Riverbend buyers seek equity lost from cancelled pre-sale contracts
Derrick Penner
Sun
Stephen Bulat in front of his house. He is one of 32 home buyers in the Riverbend development who have a serious dispute with the developer who wants to cancel early contracts. Steve Bosch/Vancouver Sun
The ill-fated Riverbend condominium project in Coquitlam could face a class-action lawsuit from buyers seeking the equity they lost when their pre-sale contract was cancelled by the developer earlier this year.
Colleen Leduc-Ledezma and her husband, Gonzalo Ledezma, want a B.C. Supreme Court judge to approve a class-action suit against the developer, CB Development (2000) Ltd., its directors, the project’s main mortgage lender, CareVest Capital Inc., and Marion Lochhead, the realtor who sold them the unit and her employer, Sutton Group 1st West Realty Inc.
There are 31 other buyers who bought single detached homes at the pre-sale of the last phase of Riverbend’s 148-unit, strata-titled development. All their contracts were cancelled at the end of April.
CB Development cited rising construction costs that pushed the project into a loss, and a construction lender that would not release its mortgage for the project unless units were sold at current market prices.
Ledezma said the couple wants to recover the money they’ve lost, the money they’ve spent trying to resolve their situation and “to see the people responsible pay for their mistakes and pay for their errors.”
“We want justice, basically,” Ledezma said. “This has been a horrible and unfortunate situation for us, the consumer, and we have gotten nothing but heartache and lawyers’ fees.”
The Ledezmas signed a pre-sale contract for one of Riverbend’s homes in January 2006 at a price of $369,000.
Ledezma said the couple sold their North Vancouver townhouse a year ago and moved, with their two young sons, into his parents’ home to save money in anticipation of taking possession of their own single-family home in a few months.
“Now, we’ve lost our place in the market,” as well as the 4.25-per-cent, five-year mortgage rate that they had locked in for their Riverbend home.
The Ledezma’s were among the 17 buyers who first tried to get a court order that would compel CB Development to honour the contracts and deliver their homes at the promised prices.
That bid failed when CareVest foreclosed on the project and put it into receivership. After the foreclosure, Supreme Court Judge Ian Pitfield ordered that the receiver, the Bowra Group, complete construction of Riverbend’s units and sell them at current market prices.
He also ordered that a portion of the proceeds, representing the amount between current prices and the pre-sale contract prices, be held in trust until a court can decide whether pre-sale buyers had a claim to the money, essentially the equity their properties would have earned if they had taken possession of them.
Bowra Group principal David Bowra said Tuesday he has secured financing from CareVest and hired a builder, Mierau Contracting, to finish construction on 25 of 34 total units in Riverbend’s final phase.
He added that a decision on what to do with the nine remaining home sites — where little or no work has been done — is expected within the next three weeks.
Bowra said he has also contacted pre-sale buyers for the nine homes closest to completion and given them the first option to buy them at current prices, which are $80,000 to $85,000 higher.
Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association said that the possibility of a “white-knight” financier, who might have come in to finish the project and deliver the homes at the contract prices, has now been lost.
Simpson, who had exploratory discussions with the anonymous developer, said the cost — about $5 million — “takes his company beyond any realm of a goodwill gesture.”
© The Vancouver Sun 2007