Mid-summer updates

This tweet caught me eye.

Condo board has residents living in fear of legal letters, say overnight guests policed by board

One owner at 135 Hillcrest Ave. compares rules to ‘correctional facility’

CBC News Toronto
Sarah MacMillan
24 July 2024

Richelle Komes's first warning from management at her Mississauga, Ont., condominium came in February 2023. 

The issue: Komes had allowed a visitor — her cousin — to stay overnight in her home, and park in her underground parking spot.

"[Y]our visitor appeared to be intoxicated which is [a] danger to the public safety and to the other residents in the building," read the letter from the condo's on-site manager.

Komes insists her cousin was not drunk. She also said her cousin was only in a public space while walking to her unit.

Komes said she wasn't aware of any visitor restrictions, and when she asked management for a copy of the rule, it wasn't provided.

The building does now have a visitor restriction in place, requiring permission from the property manager or board of directors for any guest staying overnight for more than one night per month. However, the rule didn't come into effect until July 2023 — five months after Komes's cousin came to visit.

"After I received that first letter in February, I felt scared and I felt alone. I didn't know what to do," said Komes, who bought her two-bedroom condo in 2022.

Those feelings have only escalated since then, she says.

She's one of more than a dozen owners at 135 Hillcrest Ave. who are raising concerns about how the building is run. Many say they fear harassment and intimidation from the condo's board and management, due to the condo corporation's frequent use of legal warnings, which the owners say serve to silence them.

CBC has reviewed legal letters sent to seven of those owners on behalf of the corporation over the past several years, for alleged issues ranging from harassment to violation of rules, spreading gossip, noise complaints and derogatory comments. In each case, the board also ordered the owner to pay for the legal costs associated with sending the letter to them.

While boards are tasked with protecting their condo corporation, she said, "that does not mean protect them by contacting a lawyer every time you turn around and sending out legal letters. It creates more adversity in the building."

Board president Ismael Jirby, building management and their lawyer have not responded to CBC's emails and phone calls.

Owners on the hook for legal fees

The February 2023 letter was just the start of Komes's friction with the condo's board and management.

This April, Komes received a letter from the corporation's lawyer, saying she had made "defamatory" comments about the corporation and a company it had hired for HVAC work. It said her conduct amounted to "workplace harassment."

The letter, from a lawyer with Elia Associates, also appeared to reference the February 2023 incident — saying Komes had violated the condo corporation's rules by allowing a visitor "who appeared to be intoxicated" to stay overnight.

"I was frustrated, and I was outraged because everything listed in the letter was untrue," she said.

Letters allege gossip, harassment

Last year, Arpil Dedhia and Dhawani Shah, also owners at 135 Hillcrest Ave., got into a legal dispute over blinds that apparently did not comply with rules about the style of window coverings — despite appearing to meet the written requirements specified in the corporation's bylaws.

Another owner there, Raulson Sequeira, received a letter in January this year saying he had argued with staff, spread gossip and made unfounded allegations. It also said he had "accosted" other residents. Sequeira vehemently denies those claims, and has refused to pay the legal fees he's been charged.

In addition to that letter, Sequeira received three noise complaints in February and March this year, one of which stated his daughter was running in a hallway.

Sequeira requested relevant records, including the security footage from the seventh-floor hallway where his daughter was allegedly running and "causing a considerable amount of noise" the evening of Feb. 24. The board's response states "no such records exist."

Sequeira said he felt "targeted," since the letters began after he raised concerns about certain issues, including the building's restrictive visitor policy, and the corporation's involvement in lawsuits.

"I feel sad about it because you know this was supposed to be a dream home," Sequeira said.

"This is our first-time home that we bought."

Efforts to address concerns

Audrey Loeb, a partner with Shibley Righton LLP in Toronto who practises condominium law, said there are times when people "don't realize" their behaviour has become problematic.

"They think they're being totally reasonable and they think they're being fine, but they can be hard on management, they can be highly critical of the board of directors," she said.

"It can cross a line from being inquisitive or inquiring, to actually being the kind of conduct where it goes on and on and on, and it becomes harassing."

Loeb has not reviewed the correspondence between management and the owners at 135 Hillcrest. In cases where owners do need to "stand up" to their board, she suggested hiring a lawyer to help navigate the Condominium Act.

Komes said since last fall, she has contacted the Condominium Authority of Ontario several times to seek advice, and has also contacted the Condominium Management Regulatory Authority of Ontario. She said she doesn't have the funds to hire a lawyer.

Condo owners can also take some issues to the Condominium Authority Tribunal, which has jurisdiction over certain issues, like nuisances from noise or smoking.

In an email to CBC, Ontario's Ministry of Public and Business Service Delivery said it is considering expanding the jurisdiction of the tribunal.

"The government recognizes the importance of providing condo communities with more opportunities to resolve certain internal disputes faster and more affordably, outside of the traditional court system," said spokesperson Matteo Guinci.

In May, Sequeira contacted a mediation facilitator at the Dixie Bloor Neighbourhood Centre, which offers the service for free to help resolve neighbourhood disputes. The facilitator has twice contacted the board president and management to request a meeting, but has not received a response.

'It's not a correctional facility'

The owners who are raising concerns believe the key issues lie with the leadership of the board.

"They need to manage the building as a big house. It's a big house with 341 rooms. It's not a correctional facility," said Steve Moran, a condo owner in the building who won $50,000 in legal costs and damages from the corporation in 2022.

A judge ruled the condo failed to make "reasonable" accommodations to allow him to renovate his unit.

135 Hillcrest Ave. is run by a three-person board, with one position coming up for election each year. Owners can also requisition a meeting where they can vote to remove a board member. Calling such a meeting requires signatures from at least 15 per cent of owners.

But some owners say communicating with their neighbours and collecting those signatures isn't easy, since they feel monitored both in the building's hallways and within a WhatsApp group for the condo community.

And they fear being hit with more legal letters — and associated fees.

The management company is Ace Corporation Management.

Google Reviews for this condo

They are not great.

When owners get into a dispute with their Board, most often the owners lose and the lost can be extremely expensive. Best defence? Read this chapter in CondoMadness:
https://condomadness.info/challenge_board.html

It is a few years old now but it still has very good advice.

Beating the busybodies: Florida gets rid of fines

13 June 2024

Florida is clamping down on HOA Karens—and not a day too soon. For years, homeowners associations (or HOAs) have terrorized Floridians, threatening to sue people over decorative garage door hinges and trying to force war veterans to give up their service dogs. Some have attempted to foreclose on families for being late on fees, even after they paid. Some outright steal money from residents.

But now, a new law—recently signed by Governor Ron DeSantis, and going into effect July 1—will finally limit the powers of the HOA.

House Bill 1203 bans HOAs from fining residents for petty infractions, like leaving their garbage cans out past trash day, or failing to remove holiday decorations (unless they refuse to take them down a week after being given notice). Additionally, HOAs can no longer prohibit residents from parking their vehicles on. . . their own property. Or tell people how they can and can’t decorate the interior of. . . their own homes. Glad we spelled this one out. 

The law also requires HOAs to be more transparent. Any association with more than 100 “parcels”—essentially, units—has to post all of its rules as well as its budget on its website. Is it insane that these weren’t rules before? Yes. But better late than never!

E-bike fires

I know I harp on this issue but it is very important. Battery operated vacuum cleaners also can catch on fire. Best advice is not to use cheap replacement batteries.

South Florida condo owners are dumping their homes after getting slapped with six-figure special assessments

Moneywise
Serah Louis
15 June 2024

Maria Tkachun and her husband shelled out $490,000 for a seventh-floor apartment with a terrace and balcony boasting incredible views of South Florida’s Biscayne Bay in 2022.

The couple coughed up an additional $100,000 to renovate their unit in the Cricket Club condominium tower, installing extra-large format Italian porcelain tiles and adding a marble countertop and island to the kitchen.

Two years later, the pair got hit with a six-figure special assessment — a charge that condo owners and homeowners in HOA communities must pay to either finance a renovation on the property or to replenish an underfunded reserve.

“This is just outrageous,” Tkachun told The Wall Street Journal (WSJ).

Florida condo associations are hiking fees to meet safety standards

Following the 2021 Surfside condo collapse — which killed 98 people due to construction flaws — Florida is requiring stricter safety standards and more frequent inspections, while many condo associations are raising fees to build a larger reserve for repairs.

The Cricket Club’s condo board recently proposed a nearly $30 million special assessment for repairs, like roof replacement and facade waterproofing — coming to more than $134,000 per unit owner.

Some owners, like Ivan Rodriguez, who liquidated his 401(k) retirement account to buy a unit for $190,000 in 2019, can’t afford the extra fees, so they’re putting up their condos for sale instead.

The WSJ reported condo inventory for sale in South Florida has more than doubled since the first quarter of 2023, to more than 18,000 units today, due to either rising insurance costs or repair fees for older buildings that aren’t passing inspections.

“I think this is just the beginning,” Greg Main-Baillie, an executive managing director at real estate firm Colliers, told the WSJ.

But sellers are finding few takers. Rodriguez originally listed his unit for $350,000, but was forced to keep marking it down until finally it sold for $110,000 in April — 42% less than what he paid for it.

Fort Myers real estate agent Claudia Springgay told NBC2 she’s also seen 1,000 more condos on the market this May compared to last year, pointing to higher association fees that have “increased somewhere between 20% and 25% on average.”

“People have become very nervous about the fact they're buying a condo and getting hit with another assessment, and there are pending assessments, and sometimes they go to the new buyer,” added another Fort Myers agent, Sue Christiano.

Read more: Rich young Americans have lost confidence in the stock market — and are betting on these assets instead. Get in now for strong long-term tailwinds

How you can avoid getting sprung with a large special assessment

Many older condo buildings in Florida have gotten away with waiving reserve funding for years — until new laws led them to ramp up fees for unit owners to ensure these buildings can adequately cover the costs of maintenance and repairs.

Tkachun said the first red flag was when banks refused to give her and her husband a mortgage for the condo unless they made a 25% down payment since the building had no reserves.

It’s important to consider whether your HOA’s reserve fund is equipped to cover repairs and maintenance or unexpected expenses before you purchase the property.

You can also try to file a complaint with your board when you receive a special assessment — if you have support from other homeowners in your building or community. However, this typically only works if you can prove the assessment is too high or isn’t funding a project that is necessary for health and safety reasons (like adding a pool, for example).

At the Cricket Club, residents say the special assessments have created resentment among unit owners who are willing to shell out the funds and move on and those who can’t afford the costs and are forced to sell. Some folks are gathering documentation to try and find evidence the fees should be lower.

Just a Florida problem? No. If your condo corporation has been skipping on required renovations and the Reserves are low, you too can face huge Special Assessments.

I know of a condo director who sold his unit because although there was $2 million in the Reserves, he read the engineering reports (Reserve Fund Studies) and knew that the 90 unit building needed over $9 million in repairs. It was time to go.

Tenant from Hell Causes $30,000 in Rental Unit Damages

Caught in Guelph
June 5th, 2024

A Guelph man has been arrested after allegedly causing more than $30,000 in damage to his rental unit.

Tuesday afternoon police were called to an address near Woolwich Street and Norfolk Street. A contractor had attended the apartment unit and called the owner after observing significant damage throughout.

Officers were invited inside and noted many holes in walls, spray paint on almost every wall, cupboards smashed to pieces and appliances damaged and rendered inoperable.

A 24-year-old Guelph man was arrested for mischief over $5,000. He will appear in court July 19.

Renting is risky whether it be a rental or a condo apartment.

I was talking with a Realtor in Toronto. His client rented out his unit to a renter who brought bedbugs into the downtown apartment. The client finally moved which thrilled the property manager until she heard that the renter was moving into another unit on a different floor.

Buyers of GTA development uncertain as it enters receivership

More than 1,000 condo, townhome units planned at Urban North Townhomes project near GO station in Barrie, Ont.

CBC News
Patrick Jones
05 May 2024

Buyers who have been waiting years to move into homes at a pre-construction development north of Toronto are facing more uncertainty and delays, after the project was placed into receivership earlier this year.

Operating as Mapleview Developments, Richmond Hill-based Pace Developments was building more than 1,000 condos and townhomes in six phases on 20 hectares of land across from the Barrie South GO station, near the intersection of Yonge Street and Mapleview Drive E., about 100 kilometres north of Toronto.

But the future of the partially-completed Urban North Townhomes project, which first went up for sale in 2018, is now up in the air.

"I feel betrayed," said Melenie Chan, who paid a $25,000 deposit after signing a sales agreement for a two-bedroom unit in September 2018. 

"It's just sickening that they can take my money ... I feel like I can't do anything."

The project is the latest Ontario residential development to enter receivership — a court-led process secured lenders can use to recover costs from assets, usually through a sale — as some developers struggle to complete projects amid elevated interest rates, high construction costs and a slower real estate market.

10s of millions of outstanding loans

A judge from the Ontario Superior Court of Justice appointed KSV Advisory in March to take control of the project, following an application by one of its lenders, KingSett Mortgage Corporation, claiming the developers have missed payments and it's owed more than $47 million plus interest.

Dino Sciavilla and Yvonne Sciavilla, both directors of Mapleview Developments and Pace Developments, are listed as guarantors of the loan, according to court records and the Home Construction Regulatory Authority (HCRA), which regulates home builders in Ontario.

"The applicant has lost all confidence in the debtors' management ... specifically due to their significant debt load and dire liquidity issues," lawyers for Kingsett argued in their application. 

In addition to at least three other lenders, who are also owed millions of dollars, 10 construction liens have been registered against the property, with the largest held by Condrain Group for more than $4 million.

Kingsett argued the appointment of a receiver would "provide the most effective and appropriate method of effecting an orderly, efficient, and transparent sale of the property."

Pace Developments didn't respond to requests for comment CBC Toronto sent via email and phone.

Buyers waiting

Chan said she and her husband bought the home for their son to move into after he graduated high school.

Their sales agreement identified the first possible move-in date as July 2021 and the last possible date as October 2023, although Chan says the closing date has been pushed back multiple times, with the latest being July 2024.

"We wanted to give generational wealth to our kids," Chan said. "We wanted to be able to secure something for them so in the future they're not struggling like how we did, you know, and it's so upsetting because I feel like we can't get there."

Chan said it's now unclear when, or if, she'll get the home, whether her sales agreement will be honoured or if she'll have to pay more to hang on to the unit.

Anna Mutetwa signed a sales agreement for a condo in August 2019, with an estimated closing date of October 2022. She said it took all of the savings she had to put down the $25,000 deposit. She planned to move in with her kids, but instead she's still renting.

"I've missed out on the pride of ownership. I've missed out on building equity. I've missed out on giving a stable home for my children," Mutetwa said. "I think there should be laws and regulations that regulates these developers, and they should be financially transparent every step of the way."

'No action has been taken'

In a notice to home buyers published in April, KSV Advisory said it's currently reviewing the status of the project.

KSV said sales already closed for 264 of 311 units in the first two phases, while the remaining 47 units are partially complete. There are "a number" of pre-sales for phases three and four, the receiver said, although it didn't identify how many. Construction hasn't begun on the final four phases, KSV said.

"At present, no action has been taken ... with respect to the project completion or any purchase agreements," the notice reads.

"The purchase agreements remain in full force and effect, subject to the terms of the receivership order."

Mark Morris, a real estate lawyer with LegalClosing.ca, said there's not much buyers waiting to take possession can do other than wait to see how the receivership process plays out.

The options available to the receiver include cancelling existing sales agreements and then selling the project to a new developer, Morris said.

But because of the amount of money already invested and tepid demand for new builds, Morris said the receiver might decide that the best way to maximize value for the lenders is to honour the existing sales agreements and appoint a general contractor to finish the project.

"What I think will happen in this case is that — the sunk costs having already been largely absorbed — these contracts will be completed regardless of how and by who," Morris said.

"They'll be completed to the standard of the Ontario Building Code and the purchasers will be forced into a closing position, though it will be delayed."

KSV Advisory didn't respond to a request for comment.

HCRA takes disciplinary action

CBC Toronto previously reported on this development in 2021, when Mapleview Developments sent letters to some 70 Phase 1 buyers, saying it planned to cancel their sales agreements unless the buyers paid an additional $100,000. The developer cited challenges related to the COVID-19 pandemic as its justification.

The ensuing controversy prompted criticism from Premier Doug Ford and an investigation by the HCRA.

"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 at the time.

"You signed a contract. You better … build that damn house."

In November 2023, the HCRA referred Mapleview Developments to its disciplinary committee, alleging the company "unlawfully terminated dozens of agreements of purchase and sale ... and misled 33 purchasers to unethically extract over $3 million from them."

HCRA alleged Mapleview altered 20 of 35 sales agreements it provided to the regulator to make it appear as if the cancellations and price increases were lawful and allowed by the agreements. 

A date for the HCRA disciplinary hearing hasn't been set.

The value of luxury condo “The One” is now about half its asking price. What happens if no one wants to buy it?

Toronto Star
Ana-Pereira
June 25, 2024

Some are now saying it’s possible the senior lender for the project could take over — and at least some buyers will see their condo purchase contracts torn up.

The One is an 85-storey behemoth under construction at the corner of Yonge and Bloor streets in Toronto. If it had been built to the 91 floors Mizrahi Developments envisioned, it would have been the ninth tallest mixed-use building in North America.

Troubled Toronto condo project The One — an unfinished 85-storey luxury tower being built at the corner of Yonge and Bloor streets — seems to be heading for even more turbulence.

In October, the building went into receivership and four months later, its original developer, Sam Mizrahi, was pushed out. Now receiver Alvarez & Marsal is trying to sell it, but industry insiders tell the Star that it’s unlikely a buyer will emerge, as the current asking price is about double what the development is actually worth.

Some are now saying it’s possible that the senior lender for the project, KEB Hana Bank, will end up taking over and at least some buyers will see their contracts torn up — as per a precedent set in previous receivership cases — so their units can be resold at a higher price.

The One’s current market value, based on publicly available information including land value, is around $600 million at most, according to commercial real estate sources. That’s just half of the minimum $1.2-billion bid set by its senior secured lenders, who, according to court documents filed by Alvarez & Marsal, “will not support any transaction proposal” below that value.

If the project doesn’t sell by October, KEB Hana Bank said it is committed to financing construction to completion, with the hope of recouping part of its approximate $1.5-billion loan with revenue from unit sales and the commercial component of the building, which includes a hotel and retail space. The receiver said the creditors have been engaging in “preliminary discussions” with potential developers and that it expects the project will be completed in the second half of 2027.

300 buyers

But for the more than 300 buyers who invested in the luxury condos, it remains unclear whether their agreements of purchase and sale (APS) will be voided by whomever ends up holding the tower. While it would make sense for the new owner to tear up some of the contracts, as the value of the project is expected to surpass the revenues of the condos sold almost a decade ago, it would then have to resell most units at current prices. And with Toronto’s condo market experiencing a slump in sales, that’s no simple feat.

“This is happening amidst the worst market in Canadian history for new construction,” said Simeon Papailias, broker at Royal LePage, who sold some of the units at The One.

“There’s simply no way, given the current environment, that they can possibly honour those APS (contracts),” he said. “You can’t sell anything because of the interest rates. It just cannot work — the cost is too high to build, and this project specifically is at the centre of it all.”

As of May, the GTA had the highest number of condos for sale since October 2020, with 8,183 apartment units on the market. Meanwhile, investors have been wary of buying pre-construction, with sales dropping 74 per cent this year compared with the 10-year average, according to commercial real estate consultant Altus.

Development land transactions are also on track to hit decade lows, said Jeremiah Shamess, founder of the Colliers Private Capital Investment Group, since “developers don’t buy land when they can’t sell condos.” This, along with the price tag, worsens the likelihood of The One finding a buyer by the fall.

“It used to take roughly one month to six months to sell a project. Now we’re hearing that the sales velocity is closer to one year to two years,” Shamess said.

To arrive at the $600-million figure, industry sources used Altus’ cost guide as well as the building’s approved density of 922,079 square feet for 95 storeys above grade to calculate development costs to date. So far, The One has reached 57 floors out of a cap of 85, with 553,247 square feet above grade and 131,210 below grade already built.

Calculations show that The One's market value based on publicly available information of land costs to date is around $600 million, or half of the asking price.

ABOVE GRADE COSTS = $271,091,226 for 553,247 square feet
BELOW GRADE COSTS for 131,210 square feet $28,866,200
GRAND TOTAL $603,745,125

TOTAL SOFT COSTS = $200 per square foot (estimated) $136,891,400
LAND COSTS 922,079 square feet x $181 per buildable square foot = $166,896,299

*Soft costs: construction loans, consultants, zoning costs, marketing, construction management and development management costs.

Note: Altus cost guide has residential hard costs for construction at $490 per square foot. Below grade costs at $220 per square foot for a premium with unusual parking garages. Land costs estimated based on the last downtown land site that sold close to a subway for $181 per zoned buildable square foot.

 (The $600-million is an estimate based on available information. To determine the true market value of the building, the Star would need more details on presales revenues, unsold inventory status and remaining costs to complete.)

Earlier this month, court-appointed receiver Alvarez & Marsal announced that it selected commercial real estate broker Jones Lang LaSalle Real Estate Services (JLL) to market the sale of the tower. Alvarez & Marsal and JLL did not respond to the Star’s requests for comment.

This is the final step of the tumultuous receivership process started by senior secured lender KEB Hana Bank last October after the development corporation co-owned by developer Sam Mizrahi and paving tycoon Jenny Coco failed to make payments as scheduled. Since then, Mizrahi Developments has been removed from the project based on allegations of mismanagement, including budget failures, contracting problems and serial delays.

The receiver also said that it will add 88 units to the upper floors of the project by breaking down larger ones due to “an extremely limited market for units of the size” — making the new total 503 apartments.

In the event that the contracts are cancelled, condo purchasers would get their deposits back, which have been held in trust and are insured by Tarion. They also might be able to sue the development corporation for damages if they can prove that they suffered a loss and that there was a breach of contract, said Steven Graff, financial services lawyer at Aird & Berlis. However, it’s unlikely that they will get any money from a lawsuit, he said.

”(The company) would have to have generated enough money to pay off all of the secured creditors ahead of that purchaser. The reality is there will be nothing available to satisfy the pool of claims that purchasers might have for the breach of contract arising from their units being disclaimed,” Graff said.

While most buyers are disgruntled by the project’s mounting delays and litigation, and many just want their deposits back, they still stand to lose from what could’ve been a great investment, said Papailias.

“People would love to have their units honoured. They bought some of the best real estate in the country for (an amount that won’t) even buy a condo in North York anymore.