# The big condominium scams



## carverman (Nov 8, 2010)

Apparently in Canada, buying a condo is not what it is all cracked up to be. The current trend for snapping up those
pre construction deals can be a headache for some and wondering what just happened to their down payments. 



> When a group of retail and condo buyers purchased units in an up-and-coming Yonge and Finch building also featuring a hotel, they envisioned packing up their current homes and moving into new ones where they would raise families, grow old and make memories together.





> They visited the lot where the building was to be constructed and found a few cinder blocks and an old city sign advertising Lee’s development proposal for a 14-storey, 150-hotel suite building and a 30-storey, 258-unit residential tower featuring some commercial space.





> While police couldn’t say how many complaints they have received, Their anti-fraud unit says, “There are numerous victims and we are getting more and more every day.”


Ma (buyer) says he hasn’t seen a penny of the $40,000 he shelled out for a retail unit in the building. The same is true for 29-year-old Leo Zheng and his wife who *spent $120,000 on a commercial space and one-bedroom unit with a balcony and a view of bustling Yonge St. to raise his two children in.*



> In July, Ma says he was relieved when a response arrived from the builder's lawyer (Cho) saying his money would be returned, but by August he was feeling uneasy again. Another letter had arrived declaring that the *lawyer had filed for bankruptcy and funds could not be recovered.
> *“Where did the money go?” asks Zheng, who says he plans to begin the hunt for a new home as soon as he gets his money back.
> Ma requested to meet with Cho, but he says s*he refused to see him so he hired a lawyer.*


Hmmm?..another Chinese lawyer no doubt....

http://www.thestar.com/news/gta/2014/08/22/police_investigating_after_condo_deal_falls_apart.html


*Ok, so this is starting to sound like one of those classic Chinese tales..The Five Chinese brothers..*

Long ago in China lived a family with five brothers who resembled each other very closely. They each possessed a special talent. *One can swallow the sea; one has an iron neck; one can stretch his legs; one can survive fire; and the last can hold his breath forever.* When one of the brothers, a somehow very successful fisherman, agrees to let a young boy accompany him on his fishing trip, trouble results. This brother holds the entire sea in his mouth so that the boy can retrieve fish and treasures. When the man can no longer hold in the sea, he frantically signals to the boy, but the boy ignores him and drowns when the man releases the water.

The man is accused of murder and sentenced to death. However, one by one, his four brothers assume his place when subjected to execution, and each uses his own superhuman ability to survive (one cannot be beheaded, one cannot be drowned, one cannot be burned, and one cannot be smothered). *At the end of the story, a judge decides that the brother accused of murder must have been innocent, since he could not be executed, and the five brothers return home.*


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## sags (May 15, 2010)

Actually that condo project was run by a Korean developer and administered by a Korean lawyer.

It is estimated that 13 million dollars in deposits is involved.

The Korean lawyer accepted the deposits and says she gave all the money to the developer.........who disappeared back to Korea with the cash.

Either the lawyer was complicit in the scam..........or she was a victim as well.

The situation may have a chilling affect on lawyers willing to act as intermediaries for developers........if they are held responsible if he developer skips town.

One other problem that is starting to appear in condos..........is the glass wall and glass balcony problems.

One building in Toronto has all the balconies sealed off............and it will cost a fortune to replace them. Trying to sell a condo in the building is impossible.

A university professor who specializes in these types of buildings, projects big problems ahead for glass wall condos........which are cheaper to build and are advertised as a selling point for the open views.

They do not seal properly and start to leak after a few years. The cost to replace whole walls is prohibitive.

He projects the shiny new condos of today............will become the low rent ghettos of tomorrow.

He recommends people buy refurbished condos in old factories etc...........that were build years ago to better standards.

Low rise..........brick walls.........totally refurbished infrastructure.........is the way to go.........but they are expensive.


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## kaleb0 (Apr 26, 2011)

sags said:


> One other problem that is starting to appear in condos..........is the glass wall and glass balcony problems.


Here in Montreal most of the condos are mid-rise (4-8 story) mixed concrete/brick buildings with windows. Some glass towers exist but they don't seem to be as prominent as in the GTA. I'm guessing this is due to the colder winters up here, but maybe there's another reason.


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## carverman (Nov 8, 2010)

sags said:


> Actually that condo project was run by a Korean developer and administered by a Korean lawyer.


Thanks for the correction..it's a Korean project that went badly.



> It is estimated that 13 million dollars in deposits is involved.
> The Korean lawyer accepted the deposits and says she gave all the money to the developer.........who disappeared back to Korea with the cash.


Interesting, but why then did she declare bankruptcy..unusual for a lawyer isn't it...as if they aren't
always digging into someone else's pocket.



> Either the lawyer was complicit in the scam..........or she was a victim as well.


Hmmm..either way it's a 13 million dollar question. 



> The situation may have a chilling affect on lawyers willing to act as intermediaries for developers........if they are held responsible if he developer skips town.


You would think they would be smarter than that even as intermediaries..it's all in the paperwork and signatures..they are not bankers. Why would 13 million dollars end up in her escrow acct? 



> He projects the shiny new condos of today............will become the low rent ghettos of tomorrow.


So you predict Toronto will end up like a lot of US cities with their own ghettos?


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## sags (May 15, 2010)

I wouldn't buy one.

There are easier and more fun ways to go broke...............


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## OurBigFatWallet (Jan 20, 2014)

Condos can be scary. The amount of special assessments given to some owners is enough for them to go bankrupt (or close). Here in Calgary the market seems to keep going up no matter what the market fundamentals say but if a slight market correction were to happen I think condos will be the first to drop


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## carverman (Nov 8, 2010)

OurBigFatWallet said:


> Condos can be scary. The amount of special assessments given to some owners is enough for them to go bankrupt (or close). Here in Calgary the market seems to keep going up no matter what the market fundamentals say but *if a slight market correction were to happen I think condos will be the first to drop*


It all would depend on the state of the economy, the locations of the condos, (harbour front view etc) and the law of supply and demand.

If enough people with financial resources are available to still buy condos either from the builder or as a resale, the market correction, when it happens , may drop prices temporarily, but after the correction the prices will start going up again. 

It would only affect those selling in times of a market correction, I would think. 

If I had a million or two stashed away, and interested in a condo down town because I had business dealings there, more than likely, I would still buy one..to avoid the traffic bottlenecks that are getting worse and worse every year.

Living out outside a big Metropolitan area like Toronto and having to face commuting down town every day (driving or having to deal with Subway rush hour), not a pleasant way to spend some of your day, would certainly influence my thinking.


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## kcowan (Jul 1, 2010)

Condo problems are known
Here is an possible action plan from 2011:


> Will history in the GTA repeat itself? High-rise apartment buildings of the 60s and 70s were once ‘chic’ cribs with underground parking and indoor pools. Now many of them are home to Toronto’s priority neighbourhoods. Is this the fate of today’s glass condo towers, to become depreciated investments that are unloaded as low income rental housing awaiting renewal? If we know anything for certain, it is never too early to begin the process of rehabilitating inferior building stock and investing in preventive measures.3
> 
> Looking at the things that can and should be done, the situation is not as dire as it first appears.
> 1. Change the codes and standards so that the durability and energy performance of condominiums is comparable to that of single family detached homes.
> ...


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## Cal (Jun 17, 2009)

I am sure the authorities have the lawyer on a no fly list already....sounds like they could leave and get a financial kickback. Doesn't pass the sniff test to me.

Edit-I guess it didn't pass the sniff test for the authorities either, I saw the lawyer was charged today.


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## carverman (Nov 8, 2010)

> "We did not doubt this project," he said. "*Who could touch trust account money*?" Ma said he received a letter saying the project had fallen through.


*



Lawyer Meerai Cho, who represented a developer of the now-cancelled Centrium condo project, is facing 75 charges and has been temporarily suspended by the Law Society of Upper Canada.

Click to expand...

*


> Police raided a building Wednesday that once held the developers' offices, but it was not immediately clear what, if anything, was found.





> "This office telephone number and address -- they do dot exist," he said of the letterhead on the notice he received. "I just don't believe this is happening in Canada."
> *The law society alleges Cho mishandled $15 million of down payments that vanished from the trust accounts.*
> 
> 
> *Some of the buyers originally gave their money to a major law firm, Brattys LLP, based in Vaughan. It is unclear why that money ended up in Cho's office.*



ah.....lawyers mishandling their.... "trust accounts", a misnomer in today's society.

They would still have us believe that we trust them when the temptation is there..to use that money..for "investments" and 'other legal expenses"....:biggrin:




> Under the Ontario New Home Warranties Plan Act, deposits paid for new residential condominium units are protected up to a maximum of $20,000. Under the Condominium Act, deposit paid for future condominium units being purchased from developers are protected by a trust," said Nilani Logeswaran a spokesperson for Consumer Services Minister David Orazietti.


Well at least some of them might get some of their deposit returned.


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