604homesblog

Matthew,

thanks for the hat tip.  

On the RE side I can't believe this is happening to these buyers.  First they run the guantlet of getting in and then they get slammed by someone who isn't responsible enough to negotiate fixed costs for materials and labour.  You would think they new something about contracts.

Anyone who has bought into the Sophia, like we have and would like to communicate about the situation, please email me at dkozely@hotmail.com. I believe it is important to share information amongst those of us who want to.

Reporters, don't bother to try and reach me. Proof that you are a buyer will be required before any discussions.

I will also let the realtors for the project know that we wish to be in touch with others.

It is clear that the government needs to step in and regulate this whole pre-buying process as it has become a gambling game. The banks and lending institutions also play a large part in this. The city of Vancouver and their policies, when civic workers are on strike need to take responsibility as well. The lengthy strike this past summer didn't help a company who obviously went out on a limb with too many projects.

For those who think we didn't do our homework, we did. A previous project in Burnaby by Eden group was completed, as well as in Calgary.  When purchasing Sophia, Ellyse project was not on the radar. Temptation to build more was irresistable, which unregulated, resulted in this fiasco.

When individuals buy too much, they take personal risk. In business, it goes beyond and affects multiple consumers; regulation is the only way to have some protection. Hope Mr. Campbell is listening.

Hopefully the judge, will rule in the consumers favour and minimize losses as much as possible. This has been heart breaking to say the least.

re your commentor

Chinese Proverb:

Fool me once shame on you,

Fool me twice shame on me.

Donna,

I'm certain Matthew will add to this.

At this point it is supposition but, don't be disappointed if you run into a just sold sign when you seek names of other buyers from the marketing Realtors.  As this seems to be going to court they may have already been advised by council not to discuss the issue or provide such information.  Additionally, they may be precluded from divulging this information as they are governed by confidentiality rules associated with agency under the RE Act.

For what it's worth, no one in this unfortunate situation wins.

Hi Matt,

What's your take on all this condo construction trouble?

http://www.cbc.ca/canada/british-columbia/story/2008/02/27/bc-condosintrouble.html?ref=rss

Is the market slowing in Vancouver, or are most of these units still selling, but the developers are either mismanaging or becoming victims of rising construction and labour costs?

There was one project that was planned for Victoria that the developer pulled out of, but before it even broke ground I believe. A couple of years ago a developer folded on a Cook St. construction project, but I believe that had to do with cost overruns and mismanagement, as the condo market has taken off in the last couple of years.

Would like to hear your comments.

The closing date for the sale of the Elyse project from William Eden to Onni is very soon. What he'll do with this 14M remains a mystery......

A follow-up thought. In reflecting on Mr. Eden's comments to media, on Feb 29th, 2008, re:everyone has made $100,000-$200,000 on the Sophia Development is disappointing to say the least. That may be partly true for some assignment sellers, of which there are a few.

However, lets not forget costs like, GST, PTT, realtor's fee's, and capital gains taxes,and now potentially a price increase. It's not fair or professional to make those kinds of statements.

Secondly, anyone with a Sophia contract now has no investment return of any kind. That remains to be seen, and certainly may be different than what is tactlessly being discussed.

Mr. Eden, may have forgotten, that at the beginning of this project, he needed a percentage of consumers to buy into his project, before he could get financing approved to proceed with it. He is biting the hand that fed him.

If your livelihood depends on people having faith in your actions and they show you faith, then respect them when the faith is shaken. Be generous, not jealous, or go see a career counsellor, because your intent is misguided. Life isn't all about money. There must be some joy or satisfaction in working for yourself, and seeing a project come to life.

Mathew- Thanks for responding. I appreciate developers positions as well, and there are multiple stakeholders in projects.

I think this is a time for all levels to assist in sharing the burden of cost, from city hall-permits dept, GST collectors, realtors, other tax dept's, developers, receivership/banks, legal council etc.

When so many benefit from profitable entities, it only makes sense that some discounts apply for buyers, when an economy spins further out of control and contributes to this kind of situation.

I think some new tax relief laws/exemptions need to be introduced, and some good will.

Thanks for paying attention.

Mathew-It clearly is double dipping.

As for PTT if they won't cancel it, then it would make sense to put that money into a fund for consumers to apply for when leaky condo's and now pre-sale condo's fail, or to provide housing for lower socioeconomic groups, especially homeless and single mothers. The fund could pay for things like, legal advice, provide low interest loans, the possibilities are endless.

The real estate consumer is paying that tax, therefore it should be available in return in some form, when disaster strikes.

It would have to be carefully managed, with equitable access.

It's truly awful what has occured given the opportunity cost for residential investment, however the fact of the matter stands,there is an inherint risk associated with a pre-sale and in this particular case, the risk overcame the reward.  On a side note, those resale units sold +/- $75 per square foot below market on average for concrete given the product type and Main Street location...I konw, I was 7 days away from completing on purchasing an assignment in the Sophia when bankrupcy was filed.

Interested in mitigating your loss and selling me a unit in the Sophia at original contract price + expected additional fees from the receiver, drop me a line.  rob_t27@hotmail.com

Rob

Mathew: No I am currently unaware.  As previously eluded, unless funds were placed into a trust account, which has been a rare situation in the Vancouver assignment market, it is my understanding assignors foot the bill (ie. the purchaser of the assignment).

On a side note:  The Eden groups previous Mount Pleasant Condo project called the Elyse which recinded on all purchasers contracts at roughly the same time the project broke ground and well before bankrupcy was required has recently come onto the market and has resold to another developer.  Bill Eden and his investors walk away with a significant lift in property value and should come out of the situation extremely well.  If I was a purchaser in the Sophia, I would strongly question Bill Eden's equity position into the project.  Same thing happended with Chandler Development (H & H, Richmond Project) where by the developer leveraged far higher than he should have and thus was exposed to far greater risk and ridiculous interest rates for second and third mortgages.  What's this all mean?  I doublt Bill Eden had very much of his own equity in the Sophia project, but relied almost solely on borrowed funds above what is the norm in the development world.  If I was a purchaser, I would think twice about this being an "unforseeable" occurance given the abnormal financial leverage in place.

cheers.

GST double dipping, the developers deduct the gst they paid from the gst they collect and pay the difference, so where is the double dipping?