Almost 200 buyers of presale condominiums in a Scarborough project still don’t know what will become of their money or the homes they agreed to purchase from Forme Development Group Inc., which filed for creditor protection late last year.
The court-appointed monitor, KSV Kofman Inc., has issued a status update on the company that states 119 condominium apartment and 69 townhouse purchasers put down $5.7-million in deposits for units at the proposed project at 250 Danforth Road. Construction was never started, and now the company’s creditors are seeking to be repaid more than $220-million in loans and mortgages, putting the future of the development referred to as Danforth Square in doubt.
“I go every day past, always thinking this week is the week they will start. I was a little bit doubtful that something is going wrong,” said Mohammad Zahurul Haq, who purchased two Danforth Square units in August, 2016, putting down close to $100,000 in deposits. “Now with this money I cannot do anything, three years before if I invest somewhere else maybe, but same-size units now are much more expensive.
“Now really I am very worried about my future. I worked to buy a house to protect my retirement.”
A letter to the buyers sent by KSV in early February – informing them the property was for sale – was for many the first time they were made aware the project was in trouble. The buyers are stuck because while Forme cannot begin construction on the condos, the presale contracts have not yet been cancelled.
The property is currently listed for sale, one of seven lots purchased by Forme in recent years that TD Cornerstone Commercial Realty Inc. has now been retained to sell in order to begin paying back Forme’s many creditors. Offers on the property must be submitted by March 27, 2019. “At the conclusion of the sale process, the monitor will advise on the status of your agreement and, if required, the process that will be carried out for the return of deposit,” KSV wrote.
In court filings, KSV expressed doubt that the units will ever be built. “At this time, it cannot be determined if a buyer of the project will assume the purchase contracts for the units. If the purchase agreements are not acquired, the monitor will seek an order of the court to return the deposits to the purchasers,” the company wrote in a motion filed in the course of the bankruptcy proceeding. The deposits are not gone, just frozen while the court process plays out; they are being held in trust by the law office of Miller Thompson LLP.
Previous filings by KSV say the land at 250 Danforth Road was purchased for $7.3-million in 2014, and now has an appraised value of $32.2-million. About $20.3-million in mortgage debt is attached to the property, including about $8.3-million that was raised from a syndicated mortgage company called Syndicate Mortage.
Yingguo Ai, of Brantford, Ont. is one of the dozens of unsecured creditors in the syndicated mortgage pool and he worries he and his fellow lenders will not be fully repaid in the process. “I put my RRSP and [my] wife’s together, $300,000, my wife and me together. That’s my retirement income, if lost I couldn’t get back that money for [the] rest of my life,” he said.
Yuan Hua (Mike) Wang, the founder and chief executive officer of Forme, has not responded to requests for comment.
Mr. Wang had spent close to $154-million since 2014 assembling and buying land for about 18 real estate projects spread across 30 companies located in Niagara Falls, Markham, Aurora, Toronto and elsewhere. KSV’s appraised value for the portfolio he assembled before running out of cash was close to $354-million.
Mr. Haq, 61, came to Canada in 2006 and has scrimped and saved, working two jobs, to purchased contracts for two two-bedroom condominium apartments, 700 and 800 square feet. He intended them for himself and his wife and also possibly for his two children, both of whom have finished university in Canada.
He was drawn to the projects because they are close to a mosque he attends. He says agents at the development’s sales centre told him that his was the last unit available. Later in December, he purchased the second unit through an assignment contract from another buyer, who’s name remains on the title. Now he feels misled, and is not certain what’s going to happen to his money, or the lost opportunity to invest now that 2016 condominium prices are long gone.
“They say to go to [a] lawyer, but a lawyer is not free, it costs money. I don’t have any house here in Canada, I never invest anywhere. I [was] building trust with this project,” Mr. Haq said.
Your house is your most valuable asset. We have a weekly Real Estate newsletter to help you stay on top of news on the housing market, mortgages, the latest closings and more. Sign up today.