A sold-out three-tower high-rise condominium project that promised to deliver units to the new Vaughan Metropolitan Centre is the latest in a string of cancelled condo projects, leaving more than 1,100 hopeful buyers in limbo.
Cosmos Condominiums was announced by Liberty Development Corporation in 2013, began pre-selling condo contracts in 2016 and was supposed to start delivering units in 2019. This week, buyers received letters from Liberty saying the project was “challenged” by “unsatisfactory financing terms” and cited early cancellation language in the contracts and said it would return buyer’s deposits.
At the time of its pre-sale offering period, Liberty sold 780 units in the first two towers in 25 days, according to real estate analysts at Altus Group. The project was later described as “sold out” of its 1,153 units on the company’s web pages, which have since been taken down.
It’s at least the ninth condo project to cancel in the last year in the Greater Toronto Area, well above the typical yearly average, according to condominium analysts at Urbanation. It’s also one of the largest developments in the region to vanish, compared with the 68-unit Kennedy Gardens in Scarborough (cancelled in January) or the 168-unit Museum Flats building (cancelled in October, 2017) in Toronto.
Still, it represents a tiny fraction of the total development plans in the region: at least 600 new residential projects are in various selling and planning stages across the GTA.
Developer pre-sale agreements are strong contracts that typically allow them to cancel projects with few penalties and no obligations to former buyers if a project restarts later.
“We have recently learned that because of circumstances beyond our control and Liberty’s best intention, our project, Cosmos Condominiums, has been challenged,” reads the letter, signed by Liberty director of sales and marketing Shawn Richardson. “At this time, financing for the project on terms satisfactory to the Vendor cannot be arranged … It will force the project vendor to now cancel all Agreements of Purchase and Sale.”
The “vendor” in this case is the owner of the land, which is a numbered company: 1945086 Ontario Inc. Liberty spokespeople would not confirm the owner of 1945086 Ontario Inc., but the company is registered at the same 1 Steelcase Rd. address as Liberty Development Corp. and lists Feyedoon (Fred) Darvish as its president. Mr. Darvish is also the president and founder of Liberty.
Mr. Richardson, Mr. Darvish and CEO Latif Fazel did not respond to interview requests. In a statement, the company repeated its explanation from buyer’s letters.
The company didn’t explain what went wrong with the financing, but conditions for builders have changed significantly in the last 24 months.
When Cosmos launched in 2016, it was selling units for about $540 per square foot, according to Urbanation. More recent projects launched in Vaughan were able to fetch more than $700 per square foot, close to a 30-per-cent increase.
Construction costs have also been rising rapidly in the last 18 months, particularly among critical concrete-forming and window suppliers in the region, who are charging 30 to 50 per cent more than they were asking in 2016.
“It would be nice if the builders had a little more consequence to their actions,” said Santino Paglia, 33, a teacher who purchased a one-bedroom unit for him and his partner when the project first went up for sale in 2016. He was projected to pay about $280,000 after providing Liberty with a 20-per-cent deposit and proof of pre-approved financing. “I signed the contract, I knew what it was, but at the end of the day it would be tough for me to trust them again for another purchase.”
The buildings were to be erected on the corner of Highway 7 and Maplecrete Road, and units were priced between the mid-$200,000s and just under a million dollars.