The Macchiusi Sales Team Weiss Realty Ltd. Real Estate Brokerage 647-800-5201 The Rose Macchiusi Sales Team
The Macchiusi Sales Team, Weiss Realty Ltd Brokerage (2022)
A lawyer for buyers in the cancelled Cosmos condos in Vaughan has asked an Ontario court to rule against “unlawful contracts” that allow developers to kill projects if they don’t consider the financing conditions satisfactory without disclosing what those conditions are.
Justice Michael Penny reserved judgment on Tuesday following arguments that centred on the contract language in the purchase agreements signed by buyers in Liberty Developments’ Cosmos condos in 2016.
Two years after purchasing units in the Cosmos condos project near Vaughan Metroplitan Centre, buyers received refunds and letters telling them the project had been cancelled “solely due to the inability to secure satisfactory construction financing.”
About 40 buyers, who turned up to witness the court proceedings, wore stickers proclaiming, “Liberty for none.”
The Tarion Addendum -- the standard form attached to condo purchase agreements that sets out schedules, occupancy dates and conditions for terminating a project -- allows vendors to cancel if they are unable to secure satisfactory financing. But it does not require them to provide details on what comprises “satisfactory.”
The Cosmos agreements, signed during a frenzied period of real estate buying in the Toronto region, also included a clause giving the vendors “sole, absolute and unfettered discretion” to cancel -- something the buyers’ lawyer said undermines the purpose of the Tarion consumer protection legislation.
“Satisfactory financing and unfettered discretion are two different things,” Ted Charney, who represents 451 Cosmos buyers, told an Ontario Court of Justice.
The condo buyers purchased units near the Vaughan Metropolitan Centre in 2016, a period of skyrocketing prices in the Toronto-area real estate market. Two years later they received refunds and letters telling them the project had been cancelled “solely due to the inability to secure satisfactory construction financing.”
The letter blamed the decision on the project’s vendors, numbered companies that own the land on the southwest corner of Hwy. 7 and Maplecrete Rd. Those companies share the same Markham address as Liberty Developments.
“To have these projects cancelled is life changing for these purchasers,” Charney told the court.
“This is an agreement that affects thousands of people , hundreds of thousands of dollars,” he said.
But if builders couldn’t cancel projects for financing reasons they might be tempted to cut corners or fail to complete the building, which wouldn’t be good for homebuyers either, said the vendors’ lawyer Monique Jilesen. The cancellation for financial reasons is among those permitted by builder regulator Tarion, she said.
There is nothing in the Tarion legislation that provides purchasers such as the Cosmos buyers to be compensated for lost market appreciation when a developer cancels a project for unsatisfactory financing reasons, according to court documents filed by the vendors.
“This is not the kind of case , where the parties entered into the agreement with an evil intention,” Jilesen told the court.
Condo buyer Cecilia Yung and her parents bought two Cosmos units to be closer to her brother in Vaughan. The family has been stuck since the project was cancelled without enough money to find comparable homes, she said.
Yung said the case shows, “There is a lot to be improved upon the Tarion agreements and forms. Something has to be done.”
“There are a number of cancellation projects coming up after Cosmos is cancelled. Obviously something is missing in the system that isn’t providing enough protection to the consumers,” she said.
The Macchiusi Sales Team - Weiss Realty Ltd. Real Estate Brokerage (2022)