan to finish off
mates hoping it will be resolved

But the salesman with slick brochures assures you of the fantastic deal you're getting because you're putting the money up.

The builder has fcuk-all in the bank, no credit, and relies on you and others like you to provide the materials and labor costs to facilitate the construction real-time.

Not the kind of developer I'd want to deal with.

Its not the sort of thing I would do either.

Anyway, this dude is in his 20's so if it all goes tits up he's got the rest of his life to pay of his loan back in england.

Risky business. Hope it pans out for him. Bigger balls than I have.

Anybody who has been here 6 months and takes any notice of what is going on would never buy a paper condo. They survive to build the next one by conning people. People never learn...TP

^

I have friends that have bought established quality condo's and not a problem.

Do you have any stories off people that have bought quality established condos and been ripped off. ?

Serious question mate as I'd like to buy one.

Originally Posted by terry57

^

I have friends that have bought established quality condo's and not a problem.

Do you have any stories off people that have bought quality established condos and been ripped off. ?

Serious question mate as I'd like to buy one.

Fine. Wire me the dosh. I might build, I might not. Easy come, easy go...

It's generally referred to as "buying air".

Sometimes the air turns into a condo, sometimes it just stays air.