Following numerous consumer complaints about cancelled contracts and unreturned deposits, an Ontario condominium builder has agreed to pay $60,000 in penalties and nearly $2.6 million to 141 affected purchasers.
Ontario’s Home Construction Regulatory Authority (HCRA) announced a settlement with ADI Morgan Developments (Lakeshore) Inc. on November 30, three months after announcing it intended to revoke the licence of the builder and numerous affiliated companies.
After notifying the builder in late August, HCRA’s September 27 Amended Notice of Proposal said that the builder had “cancelled hundreds of purchase and sale agreements for condominium units in order to increase its profits” and the builder expected purchasers to pay hundreds of thousands of dollars more for their units at Burlington, Ontario-area condominium developments, and that those who refused to pay the additional costs only received deposits once a new purchaser was found who was willing to pay the new, higher price.
HCRA said those practices violated the New Home Construction Licensing Act and the Ontario New Home Warranties Plan Act. That filing also said HCRA’s investigation was hindered because “requests for documents and information were met with delays, incomplete responses, and falsified documents.”
However, the settlement announcement from the License Appeal Tribunal dated November 28 includes agreement that there was “no finding or admission as to any ADI Entity having provided altered or false information or documents to the HCRA.”
Within the settlement agreement, the builder admitted that it failed to return purchaser deposits within the time period required by applicable legislation and it was said, however, the builder had since returned all deposits to all purchasers.
The builder agreed to pay the $60,000 fine to HCRA once the organization gains official authority to impose these kinds of administrative monetary penalties (AMP), scheduled to come into effect February 1, 2023. The AMP will also include an amount of $2,585,674 owed to purchasers. This is the amount of interest accrued at 6% on “every affected purchaser’s deposit not returned on time” by the builder.
“By requiring ADI Lakeshore to pay this money to the purchasers, we are ensuring that the builder did not benefit from breaching their licence requirements,” noted HCRA Chief Executive Officer and Registrar Wendy Moir in a statement announcing the agreement.
Three of the builders’ affiliates will have licences immediately revoked. Others will be allowed to continue to operate to complete current projects, subject to additional licensing conditions and a two-year ban on new projects.