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CB developments ordered to stop selling units.

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CB Developments, the Vancouver developer that decided to cancel buyer contracts and resell houses at their coquitlam housing development has been ordered to cease marketing those units by the provinces superintendent of real estate under the Real Estate Development Marketing Act.

In his decision, W. Alan Clark said there is a “substantial likelihood” the company planned to remarket the properties to new potential purchaser “without providing accurate disclosure.”

Clark said the fact that lawsuits have been filed against CB could affect the value and price of the units, and could influence the decision of would-be purchasers.

Even if the developer did re-sell the units to new buyers, they would likely end up tied up in litigation and might not receive title, Clark said, so he has suspended the company’s right to sell them.

CB Developments has stated that they need to cancel the contracts and try to resell the units for more money due to ‘rising construction costs and increased land values’. Ten years ago I sold a classic car that’s now worth 10 times what I sold it for.. I should really look into canceling that buyer contract.

Full story on the CBC.

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grant

Drachen, it seems you think that merely miscalculating "wriggle room" qualifies as "greed". I happen to think it's simply a mistake or ignorance. I guess we'll have to disagree on this matter of semantics.Scoop, if you truly believe that these original buyers who have received their deposit back currently are on title of these properties, you are wildly optimistic.

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Patiently Waiting

I don't have the paper anymore (well, its bundled) and didn't see it on the internet. IIRC it was NDP MLA Diane Thorne who wanted new rules or no more pre-sales. Something to that effect.

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scoop

One local MLA is quoted as calling for a possible halt to all assignment sales.Typical political over-reaction. Do you have a link? What's the connection to assignment sales?

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scoop

Buyer's own the land title in a sense that they are positive and obey the contract what else is left take a possesion that will register them against the title,But that is not title. The buyers have a contractual right to receive title to their unit on completion. Prior to completion, they have contractual rights but not property rights. If the developer is unable to perform its side of the bargain, the courts will ensure that the buyers are put back to their pre-contract positions. I.e. here's your deposit back.

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Drachen

Grant"That's a very harsh definition! So according to you, every business that happens to fail did so because they were "too greedy"?"Grant would you please read what I write before jumping to conclusions?You didn't even read the part you quoted."If a business overextends it's self to the point where they can no longer get further financing it's because they're too greedy."I am an entrepreneur myself and I can tell you businesses fail for many reasons. Very few businesses fail because they gamble all of their available capital on a "Big Score" which is apparently what CB did if they don't have the money to finish things. Every intelligent being on this planet knows that things rarely go according to plan and you need some wiggle room. From the start of the project in question to now construction costs have not… Read more »

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Patiently Waiting

This story has legs. I'm house-sitting out in Port Muddy and the local papers are all over this. One local MLA is quoted as calling for a possible halt to all assignment sales. This is definitely hurting assignments and may do larger damage.

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satv

Perhaps you can explain why the banks would offer financing to a developer that doesn't own any land? And why the developer would transfer title before being paid fully? 5/16/07 4:41 PM Buyer's own the land title in a sense that they are positive and obey the contract what else is left take a possesion that will register them against the title,why financing?because developer fill the required fields.like selling of required percentage before construction takes place.by laws aproved by city which permit construction.those are the things you need to convince financial institution.rising construction cost is not an issue for developer because they have margin of profit on the sold units and most of time they already negotiate for material.I mean to say when you sell one unit for 500k that does not mean its real cost.because profits for developers are… Read more »

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grant

Because developers aren't incompetent – if you're starting a project like this you have contingencies and nothing has changed enoughYou are very mistaken if you really believe that "nothing has changed" in regards for the costs of commodities & trades in the last 2 years, as they have been rising steadily.How would you know the business competency of these particular developers? How do you know the size of their contingency? I think you are speculating based on a perfect world scenario.According to your theory, the developer is perfectly able to complete construction, and they have convinced their lawyer to spread a lie about the bank holding back their financing. Yet despite this supposed savvy planning, they somehow create the biggest PR nightmare possible for themselves. A bit far-fetched, no?When you've blown your project so badly that the superintendent of real… Read more »

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satv

Buyer edge over banksgrant said… If anyone is more powerful than the real estate superintendant, it's the banks, so even if the developer "loses" we can't assume that the presale buyers will "win".buyer own the land title already if they win banks can't do anything to buyers.developers and banks are engaged with each other.buyer never ask developer to get finance.financing is developers problem.buyers are responsible for their part not for on behalf of developers.Markx saidFor the die hard bears here, anyone want to bet that if this bubble pops before 2009, we'll see news headlines on Woodwards buyers suing developer/Uncle Bob to get out of contract and get deposit back with whatever excuses? They seemed pretty eager to buy, let's see how eager they are to actually close in 2009. 5/16/07 3:13 PM what do you call a deposit?what do… Read more »

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markx

South of border, the reverse is happening. In Florida, condo buyers are sueing developers to try to get out of pre-sale contracts, using whatever excuses they can find. Some of the reasons include the developer only building two buildings instead of planned 4, or change in color of building, or whatever. The moral of the story is, when the tide suddenly changes, people will be driven by greed to get out of unfavorable contract by whatever means.For the die hard bears here, anyone want to bet that if this bubble pops before 2009, we'll see news headlines on Woodwards buyers suing developer/Uncle Bob to get out of contract and get deposit back with whatever excuses? They seemed pretty eager to buy, let's see how eager they are to actually close in 2009.

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Drachen

"As for all these people who are screaming "Greed!!", what if the developer is telling the truth? How do you expect them to finish construction with money they don't have?"If a business overextends it's self to the point where they can no longer get further financing it's because they're too greedy. The real question is, are they greedy and incompetent financially or greedy and incompetent legally?

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mold city

As for all these people who are screaming "Greed!!", what if the developer is telling the truth? How do you expect them to finish construction with money they don't have?Because developers aren't incompetent – if you're starting a project like this you have contingencies and nothing has changed enough (other than house prices) to make sense for this move.

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grant

If anyone is more powerful than the real estate superintendant, it's the banks, so even if the developer "loses" we can't assume that the presale buyers will "win". The banks will still have liens on these properties and certainly neither them nor anyone else is going to step in with the necessary money to finish up the development unless there's some kind of arrangement that increases the cost to the buyer.As for all these people who are screaming "Greed!!", what if the developer is telling the truth? How do you expect them to finish construction with money they don't have?

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satv

No they don't go bankrupt,before they go to finance there is a percentage of project that must be sold.and after selling that prcentage their by laws in the contracts(amendment)must be aproved by city.lots of projects been canceled in the past,but prior constrution.after construction start their is no legitmate excuse to back up.thats why this backing up thing easy to probe greed because of price appriciation.they are definitly going to lose

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jesse

"If the developer goes bankrupt and can't complete, the purchaser does not have an interest in the land or the half-finished house."Are you sure about this? I don't know the standard pecking order in these situations. Certainly ask your lawyer about what typically happens in these situations before signing a presale agreement and what the presale agreement actually entitles you to.

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satv

DEVELOPER MUST BE DEFEATED————————–Selling of a project.When some one buying a unit guess what and what price developer set up for the unit.imagine a unit sold for 500k what and what price of the project for the unit is included.Sense of selling.BEAT THE PRICE **************is a condition when someone locked in to price posted or measure by developer financial instituation,retailer,or whole seller.WINNER TAKES IT ALL——————-in a race who ever touch the riben first become a winner.lets say freako buying a mortgage at the rate of 5.10% locked for 5 year or 25 year and next day rate goes up to 6.50%.this price change not going to effect freako because he is already locked in or beat the price before any up and down.CONSTRUCTION COST.when developer selling unit for lets say 500k again.how did he setup the price thats not from… Read more »

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scoop

dosh, Contracts are about allocating risks, usually to the party in the best position to manage or predict them.Once the presale contract is in place, the purchaser bears the risk of change in resale value and the developer bears the cost risks. At that point the developer doesn't have any "right" to renegotiate the price any more than the purchaser has a right to demand free upgrades.But there's another risk for the purchaser. If the developer goes bankrupt and can't complete, the purchaser does not have an interest in the land or the half-finished house. He only gets his deposit back. The bank, on the other hand, will have the right to take over the project and sell it to recover the developer's debt.That, I think, is the situation that we're seeing here. Not so much greed as a mismanaged… Read more »

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freako

"It's the developers right to try to get as much out of a project as they can."Shut your sorry wordhole. It isn't a right to breach a contract. As per my analogy last week, imagine that your car got stolen tonight. You expect a cheque from ICBC, but they merely give you a refund cheque under with the explanation that claims have gone up so much that they can't afford to cover you."Pre-sales are a line-up process for a project not an actual purchase. The developer is paying for everything and taking the risks, why shouldn't they benefit from that? "Again, shut that word hole of yours. It is an actual contract. Where do you come up with this crap. The developer isn't paying for sh*t, the lender is. The reason the builder gets financing is because he has already… Read more »

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short_squeezed

"I don't know why anyone would be happy about this story or asking the government to step in. We live in a free-market system where the motivation to work is provided by profit. It's the developers right to try to get as much out of a project as they can.Pre-sales are a line-up process for a project not an actual purchase. The developer is paying for everything and taking the risks, why shouldn't they benefit from that? "When the developer is asking for 35% down then their risk is only that of increased costs. It's not like they built the building without ever selling a unit. The developer sold out the project before a shovel even broke ground. Please tell me what developer wouldn't want this?So contract law should not be obliged? Basically then there would be no ownership since… Read more »

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Drachen

Dosh:So essentially you intend to throw all contract law out the window?Companies can feel free to cancel their obligations on a whim?"Oh yeah Mr. Smith, I guess your housing insurance DOES cover that terrible fire in which you lost everything, but it's not profitable for us to PAY you money so we're just going to go ahead and cancel that contract."Come to think of it there was a lot of that going on after Katrina…

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dosh

I don't know why anyone would be happy about this story or asking the government to step in. We live in a free-market system where the motivation to work is provided by profit. It's the developers right to try to get as much out of a project as they can.Pre-sales are a line-up process for a project not an actual purchase. The developer is paying for everything and taking the risks, why shouldn't they benefit from that?

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short_squeezed

Developers asking for more money and cancelling contracts is happening all over the lower mainland. I'm one of the unfortunate individuals caught up in the SCAM. It's a different developer and project but given that it is tied up in litigation I cannot comment on who or where.Politicians will need to step in cause it's getting ugly right now.

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mold city

Thats awesome. The developers greed could end up being very expensive. I still feel sorry for the original buyers though, its a shame that housing here has become such a speculative cluster-f##k.

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jesse

It is starting to sound much worse than first thought. For CB anyways. I am suspecting criminal charges will be coming. Bankruptcy, fines, and jail for some but probably the "owners" that placed the downpayment will get their properties, unfortunately costing them a few $10Ks extra to get them livable. But in today's market even that is a bargain.

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digi

[nelson] Ha-hah! [/nelson]I'm sure the developer isn't worried, barring some unforseen event by the time this works its way through court these houses should be worth twice as much as they are today!

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