Canada's Housing Bubble

Oct 3, 2010 Lori Culbert Vancouver Sun

Vancouver - Back in 2007 and 2008, in the pre-Olympics excitement, 264 of the 737 available units in what would become the athletes’ village on False Creek were pre-sold, long before the development was built.

But it appears that 41 of those pre-sales — 15 per cent — have still not closed, adding to the growing list of problems in the Millennium Water development.

That list includes the recent default by the developer, Millennium, on a portion of its last loan payment, and the continuing struggle to sell the more than 450 available units in the controversial complex.

Originally, the city announced 264 buyers had signed up for pre-sale units. This week, city hall said that in fact, of the 259 units in the troubled development that have sold, only 223 are from pre-sales made in 2007 and 2008. (The other 36 units were sold more recently.)

Forty-one pre-sold units are therefore unaccounted for.

Writs filed in B.C. Supreme Court show the buyers involved in at least 15 pre-sales of the Millenium Water units are now trying to get out of those contracts.

A lawyer representing one of those clients said he believes there are more dissatisfied pre-sale buyers, and predicted a growing number could be turning to the courts to try to break the original agreements.

“Other lawyers have spoken to me about people they are representing who are similarly disgruntled and may take similar action,” said Andrew Morrison, an experienced Vancouver real estate lawyer.

In briefing documents released to the media this week, the city said the developer was pursuing the “outstanding” pre-sale buyers who had not closed their deals, but did not elaborate.

When The Vancouver Sun tried to confirm that there were 41 pre-sale agreements that had not yet been finalized, city manager Penny Ballem referred the question to Bob Rennie, who is marketing the Millennium units.

In a brief e-mail Friday, Rennie said: “Yes 41 are not closed and are at various stages of negotiations.”

Morrison filed a civil suit Sept. 21 on behalf of a client in Alberta who agreed in 2008 to buy a $1.56-million condo and put down a $156,500 deposit.

The client now wants his money back.

The legal reason for the action is alleged improprieties with the development’s disclosure statement, which Millennium is required to file under the Real Estate Development Marketing Act.

But Morrison’s client is also upset about the “deficiencies” he saw in the high-end condo when he viewed it for the first time earlier this year.

“It wasn’t finished to the level that he was led to believe it would be,” Morrison said, adding his client is also upset about the condo’s value falling.

“The overwhelming evidence seems to be the prices at which they were selling these units are far in excess of what they are currently worth.”

Lawyer Bryan Baynham, of Harper Grey, represents 11 clients who want to nullify contracts they signed for 13 of the units during pre-sales. In addition, two more clients filed court actions and “resolved their differences with Millenium” in June, resulting in two additional condo pre-sales not going through.

Baynham’s clients, in a series of lawsuits filed in the summer, also allege Millennium was guilty of a breach of contract under the real estate act.

But Baynham noted, too, that his clients want their deposits back because they simply don’t want to have anything to do with the development.

“It is very different from what they were told it was going to be. In part they don’t think the workmanship is as good as it was promised [to be],” Baynham said.

“Ultimately they were sold a world-class development that turned out to be sort of a walled area in the wasteland around it. It was sold to them as if it was going to have development all around it with parks and schools, and now it is sort of a fortress off by itself.”

Baynham estimated the value of the lower-end units in the building has declined about 15 per cent, while the value of those sold for more than $1 million may have fallen by 20 to 25 per cent since the pre-sales.

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