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The house at 61 Shannon St., in Toronto.Emerald Builders

Onlookers have been busily predicting the outlook for real estate in 2024, but one hangover from 2023 still looms over the market: observers say a remarkably high number of homes are still being sold under power of sale.

Most mortgage agreements allow the lender to force the sale of a property if a borrower fails to make required payments.

“Most of the stuff you’re seeing now is reno flips gone bad,” said Ron Butler, broker and owner of Butler Mortgage Inc., referring to homes that appear to have racked up big debts to renovate and upgrade to attract a higher-end buyer. “What we’re seeing here is the collapse of speculation: it takes a while to collapse; it’s never instantaneous … there’s a policy point where the lender says ‘let’s cut our losses.’”

In the greater Toronto region – the country’s largest real estate market – there are dozens of power of sale listings, and more being added all the time with a surge of new court filings in the new year. Real estate analysts and social media creators have been highlighting the latest evidence of enormous losses realized when a house bought at the peak of the market in 2022 goes up for sale or is sold for significantly less than the buyer paid.

One frequent poster on, identified only as @Shazigoalie, posted a recent listing of a reno flip house in Toronto’s pricey Trinity Bellwoods area that serves as an object lesson in the challenges of the current market.

The home at 61 Shannon St. is for sale by lender Vault Capital Inc., listed with an asking price of $3.599-million. In early 2023, it sat unsold for three months after being listed for $5.398-million.

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Vault Capital is seeking repayment of $2.8-million, which is on top of another almost $2.9-million registered against the property by a variety of numbered companies, individuals and other lenders.Emerald Builders

According to property records, it was transferred to Brampton-based Emerald Buildings Investment Ltd. for $2.050-million in 2019. In March, 2022, Vault Capital lent $1.64-million against the property (a sum that was added to with subsequent refinancings) at the peak of the valuation bubble in Ontario real estate. Now, Vault is seeking repayment of $2.8-million, which is on top of another almost $2.9-million registered against the property by a variety of numbered companies, individuals and other lenders.

Avneep Singh Baidwan, founder of Emerald, said the Shannon project was intended as a demonstration of his company’s design skill. He also admits that if Vault can find a buyer, Emerald is likely to lose money on the project.

According to property records reviewed by The Globe, by the end of 2023 Emerald companies and principals had amassed more than $22-million in debts attached to just six homes the company has advertised on its site as its projects. Now that there are power of sale claims against many of these potential reno flip sites, Mr. Baidwan admits he was wrong to hope the market would correct in 2023.

Regardless of how much it may have cost Emerald to renovate the Shannon house, realtor Scott Ingram doubts it could ever have attained the sale price it needed to break even.

“In the history of Trinity-Bellwoods (and Little Portugal beside it, where this one is close to) there have only ever been three sales over $5-million,” said Mr. Ingram, a realtor with Century 21 Regal Realty Inc. He says those $5-million properties were either significantly bigger or more unique than Shannon, and, in his opinion, the house might more realistically be priced at about $3-million. “Unfortunately for them, the market doesn’t care how much you paid for it, or put into it, or how much money you need. It cares about how much it’s worth.”

“It was a bit of, I would say, being optimistic,” Mr. Baidwan said in an interview. “We were thinking, it might be the market won’t hit custom homes? But it hit the custom homes. So we’ve been holding, and holding for a long time. Eighteen months of holding. It’s a quite a bit.”

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In early 2023, the house sat unsold for three months after being listed for $5.398-million.Emerald Builders

Mr. Baidwan said the cash crunch got worse in late 2023 because a deal to sell his whole portfolio fell through and at that point he could only make partial payments on the tens of thousands of dollars in monthly mortgage payments he owed.

He recently closed a sale on one house that had a power of sale claim against it – 1386 Glenwood Dr. in Mississauga – that was purchased for $4.3-million. He had listed it for sale at $5.499-million in December, 2022. He said that, after lender New Haven Mortgage Holding Corp. gets back the $3.075-million it is owed, he will have some money left over to transition his company – with the help of some of his long-time investors – away from the high-end flip business to renovating more multifamily rental/investment type homes.

There were other loans on the property – $535,000 from ATM Investments & Financial Services Ltd. and a $1.5-million loan registered in 2022 by real estate broker Robert Piperni – but Mr. Baidwan says all his partners will be added to new projects and he hopes to repay them all by the end of 2024.

Some of the lenders, such as Mr. Piperni, appear multiple times in Emerald’s property records. For example, Vault Capital Corp. filed another claim for power of sale against 322 Euclid Ave. on Dec. 18 that said the mortgage investment company was owed $1.71-million for a loan registered in March, 2022. It alleges Emerald stopped making the 10.74 per cent monthly interest payments (about $14,000 a month) in August, 2023.

Mr. Piperni is registered on title again with $2.075-million in loans, as well as two individuals who registered another $450,000 loan on title. The property is currently listed as power of sale for $1.899-million – less than the $2.05-million Emerald paid for it in 2021 – but Mr. Baidwan said he is hopeful that a financial partner of his will buy the home and hire him to refit it for rental uses.

There are other mortgage investment companies on other Emerald properties Mr. Baidwan hopes to purchase out of power of sale. At 1618 Trotwood Ave. in Mississauga, Neigbourhood Holding Company Ltd., claims it is owed $1.368-million. At 319 Crawford St. in Toronto, MCC Mortgage Holdings Inc. is seeking power of sale to recover $1,521,751 it lent. Mr. Baidwan is leveraged on other properties such as $1,449,350 he borrowed from VWR Capital Inc. for 24 Highbourne Rd. in Toronto.

None of the claims have been proven in court. Mr. Piperni declined to comment. None of the other mortgage lenders responded to requests for comment.

Mr. Baidwan came to Canada from India on an international student visa in 2010 to study at Sheridan College, earning a work permit as a truck driver and contractor and, eventually, his citizenship.

The ultimate fate of renovators and speculators both bigger and smaller than Mr. Baidwan is still being worked out in the courts, but in Mr. Butler’s view the contagion is unlikely to spread beyond the B-lending space of mortgage investment companies and credit unions that have been able to side-step strict stress test requirements for mortgages.

“The banks … really never lend to these people. The rule changes and rule tightening has made a super select market of borrowers for mortgages.”

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