Premier slams Ontario developer that raised condo prices by $100K after cancelling sales deals
CBC
Premier Doug Ford on Monday criticized an Ontario developer that cancelled dozens of years-old sales deals with buyers of under-construction condo units — unless they agreed to pay more.
"Nothing burns me up more than that — some developer just trying to make extra money off the backs of hard-working people. Unacceptable," Ford said when asked at a news conference in Orillia, Ont., about the actions of Pace Developments, based in Richmond Hill.
"You signed a contract. You better … build that damn house."
Last week, CBC News reported on how the company suddenly cancelled pre-construction contracts with 70 buyers of walk-up condos at its Mapleview Developments, known as Urban North Townhomes, in Barrie, about 100 kilometres north of Toronto.
The buyers, who signed agreements between 2018 and 2020, were given the same two options in a letter sent by the developer — walk away with their deposits or buy back in for an additional $100,000. Some of the units are scheduled to be finished as early as April.
The company defended the move by pointing to the inflated costs of raw materials and labour related to the COVID-19 pandemic.
Earlier this year, a lumber shortage sent prices skyrocketing — adding to the cost of building homes — and although prices have recently come back down, many retailers and developers had already purchased lumber at the higher cost.
Ford said developers should bear the cost of price increases if they have already signed contracts and agreed to a final price.
"If [buyers] signed a contract and it's no fault of their own, but the prices have gone up in lumber ... that's the cost of doing business for the developer," Ford said.
He pledged to put an end to the practice "because it's totally unfair." Pace Developments didn't respond to a request for comment.
Most pre-construction contracts allow developers to cancel sales agreements, require more money and delay projects if there are "unavoidable" reasons, like a pandemic, according to experts CBC News spoke with. However, those experts haven't read the contracts in this specific case.
Audrey Loeb, a condo law expert with the firm Shibley Righton, said developers shouldn't have the power to unilaterally cancel contracts, and more regulations are needed to protect buyers.
"The notion ... that a developer should have the sole determinant of right to terminate an agreement — I have a little bit of difficulty with that," said Loeb. "I would like an independent agency to confirm the developer's position."
Loeb said Tarion, a non-profit agency that governs builders on behalf of the provincial government, should have the power to conduct independent reviews to determine if a developer is justified in unilaterally backing out of a contract.
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