When he put down a deposit on a pre-construction home with a master suite in a new development in Mississauga, Ontario, Jawed Yusuf thought about his dream of buying a home big enough for his family – and for his father comes to live with them from Pakistan – were finally coming true.
It’s been almost three years since he’s paid the money, but today the project has been canceled and the builder says he’s keeping his $150,000 deposit – unless Yusuf agrees to do not continue.
Meanwhile, he and his family have no new home to move into and his aging father remains in Pakistan.
“We’ve been planning this for so long,” Yusuf said in tears. “It’s an honor for us when our parents live with us.”
In 2019, Yusuf made a down payment on a home at Longview Ravine Estates – a 45-property development by Exquisite Bay Development Inc., also known as Bay Homes. The company pitched the site as a luxury development of detached and semi-detached homes backing onto a ravine in north Mississauga.
But the project went awry and last month Exquisite Bay sold the land to another developer.
The buyers told CBC News they were never informed of the sale or the fate of the project; instead, they received letters, dated April 11, 2022, from Exquisite Bay stating that they were in breach of their purchase contracts and that the company was keeping their deposits unless they agreed not to sue.
The letters contained no mention of the sale or cancellation of the project.
“It looks like they are holding our money hostage,” said Kerrese Predovich, who also signed in 2019 and expanded her family in hopes of moving into the new home.
“We feel like they’re holding our lives hostage. We’ve been waiting for three years.”
WATCH | Buyer Kerrese Predovich says she’s hurt by the builder’s handling of the project
CBC News spoke to half a dozen people who are part of a group of about 30 buyers who have banded together to try to figure out what to do next. While Exquisite Bay argued that all of the buyers breached their purchase agreements, the buyers disagree.
“Why do they blame us? What do we do ? How can we get another house? said Predovitch. “We are out of the market because we bought our house three years ago.”
In a statement, Exquisite Bay Chairman Ahmed Yousuf said the company was unable to proceed with the project “due to circumstances beyond its control, including maintenance delays, cost issues and the inability to sustain construction funding.”
“At the same time, all of the buyers were in default of the purchase agreements and, therefore, Exquisite Bay had no obligation to complete the sale transactions or return the deposits. In the circumstances, Exquisite Bay did not I had no choice but to cancel the project and sell the land to another developer,” Yousuf said.
Exquisite Bay says all buyers are in default of sale agreement
Yousuf said the vast majority of buyers in default of the sale agreement did so because they failed to provide the company with the proper mortgage commitment documentation.
The buyers said their financial documents had been approved by the company and its sales agents. They point out that the compromis de vente states that after the initial signing period, they had 14 days to provide supporting documentation upon request. But Exquisite Bay did not raise any issues with their funding until last month, they say, in the letter that ended their agreements – three years after they were signed and when the project had already stalled.
“It was really like a punch in the stomach,” Predovich said.
Yousuf, of Exquisite Bay, said other buyers are in default because they put their homes on the market, which also violated the purchase agreement. A couple received a letter from Exquisite Bay saying they had put their house up for rent online, but the couple said they had not tried to rent out the house – it was never built.
All buyers were told to contact the company’s attorney, and those who did were offered their down payment, plus six percent interest for each year, Yousuf said. But to receive it, buyers must sign an agreement pledging not to take legal action.
He also said some buyers had agreed to the terms.
But Predovich and Yusuf said they are weighing their options. They want the builder to “do the right thing” and return the deposit unconditionally.
“Our mental health and financial situation have been negatively affected, so I don’t plan on just agreeing to their terms,” Predovich said.
Construction delays drag on for years
Exquisite Bay began marketing Longview Ravine Estates in 2018 and, according to the company’s social media, construction was in full swing in January 2020, although it did not have all of its building permits at that time. The project sold in September 2020.
In March 2021, the company’s application to renew its builder’s and vendor’s license was denied, according to Ontario’s Home Construction Regulatory Authority (HCRA). UNHCR said it could not disclose the reason unless the matter was appealed, which Exquisite Bay did not.
Exquisite Bay did not respond to questions on file regarding its license.
Just weeks after its March 2021 license renewal was denied, the company sent a letter to buyers, extending their closing dates from July 2021 to November 2021. But November 1, 2021 has come and gone.
Next, Exquisite Bay sent a letter, dated November 9, 2021, saying that the servicing of the land was complete. This too promised buyers that construction would begin soon as the company was in the process of obtaining building permits.
“I was full of anxiety,” said buyer Afzal Chowdhury. He and his family had been walking past the site regularly over the past three years, eagerly waiting to see if any progress had been made.
“We really didn’t know what their plans were. We asked them many times and they kept giving us hope.”
Yousuf, in his statement to CBC News, said, “We are acting and have acted in good faith and honorably in a difficult situation.”
Better buyer protections desired
Mark Morris, a real estate lawyer who is not involved in the case, said pre-construction sales contracts are drawn up in favor of developers and buyers are “at the mercy” of their skill.
He said whichever party wins next month’s provincial election should introduce better buyer protection for pre-construction sales, including legislation that imposes a fixed purchase price and allows buyers to register their contract of sale on the land on which the property is supposed to be built.
“I want a government to step in and actually help the parties that are going ahead with the biggest purchases of their lives so they don’t end up in that exact scenario,” Morris said.
Exquisite Bay bought the land in Mississauga, Ont., for just over $21 million in 2018, real estate documents show, and sold it for $38 million to Vandyk Properties last month.
In a report, Vandyk’s vice president, general manager of real estate, Sherman Chan, said the company was keeping the project intact and not making any drastic changes.
He acknowledged that the buyers of Exquisite Bay were in a difficult situation and said Vandyk would seek to offer them an advanced opportunity to buy into his development, “in the hope of ensuring that they are heard and recognized. “.
But Yusuf, Predovich and Chowdury all said that even if they agreed to Exquisite Bay’s terms and got their deposit back, they probably couldn’t afford the new homes in today’s housing market.
All three said that while they understand that projects don’t always go to plan and costs can increase, they wished Exquisite Bay had been more transparent when things started to go wrong.
“Why didn’t the builder talk to all the buyers? Maybe there would have been a better solution than this,” Yusuf said.