Two years after they paid deposits to buy a sold-out development in Vaughan, 1,100 condominium buyers have been told the project is cancelled and they won’t be able to move into the units they bought.
“This seems very wrong for everybody who planned their life around this development,” said 21-year-old Karan Kundra.
Kundra, a first-time home buyer who will be working in downtown Toronto, said he bought into the Cosmos project because it would have been walking distance to the TTC’s new Vaughan Metropolitan Centre subway station.
The Cosmos condominium was promoted and sold by Liberty Development Corporation. On its website, Liberty describes itself as “a leading developer of commercial, office, and residential buildings in the Greater Toronto Area. The principals of Liberty have over 30 years of hands-on experience in the development and construction industries.”
But a day after sending letters to confused buyers, no one from Liberty Development would agree to an interview with Global News. Instead, the company explained its decision through a publicist’s statement.
“The cancellation of all purchaser agreements was made solely due to the inability to secure satisfactory construction financing. Purchasers have been advised that any deposits collected to date would be returned, in full, in the days to come,” the company said in an email.
Toronto real estate lawyer Bob Aaron said it’s legal under Ontario law to cancel agreements like this one. He said insufficient financing is an unlikely reason.
“It’s legal, but it’s clear the law is not helping consumers. It didn’t anticipate builders backing out for manufactured reasons. The law has to change,” said Aaron.
“If we have builder who is less than scrupulous, they have the right to invoke those clauses and get out of that deal.”
Thirty-year-old Jacob Jaramillo said he paid $385,000 for a two-bedroom unit at Cosmos, which would have been directly adjacent to a building occupied by his parents.
“We thought it was a good deal considering real estate prices right now,” said Jaramillo.
He and his wife said they thought they would be moving into the building in 2020. Now, he said it will cost tens of thousands of dollars more to find a similarly featured condo unit in the area because other buildings are sold out.
The opening of the TTC subway station in December has made the area more attractive to buyers who work in Toronto. Public transit to Vaughan has raised property values, according to recent real estate listings.
Santino Paglia told Global News he and other buyers feel like they have been “taken for a ride” by Liberty. He said he doesn’t believe the company’s explanation.
“Seems like a generic excuse, kind of like when a couple breaks up and you get the, ‘It’s not you, it’s me,'” Paglia wrote in an email.
Another Vaughan resident who bought at Cosmos said he believes the project was scrapped so Liberty could make more money.
“It’s quite obvious they saw the prices skyrocket and now want a cut of their own. Do we as buyers have absolutely no protections against this in this country?” asked Greg Eleftheriou.
There’s nothing stopping Liberty Development from initiating another project on the same site and charging substantially higher prices for exactly the same units and amenities.
Meanwhile, Aaron said this kind of situation has happened before and will likely happen again in a booming housing market.
“The government has to get involved in protecting consumers from this kind of scam,” he said.