So Now We Are Seeing the “Collateral Damage Affect” of Dealing With An Unethical Builder

With the horrendous workload that I (and two other dedicated volunteers in the community) have inherited upon finally getting our hands on some documentation at the “Turn Over Meeting” seven weeks ago, I’m finding it excessively difficult to keep my blog up to date, but as my blog actually is a running narrative of the abuse being handed out to consumers (“families” who have each put up more than a million dollars to purchase their “home” in good faith only to be deal with as shills in a game of “Three Card Monty“)!

The exploitation of these consumers is literally beyond belief and there has been simply nowhere for these consumers to turn, up until now!

Hopefully, Easter of 2017 is an event that will go down in Condoland history as the date that at least a legitimate initiative to install some level of consumer protection into this very slanted playing field.

But it’s not just these consumers that feel the negative effect of all of this exploitation.

I say exploitation because all of this is done for only one reason  . . . .  “money“, and lots of it.

This builder is not interested in “building luxury homes“, despite everything that their web site will promise you, and you can forget about counting on any integrity in their brochures and promotional material.

This builder has proven singularly focused on “money“, getting it and doing as little as possible, in an industry where they have demonstrated not knowledge, experience of skill at!

But they’ve been running all over Ontario buying up land with money from investors and deposits on upcoming pre-sale home projects (much like a Ponzi scheme actually).

This builder has proven themselves repeatedly to be untrustworthy in their business dealings.

I’ve been chronicling some of their outrageous behaviour here on simply charles.com for over a year now and my reporting is designed to form an educational and all encompassing Case Study on everything that is wrong in Condoland.

I’ve been preaching all of this for years but to deaf ears!

Finally, Minister of Government and Consumer Services has announced her commitment to address the mess that is Ontario’s Condoland!

Now, there’s a big task.

But today I want to address the collateral damage in all of this.

Neighbours surrounding this small parcel of land have been required to accept “a panoramic view of a disaster zone“.  If you’ve ever lived in the centre of a construction site you will know but if you haven’t, I’m afraid you will have difficulty relating to just how dirty, noisy and uncomfortable it is.

Well, t “his builder withhelda critical document that it should have attached to the agreement of purchase and sale (I would expect this to prove to be unlawful).

This document, (“Subdivision Agreement“) had consumer protective clause that restricted the builder from “imposing Occupancy” prior to certain conditions being met (postal boxes on site, sidewalks, curbs, fence, etc.).

Well, you guessed it!

This builder, having withheld this document from its buyers, applied for “building permits” on each house as it approached the exterior completion.   And somehow, the Municipality of the Town of Oakville (the Municipal Government) complied and issued Occupancy Permits, contrary to the Subdivision Agreement that it wrote and executed with the original developer.

Doesn’t all of this sound “criminal” to you?

This is the kind of stuff that got me to stop working for developers and introduce Buyer Agency to Ontario in 2000!  And I’ve been fighting every since, but making disappointingly little progress.

That is until now, as I’ve got to believe that Minister MacCharles may prove a beacon of hope for consumers in Ontario.

I understand that she doesn’t have a background in Condoland and I see that as a positive.

I have an abundance of that from both sides of the equation.

So a half dozen or so families had occupancy shoved down their throats by an unethical builder who withheld critical documents and no one even complained!

Well, that’s because they didn’t know about it!

The property management company that we just fired had the audacity to say to my two volunteer board members that “you are a part of the problem“!

I let him know in no uncertain terms that he was being offensive and inaccurate and that they were consumers not educated in matters of this nature and relied on the government to protect them (obviously a mistake in this instance).

So all the surrounding neighbouring property owners have been forced to have this panorama of dirt and debris for two years (despite the construction having been completed six months ago)!

This builder is so unprofessional that they don’t even clean up their ongoing mess (I’ve seen “union” construction sites kept amazingly clean!) but that’s because they use non-union workers.

Well actually this builder depends on union trades people doing this builder’s work on the trades people’s off hours, but then this builder doesn’t pay them, word goes out and they won’t come back to finish the job (this just happened with building the fence – the contractor did not get paid) or remedy deficiencies.

The contractors are angry with the builder but take it out on the owners.  The fence guy threatened to Lien all the owners homes (fundamentally blackmailing any owner trying to sell or get financing to either settle the builder’s debt for him to be able to sell and move on or have the deal fall apart)!

So, no we have the buyers being exploited and the neighbours and neighbourhood being exploited and now comes the ultimate punch line.

Last week I blogged about being threatened with a law suit for blogging (factually reporting on) “exposing” the horrendous exploitation of buyers in “Bronte Harbourside“.

I always know when a company is corrupt by how fast they get litigators snapping at my heels!

In this instance the company threatening to sue me, is the property management company (a huge multi-national “American” corporation involved in a highly refined consumer exploitation scheme) brought in by this builder, who admitted to not having had a contract with the builder until 2017 but who mysteriously had total control of our condo corporation’s bank accounts and funds!

They also admitted “taking two (2) years budgeted funds for property management ($35,000+)” despite having admitted to “not having done any work or supplied any services during that time period“.

Having volunteered to sit as President of our Board of Directors I’ve been burdened to deal with these unsavoury people!

So seven weeks ago we inherited our condo corporation but no funds were turned over nor were any meaningful documents and corporate records turned over (both a REQUIREMENTS UNDER THE CONDO ACT)!

Now all of the twine become unravelled, as this builder (undisclosed to buyers) “registered” the condo corporation before I even bought, did not disclose this fact (or I would have required a Status Certificate which would have disclosed “Liens“)!

Today the condo corporation is going into its third (3rd) year, despite absolutely nothing having gone on in 18 months!

When I say nothing, I mean “nothing“!

No corporate records!

No Performance Audit!

No Reserve Fund Study!

No Common Element Fees paid by Builder (owner of all units)

No Annual Audit

No corporate reporting

NOTHING!!!!

Now we volunteer board members are burdened to catch up on all this legally required administrative nightmare.

So, to try to get our community stabilized while this American multi-national property management company contemplates one day giving us back or money with which we handle the finances of our condo corporation and going forward, our board of directors was required to conclude to “reject” the third year Budget that required each owner’s monthly common element fees to increase to $187 from $116 (despite not reserve fund study having ever been done).

Our strategy was quite straight forward, why would be face 80% of our Annual Budget paying a property management company to manage our “Road“?

You see this condo is a common element condo (“POTL“) and relates ONLY to the roadway, sidewalk, street lights, etc., and has nothing to do with the homes.

This collection of 18 homes is in the words of the originator of the documents “best serve through self-management“.

Now we see a second layer of collateral damage.

Our board concluded, after studying the mess thoroughly, that our shareholders (the 18 owners) are best served “compartmentalizing the mess” by not addressing years 2015 and 2016 and simply starting at 2017 Budget Year and moving forward.

The board announced its conclusion yesterday and overnight received a Notice from an owner who is suing the builder that the “feel that the services set out in the purchase and sale documents have not been adequately delivered” (which I fully agree with) “and that their family is not prepared to pay any monthly maintenance fees” (which I, with all due respect to my neighbour, do not fully agree with although I see where they are coming from).

Don’t get me wrong, in my opinion morally and ethically, this Owner is absolutely right in calling out the egregious conduct and practices of this proven unethical builder (I’ve read their Pleadings in their law suit against him and I don’t blame them a bit for suing him)!

This builder made it very personal with these consumers/owners/buyers by repeatedly outright lying to them which is bad enough, but the builder also promised to remedy the many serious deficiencies of the new home “if the Owner closed on a certain date (volunteering to live in the centre of a dysfunctional builder’s patchwork construction site) saving him from impending bankruptcy“.

Like a bad “punchline to a joke“, the Owner gave the builder the money and Closed, and the builder  . . . .  never returned, or at least until the family served them Notice of Pending Litigation!

I applaud these buyers for standing up (fortunately knowing enough about law to be able to get around the multiplicity of legal protection built into the sale contracts) to the builder and I can fully understand the emotional turmoil introduced into this family’s life.

The buyers were given promise after promise, after promise, after having voluntarily stepped up and literally saved the builder from bankruptcy (if there was any truth to the plea at all) only to be slapped in the face!

I can understand why the ongoing law suit is so emotional for them  . . . . . after all it is their “home“!

That said, I fear that level of emotional anxiety has a tendency of spilling over, and that’s what I fear is happening here.

The one (and always the hardest) rule of real estate investing is “never get emotional“!

Don’t let yourself get emotionally charged or even connected to anything.  Always be ready to walk away and sometimes be ready to run!

When I’m assessing investments I follow the theory that “if it is meant to be it will be and if it is not meant to be  . .  then it won’t be”!

So, this owner whom I respect and am actually cheering for (in their law suit – I was served as they put a Lien on my property prior to my Closing) responded to our new board’s effort to keep our condo corporation in good financial standing with respect to corporate governance, and financially solid by announcing that “they would not agree to pay the originally stated monthly maintenance fees of $116 instead of the year 3 budgeted $187“!

This is where I say sometimes “emotion confuses logic” (and maybe even law).

I’m a simply guy  . . . .   thus “simplycharles.com”.

When we all bought in here, it was disclosed to us that maintaining our home here required each owner to contribute a monthly “common element fee” to cover the maintenance and upkeep of the road, curbs, lights, insurance and electricity for the lights.

That’s what a POTL (“Parcel Of Tied Lands“) or “Common Element Condominium” is.

And I fully agree with this dissenting owner, as the builder has done an insultingly good job of exploiting all of us buyers at every opportunity throughout the insulting two years since we bought here.

Don’t get me wrong, I’m quite satisfied with the property that I bought.  The location is better than ideal and exactly what we were looking for and the original Sub-contractor (“Jason Smith” a local contractor hired by this builder to oversee the building of these houses) knew how to build a “quality house”.  The only one associated with this builder that showed any level of knowledge skill or expertise in either building a house or business!

This builder and its directors proved to not have a clue about construction, let alone construction of high end houses.

They have proved masterful “marketers” (money does that) by presenting excellent credentials (but factually untruthful) on their web site to catch that 90% of buyers that try to do their own research online before buying a home.

This builder and pretty well everyone close to them have proven the “poster child for consumer exploitation” (you’ll want to read my upcoming Case Study that exposes all of this).

Their brochure on this site is the absolute antithesis to what their conduct has proven to be.

This builder has proven a classic “grab the money and run builder” (as referred to in the existing law suit referred to above) leaving damaged and exploited consumers in their wake.

Their promotional material proved guilty of “shortchanging by exclusion” (by not listing finishes the builder sells the concept of “luxury home” but gets away delivering ceramic tiles, laminate countertops, etc.).  You have to have my four decades of condo experience to discover all that is missing.

Thus the consumer buys one thing and receives a totally different thing but has no defence!

I feel legitimately bad for my neighbour as they litigate their way to getting what they feel they deserve.  Most buyers simply don’t.  They don’t have the finances or emotional capital to fight the fight that one has to fight to break even at this game.

But we can’t let emotion distort the reality on the ground.

The POTL, condo corporation and owners have operating costs, reserve fund contributions, insurance premiums to pay, electric bills to pay our street lights, etc., thus common element fees must be paid or owners are “punishing the messenger”.

Your condo corporation is “you“!

Your board is working to protect “your best interests”.

The two issues are independent of one another.

Pursuits of legal remedies against an unethical builder and meeting your contractually agreed upon monthly common element fees are simply two unrelated issues.

Respectfully, I would submit that should you, at any time (as an owner), feel that your monthly common element fees are inappropriate due to the builder having failed to deliver services that have not been delivered, then there is an arena in which that issue should be dealt, and in my opinion should be added to the existing damages plus interest already being sought in this instance.

Your condo board can do nothing to settle issues between owners and their builder especially once the builder has gotten their money which is the case here.

The only venue left for owners is the courts and that is very costly and risky especially realizing that the builder built in certain protective clauses in the contracts of purchase and sale entered into with each owner.

I’m hoping that given some time to reflect (hopefully having read this blog as I know they’ve followed me in the past) on the effect of their decision, this owner/neighbour will support the community by meeting the financial obligations going forward as they have lived here under the terms of these same contracts for some time now.

So now the damage is not limited to the owners (“consumers“) or even the owners of neighbouring properties, but now it stands to spread its ugly tentacles into the very community that is trying to form!

And, for the Record here is what the Condo Act says:

PART VI “OPERATION – COMMON EXPENSES”

Contribution of Owners

84.(1)  “Subject to the other provisions of this Act, the owners shall contribute to the common expenses in the proportion specified in the declaration“.

No avoidance  –

84.(3)   “An owner is not exempt from the obligation to contribute to the common expenses, even if,”

  (a)  the owner has waived or abandoned the right to use the common elements or part of them;

          (b)  the owner is making a claim against the corporation; or

          (c)  the declaration, by-laws or rules restrict the owner from using the common elements or    part of them.

85.(1)  “If an owner defaults in the obligation to contribute to the common expenses the corporation has a lien against the owner’s unit . . . . .

So, please understand that the paying of monthly common expenses as set out in your documents, is the financial life blood of your community and clearly the law (Condo Act) requires that they be paid NO MATTER WHAT!

I’m Charles

 

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