UrbanCorp Finally Gets Their Comeuppance

It happened, folks.  It finally happened.

Or let’s just say that what Urbancorp really deserves is starting to happen, as news broke yesterday that TARION is about to revoke Urbancorp’s registration with the warranty insurer.

I’ve been complaining about Urbancorp for a decade, as I think they are the worst developer in the city of Toronto, and they’ve left a trail of scorched earth everywhere they’ve built.

So I have to say that I had a you-know-what-eating grin on my face yesterday when a client sent me a report from TARION’s website entitled, “Important Information For Customers Of Urbancorp”…

Comeuppance

It wouldn’t be government if things didn’t take three times as long as they should have, would it?

Now I don’t want to be twice as negative in today’s blog post as I’m going to be, by first hammering on TARION before moving on to Urbancorp.  But I’m of the opinion that TARION, and their motto, “Protecting Ontario’s New Home Buyers,” is simply a smoke-and-mirrors operation made to help the public think that the government is actually enforcing the Ontario New Home Warranties Plan Act from 1990.

TARION, in my opinion, is run by developers.  Not officially, of course, but developers have, oh, I dunno, about a thousand times more sway than consumers.

TARION, in my opinion, serves to protect developers, not consumers, by taking the onus off the developer to fix problems that they themselves created and are most apt to repair, and instead creating a trail of red-tape and hoops to jump through, via several different warranties, for different items, lasting different periods of time.

In any event, I’ll stop short of saying, “If you feel ‘safe’ because you have a TARION warranty, then you don’t know anything about TARION or that warranty.”  Wait.  I just said that…

So!

The big news is out!

And it’s shocking.

A client sent me the following link yesterday from TARION’s website: http://www.tarion.com/About-Tarion/Pages/Information-about-UrbanCorp.aspx

It was something I’ve been waiting to see for a couple years, and something I’ve been hoping to see for even longer.

Urbancorp is the very reason I have been frustrated with the state of the condominium construction industry for the last decade.  They represent all that is wrong with the “system” in place, and are the poster child for why the Condominium Act of 1997 needs to be re-written.

Of course, I have first-hand knowledge of the way Urbancorp works.

Call be me biased, or bitter if you want to.  But I purchased a unit from Urbancorp eleven years ago, back in the good old days when you actually could make money in pre-construction, and before the developers starting passing along their costs to the consumer in tricky contracts and closing costs.

If you didn’t know this, and you’ve been reading my anti-pre-construction rants for the last month, or year, or more, then you should really go back to the archives!

But the experience with Urbancorp in 2005, 2006 and so on, was exactly the reason I started to warn consumers from the perils of pre-construction investing.

Sure, I made money on several projects as far back as 2004.  But that was then, and it was a LOT different!  You could pay $200,000 for a pre-construction condo that was worth $250,000 that day, and put down only 5% and then wait for it to be finished in three years.  Today, you pay $325,000 for that condo that is worth $275,000, you put down 20%, and the “closing costs” are fifty times what they used to be.

Do you know what my “closing costs” were the first time I bought a pre-construction condo?

Zero.

Imagine my surprise the next time around when I was offered a “cap” on closing costs of $1,500.  I asked, “Why the hell am I paying for part of your development fees, law society fees, education levies, neighbourhood beautification project, et al?”

Fast-forward to today, and we hear horror stories about buyers of $350,000 condos getting a bill for $50,000 in closing costs.

The construction delays are longer.

The occupancy period is 3-4 times what it used to be.

The product delivered is often terrible.

And the repercussions and/or responsibility of the developer are mitigated by TARION’s “warranty.”

But back to Urbancorp…

I had no problem documenting the entire debacle at West Side Lofts from 2005 onwards, and it culminated in my taking possession of the condo in 2010, and the following posts:

Welcome To My Nightmare Pt1
Welcome To My Nightmare Pt2
Welcome To My Nightmare Pt3

I took a lot of crap for that.

I got letters from Urbancorp.

I was mocked on another real estate site for “being a Realtor who didn’t read the contract,” which completely missed the point, and sought to let the developer off the hook.

And some wanna-be TV-star Realtor, who shall remain nameless, had the VP of Urbancorp on some hack Rogers Cable TV show, watching my video and picking me apart, without providing me the ability to argue my points.

It’s pretty easy to beat up on somebody when their arms and legs are tied…

What I saw, first-hand, from Urbancorp in that development at 150 Sudbury Street was shocking, and appalling.

Just for fun, let me go back to the well and show you their idea of a “finished” unit:

UC1

I have hundreds of photos, but I don’t even want to get into that today.

It wasn’t just the shoddy workmanship (that they refused to fix, thanks to TARION!), but rather it was their poor customer service and their arrogance in displaying it.  It was like they took pride in screwing people.

I remember walking outside of 150 Sudbury Street one day and seeing the construction workers at 170 Sudbury Street, working away, with their power-tools plugged into the outlets at 150 Sudbury.  I told them they were stealing power, and one of them said, “F*** you, you don’t own that condo, you merely occupy it.”

Theoretically, they were right.  But it was obvious that even the workers themselves were instilled with the lying, cheating mentality that the senior people had instilled.

I remember going to check up on my unit one day, during occupancy, when the entire building was a war-zone, and I was waiting for the elevator (two out of three were on service for the workers), and a young lady came out of her unit and waited with me.

She stood, unassuming, next to a giant pencil drawing of a guy with his you-know-what in his hand, that clearly a construction worker had drawn on the hallway wall (still drywall at this point).  This was their culture.

After 7-8 minutes, the elevator door chimed, and it opened, and there was a worker, with a classic “dart” hanging out of his mouth (which of course, was lit), and a giant garbage bin taking up the whole elevator.

This was, of course, the one elevator of three that was designated for resident use.

He said, “Get the next one,” and I lost my mind.

I grabbed his waste bin with both hands and yanked it as hard as I could, rolling it out on the wheels, into the hallway.  I yelled in his face, “This is a home to these people!  This is her home!  Show some respect!”

Stories like this are a dime a dozen.

There was a Facebook group for “victims” and I finally had to delete it as every single day, people shared stories about their vicious interactions with construction workers, the developers, or their lawyers.

I detailed stories like this on my blog, to go with the stories I had told previously about the delays, the cancelling-and-reselling of the condos, the bait-and-switch tactics in the sales centre, and everything else I had experienced over the five years previous.

And over the next few years, I think I saved a lot of people from making mistakes and buying into Urbancorp’s projects.

Google just ate up my posts, videos, and blogs, and if you were to Google “urbancorp” and just about any term, you’ll find my blogs in the top search results.

As soon as I posted my first blogs on Urbancorp in 2007 and 2008, I started to get emails from people who were experiencing identical issues at other projects.

When I posted those videos in 2010, I got calls, emails, and letters!  Who the hell writes a letter anymore?

What I knew about Urbancorp back then is only now coming to light, so while I told people “stay away” 7-8 years ago, not all of them did.

I remember one guy who was interested in their Val Homes project, and to whom I spoke to 3-4 times, met with once, and I even showed him a bunch of freehold bungalows in the Downsview area.  After two weeks, he thanked me for my time, and said he was going ahead with the Val Homes purchase through Urbancorp.

Hindsight.  It’ll get ‘ya!

I was amazed that despite all the press, all the rumous, and all the negativity surrounding the company, people still bought into their projects!

There’s just a lot of people looking to get rich quick in today’s society, and if you have to make it illegal to not wear a seatbelt, then is it any surprise that stupid people do stupid things, like buy into an Urbancorp project?

In 2015, Sue Pigg from the Toronto Star began to go after Urbancorp.

First, there was the “King’s Club” condominium that was cancelled, and as I like to say, Urbancorp “stole back” their condos to keep, resell, rent, or package and sell to a REIT.  The story is HERE.

Second, there was the story about Urbancorp refusing to return deposits to buyers who had opted out of their contracts.  The story is HERE.

What hasn’t yet been brought to light are a slew of other issues, some of which I know as fact from sources I won’t name, and some of which are unsubstantiated.

Urbancorp apparently sold its entire Val Homes project to Mattamy Homes, who was then free to renegotiate with the buyers, who lost out on years of appreciation.

Urbancorp apparently owes millions of dollars in commissions, many overdue by 2-3 years, to Realtors who will likely never see a penny of that money.

Urbancorp apparently (and I have this from somebody inside) has instructed its employees not to return any emails or phone calls, from anybody, unless they’re looking to buy.

Urbancorp apparently is on the edge of bankruptcy, but the Globe & Mail and CBC articles from Thursday all but confirm this.

I just searched for “urbancorp” in my Microsoft Outlook and so far this year I have received nine emails from random people.

One woman works for a supplier who hasn’t been paid, and who says Urbancorp hasn’t returned their phone calls or emails.  She found my blog online and said it was a “last ditch effort” and that she was hoping I knew somebody who had made a dent.  How random an email is that?

Every time I get an email with “Urbancorp” in the title, I just know it’s going to be another story about somebody who got screwed.

If there is a real estate God out there, these guys will never take another deposit on a condo again.

If you’re reading this, and you think I’m being harsh, or that my enjoyment in somebody “going bankrupt” is unkind, trust me when I say this isn’t a case of the hard-working, entrepreneur’s soap store having to close up shop because they didn’t sell enough product.

This is a case of a developer who had a business model to screw people, finally reaching the end of the line.

I can’t tell you how much this, and other developers’ actions, have bothered me over the past ten years.

Wait, maybe I can.  Try this on…

Two weeks ago, I was called in for a listing presentation at a Yonge/Eg condominium, and the owner was a young guy who worked in construction, and his father came along to hear my pitch.

The father, who I gathered worked in condo development after talking to the two of them, asked me after an hour-long conversation, “So how much work have you done with condo developers?”

I told him I hadn’t done any, and that I didn’t sell pre-construction condos.

He furrowed his brow, crossed his arms, and said, “Why not?”

Right then and there, I knew I had two options:

1) Shut up, backtrack, say something nice, and get the listing.
2) Tell him what I really thought about condo development in the province of Ontario, and kiss the listing goodbye.

I think you all know which option I chose…

I refuse to compromise on this subject.

The system of condominium development has been broken for quite some time, and maybe, just maybe, the revocation of Urbancorp’s TARION registration will open a few more eyes.

Or maybe, and sadly, it will do nothing.  And the Condominium Act, which developers work around daily, will remain as is, and naive, uninformed, unprotected buyers will continue to attend “VIP Sales Events” and hand deposits over to developers with atrocious track records that ONE simple Google-search would demonstrate.

Tell me, “buyer beware” if you want to.

I just don’t think it’s that simple…

15 Comments

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  1. Brian says:

    as a former owner in 150 Sudbury St, the same building David is talking about that he had bought in, I can vouch for everything he said.. total trash company and building.. it took awhile, and I made NO $$ over the 7 years I was involved in this building, from purchase, to lengthy occupancy, to getting out, I still feel very fortunate that I got out ! unfortunately I bought a bit impulsively and had not known of David and his advice on preconstruction condo’s, particularly urbancrap but I have learned and moved on !..

  2. Ar says:

    I’m not impressed with my Aspen Ridge built condo, lots of little things that don’t work, but I’m also not impressed with Brookfield property management, who gouges and ignores their responsibilities. I’d be interested in a review and ratings on property managers.

  3. AF says:

    Their bonds on the Tel Aviv exchange were trading around par after coming to market in Dec, plunged into the 45% range ..have recovered some. Their issue was 8.15% coupon, maturity = 31DEC2019, ILS 180.583 million (~ USD 47 million at the time). Coupon also just got stepped up by 50 bps yesterday now to 8.65% after ratings downgrade. First coupon date = Jun 30/16.

    http://www.tase.co.il/Eng/General/Company/Pages/companyMainData.aspx?CompanyId=001656&ShareID=01137041&subDataType=1

  4. Waldo says:

    Ive had good experiences with Great Gulf and Menkes. Both top notch build and service post closing.

    Stay away from Lanterra – they are el cheapo quality though they seem to land good locations.

  5. DooDad says:

    Hurray!
    I bought an Urbancorp condo on the advice of an agent from a well known condo-only brokerage. It was a terrible experience. The occupancy period went on forever and during that time they didn’t really bother to manage the building and the building’s reputation and condition tanked. What a mess.

  6. Marina says:

    David, in your experience, what are the “good” developers in Toronto?

    I’ve heard good things about Tridel (pricey, but good). Anyone else?

    1. GinaTO says:

      The only condo I ever bought was pre-construction, from Plazacorp, and I was very happy with my purchase. Only six months delay (which I was expecting anyway), four months occupancy, workmanship quite good, I didn’t feel like I was getting fleeced. Mind you, that was a while ago (2005).

    2. Kyle says:

      I have no direct experience with any builder, but i really like what i’ve seen from Streetcar Developments. They seem to actually be focused on delivering a good product and building up the communities they develop. Buying, restoring and converting the Broadview Hotel into a neighbourhood destination is a pretty classy act in my book.

    3. AndrewB says:

      I like my Monarch built condo.

    4. Darren says:

      I bought my first place in 2003 from Pemberton. I have to say they were excellent in every way. Very few PDI items and the ones that I had were fixed very quickly. For what it’s worth construction was well underway when I bought and I was one of the last to close.

      I bought my next from Camrost Felcorp. They left a lot to be desired and I wouldn’t buy from them again.

      I bought an already constructed one from a no-name developer too. It was not well built, but I bought it because it was cheap, I didn’t expect much. Final closing took forever!

      Having done it 3 times, it’s just not worth it for the many reasons David has listed. I doubt I’d buy a condo again, period. But I absolutely would not buy a new one again. No problem renting one though..

      1. Condodweller says:

        Great Gulf and Minto are supposed to be pretty good. I also bought two preconstruction condos back in early 2000 for below market value. The first one still had PDI items outstanding when we moved out! The trick is to do the opposite of what everybody else is doing. During those days people called me crazy for buying preconstruction and nobody was buying. Now everyone wants to buy. The time to buy condos will be when everybody will be selling. Patience is a virtue.

  7. GinaTO says:

    Excellent news indeed. But what’s to stop them from doing the same thing all over again under another name? And the Saskins have already been buying up SFH for a while to turn them into “duplex condos” (who buys this crap?) – so they basically can do as they please:

    http://www.thestar.com/news/gta/2015/10/02/downtown-residents-irked-by-dominating-duplex-mega-dwellings.html

    Would love your take on this, David.

    1. McBloggert says:

      @GinaTO – I never knew there was a connection between those new modern $1M+ duplex’s and Urban corp! Really interesting!

      I have been following those as they pop up out of pure interest and novelty. Some of the larger ones look OK but often they have odd layouts and very little living space. If the prices were cheap – I could see them being successful (well designed micro living); but they’re not! I think a few were up around $1.2 – $1.3M. I think they would make great rental properties – but at the price they’re asking, the limited layouts and the whole condo corp of two leaves a lot to be desired.

      Adding into it the shady practices of Urban Corp – it really makes you wonder…

      1. GinaTO says:

        I learned by reading the comment sections on themash.ca – very informative! And you are right, they buy these older houses for $700K, build these duplexes with weird and cramped layouts, and sell each “condo” for $1.2M. Now how does a “condo corp” of two owners work, I don’t know… I can’t imagine it’s a good situation. Shady shady shady all the way to the bank.

        1. McBloggert says:

          Ahh yes, back when the Mash used to have commenting those were the days…

          Without commenting the site has lost a lot of its fun!

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