rfmcdonald | [URBAN NOTE] "The tale of a failed Toronto condo project raises red flags" (Reply)

MacLean's Chris Sorenson writes about a very problematic condo development in Toronto.

With Toronto’s condo market still running on a full boil, it was only a matter of time before some unlucky buyers got burned.

CityNews reported Friday that Centrust, the developer behind a proposed hotel and condo project north of Toronto’s busy Highway 401, has allegedly skipped town with roughly $12 million in buyers’ cash. The story is still unravelling, but it appears the units first went up for sale in 2010, and Centrust later filed for bankruptcy without telling any of the purchasers. Now the company’s principals can’t be located, with some speculating they’ve left for Korea. All that remains is an empty lot and a bunch of angry people.

While real estate deposits are typically held in a trust account, at least one of the developer’s lawyers has also filed for bankruptcy. Police are investigating, although it’s unlikely the buyers will get their money back—at least not all of it. Buyers put down anywhere from $20,000 for condo units (the maximum covered by Ontario’s new home warranty corporation, Tarion) to $600,000 for commercial space.

The debacle should be a red flag for anyone eager to jump into the frothy condo market in cities like Vancouver, Calgary and Toronto, where gleaming new projects with tantalizing amenities—juice bars, splash pools—seem to pop up every week. All that money sloshing around is bound to attract inexperienced and, possibly, unscrupulous operators, with many experts saying the industry largely remains a “wild west” in Ontario when it comes to regulation.