Thanks the condo gods, the Provincial government is finally stepping in to help clean up shady builder behavior.
We talked in last week’s 2016 Federal Budget review about how the Fed’s are using their agency’s like StatsCan and Canada Revenue to enact more control over Canadian real estate. This includes tracking foreign buyer data and cracking down on developer’s who dodge taxes. Now, Tarion (an agency of the Government of Ontario) has taken the first step in cracking down on the most notorious developer in the Toronto condo market – Urbancorp.
Tarion Plans to Revoke Urbancorp Membership
Tarion, the Provincial agency who administers the Tarion home warranty protection available to buyers of new Ontario condos and homes, have sent a notice of proposal outlining their intent to revoke Urbancorp’s membership – including all 17 companies under the Urbancorp umbrella – after receiving a record-number of buyer claims and complaints over what’s assumed to be a number of years.
This is not news to those of us in the industry but this is a precedent-setting move by Tarion. Urbancorp is, no surprise, appealing Tarion’s decision but things are not looking good for the mega developer who’s also rumored to be in major financial trouble. Tarion has reportedly put a freeze on their assets in the meantime.
Urbancorp has one of the worst reputation’s in the industry; there’s a reason why Urbancorp’s nickname among Realtors is Urban Crap. We’ve covered Urbancorp’s cancellation of a condo project last year where buyers were left in the lurch after the developer changed the project to an apartment rental after selling many condo units based off of the original plan. The buyer switch-a-roo at Kingsclub, pictured below, is just the tip of the iceberg.
Complaints against Urbancorp include everything from structural defects and sub-par finishes to horrendous customer service. Many Urbancorp customers have had trouble getting their deposits back after Urbancorp projects get cancelled or substantively altered and many more have had to make arguing with the developer a second job given the time and energy spent trying to get condo warranty claims filed.
But it’s not just the nature of complaints themselves that are so frightening, it’s the sheer volume. And for years the authorities, and the market, have seemed to just put up with it, letting developers skirt the issues by leveraging ridiculous legal clauses in pre-con contracts that always favour the builder.
While I’m deeply saddened for the thousands of condo buyers who’ve been snowed on pre-con purchases that failed to live up to promises made at time of purchase, I’m happy the tide is starting to turn in buyers’ favour.
This isn’t a case of “buyer beware”. It’s gone far beyond that. This is, in my opinion, a case of a company knowingly profiting off of blindsiding consumers. The government takes a strong stance and provides a plethora of information on consumer protection issues like unauthorized door-to-door furnace repairman and fake charity scams.
The activity of some developers is comparable to this in our opinion – selling dream condos for a ton of money upfront but delivering a mere shadow of the paper promise. But rather than costing consumers a few hundred or a few thousand dollars each, we’re talking tens of thousands or hundreds of thousands of dollars. And yet, not a lot has been done until now to regulate the industry, short of private class-action lawsuits that put yet more strain on buyers.
What to do if You’ve Already Purchased an Urbancorp Condo
If you’ve already been bit by Urbancorp, there’s further information for buyers of Urbancorp properties on the Tarion website and they’re welcoming calls at 1-877-982-7466.
Current Urbancorp projects include West Queen West Condos, pictured above, and the newly opened Epic on Triangle Park among many others. Note that when you search for condos on Condos.ca – whether re-sale or pre-construction – we always list the developer so you will be able to identify an Urbancorp project easily.
Should You Buy Pre-Construction From Another Developer?
We’ve talked for years about the dangers of buying pre-construction condos including the fact that they’re typically over-priced and rife with hidden fees, not to mention the huge amount of risk the buyer assumes versus buying a newer re-sale condo that you can get into, see and inspect.
15 years ago, there were deals to be had buying pre-con. Unfortunately, those days are long gone. Yet, many buyers are still stuck in the early-boom mindset. It is a totally different market now, folks.
It’s not that all developers are evil and that all pre-construction bad. But if we’ve said it once we’ve said it a thousand times – it just doesn’t make sense to buy a pre-construction condo in Toronto when there are thousands of comparable, new (many brand new, never lived in) condos for sale in Toronto. If you think pre-con is a great get rich quick scheme or that that fancy sales brochure means you’re getting something nicer than what already exists in the market, think again.
The only time pre-con makes sense is if you’re an end-user buyer (not an investor) who’s 100% sold on a particular neighbourhood where there aren’t very many, or any, re-sale condo options (there are ‘hoods in Toronto that are still condo-light). And you should be very confident that your lifestyle isn’t going to change for a good 6+ years and that the unit will be appropriate for you for some time to come.
It’s not just the 3-4 years of wait time you have to factor in when budget crunching, add another 3-4 years of living in the unit before you’re likely to turn a decent profit in re-sale. Again, this is because pre-con is generally overpriced by today’s market standards (so you’re paying tomorrow’s anticipated values, today, and not earning anything on your investment during the pre-sales and construction years). Sell pre-con as soon as doors open and you’ll likely lose money in this market.
If the above buyer profile sounds like you, then there are developers with a solid track record and excellent customer service that we can recommend. Reach out to one of our Condo Specialists or give us a call at 416.583.1660 if you’re considering pre-construction.
It doesn’t cost you anything more to bring your own Realtor to the table so don’t gamble on one of the biggest purchases of your life by going it alone. The agents at pre-con sales offices do not work for you. No matter how nice everyone seems, their goal is profit for the developers and themselves, not getting you a good deal and ensuring you don’t get snowed by legal loopholes.
Still not convinced that pre-con is an unwise investment in today’s market? Have a read of our post on the Top 10 Mistakes Buyers of Pre-Construction Condos Make.