Saturday, 3 November 2012

Markham condo buyers sue developer over last-minute charges!

Dear Readers,

Niamh Scallan, Staff Reporter for the Toronto Star reports that some Markham Condo buyers are suing backers of the proposed Markham Arena. Below is a verbatim account of Niamh's article along with my response and you'll have space at the bottom for your comments!

        Samir Sa'd is part of a class-action lawsuit against a Markham devolper over development charges.
                                                   PHOTO: Colin McConnell/Toronto Star 

A group of Markham condo buyers have filed a class-action lawsuit against a developer for allegedly piling on thousands of dollars in what they call unfair and last-minute charges. A statement of claim was filed against The Remington Group — the key financial backer and developer named in Markham’s ambitious NHL-size arena plan — and its alleged subsidiary companies on behalf of condo buyers in Remington’s 95-hectare mixed-used development in downtown Markham.

According to the claim, which seeks more than $5 million in damages, the buyers were hit with about $3,000 each in “increased development charges” as closing day approached, a last-minute demand that saw many pay undue fees. “At that time, we had no choice. We didn’t question it,” said Samir Sa’d, a 69-year-old retiree who said he was surprised to discover thousands of extra dollars in development charges when he was buying a one-bedroom condo in Remington’s Rouge Bijou Terraces in 2006.

The Remington Group and its alleged subsidiaries, Rouge Residences I Inc. and Rouge Residences II Inc., filed a notice of intent to defend the claim with the Ontario Superior Court of Justice on Sept. 28, 2011. “The defendants intend to defend this action,” it said. More than a year later, the lawyer representing Remington condo buyers said the parties are nearing a settlement out of court.

“We are negotiating,” said lawyer Sean Grayson with Roy Elliott O’Connor LLP. “I’m hopeful we will come to a settlement relatively quickly . . . within the next couple of weeks.” Neither Remington Group nor the company’s lawyer responded to repeated requests for comment. The class-action suit has come to light over the past few months as news emerged of Remington’s involvement in Markham’s proposed arena deal. At a recent public meeting, residents brought up the lawsuit and spoke about their experience of living in one of Remington’s first developments in the city’s highly-touted downtown.

According to Sa’d, the only plaintiff named in the class-action suit, he and another buyer began to investigate the adjusted charges on their condo agreements and, after discovering “red flags,” decided to pursue legal action. The suit contends that one of Remington Group’s subsidiary companies prepaid the development charges — a government fee that goes toward anything from parks to sanitation systems to education levies — as a way to avoid increased rates over time.

When it came to closing day, the suit adds, buyers were charged the closing-day rate, which had increased from the earlier prepayment fee. According to the statement of claim, the developer paid roughly $300 for each unit, but charged buyers around $3,000 when closing dates arrived. While the purchase and sale agreement notes that fees may increase to compensate for rising municipal levies or development charges, the claim states the developer had no right to jack up the charges given that the increase was not required by the City of Markham.

“It is a convention in the real estate industry that purchasers are only to pay for the development charges that were incurred by the developer,” the claim notes. “The payment is an unjust enrichment.” According to Jim Baird, Markham’s commissioner of development services, the municipality sets the development fee based on infrastructure needs in the area. He said he couldn’t speak further about the lawsuit as the city is not involved.

In a separate case three years ago, two Remington condo buyers took the developer to small claims court after they had allegedly been charged an extra $7,680 to $11,283 for levy increases. In early 2011, the judge ruled in favour of the buyers and ordered Remington Group to repay the levy increases as well as interest and legal costs.

Two months after the ruling, however, Remington Group filed an appeal and the parties later settled out of court for an undisclosed amount. Toronto lawyer Michael Carlson, who represented both condo owners on the appeals, said he could not discuss details of the settlement. While the outcome is unknown, the case prompted an amendment to the Ontario New Home Warranties Plan Act in January 2011 that prevents developers from charging price adjustments unless they pay the amount to the third party, which in this case would be the City of Markham.

As a result of the regulation change, the scope of the current class-action suit against Remington Group has been limited to condominium developments with closing dates before 2011. Sa’d, still waiting to hear whether the added charges for his Rouge Bijou Terraces unit will be recouped, said he hoped for a favourable outcome not just for the money, but as a matter of principle. “It’s not a money issue,” he said. “It’s unethical . . . they should not take advantage of the little guy.”

With files from Noor Javed, staff write for the Toronto Star and

my response..... is hardly a secret that Toronto's development charges were strikingly low compared to the surrounding GTA. For example, when a two-bedroom condo in Toronto carried a development charge of $8,000, the fee for a similar unit in Markham was about $20,000 higher. This made it prohibitive for some young home buyers to get their start in our community by artificially increasing the value of property in Markham. 

So why would City Council think that adding a surcharge would be acceptable? Purchasers are saying that 'increased development charges' fund an Arena where the profits are privatized while the losses are socialized is unaffordable, unacceptable and maybe even unlawful...and they are willing to go to court to prove it!!

                              Graeme Roustan (left), chairman and CEO of GTA Sports and 
                               Entertainment speaks as developer Rudy Bratty (right) and 
                                colleague Randy Pettigrew of the Remington Group look 
                                   on during a meeting in Markham Council Chambers.  
                                            PHOTO: STEVE SOMERVILLE/YRMG

The official Building Industry and Land Development Association (BILD) responded with a letter to Mayor Scarpitti saying that their builder organization would not support a so-called  'voluntary' increase in development charges and now.....

                  Frank Sarpitti and Jack Heath in Markham Council Chambers                                                        PHOTO: TORONTO SUN

Jack Heath has been quoted as follows, "Many taxpayers are opposed to Markham being involved in any financial aspect of the Markham Sports, Entertainment and Cultural Centre (MSECC).  They see risk and question the need and benefit.  I worry that the “Special Levy,” which is over and above standard Development Charges, may be challenged in the courts sometime in the future.  The proposed financial framework is not appropriate for a fiscally responsible municipality of our size."

This discussion isn't over yet, by any means. There are other Councillors who have not taken Deputy Mayor Heath's stand, as yet so the question becomes...who will be the next Councillor to feel taxpayer wrath and reverse themselves by turning their thumbs down on the dubious 'financial framework', as proposed? It's up to Markham taxpayers to encourage their Councillor to do what's right! 

What say you, Markham taxpayer?


1 comment:

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