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Unscrupulous Toronto condo developer is being sued

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Deal Expert
Feb 29, 2008
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Unscrupulous Toronto condo developer is being sued

http://www.thestar.com/business/2014/04 ... wsuit.html

Here's yet another example of a developer pulling a bait and switch on buyers. I have no idea why anyone would want to buy a pre-construction condo right now.

“North York Condo Developer Faces $30M Lawsuit”
By: Sue Pigg
The Toronto Star

Wendy Ji believes in getting what you pay for, so she’s spearheading a $30- million class-action lawsuit against a Toronto condo developer, claiming they failed to deliver on their promises.

Ji, 26, says she bought her two-bedroom unit in Emerald City Condominiums at Don Mills Rd. and Sheppard Ave. E. back in 2010 for one key reason: Developer Elad Canada Inc. said the 36-storey tower, when built, would have “easy underground access” to the Sheppard subway line and nearby Fairview Mall.

When Ji was finally handed the keys to her brand new unit in February she discovered a problem: There was no tunnel.

She could only get into the Don Mills subway station by walking outside, or to Fairview Mall by walking across busy Sheppard Ave. or through TTC pathways that ended in outdoor mall parking lots.

The lawyer for condo developer Elad disputes the claim saying, “there was never any representation that there would be underground access” from the condo building to the subway or directly to Fairview Mall: Both are easy to reach by walking out the lobby doors and six metres to the subway entrance right out front.

“The station isn’t far. It’s not going to kill me to walk there. But it’s the failure of the promise and the fact we paid a premium for that building because it was supposed to have underground access,” said Ji in an interview.

She bought the $460,000 condo with backing from her parents who were taken with a promotional virtual video — “they must have watched it 10 or 15 times” — showing a subway train pulling into a station with stairs marked Emerald City. She, like other residents, is seeking a 10 to 15 per cent rebate, saying the lack of direct access has devalued their units.

“Most people would just accept it and keep complaining, but this just pushed my buttons and, I thought, we have to speak up for ourselves.”

The lawsuit, citing misrepresentation and breach of contract, was filed last week and involves owners of some 60 condos in the 464-unit Emerald City Phase I.

It is just the latest evidence that folks who’ve bought preconstruction units from blueprints — years before they are actually built — may be reaching a tipping point, just as tens of thousands more new units are soon to come to completion.

Instead of just griping to friends and in online forums about what can end up being shoddy workmanship, faulty finishes, falling glass and even ceilings lower than promised in developers’ marketing materials, they are fighting back.

And they’ve found a couple of high-powered allies in lawyers Theodore Charney and Harvey Strosberg, the latter considered “the multimillion-dollar lawyer” because of his track record as one of the most successful class-action litigators in Canada.

Ji approached the two when she found out, via Google, that they’d launched three similar suits last fall on behalf of owners and renters in newly built condos over falling glass.

They’re also suing developers of a 10-year-old CityPlace building where balcony railings had to be replaced, shutting down outdoor access for some owners for two years.

Elad vice-president of development and marketing, Netanel Ben Or, did not respond to emails from the Star about the Emerald City lawsuit.

“From what we know so far, there doesn’t seem to be any merit to these allegations,” said Alan D’Silva, a lawyer with Stikeman Elliott LLP who was just retained by Emerald City on Friday to handle the suit.

He disputed part of the statement of claim that says residents’ only underground option now to get to Fairview Mall is by paying fares of $3 each way to use TTC pathways: “It’s not right and it’s not accurate.”

Real estate lawyer Bob Aaron, long a critic of condo sales agreements that are heavily weighted in favour of developers, says these class-action cases could shed new light on what he calls “weasel clauses” that often leave buyers at a disadvantage in complex preconstruction condo deals that are often penned two to four years before the condo is built.

“There are so many disclaimers (in sales agreements) that the developer can build something entirely different and then say, ‘Don’t come to us (complaining) about any changes.’ ”

Henry Chien Lin created a website, condoeh.com, to connect with other Emerald City buyers, such as Ji, when he says he discovered a number of problems with the penthouse unit he bought with his wife and 15-year-old daughter. Ceilings were lower than promised in marketing materials for the premium units. What was supposed to have been a glass exterior wall in his daughter’s bedroom, he says, was divided in half by a four-foot stretch of concrete.

But it’s Elad’s failure to disclose the lack of direct underground access to the subway, touted in marketing materials and sales contracts, according to the statement of claim, that upset Lin most: He saw it as a safety feature for his daughter if she eventually commutes to classes at the University of Toronto.

“This is our home. We’re not investors. We paid a whole lot of extra money (largely because of the promise of direct subway access) and we actually received a whole lot less,” said Lin.

After Ji realized there was no underground connection, she had her real estate lawyer send a letter to Elad on March 29, asking for a rebate. Ji had scoured MLS listings and found similar units, without subway access, were selling for 10 to 15 per cent less.

“With respect to the direct access to the Sheppard subway, there is direct access through the front lobby and across six metres of city property, over which the condominium enjoys an access easement,” said Elad lawyer Leor Margulies in response, a reference to the above-ground subway entrance.

“There was never any representation that there would be underground access or other forms of access to the subway.”

In fact, a promotional brochure for Emerald City says “the lower level lobby is connected directly to the subway, allowing you the convenience of going anywhere you like on the TTC without having to go outside,” according to the statement of claim.

A YouTube virtual tour shows a subway train pulling up to stairs marked “Emerald City” and TTC signs hanging in the condo’s lower lobby.

The lawsuit alleges that Elad is in breach of contract for making representations that were “inaccurate or untrue” and then continuing to make the representations and failing to notify purchasers and prospective purchasers once the representations were or became inaccurate.

One major developer, who spoke on condition his name not be used, said it’s not unusual for plans to change as buildings go from blueprints to reality. Accommodating mechanical systems, for instance, can change the look and ceiling heights of some units or floors.

“Communication is probably the best way to handle any issues that happen from time to time. It’s all about letting the purchaser know the minute there is a change and working out fair compensation if you can’t deliver.”
46 replies
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I think they will lose not because they are wrong but because of who/what industry they are taking on, i bet the contract is written in a way that allows them to get away with almost anything.
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Quentin5 wrote: I think they will lose not because they are wrong but because of who/what industry they are taking on, i bet the contract is written in a way that allows them to get away with almost anything.
You're right. At least they tried, though.
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JayLove06 wrote: You're right. At least they tried, though.
I hope i'm wrong and they succeed, it would set a good precedent
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If they have evidence of these marketing materials claiming direct TTC access, I hope they win. Otherwise it sets a dangerous precedent for consumers. There are things you can't just wave with a contract.
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Oldmaster wrote: If they have evidence of these marketing materials claiming direct TTC access, I hope they win. Otherwise it sets a dangerous precedent for consumers. There are things you can't just wave with a contract.
They were marketing that for years. My aunt wanted to buy there and that feature was a big draw. I believe it's even in the paperwork. But still, developers do this all the time. This is why I hope they win. And update the dated condo act too which allows for builders to use loopholes to pull this kind of stuff.
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I remember seeing that (direct subway access claim on ads) when driving around fairview mall during construction.

Even on the below it says,[QUOTE] "...direct access to the Sheppard Subway and an underground connection to Fairview Mall."[/QUOTE]

[IMG]http://www.condoinvestments.ca/images/1 ... Medium.jpg[/IMG]
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Looks like a slam dunk case for the plaintiff lawyer
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I've been told that whatever is in the marketing material doesn't actually matter and that it has to be in the sales contract.

Obviously, the sales contract isn't going to state "direct access to subway station", but I'm sure the developer will find a way to win regardless.
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JayLove06 wrote: They were marketing that for years. My aunt wanted to buy there and that feature was a big draw. I believe it's even in the paperwork. But still, developers do this all the time. This is why I hope they win. And update the dated condo act too which allows for builders to use loopholes to pull this kind of stuff.
The following was included in today's provincial budget announcement:

Ontario proposes to update the Condominium Act by establishing mandatory qualifications for condo managers and giving condo owners an alternative to the court system when trying to resolve disputes. The legislation would also include measures to increase protection for owners, tenants and buyers by improving condo management standards.
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The sales people for my condo made claims of an underground access to TTC subway, but never showed any proof that they were building one. When I called them out on it (before buying), they would back track and say things like they are still in the planning stage.

That wasn't the reason why I bought in the condo... the fact that it was a 2 minute walk door to door outside to the subway is totally fine by me.

I hope they win their case though... this false advertising is BS.
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9394 wrote: I've been told that whatever is in the marketing material doesn't actually matter and that it has to be in the sales contract.

Obviously, the sales contract isn't going to state "direct access to subway station", but I'm sure the developer will find a way to win regardless.
It's in the purchase agreement. Not as direct as the sales stuff but does say that there will be covered access to the Subway.

I have no idea how it is legal to market something, sell people on it, then bury a bunch of loopholes in a 40 page document that lets you off the hook for doing anything. It's not even that they took out the TTC access blurb in the purchase agreeent. They just moved some words around. It makes the builder look very shady.
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JayLove06 wrote: It's in the purchase agreement. Not as direct as the sales stuff but does say that there will be covered access to the Subway.

I have no idea how it is legal to market something, sell people on it, then bury a bunch of loopholes in a 40 page document that lets you off the hook for doing anything. It's not even that they took out the TTC access blurb in the purchase agreeent. They just moved some words around. It makes the builder look very shady.
Whoever has the more expensive lawyers wins :(
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fdl wrote: The following was included in today's provincial budget announcement:

Ontario proposes to update the Condominium Act by establishing mandatory qualifications for condo managers and giving condo owners an alternative to the court system when trying to resolve disputes. The legislation would also include measures to increase protection for owners, tenants and buyers by improving condo management standards.
It's a start, but more needs to be done IMO.
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Quentin5 wrote: Whoever has the more expensive lawyers wins :(
You're right. But the good thing is this problem is now public knowledge. The developer is new to the city. They have many more buildings to sell as part of their master plan. They would be dumb if they let this thing drag on and played hard ball. Cut a cheque, apologize and move on.
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JayLove06 wrote: You're right. But the good thing is this problem is now public knowledge. The developer is new to the city. They have many more buildings to sell as part of their master plan. They would be dumb if they let this thing drag on and played hard ball. Cut a cheque, apologize and move on.
people don't like parting with money even if they screwed up or lied so i suspect this will end up in court because the clauses in the contract will be good enough to get them off the hook, thats why they pay the lawyers the big bucks to write these things.

I hope the court is smart enough to realize this and issue a ruling saying you can't defraud people by hiding it in the contract, but that is not likely, thats one reason why everyone hates lawyers.
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JayLove06 wrote: It's in the purchase agreement. Not as direct as the sales stuff but does say that there will be covered access to the Subway.

I have no idea how it is legal to market something, sell people on it, then bury a bunch of loopholes in a 40 page document that lets you off the hook for doing anything. It's not even that they took out the TTC access blurb in the purchase agreeent. They just moved some words around. It makes the builder look very shady.
Yeah, it's total BS. This is the largest purchase anyone is going to be making and to have such a large selling feature being changed totally sucks.

This brings up the debate between pre-construction and resale... Knowing what you're getting or saving (likely) a significant amount of money.
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Quentin5 wrote: people don't like parting with money even if they screwed up or lied so i suspect this will end up in court because the clauses in the contract will be good enough to get them off the hook, thats why they pay the lawyers the big bucks to write these things.

I hope the court is smart enough to realize this and issue a ruling saying you can't defraud people by hiding it in the contract, but that is not likely, thats one reason why everyone hates lawyers.
Good point.
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9394 wrote: Yeah, it's total BS. This is the largest purchase anyone is going to be making and to have such a large selling feature being changed totally sucks.

This brings up the debate between pre-construction and resale.
There really shouldn't be much of a debate. Pre-construction was only a good option before because it was so much cheaper than resale. Now, it's more. Add a bunch of construction delays, huge closing costs, builder tricks and I can't see how pre-construction wins this.
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Agree w/ all your below posts.
Quentin5 wrote: I hope i'm wrong and they succeed, it would set a good precedent
Oldmaster wrote: If they have evidence of these marketing materials claiming direct TTC access, I hope they win. Otherwise it sets a dangerous precedent for consumers. There are things you can't just wave with a contract.
Phat$ wrote: I remember seeing that (direct subway access claim on ads) when driving around fairview mall during construction.

Even on the below it says,

[IMG]http://www.condoinvestments.ca/images/1 ... Medium.jpg[/IMG]
I'm concerned about the wording: "...direct access to...Subway and an underground connection to Fairview Mall". That does *not* mean there's an underground access to the subway, but it does mean there should be underground access to the mall. I assume that from the mall to TTC one has to go outside? I can't remember the layout of that area.
JayLove06 wrote: It's in the purchase agreement. Not as direct as the sales stuff but does say that there will be covered access to the Subway.

I have no idea how it is legal to market something, sell people on it, then bury a bunch of loopholes in a 40 page document that lets you off the hook for doing anything. It's not even that they took out the TTC access blurb in the purchase agreeent. They just moved some words around. It makes the builder look very shady.
If it's in the PA, then that's even better than marketing materials. Hope the plaintiffs win or the developers will continue to freely do these scams w/o fear of any repercussions, which is total BS.
JayLove06 wrote: There really shouldn't be much of a debate. Pre-construction was only a good option before because it was so much cheaper than resale. Now, it's more. Add a bunch of construction delays, huge closing costs, builder tricks and I can't see how pre-construction wins this.
Ya, then should ban presales entirely. The only one that benefits is the damn developer.

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